A Bay of Plenty couple embroiled in a lawsuit with a real estate agent they claim misled them about the boundary of their home, say changes to real estate laws are not working.

Phil Barras and Sandra Knapton say they were misled by Tauranga real estate agent Andrea Quin in relation to the boundary of their Oropi Gorge Road property.

Sandra stands on the actual property boundary. Photo: Tracy Hardy

The couple purchased the one hectare lifestyle block at auction in November 2009 for $290,000 after being originally shown the property by Andrea. The property had a CV of $400,000.

Phil and Sandra say Andrea never mentioned the then access to the property was not part of the property, and fence running down the driveway was not the true boundary.

They say that fact ruined their plans to build an engineering workshop with heavy vehicle access.

Andrea says Sandra and Phil were not her buyers and were shown the property on the spur of the moment.

At the showing, which she says lasted about 10 minutes, Andrea did not have the property file with her and claims she did inform Phil and Sandra there was an issue with the boundary.

After checking with council, Phil and Sandra purchased the property and only later discovered the boundary was inaccurate.

Andrea says they were given the option of re-selling the property. A buyer had offered more than Phil and Sandra paid, but they declined the offer.

'They say I have cost them a $100,000, but if you could see the property, what they have done with it, what they paid for it, what they have got out of it, it has not cost them a penny.”

Phil and Sandra took their complaint to the Real Estate Complaints Committee, which ordered Andrea to pay a fine of $7000, plus $25,000 plus GST in costs spent by Phil and Sandra to construct a new access.

The committee found that Andrea was not open and honest with Phil and Sandra, and ordered her to complete real estate unit standards on demonstrating a knowledge of misleading and deceiving conduct, and demonstrating knowledge of the licensing code of professional conduct.

Andrea was also ordered to pay Phil and Sandra $25,000 plus GST on proof that the work on a shed driveway for which they obtained quotes, was done.

Andrea appealed the committee decision to the Real Estate Tribunal, which upheld the committee findings, and increased the amount Andrea had to pay to $40,000.

She then appealed to the High Court which quashed damages and ordered costs in Andrea's favour.

In his ruling Justice Tim Brewer didn't allow an appeal on Andrea's unsatisfactory conduct. He says it's still unsatisfactory even though the unsatisfactory conduct happened on November 9, 2009 – just eight days before the Real Estate Act became law on November 17.

Justice Brewer says the primary function of the Real Estate Act is to promote and protect the interests of consumers - it is not a forum in which complainants can seek monetary compensation.

He says a Real Estate Committee can't order a real estate agent to pay damages. That power is given only to the Real Estate Tribunal to a limit of $100,000, and only in cases of misconduct, not the less serious charge of unsatisfactory conduct.

By the time of the auction it was too late for Andrea to rectify her error or omission, but she could have taken steps to provide relief from the consequence, said the judge.

Phil and Sandra elected to keep the property and paid the extra cost of developing it to achieve the result they expected when they bought it. That extra cost isn't covered by section 93 of the Real Estate Act.

'I emphasise that my decision does not leave the second respondents without a remedy,” says the judgement.

'It is clear that they suffered loss of expectation because of the appellant's unsatisfactory conduct.

'My decision means the Tribunal acted outside its jurisdiction in ordering payment by the appellant. It does not mean it would be outside the jurisdiction of the District Court, or of this court, although other parties might need to be involved.”

Under the new law, Justice Brewer says Andrea had an on-going obligation to find out about the boundary and access.

At the time of the purchase Andrea then worked for Land Agents 2007 Ltd, trading as ReMax Property. It is now trading as Action Real Estate.

The business principle John Foot says Andrea made a small error at a time of a sea change in the real estate industry. From a previous climate of ‘let the buyer beware' the onus shifted entirely onto the real estate agent.

There are also a lot of new disclosure requirements under the new act, where vendors have to tell real estate agents things about their properties they may have let slide in the past.

'Andrea did try and warn the purchasers there was a discrepancy with the driveway. She tried to pass on as much information as she had and that's where the matter should end,” says John.

'We accepted she could have done better with the disclosure, we didn't appeal that even though it was before the new act came into effect.”

They appealed the fact her conduct was considered ongoing, which continued from the time of the one and only viewing of the property.

John says the couple were not Andrea's clients and she only met them on the one occasion.

'She wasn't prepared to show it, she did not have the file,” says John.

'One short viewing lasting about ten minutes, that was the only time Andrea ever met them. She tried to say something about the drive.”

John says efforts were made to attempt to resell the property, and on auction day there was a buyer lined up prepared to offer $300,000 but was unable to make it unconditional for a further few days.

The new Real Estate Authority also wanted to jump hard on transgressions and stamp their authority on the industry, says John.

'Today there is a very different approach from what they had in the first few months of the new regime.”

Sandra and Phil have now filed a civil action, which Andrea's solicitor has taken back to the High Court because of the amount being claimed, and they have taken the court documents to Tauranga MP Simon Bridges' office in the hope the Act can be amended.

'The whole issue is we went through the right channels, which was the real estate agents,” says Sandra.

'If we had known to just do a civil case three years ago that's what we would have done.”

'The solicitor's advice is to go public because it points out a huge loophole in the law, the 2008 Real Estate Act,” says Sandra.