4 October 2007

"Gagging" of member by the Real Estate Institute

> NZHerald: "Real estate body's move 'bizarre'" The action of the Real Estate Institute of New Zealand to discipline The Joneses under its Code of Ethics for publicly criticising other agents publicly is not only bizarre, but - assuming the complaint is upheld - it's potentially unlawful. The complaint appears to be brought under rules 13.1 and 13.5 of REINZ's Code of Ethics:
13.1 Members shall always act in accordance with good agency practices, and conduct themselves in a manner that reflects well on the Institute, its members, and the real estate profession. … 3.5 Members shall never publicly criticise fellow members.
Now, if REINZ was simply a private organisation, it would be entirely capable of maintaining such a rule and disciplining members for breaching it – it would be a contractual term agreed to by private parties. However… REINZ is not entirely a private organisation. REINZ is a body recognised in Part 5 the Real Estate Agents Act 1976. All licensed real estate agents are required under the Act to belong to the institute. There is specific provision for the Institute to prescribe a Code of Ethics (s 70(1)(m)) and for the discipline of members for breaching the Code (s (70(1)(ma)-(o)). Interestingly, the Code of Ethics does not come into force until approved by the Minister of Justice (s 70(4)); I presume this means the government has previously approved the rule in the Code of Ethics being relied on in this case (which probably makes Clayton Cosgrove's complaints about "Keystone Kops stuff" a bit rich). In this capacity, it seems clear that REINZ is caught by section 3(b) of the NZ Bill of Rights, that is, its actions are "actions done by… any body in the performance of any public function, power, or duty conferred or imposed on that person or body by or pursuant to law". And, of course, orthodox administrative law principles as well, under the Datafin principle. For present purposes, the important consequence is that the rule in the Code of Ethics and actions in disciplining the member must, as a matter of law, be consistent with the Bill of Rights. Prima facie, the REINZ rules and actions would breach the freedom of expression in section 14:
"Everyone has the right to freedom of expression, including the freedom to seek, receive, and impart information and opinions of any kind in any form."
Of course, the limitation of expressive rights may be justified under section 5:
"[T]he rights and freedoms contained in this Bill of Rights may be subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society."
That requires an assessment of whether, in general terms, the limitation of the right is "proportionate", namely whether the limitation is necessary, suitable, and appropriate. As the Court of Appeal in Moonen v Film and Literature Board of Review [2000] 2 NZLR 9 said:
"In determining whether an abrogation or limitation of a right or freedom can be justified in terms of s 5, it is desirable first to identify the objective which the legislature was endeavouring to achieve by the provision in question. The importance and significance of that objective must then be assessed. The way in which the objective is statutorily achieved must be in reasonable proportion to the importance of the objective. A sledgehammer should not be used to crack a nut. The means used must also have a rational relationship with the objective, and in achieving the objective there must be as little interference as possible with the right or freedom affected. Furthermore, the limitation involved must be justifiable in the light of the objective. Of necessity value judgments will be involved."
While it is arguable there might be a legitimate governmental or public interest in preventing real estate agents from criticising each other, it is an extremely weak governmental imperative. Even if it could be argued that the rule might be seeking to advance a legitimate governmental objective, it seems clear that an absolute ban on any criticism goes well beyond what is necessary to achieve this objective and/or any productive benefits are far outweighed by its negative effects. The negative effect on the individual is obvious; further, there seems to be a broader public interest in allowing discussion about the propriety of practices within the real estate profession. Accordingly, in my view, the rule in the Code of Ethics is ultra vires or invalid. Even if the rule is valid, then the action of disciplining a member in these circumstances is likely to be invalid. First, there's a simple argument that the comments fall outside the rule, ie the comments were not publicly criticising fellow members; the comments were made about the industry as a whole. Secondly, for similar reasons as discussed above, disciplining members in these circumstances would seem to breach the Bill of Rights.

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Course Outline

Lord Justice Lawton in Maxwell v Department of Trade and Industry [1974] 2 All ER 122 said:

"From time to time ... lawyers and judges have tried to define what constitutes fairness. Like defining an elephant, it is not easy to do, although fairness in practice has the elephantine quality of being easy to recognise. As a result of these efforts a word in common usage has acquired the trappings of legalism: 'acting fairly' has become 'acting in accordance with the rules of natural justice', and on occasion has been dressed up with Latin tags. This phrase in my opinion serves no useful purpose and in recent years it has encouraged lawyers to try to put those who hold inquiries into legal straitjackets.... For the purposes of my judgment I intend to ask myself this simple question: did the [decision-maker] act fairly towards the plaintiff?"


This course examines the elephantine concept of fairness in the law, along with other contemporary legal issues.

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