Barbalich v Leaders Real Estate (1987) Limited

[2014] NZHC 1839

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-974 [2014] NZHC 1839

BETWEEN

ELIZABETH JANET BARBALICH

Plaintiff

AND

LEADERS REAL ESTATE (1987) LIMITED

First Defendant

NICHOLAS LIAM DENIS REEVE Second Defendant

Hearing:	4 and 5 August 2014
Counsel:	F E Geiringer for the Plaintiff J R Parker and L D Tidey for the First and Second Defendants
Judgment:	5 August 2014

ORALJUDGMENT OF MALLON J (Privilege)

[1]      Before me is an application to set aside a claim of privilege over a number of documents.  The application was made at the commencement of a trial in which the plaintiff seeks compensation under the Fair Trading Act 1986.

[2]      The context of the claim is the plaintiff’s purchase of a Karori property.  The second defendant was the real estate agent in respect of that purchase.  The house was for sale by tender with tenders to close at 2 pm on 28 February 2013.   The plaintiff’s  initial  offer  was  made on  the afternoon  of 28 February 2013,  shortly before the closing time for tenders.  Later in the afternoon, the plaintiff was advised that the vendors had made a counter offer.  The next day, 1 March 2013, the plaintiff

submitted another offer and that offer was accepted by the vendors.

BARBALICH v LEADERS REAL ESTATE (1987) LTD [2014] NZHC 1839 [5 August 2014]

[3]      The plaintiff contends that when she made her offer on 28 February 2013, and  when  she  made  the  further  increased  offer  on  1 March  2013,  the  second defendant told her that the vendors had received two other tenders for the property. The second defendant denies he said this.

[4]      Soon after the plaintiff’s offer on 1 March 2013 was accepted by the vendors, the plaintiff’s husband called the second defendant.   The content of that call is in dispute.   However, it is not in dispute that after that conversation the plaintiff’s husband sent the second defendant a text saying that he was going to sue the second defendant and make a complaint to the Real Estate Agents’ Authority (REAA).  It is accepted that, in light of that threat, litigation was reasonably apprehended as at

1 March 2013.  The complaint to the REAA was made on or by 7 May 2013.  The proceedings were brought on 28 May 2013.

[5]      I have inspected the documents at issue.  The documents are communications between the second defendant and the vendors in May 2013.    They are communications setting out the sequence of events from the second defendant’s perspective.  It is apparent that they are directly in response to the complaint to the REAA and that they are for the purpose of responding to that complaint.  The second defendant provides his proposed response to the vendors and seeks their advice and comment upon it.

[6]      Privilege is claimed on the basis of s 56(2)(a) of the Evidence Act 2006.  To qualify for that privilege:

(a)       there must be a proceeding or an apprehended proceeding;

(b)the communication must be between a party to that proceeding or apprehended proceeding and another person; and

(c)       the communication must be for the dominant purpose of preparing for the proceeding or apprehended proceeding.

[7]      It is accepted that the first two requirements are established.  The issue is as to the third requirement.  The definition of “proceeding” and “court” in the Evidence Act  mean  that  the privilege does  not  apply to  a proceeding before the REAA. Therefore the documents are not privileged because they were prepared for that purpose.   The claim for privilege is on the basis that there was, at the time the communications were made, both a complaint that had been made to the REAA and a court proceeding reasonably apprehended.  It is said that responding to the REAA complaint was inextricably linked to preparing for the apprehended litigation.

[8]      Counsel for the plaintiff accepts that it is possible that a document may have more than one dominant purpose.   The question is whether, in the particular circumstances, it does.  Counsel for the plaintiff provided two cases which arose in the context of documents prepared, both for the purpose of an insurer deciding whether to accept or decline an insurance claim, and for the purposes of defending litigation if the claim was declined.  In one of those cases, the Court found that the

two purposes were inseparable and the claim for privilege was upheld.1   In the other

case, the Court found that, in the circumstances of that case, litigation was not reasonably apprehended until the circumstances of the claim had been investigated and a decision had been made to decline the claim, and that the dominant purpose of the documents was to decide whether the claim should be accepted or rejected.2

[9]      The two cases are different from the present situation.  In this case there was no doubt that litigation was reasonably apprehended at the time the communications were made.   There was also no doubt that the response to the REAA would be equally relevant to the defence of the apprehended litigation.  The second defendant knew that and prepared his response in that light.   In those circumstances I am satisfied that the dominant purpose of the communications was equally to prepare a response to the REAA and to prepare for the anticipated litigation.  I am therefore satisfied that the claim for privilege is appropriate.  The application to set aside that

claim is dismissed.

1      Mudgway v New Zealand Insurance Co Ltd. [1988] 2 NZLR 283 (HC).

2      Carlton Cranes Ltd v Consolidated Hotels Ltd [1988] 2 NZLR 555 (HC).

[10]     Costs are reserved.

Mallon J

Solicitors:

Brandons, Wellington for plaintiff

Morrison Kent, Wellington for defendants