ERA says agent in flipping case done no wrong

[nextinfidel]

part 2

APPOINTMENT

Subject to the provisions of this Agreement, the Broker hereby appoints the Associate as the Broker’s real estate agent to sell, lease and provide other real estate brokerage services, to solicit additional property listings and customers for the Broker and to otherwise promote the business of servicing the public in real estate transactions, and the Associate hereby accepts this appointment. The Associate agrees to work diligently and to perform his services to the best of his ability. The Associate shall at all times conform to and abide by all rules, regulations and policies of the Broker for the performance of the Associate’s obligations hereunder, as the same may be amended from time to time at the Broker’s sole discretion. The Associate agrees to conduct his business and regulate his habits, so as to maintain and to increase, and not to diminish, the goodwill and reputation of the Broker. For the avoidance of doubt, nothing in this Agreement shall constitute or create a partnership or employment between the Broker and the Associate.

This agreement also provided for the commission to be charged to clients or customers for services rendered by the associate. Although it declared that it was not a document creating a partnership or an employer-employee relationship between the associate and the defendant, I am of the view that the defendant had held out the associate as its agent. In the circumstances, unless the associate’s client was expressly told otherwise, the client was entitled to regard the associate as a servant or agent of the defendant. I am satisfied that such disclosure was not made to either the first plaintiff or the second plaintiff.

9 Mr Loo attempted to show that the second plaintiff was an experienced businesswoman with a real estate agency company called Katz Realty Pte Ltd. Counsel thus wished to persuade the court that she must have not only known what was going on, but also knew that the defendant was not bound by Jeremy’s conduct. The evidence did not support Mr Loo’s argument. I accept the evidence of the first and second plaintiffs and find that they were not professionally familiar with the real estate business of Katz Realty Pte Ltd; and, further, that they had unreservedly relied on the services and expertise of Jeremy. I accept the second plaintiff’s evidence that her business was that of a personnel agency.

10 I accept the evidence of the second plaintiff that had she known the full facts, that is, that Natassha was Mike’s wife; and Mike was not only an ERA agent, but also a Divisional Director and Jeremy’s boss, she would not have agreed to sell her flat to Natassha; and that she would have asked an agent from a different housing agency to act for her. She voiced what I think would be the sentiment of any reasonable vendor, namely, that she would not have trusted an agent who did not disclose that the purchaser he procured was actually the agent’s boss. I also reject Mr Loo’s argument that the plaintiffs sold at the price they wanted therefore they should not be unhappy that the purchaser made a larger profit. That argument missed the point. Jeremy was not entitled to act as he did, namely, placing himself in a position where he might have to act in conflict between his principal’s interests and his own. In any event, the second plaintiff had stated that she would not have granted the option had she known the concealed facts.

11 Chua Khee Hak (better known as “Jack Chua”) was (and still is) the president of the defendant as well as the president of the defendant’s holding company. He was not called as a witness for the defendant and was thus subpoenaed to appear by the plaintiffs as a witness for the plaintiffs. He testified that understanding the facts as disclosed he did not think that Jeremy or Mike had acted unethically. He also testified that by reason of the Associate Agreement, Jeremy and Mike were independent agents whose actions do not bind the defendant. He stated that the defendant’s agents need not disclose the identity of the buyer unless the agent himself has a pecuniary interest, or the defendant would have obtained a financial benefit for itself. He confirmed that no disciplinary action had been taken against either Mike or Jeremy. When Mike and Jeremy gave their evidence they likewise declared that their conduct was not unethical. Their evidence were consistent with that of Jack Chua. Ms Gan Kam Yuin, counsel for the plaintiffs, drew Mike’s attention to the Code of Ethics of the Institute of Estate Agents (“the Code of Conduct”) and showed him that they had provisions that would have required Jeremy to make the appropriate disclosure to the plaintiffs. Mike expressed the view that since Jeremy was not a member of the Institute of Estate Agents he (Jeremy) was not bound by the Code of Conduct. Mike admitted that although he (Mike) was a member of the Institute, he was not in breach of the code of ethics because he was not the plaintiff’s agent. That was the thrust of the defendant’s case – Mike and Jeremy did no wrong for the reasons given by Mike, and in any event, they were independent contractors whose conduct did not bind the defendant.

 

[nextinfidel]

part 3

12 It transpired in the trial that this was not the only instance in which Jeremy, Mike, and Natassha had been involved in a sale and purchase of property on behalf of clients without disclosing to them the identity, connection, and the interests of each of them. I think that the facts as I found above indicated that Jeremy was utterly wrong not to have made full disclosure to the plaintiffs. I find that Natassha was only a nominee, and the person who had wanted to buy the plaintiffs’ flat was Mike because he was the one who was acutely aware of the true state of what Jeremy described as the “crazy” market at the time. I am of the opinion that he was the one who wanted to make a profit from a quick subsidiary sale as he had done. However, had he done so himself, he would have been in breach of the ethics set out in the Code of Conduct. He thus created a little more distance between himself and the plaintiffs by using his wife Natassha as the purchaser, and Jeremy as the vendor’s agent. I think that any reasonable person would hold such conduct to be wrong, and I was surprised that Jack Chua, the president of the defendant, as well as Marcus Chu, the defendant’s Senior Vice President, both thought that there had been no misconduct on the part of Mike, Jeremy, and the defendant. It was only during the cross-examination of Marcus Chu that it became clear to me why they thought so – Marcus Chu admitted that he and others in the company as well as agents from other companies in the housing agency business had been doing what Mike and Jeremy had done in the transaction of the plaintiffs’ flat.

13 I am of the opinion that the Mike and Jeremy were ethically wrong and in breach of contract by reason of creating a conflict of interest between their client and themselves. Jeremy was the contractual link between the plaintiffs and the defendant, but Mike was person behind the scheme, and his position in the defendant rendered Jeremy’s breach even more reprehensible. The misconduct of Jeremy, Mike and the defendant in question is a matter of such importance that I feel bound to explain as simply and as briefly as I can the reasons as to why I think that the agents’ conduct was wrong so that no property agent can claim ignorance after this. When a property agent is engaged to sell or buy real property, he (the agent) is the agent of the person who engaged him. That other person is his principal. The property agent has professional as well as specialised expertise and knowledge of the market that the property owner or buyer may not have. When he is so engaged, the agent has a responsibility to act in his principal’s interests – not his own, or his friends’, or his relatives’ or his boss’s. When a person has been appointed an agent of another, he becomes an extension of that other and so far as his endeavours are for the benefit of his principal he cannot create benefits for himself or his friends without due disclosure. That is the law of agency. This responsibility that the agent bears is the foundation of the ethical rules and contractual principles that prohibit an agent from acting in conflict of interests, and reaping secret profits for himself or his friends. The relationship that an agent has with his principal is fiduciary in nature; that is to say, it is one founded in trust. When a farmer negotiates with the fox on behalf of the chicken for its safe passage the farmer cannot have a personal interest in the deal or the chicken might be doomed for it has given its trust to the farmer and placed its safety in his hands.

14 The evidence showed that the option form had the defendant’s logo printed on it. The agent’s commission agreement was in fact executed between the second plaintiff and the defendant. All the advertisements were made with the object of persuading the public that if they engaged an ERA housing agent they would have the backing of ERA Realty Pte Ltd, ie, the defendant, and its network of clients and agents. This was exactly what the plaintiffs’ believed. I do not accept that Jeremy and Mike had acted as independent contractors. They were agents of the defendant and their conduct binds the defendant. The result of the concerted efforts of Jeremy, Mike, and Natassha resulted in the plaintiffs’ selling their flat for less than what they might have had they been properly and honestly advised. The profit Natassha made from the subsidiary sale is what the court regards as a secret profit even though Natassha herself was not a housing agent. She was a party to the plan made and carried out by two agents of the defendant.

15 In his written submissions Mr Loo referred me to the Privy Council case of Horace Brenton Kelly v Margot Cooper and Another [1993] 1 AC 205. The principle against acting in conflict of interests is a principle of law. Whether the circumstances of a given case amount to a conflict of interests is a question of fact. In Horace Brenton Kelly v Margot Cooper and Another, the agent was acting for two independent home owners. He owed duties of confidentiality to both and there was therefore an implied term not to divulge information regarding one principal to the other. In the present case the Jeremy acted in the interests of his friend – assisting Mike in making a profit from the plaintiffs’ property when both of them were directors of the defendant. That was the conflict in this case. Furthermore, in Horace Brenton Kelly v Margot Cooper and Another, the court found that there was no element of dishonesty or bad faith on the part of the agent. I cannot say the same in this case. I find that the evidence established that the conduct of Mike and Jeremy amounted to a breach of duty and fraud. This case differs also on the facts from ERA Realty Pte Ltd v Pushpha Rajaram Lakhiani and Anor [1999] 1 SLR 190. I agree with the court there that where a housing agent acts for more than one potential purchaser he may not owe the duty of fidelity in the same way to all of them the way he would if he were acting for only one. A buyer is entitled to use a nominee when buying a property, but when the buyer is closely connected to the agent as to give rise to a situation of conflict, the true facts must be disclosed. The conflict of interest before me was a conflict between the agent Jeremy and the vendor. In addition, Jeremy’s duty to act honestly required him to disclose his boss’s interests in the sale and purchase. The arrangements made and carried out by him in collaboration with Mike and his wife Natassha in the transaction depended on deception. The fact that there was no exclusivity of right of marketing was not relevant. The duties in contract express and implied depend on the facts.

16 For the above reasons, I give judgment in favour of the plaintiffs and order that the defendant pay them the sum of $257,000 being the profit made by Natassha, as well as all disbursements and expenses incurred by the plaintiffs in uncovering Natassha’s relationship with Mike and Mike’s relationship with Jeremy; all judgment sums will carry interests at the rate of 5.33% from the date of the filing of the writ to final payment. I am also ordering the defendant to pay costs to the plaintiffs on an indemnity basis to emphasize the gravity of the misconduct and breach of duty in this case. Mike has 200 agents working for him and we do not know how many agents the defendant has, nor how many housing agents there are in all. This kind of misconduct is never easy to discover because it is carried out in stealth and in breach of trust; and far too many homeowners and potential purchasers are at risk. The defendant and its two agents had done a grave disservice to the honourable and honest members in their rank.

 

[nextinfidel]

>>>>In a statement responding to queries from The Straits Times, ERA president Jack Chua said yesterday that Mr Parikh and Mr Ang have resigned.

The two men have also agreed to make full restitution for the claims against ERA, he said. <<<<

I suspect ERA asked them to resign instead of dismissing them.

 

[Mdm Tang]

>>>>In a statement responding to queries from The Straits Times, ERA president Jack Chua said yesterday that Mr Parikh and Mr Ang have resigned.

The two men have also agreed to make full restitution for the claims against ERA, he said. <<<<

I suspect ERA asked them to resign instead of dismissing them.

ya lor ....

 

[Jah_rastafar_I]

OH crap a keling husband and wife snake.


It seems like they might escape after all kelings have the amazing ability to slither out of trouble.

 

[nextinfidel]

so is there a penalty to be meted out to the agent and the keling fellow?

strange, becos if there isn't, then it would be akin to like robbing a bank, getting caught by the police, forced to return the money you took from the bank, and then just walking off scot free.

 

[Mdm Tang]

so is there a penalty to be meted out to the agent and the keling fellow?

strange, becos if there isn't, then it would be akin to like robbing a bank, getting caught by the police, forced to return the money you took from the bank, and then just walking off scot free.

" ...and then just walking off scot free ... " and setting setting up shop
again maybe in front of the police post ...