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:18433] 
KATE WILKINSON (National) 
: 
 Thank you for allowing me to take a brief call on Part 6 the final part of the Real Estate Agents Bill. This part relates to the miscellaneous provisions. It includes the offence and penalty provisions provisions regarding civil remedies provisions for regulations to be made by the Governor-General and some transitional provisions such as those concerning the Real Estate Agents Fidelity Guarantee Fund existing claims and applications that are pending. 
I will start by talking about the penalties regime. The penalties regime is interesting in the sense of its relativity with that in other legislation. I think sadly it indicates that there has been a bit of a personal vendetta against the real estate industry. If we look at the penalties in this legislation and compare them with those in other legislation we see that there is not a lot of relativity. I refer for example to the penalty for failure to notify the registrar of a change of circumstances. Under this bill the penalty for an individual is $25000 and for a company it is $50000. That is just for changing one’s address and not notifying the registrar in time. It could be a mere administrative slip which of course New Zealand First knows about. But the fine under the bill for that is $25000 which I say does seem to be a bit excessive. 
That is not to demean whatsoever the importance of making sure that changes of circumstances are notified. But under the bill the penalty is $25000. If we compare that situation with for example the penalty for failure to notify the registrar of a change of circumstances under the Motor Vehicle Sales Act 2003 we find that the fine in that Act is only $2000. There is a big difference between $2000 and $25000. Yes one piece of legislation relates to selling cars and the other to selling property and they have different Ministers in charge of them. Perhaps we should also go to the Plumbers Gasfitters and Drainlayers Act which is a recent Act. The fine for failure to notify the registrar of a change of circumstances under that Act is $500 as opposed to $25000 under this bill. The fine provided for in the Immigration Advisers Licensing Act is more in keeping with that in this bill; it is $10000 for failure to notify the registrar of a change of circumstances. But again that is significantly less than the penalty provided for in this bill. 
There is a penalty for failure to provide information and again I will look at that from the point of view of relativity. Under this bill the fine is $25000 for an individual and $50000 for a company. If one compares that again with a similar offence under the Motor Vehicle Sales Act 2003 one finds that the fine for failing to provide information under that Act is $2000—not $25000 for an individual as it is under this bill. In the Plumbers Gasfitters and Drainlayers Act and also in the Immigration Advisers Licensing Act by way of comparison the penalties under both Acts are $10000 for the same offence which is still significantly less than the $25000 fine or penalty that is proposed to be imposed under this bill. 
There are also offences set out in the bill that are not comparable with offences in the other Acts that I have used for the purpose of comparison. The failure to provide an approved guide again carries a fine of $25000 for an individual and of $50000 for a company. The fine for failure to provide a copy of a contractual document is again $25000 for an individual and $50000 for a company. 
I really would be interested in the Minister in the chair the Hon Clayton Cosgrove taking a call—although I am not particularly optimistic about that—and telling us how he has calculated and assessed the quantum of penalty for offences that in some situations can be just the result of a mere administrative oversight. I would also like the Minister to take a call even just to answer one question which I have asked three times so far today. It is a very simple question: does the definition of residential property include or does it not include lifestyle properties? I will ask it again because I really would like to receive an answer to it. Although I did say this would be a short call I have got carried away obviously in relation to the penalties. 
I turn to the provision in Part 6 relating to the winding up of the Real Estate Agents Fidelity Guarantee Fund. We questioned the submitters on whether it should be wound up and most of the submitters mentioned for a start that the two claims in recent history on the fund have related to property management and not to real estate agency work itself. If one looks at the purpose of a fidelity fund one sees it is a fund of last resort so one first has to go through the courts. The fund is available in relation to theft of course and the ability of real estate agents to misappropriate money is possibly limited to the extent that they hold the deposit—this is normally monitored by both the vendor’s solicitor and the purchaser’s solicitor—during the conditional period of a contract until it becomes confirmed as unconditional and thereafter perhaps for the statutory period of 10 days which was mentioned by previous speakers unless of course that 10 days has been waived which quite rightly can be done by agreement. The opportunity for an agent to actually misappropriate the funds is quite limited so from that rationale it is possibly sensible to wind up the fidelity guarantee fund. 
But from the point of view of property management for which the claims have been made against the fund it does not make the same sense because sometimes the funds are being held for overseas owners of property who might perhaps not check their accounts more than once a year when they have to do their tax returns. So property managers have more scope than real estate agents to misappropriate the money of clients. None the less Part 6 does provide for the winding up of that fidelity fund. 
There are other transitional provisions as well that cover things where there are pending disciplinary proceedings and that cover the effect of agency agreements that have been entered into before the new legislation comes into effect. The law that is applicable to them is the old 1976 Real Estate Agents Act. That provision had to be inserted in the bill at the behest of the Justice and Electoral Committee because it had not been thought of by the Minister. And there are other miscellaneous provisions in Part 6. 
I think Part 6 is generally fairly uncontentious except for the quantum of the penalties which seems to be somewhat high. One does have to wonder about the motivation behind setting such a high penalty for what is in some cases purely and merely an administrative oversight. 
Nathan Guy 
: Another tax? 
KATE WILKINSON 
: It could indeed be another tax but it is just another way of taking a personal vendetta against real estate agents and the real estate industry. The offences for which a real estate agent could be fined $25000 or $50000 are such that the circumstances would rarely affect the integrity of a transaction or actually have much of a detrimental effect on clients. In terms of relativity certainly we have concerns about the quantum of those penalties. I think Mr Chair that I will probably leave my discussion of Part 6 at that.