Decision given against Real Estate Institute

Press, Volume CXI, Issue 32536, 20 February 1971, Page 22

Decision given against Real Estate Institute

N.Z.press Ass

AUCKLAND, Feb. 17. An Auckland couple, who had $ll,OOO misappropriated by a real estate agent have had their claim for reimbursement allowed by a decision of Mr Justice Woodhouse in the Supreme Court at Auckland. His Honour entered judgment of $4OOO in favour of Geoffrey and Maurine Purdeu against the Real Estate Institute of New Zealand. In a separate action, in which the Attorney-General claimed $20,000 from the Land Agents Guarantee Company, Ltd, he entered judgment for the sum claimed, saying he imagined the balance remaining after an appropriate amount was paid to the plaintiffs would be promptly returned to the company. Mr S. B. W. Grieve appeared for the AttorneyGeneral, Mr J. S. Henry for Mr and Mrs Purdeu, and Mr B. H. Clark for both defendants.

In hi.s oral judgment, his Honour said the plaintiffs paid $ll,OOO to a man named Turner, an old friend, who was a director and virtual owner of a company called Auckland Real Estate, Ltd. The purpose was to enable the plaintiffs to acquire an interest in a house property at Howick as members of a syndicate which would develop the property for subdivision and resale. “In fact,” said his Honour, “the property was not . purchased and probably nothing was ever done by Turner to negotiate for the place.”

It was common ground that Turner had pleaded guilty in the Supreme Court to a number of charges of theft of the money in question and was duly dealt with.

The plaintiffs alleged that none of the money was recoverable from Turner because he was bankrupt and without assets; or from the company which was in liquidation and also without assets; and that they were entitled to reimbursement from fidelity funds set up in terms of the Land Agents Act, 1953, and the Real Estate Agents Act, 1963. Counsel for the defendants, however, claimed that the plaintiffs were at no

time dealing with the company which owned the real estate business or with Turner as one of its directors or servants. Instead, the case was simply one of a person who hapepned to be associated with a land agency business making a decision to embark on a private speculation; or alternatively using such an approach as a sub-

terfuge for a deliberate fraud upon his friends.

His Honour said he accepted the view of Mr and Mrs Purdeu that they believed they were to be part of a syndicate and that it was being formed by Turner and a co-shareholder as one facet of his activities inside his real estate firm.

Quite apart from this, Auckland Real Estate, Ltd, was acting as agent for the vendor for the sale of the property. Public protection “For the protection of the public, the real estate agents in New Zealand have commendably promoted legislation for the setting up of the fidelity fund outlined in the 1963 act,” said his Honour, “and for similar reasons both that act and its predecessor provide that money received by a real estate agent in that capacity shall not be retained by him except, in a trust account.

"It would be farcical if those last provisions Were necessarily to be construed as an obligation which could be avoided as soon as the agent joined his lay client as a partner. “It would certainly do no service to the commendable efforts of the profession to give the protection I have mentioned if that sort of loophole were open to the occasional individual of dishonest intentions, and I 'am satisfied as a matter of construction that . the act should not and cannot be construed in that fashion.” His Honour also awarded costs, witnesses’ expenses and disbursements to the plaintiffs.