REAL ESTATE AGENTS AUTHORITY v LUKE DOMB [2017] NZCA 199

REAL ESTATE AGENTS AUTHORITY v LUKE DOMB [2017] NZCA 199 [23 May 2017]IN THE COURT OF APPEAL OF NEW ZEALANDCA35/2016[2017] NZCA 199BETWEEN REAL ESTATE AGENTS AUTHORITYAppellantAND LUKE DOMBRespondentHearing: 2 May 2017Court: Miller, Gilbert and Katz JJCounsel: M J Hodge and E A Mok for AppellantA OʼConnor and C OʼConnor for RespondentK Raftery QC and L Gerrard for Real Estate Institute ofNew Zealand as IntervenerJudgment: 23 May 2017 at 2.30 pmJUDGMENT OF THE COURTA The appeal is allowed. The Registrar may not require applicants to undergo police vetting (as described at [25] – [26]) or hold their refusal to submit against them. She may require that applicants authorise disclosure of their criminal history (as defined at [30]), and she may make specific inquiries of the police to elicit information that she reasonably considers relevant to her decision whether the applicant is a fit and proper person to hold a licence.B The appellant must pay the respondent's costs for a standard appeal on aBand A basis with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)Introduction[1] May the Registrar of the Real Estate Agents Authority insist that a person seeking or renewing a real estate agent's licence submit to full police vetting, whichextends to disclosure of anything the police know about the person in whatever capacity?[2] Applicants must authorise disclosure of their criminal history.1 The Registrar justifies vetting, which may go much further, by saying that it may sometimes produce information relevant to her decision whether an applicant is a fit and proper person to hold a licence.[3] The legislation says nothing about vetting. The Registrar required that applicants sign a form authorising it. The form was not prescribed in the relevant regulations, the Real Estate Agents (Licensing) Regulations 2009. The Registrar used it because the police vetting unit insisted that the form that is prescribed, whichauthorises "inquiries to, and the exchange of information with, the authorities", doesnot go far enough.2[4] This is a test case. The respondent, Mr Domb, is a licensed agent who believes the Registrar overstepped her authority by insisting on police vetting. When renewing his annual licence in 2013 he refused to sign the form. The Registrar responded that she could not be satisfied he was a fit and proper person. He then submitted on a without prejudice basis and his licence was granted. There is no dispute about his fitness to hold a licence.[5] The Real Estate Agents Disciplinary Tribunal agreed with Mr Domb that the Registrar exceeded her authority by insisting on the form.3 The Registrar responded by modifying her requirements. She asked applicants to sign the vetting form and1 Real Estate Agents Act 2008, ss 36–38; and Real Estate Agents (Licencing) Regulations 2009, sch 2 form 1.2 Real Estate Agents (Licencing) Regulations, sch 2 form 1.3 Domb v Registrar of the Real Estate Agents Authority [2014] NZREADT 5.stated that although it was not compulsory, refusal to sign it might be taken intoaccount when deciding their applications. In Mr Domb's case she told him, on asubsequent renewal in 2015, that as he had not signed it she did not have sufficient information to decide his application. This behaviour is not strictly before us, but it was addressed in argument because our decision inevitably bears upon it.[6] After the Tribunal's decision Mr Domb brought proceedings in theHigh Court under s 3 of the Declaratory Judgments Act 1908, seeking a declarationas to the Registrar's powers to require applicants to consent to her obtaininginformation about them from the police. Collins J agreed that the Registrar had exceeded her authority.4 She could not require applicants to authorise vetting. He held that she could require that applicants authorise police disclosure of convictions, along with discharges without conviction and pending charges relevant to theRegistrar's assessment of fitness.5 With the assistance of counsel he went on in two subsequent judgments to better define what discharges and pending charges might be relevant.6 Notably, he limited disclosure to offences for which the applicant might elect jury trial or infringements carrying a maximum penalty of $10,000 or more.7Pending our decision in this appeal the Registrar is observing those limits.[7] The Registrar says on further appeal that she may lawfully insist on vetting, either because the prescribed form extends so far or because she may require applicants to sign the police form. She further contends that Collins J was wrong to set boundaries on what information she may require; by doing so he set inappropriate limits not just on information gathering but on what is relevant to her assessment of fitness.The legislation[8] This is a question of statutory interpretation, so we turn at once to the Real Estate Agents Act 2008. It was passed to protect the interests of consumers in4 Domb v Real Estate Agents Authority [2015] NZHC 3157, [2016] NZAR 47 [HC Substantive Judgment].5 At [3], [54] and [58].6 Domb v Real Estate Agents Authority [2016] NZHC 767 [HC Supplementary Judgment 1]; andDomb v Real Estate Agents Authority [2016] NZHC 954 [HC Supplementary Judgment 2].7 HC Supplementary Judgment 1, above n 6, at [19]; and HC Supplementary Judgment 2, above n 6, at [3]–[4].real estate transactions and to promote public confidence in the performance of real estate agency work. It achieves its purpose by regulating agents, raising industry standards, and providing accountability through a disciplinary regime.8 No unlicensed person may carry out real estate agency work, which is defined as work or services in trade on behalf of another for the purpose of bringing about a real estate transaction.9[9] Section 36 establishes entitlement to a licence. For agents (requirements for salespersons are materially identical), it provides that:36 Entitlement to licence(1) An individual may be licensed as an agent or branch manager if the individual satisfies the Registrar that he or she—(a) has attained the age of 18 years; and(b) is not prohibited from holding a licence under section 37; and(c) is a fit and proper person to hold a licence; and(d) has the prescribed qualifications; and(e) has obtained 3 years' experience in real estate agency workwithin the 10 years preceding the application to be licensed as an agent or branch manager under this Act.[10] Certain persons are prohibited, notably those with what we may loosely term'current' convictions for offences of dishonesty and other specified offences:37 Persons prohibited from being licensed(1) The following persons are not eligible to hold a licence:(a) a person who has been convicted, whether in New Zealand or another country, of a crime involving dishonesty (or of a crime that, if committed in New Zealand, would be a crime involving dishonesty) within the 10 years preceding the application for a licence:(b) a person who has been convicted of an offence under sections 12A, 14, 17 to 22, or 24 of the Fair Trading Act8 Real Estate Agents Act 2008, s 3.9 Section 2 definition of "real estate agency work" and s 6(1).1986, within the 5 years preceding the application for a licence:The Fair Trading Act offences listed include making claims without reasonable grounds, making certain false claims about land, offering gifts with no intention of delivering them, and using bait advertising.10 They generally address conduct that in a real estate agent would be considered at least unethical.[11] A register of licensees is kept to allow the public to determine if a person is licensed and establish the status of the licence, to choose and contact an agent, and to know which licensees have been disciplined within the last three years.11 Section 67 obliges any applicant for a licence, and any licensee, to notify the Registrar within 10 working days after a change of circumstances. Such change means any change in information recorded in the register of agents, any change in the real estate businessfor which the person works, and "any change that may be prescribed".12[12] The Act authorises regulations for purposes including the following:156 Regulations(1) The Governor-General may, by Order in Council, make regulations for all or any of the following purposes:(b) prescribing the qualifications necessary before a person is entitled to be licensed as an agent, a branch manager, or salesperson:(c) prescribing the form, manner, or content of applications, notices, or any other documentation or information required under this Act:[13] The 2009 Regulations were made under this authority. They prescribe licensing forms and establish processes. Regulation 10(2) provides relevantly that an agent must give written notice under s 67 of any change in circumstances under10 Fair Trading Act 1986, ss 12A, 14, 17 and 19.11 Real Estate Agents Act, s 66.12 Section 67(2).s 37, that might result in that agent becoming prohibited from holding a licence, or any change in circumstances that might result in that agent no longer being a 'fit and proper' person.[14] Regulation 6 states that certain forms must be used. They include form 1,which is an application for an agent's licence. The form provides for identifyingdetails, qualifications, workplace and referees. It then states that:Consent and certificationI consent to the making of inquiries to, and the exchange of information with, the authorities in New Zealand or in any participating jurisdiction regarding matters relevant to this application.Notes1 A copy of this application, together with the prescribed statutory declaration, the prescribed fee, and any supporting documents (including sufficient authorisation to release information concerning the applicant's criminal history and any proof of qualifications that is required by the Registrar) must be sent to the Registrar.[15] Also of note is form 7, dealing with annual renewals. It contains the same form of consent and note. However, it differs in that it requires disclosure ofcontinuing education undertaken and certifies that the applicant's circumstances establishing eligibility under ss 36 and 37 have not changed since the applicant'smost recent application or last advice under s 67.[16] Two points may be made at this juncture about the statutory framework.First, by providing for continuing disclosure of circumstances relevant to the 'fit and proper' criteria, reg 10 contemplates, as one would expect, that the Registrar may askapplicants to disclose such information when seeking or renewing licences, even though the prescribed forms do not include such questions. This is not in dispute,though Mr O'Connor, for Mr Domb, took a point, which we address below, about theway in which the Registrar has gone about it.[17] Second, if the legislature meant to authorise vetting of applicants by third parties such as the police, it has gone about it in a rather indirect way. Authoritymust be derived from the 'fit and proper' criterion and the power to make regulations prescribing forms. The form itself does not speak of police vetting or authorise the Registrar to gather everything the authorities know and then decide whether any of it is relevant; rather, it authorises inquiries and explains that the Registrar requiressufficient authorisation to release information about "the applicant's criminal history". By way of contrast, teachers are expressly required to undergo policevetting, and the Education Council, which administers registration, is expressly obliged to hold the vet confidential.13The privacy interest[18] Applicants have what may be a powerful privacy interest in information disclosed by police vetting. Counsel agree that that interest may be taken into account when interpreting the legislation. In particular, interpretation should beinformed by the Privacy Act 1993's privacy principle 1(b), which states that agenciesshould only collect personal information that is necessary for the purpose for which it is collected.14[19] As we explain below, the vetting process may produce information that is notrelevant to the Registrar's work. She acknowledges this but emphasises that sheignores anything irrelevant, that she handles personal information appropriately, and also that she may refuse to disclose such information to third parties under the Official Information Act 1982.15 We are prepared to adopt the working assumption that she does handle personal information appropriately. But that is no answer to the question whether she may collect it in the first place.13 Section 413 of the Education Act 1989 provides that the Education Council, which administersregistration and renewal of practising certificates, must establish a system for "co-ordinatingPolice vetting" and maintain "strict confidentiality for the Police vet".14 Privacy Act 1993, s 6 Principle 1(b).15 Official Information Act 1982, s 9(2)(a). We note in passing that the s 9(2)(a) restriction is subject to the public interest and the overriding principle of availability of official information: ss 5 and 9(1).The Registrar's forms[20] We have attached as an appendix the renewals form used by the Registrar in 2013. It is a four-page form (excluding payment details and a "guide to completion") in which each page is headed "form 7", so conveying the impression that it is a prescribed form. In fact question 12 on page three and the whole of page four are not part of the prescribed form found in the Regulations.[21] Question 12 is a list of questions that the Registrar asked of the applicant. They take the form of disclosures of information, such as convictions or pending charges, since the last renewal. It is not in dispute, for the reasons given at [16] above, that the Registrar may properly ask questions of this type, and it will be seen that on page three she drew attention to the source of her authority, explaining that applicants were being asked to establish whether they were prohibited under s 37 or a fit and proper person to hold a licence under s 36.16[22] Page three also contains the prescribed form of consent to inquiries of authorities which we have quoted at [14] above. The form nowhere includes the prescribed explanatory note, which ought to appear directly below the space forsignature, explaining that the Registrar must have "sufficient authorisation to releaseinformation concerning the applicant's criminal history and any proof of qualifications".17 As will be seen, we regard this as a serious omission.[23] Page four is the police vetting form. It required a separate signature. As Mr O'Connor rightly emphasised, its inclusion in "form 7" was apt to mislead applicants about the source of the Registrar's authority to insist they submit to policevetting.[24] As noted above, the Registrar changed the form after the Tribunal decision. The modified form still omits the explanatory note. It no longer bears "form 7" atthe top of page four, containing the police vetting form, and the following statement appears at the foot of that page:16 Mr O'Connor complained that some of the questions go further than appropriate, but that issue is not before us and we express no view about it.17 Real Estate Agents (Licensing) Regulations, sch 2 form 1.Pursuant to Regulation 6 of the Real Estate Agents (Licensing) Regulations 2009 you are required to complete pages 1 to 3 of the application. Page 4 is an additional disclosure document that the Registrar of the Real Estate Agents Authority requires you to complete as part of an assessment of fitness and propriety to hold a licence. You can choose not to complete page four, however, this will be taken into account by the Registrar in determining any application.[25] The police vetting form itself is the same in both the 2013 and the 2015 versions. It authorises the police to disclose to the Authority any "personal information" that the police consider relevant to the application. Paragraph oneexplains what is meant by personal information:The information about me that NZ Police may consider relevant to my application and release in vetting comprises any conviction history and, for certain agencies, infringement/demerit reports; and it may include other information such as active charges and warrants to arrest, any information received or obtained by NZ Police, and any interaction I have had with NZ Police in any context (including family violence), even where I have not been charged, or charges are withdrawn, or I have been acquitted (not guilty) of a charge, or I have been discharged without conviction.[26] As Mr Hodge, for the Registrar, acknowledged, this language extends to disclosure of any information that the police may have learned about an applicant.Indeed, the Registrar's form goes on to make that point in the guide to completion:The Consent to Disclose Information Form specifically authorises the New Zealand police to disclose ANY information that may be held by Police, including any interaction you may have had with Police in any context or any information received by Police, to the Authority. This is not limited to conviction information. Any disclosure will be subject to the Criminal Records (Clean Slate) Act 2004.So, for example, the authority conferred by this form extends to information about an applicant who has been the victim of a crime, or the subject of an unsubstantiated complaint.[27] The form allows the police to withhold information that they think irrelevant to the application, but that does not diminish the scope of the authority. Nor does it mean that as a practical matter information about victims will not be disclosed. The police may think it relevant, for example, that they found the applicant an untruthful complainant, or that the circumstances of the crime in some way reflect poorly onthe applicant. In any event, the police are not authorised by the Act, or necessarily competent, to decide what is relevant to the Registrar.What police disclosure do the prescribed forms authorise?[28] The first question is whether the authority required in the prescribed forms authorises police vetting, without more.18 The Registrar says that it does. As noted, she uses the police form because the police insist on it.[29] This argument raises two further questions: what "criminal history" means,and whether the prescribed consent extends to police vetting.[30] "Criminal history" undoubtedly includes convictions. In our opinion itshould be interpreted as extending to a discharge without conviction, and also diversion, because both are dispositions resulting from a formal interaction with the justice system and an admission of guilt. It does not extend to pending charges, or to any interaction with the police in a capacity other than that of a defendant.[31] Mr Hodge submitted that the applicant's consent to the "making of inquiries to" and "exchange of information with" authorities extends to vetting. We do notagree, for two reasons. First, the explanatory note is part of the form and it makes clear that the Registrar needs sufficient authority to disclose criminal history. If the form authorised full vetting, that explanation would be positively misleading.[32] Second, we have explained that vetting results in the Registrar receiving all information known to the police then reviewing it for relevance. We do not accept that the prescribed form extends to inquiries of that kind. The natural meaning of its words is that the Registrar may make specific inquiries aimed at eliciting information that she reasonably thinks relevant to her decision. That may involve, by way of illustration, verifying something that the applicant has said to explain away a conviction, or establishing when the charge that resulted in conviction was laid so as to verify that the agent disclosed pending charges on a previous application.18 Schedule 2 form 1.May the Registrar require more?[33] It follows from the conclusions we have just reached that by requiring applicants to sign the police vetting form the Registrar has enlarged upon her express powers. The next question is whether she may do that.[34] Mr Hodge emphasised that agents play a central role in transactions of great importance in the lives of those involved. They must be trustworthy in matters of business. They must also be honest and safe, because they enjoy unfettered access totheir clients' homes, and they may often find themselves alone with vendors or prospective buyers.[35] We agree, but it does not follow that we should interpret the legislation so as to require police vetting in the sense that we have used that term, meaning disclosure extending to anything known to the police. Some perspective is needed. We make three points.[36] First, it must be borne in mind that the Act is designed to protect the interests of consumers in real estate transactions. It focuses on the economic interests of consumers and the integrity and ability of agents in that connection. The list of prohibited convictions in s 37 confirms that.[37] This is not for one moment to suggest that an agent's history of violence, say,is irrelevant. But so far as violent offending is concerned, the risk that real estate agents pose to consumers is no different from that posed by other people who getaccess to consumers' homes in the course of their work. Of course mosttradespeople are not required by regulation to meet a 'fit and proper' standard, but tosay that is merely to confirm that the legislature has not identified a general need to vet those whose work takes them into homes. We add that, as Mr Raftery QC (for the Real Estate Institute of New Zealand) pointed out, lawyers and plumbers mustalso meet a 'fit and proper' standard but their regulators do not employ police vetting.1919 Lawyers and Conveyancers Act 2006, ss 49 and 55; and Plumbers, Gasfitters, and Drainlayers Act 2006, s 36.[38] Second, there are some 14,000 agents and salespeople in New Zealand. Each must renew his or her licence annually. So the scale of police vetting under this process is considerable. It intrudes upon the privacy interests of a great many people. It must incur significant costs for the community. The police bear these costs at present, though we were given to understand that they intend to charge for vetting.[39] Third, it is reasonable to inquire whether the results of police vetting justify the burden it imposes. There is no evidence that it does. The Registrar says only that it may sometimes produce relevant information. That may be assumed, but it does not take us very far. Further, the real question is what vetting adds to theinformation produced by annual criminal history checks and agents' annualdisclosures. Those disclosures are made in the knowledge that a future conviction check will disclose pending charges that register in criminal history and failure to disclose them may jeopardise the next renewal.[40] One would expect that had Parliament intended police vetting of real estate agents the legislative record would evidence some examination of these practical and policy questions, and the legislation itself would speak clearly. It bears emphasisthat a 'fit and proper' standard appears in a large number of statutes but our attentionwas drawn to only one statute, the Education Act, in which police vetting is required. From our own research we have also noted the relevant provisions of the recentVulnerable Children Act 2014, which govern police vetting of children's workers.That Act has an explicit regulation-making power to cover "police safety checks",and pursuant to that power detailed regulations cover how police vetting ofchildren's workers is to occur.20 There is nothing similar for real estate agents in either the Act or the Regulations.[41] For these reasons we see no need to interpret the Registrar's powersexpansively. We respectfully endorse what the late Judge Barber said in the Tribunal decision:2120 Vulnerable Children Act 2014, s 32; and Vulnerable Children (Requirements for Safety Checksof Children's Workers) Regulations 2015, cl 6.21 Domb v Registrar of the Real Estate Agents Authority, above n 3, at [52]. it is not for the Registrar to expand upon the scope of the statutory Form 7 nor to insist that an altered version be signed by the applicant. TheRegistrar may not create requirements of an applicant which are more stringent than provided for in the Act and its Regulations.[42] We conclude accordingly that the Registrar is without lawful authority to require that applicants sign the police vetting form. She is also without authority to demand that unless applicants do so she will reject their applications for want of information, as she did with Mr Domb in 2015, or hold their refusal against them, as she indicated in the 2015 form she would do.[43] It follows that we respectfully disagree with the express limits placed by Collins J upon inquiries that the Registrar may make.22 Mr Raftery fairly described them as a reasonable attempt to assist by fixing limits on what the Registrar may do. But as we have explained, we think the better view is that criminal history does not include pending charges, and we have observed that such charges will appear on a future renewal if they result in a conviction, a discharge, or diversion. Further, it is not easy to identify authority in the legislation for the specific limits adopted by the Judge on disclosure of discharges and pending charges.Decision[44] The Registrar may:(a) require that an applicant authorise disclosure of their criminal history, as we have defined it in [30] above; and(b) make other specific inquiries of the police to elicit information that she reasonably considers relevant to her decision whether the agent is a fit and proper person to hold a licence. In the absence of a factual context, we cannot be more specific than that.[45] The Registrar may not ask or require agents to sign the police vetting form as a matter of course. If she thinks routine vetting is necessary, she should ask the legislature to amend the Act.22 HC Supplementary Judgment 1, above n 6, at [19]; and HC Supplementary Judgment 2, above n 6, at [3]–[4].[46] This judgment addresses third party disclosure by the police. As noted above, it is common ground that the Registrar may require applicants themselves to disclose relevant information and we are not called upon to fix the limits of her authority to do so.[47] Because we have held that the legislation does not authorise the specific limits set in the High Court, the formal result is that the Registrar's appeal isallowed. The substance, though, is that we have taken a narrower view of her powers than did either the Tribunal or the High Court.[48] In the circumstances, Mr Domb must be considered the successful party. He will have costs, payable by the Authority, for a standard appeal on a band A basis with usual disbursements.Solicitors:Meredith Connell, Auckland for AppellantSimpson and Co, Mana for RespondentReal Estate Institute of New Zealand, Auckland for Intervener