Wilkinson Kate: Real Estate Agents Bill — Second Reading In Committee Third Reading 
Wilkinson Kate: Real Estate Agents Bill — Second Reading In Committee Third Reading 
[Volume:649;Page:18377] 
KATE WILKINSON (National) 
: 
 Thank you Mr Chairperson for allowing me to take a call on Part 1 of the Real Estate Agents Bill. As National members have stated throughout the debate on both the first and second readings we support the purpose of the bill as contained in clause 3 which is to promote and protect the interests of consumers in respect of transactions that relate to real estate and to promote public confidence in the performance of real estate agency work. I cannot underscore enough the fact that we certainly support that purpose. We do not think this bill achieves that purpose and we think that it is a missed opportunity. 
I want to spend some time on the interpretation clause which is clause 4. It is the definitions clause and there are a couple of definitions I would like the Minister to take a call on. The definitions of “residential” and of “real estate agency work” are integral to how this bill will operate how it can protect consumers and how it can be effective. As a practitioner who spent some time in the conveyancing field of legal work I certainly know that even under the old real estate legislation the definition of real estate work was very topical and often discussed. It is a definition that will cause confusion and I think it will be tested in the courts if this Parliament introduces provisions that are uncertain or ambiguous. 
If one looks at the definition in clause 4 of “real estate agency work or agency work” one sees that it “(a) means any work done or services provided in trade on behalf of another person for the purpose of bringing about a transaction; and (b) includes any work done by a branch manager …”. And that is fine but I think we really do need some clarification on the exclusions. Under paragraph (c) the work “does not include—(i) the provision of general advice or materials to assist owners to locate and negotiate with potential buyers; or (ii) the publication of newspapers journals” etc. “that include advertisements for the sale or other disposal of any land or business;”—and that is fine—or the broadcasting of such advertisements. Again that is fine. The work also does not include “(iv) the lending of money on mortgage or otherwise; or (v) the provision of investment advice;”. The Minister just might like to know that there is an extra “or” at the end of that subparagraph which needs to be deleted. It does not affect the substance of the provision but it certainly does affect its form. 
I would like the Minister to take a call to explain to me and to the Committee how the operations of companies such as Green Door and the increasing trend to sell properties on TradeMe are affected by this definition of real estate work or the exclusions thereto. I would also appreciate the Minister taking a call in relation to subparagraph (v) which excludes the provision of investment advice. Many people go to their real estate agents for investment advice. They want to know what investment properties to purchase they want to know the rate of return on property and they want to know whether there is any possibility of making capital gain on property. So they actually do go to their real estate agents. Admittedly that is mainly in the commercial field but not necessarily just in that field; it can also be in the residential field. They go to their real estate agents for investment advice. 
This bill expressly excludes the giving of investment advice but the bill is deficient to the extent that it does not actually say what investment advice really is and where it starts and stops. Does it include the real estate agency work that is done once the purchaser has decided to purchase a property? Does it start at the beginning of the transaction when the advice is first sought? Where does the investment advice start and stop because that is a very important point in determining what exactly investment advice is and whether it is excluded under the regime of this Real Estate Agents Bill. 
I know that the Minister in the chair the Hon Clayton Cosgrove is not listening because he does not actually understand the real estate industry at all but the other issue is in relation to residential property and its definition in clause 4: “residential property means any property used or intended to be used exclusively or principally for residential purposes”. That sounds simple enough and the Minister will know because he is actually temporarily the electorate member for one of the fastest-growing areas in the country which has a proliferation of lifestyle properties. Does a lifestyle property fall within the definition of a residential property or not? What does “exclusively or principally” mean? If a person has a 10-acre/4-hectare property on which there is a house a garage a stable a couple of ponies and four sheep is that residential property for the purposes of this Real Estate Agents Bill or is that excluded? 
Someone might ask why that definition is important. It is important because we can turn to clause 129 and read “Parties may cancel sole agency agreements in respect of residential property 90 days after agreement is signed”. So if a property is a lifestyle property—that is partially used for residential partially used for agistment partially used for grazing—does that mean that the parties to that agreement the vendor-clients can then automatically cancel that sole agency agreement after 90 days or does that mean they cannot because that will be very important. If they cancel it and they cancel it wrongly because of the uncertainty in this bill as enacted they could end up instructing other agents and paying twice the agency fees twice the real estate agent’s commission. So we need to know and the Minister needs to take a call on the scope of that word “residential”. 
The other issue in relation to the definition of “residential” concerns subdivisions. Although clause 129(4A) excludes residential property that “(a) has been developed with other properties in a continuous area; and (b) is proposed to be sold or otherwise disposed of by a vendor who also proposes to sell or otherwise dispose of … some or all of those other properties.” at what stage does residential property fall within that exclusion? Is a subdivision created for example by dividing that 4-hectare paddock into two 2-hectare paddocks? Does that make that land a subdivision that falls within the exclusion provision in the definition of residential property for the purpose of clause 129? 
Although to some that may seem pedantic as one who has been involved in this industry as a lawyer for many many years I can tell members that a number of disputes arise from the vendor-clients who think they have properly cancelled a sole agency agreement for whatever reason but who suddenly find that they have not cancelled it and in the meantime they have gone to another agent and then they run the risk of paying twice the commission. 
I do not think this bill is good law for the protection of the consumer when it has these uncertainties in it. Some of these uncertainties were raised at the select committee but they were not answered and I think one of the basic flaws of this bill is that although it is a real estate bill and relates to real estate agents it seems to have been tailored with only residential property in mind and without giving any thought to other sales of real estate whether commercial industrial or lifestyle. I think those issues do need to be addressed and I do think the Minister needs to take a call on that. 
The other definition I will also speak about is the definition of “transaction”. Although it might be a typo that definition in clause 4 has five paragraphs. Most talk about the “grant sale purchase or the disposal or acquisition” of a licence freehold estate or leasehold estate but paragraph (a) does not include the word “grant”. The word “grant” is specifically excluded in relation to paragraph (a) of the definition of transaction so paragraph (a) includes only “the sale purchase or other disposal or acquisition of a freehold estate …”. It does not include the “grant”. That omission must be deemed to be deliberate because that is the way statutes are interpreted and I want to know why the word “grant” has been deliberately omitted from paragraph (a). 
Finally in relation to this call I will talk about the Minister’s Supplementary Order Paper 243 which talks about the sale and purchase of shares and states that they are excluded. Why are they excluded? In the field of real estate there is often a family-owned company whose sole asset is a farm and for various reasons—for example it could be for GST or other reasons—rather than sell the real estate or the property itself the parties decide to effect the transaction by way of the sale of shares. That for all intents and purposes and common sense says that that is a sale relating to real estate but under this bill it is not caught. I think that that again is a deficiency in this bill which is borne out by the lack of awareness on the part of the Government parties as to how the real estate industry works. I think that that really does need to be clarified because more and more rural property transactions are being conducted by way of a sale of shares.