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Barber v Cottle

Barber v Cottle

Case [2010] NZCA 31 22 March 2010

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Breach of Fiduciary Duty

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA637/2009
[2010] NZCA 31
BETWEENCHRISTINE ELIZABETH BARBER

Applicant

ANDSUZANNE LYNNE COTTLE

First Respondent
ANDROBIN STEWART COTTLE

Second Respondent
ANDALAN MERVYN HERBERT

Third Respondent
ANDSUSAN VILORA HERBERT

Fourth Respondent
ANDPAPAITONGA SPRINGS LTD

Fifth Respondent

Hearing:16 February 2010

Court:O'Regan, Arnold and Baragwanath JJ
Counsel:J McGuire for Applicant

W C Pyke for Respondents

Judgment:22 March 2010 at 4 pm

JUDGMENT OF THE COURT

AThe application for an extension of time within which to file an appeal is declined.
BWe make no order as to costs.

REASONS
O’Regan and Arnold JJ  [1]
Baragwanath J (dissenting)  [16]
O’REGAN AND ARNOLD JJ
(Given by Arnold J)
[1]        The applicant, Mrs Barber, seeks an extension of time within which to file an appeal against a judgment of Mallon J given on 13 March 2008.[1] Her application was filed in this Court on 8 October 2009, some 18 months out of time.
A brief background
[1]      Barber v Cottle HC Palmerston North CIV 2004-454-756, 13 March 2008.
[2]        The litigation arises out of a land transaction which occurred in late November 1998. Mrs Barber entered into an agreement for the sale of a block of land which she owned to the fifth respondent, Papaitonga Springs Ltd (PSL), for $700,000 plus GST. The remaining respondents were, with two others, shareholders in PSL. The first respondent, Mrs Cottle, was also Mrs Barber’s real estate agent on the sale. Accordingly, by virtue of ss 63 and 64 of the Real Estate Agents Act 1976 she was required to provide Mrs Barber with an independent valuation within a fixed period. After purchasing the property, PSL sold part of it to the Department of Conservation (DOC) for $72,500 and subdivided the remainder, making a profit on the subdivision of something in the order of $1.7 million.
[3]        Mrs Barber made various claims against the respondents. For present purposes, the most important are those against Mrs Cottle, in particular claims based on breach of fiduciary duty and failure to comply with her statutory obligations. In relation to the former, Mrs Barber alleged that Mrs Cottle:
(a)         being her real estate agent, owed her fiduciary obligations;
(b)had a conflict of interest on the transaction because she had an interest in the purchaser, PSL;
(c)breached her obligations to Mrs Barber by not marketing the property as one having subdivision potential and by not disclosing her conflict of interest or the true value of the property. In argument before us, Mr McGuire (who did not appear at trial) also noted that Mrs Cottle did not disclose that principals of PSL were in negotiation with DOC for the sale of part of the property prior to the making of the agreement for sale and purchase, although that was not a pleaded breach. In effect, then, Mrs Barber alleged that Mrs Cottle hid both her interest in the property and its true value.

[4] Mrs Barber alleged that the property had been sold at an undervalue because the price did not…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Barber v Cottle

Details

AGLC: Barber v Cottle [2010] NZCA 31
Case: [2010] NZCA 31
Decision Date: 22 March 2010

CaseChat Overview and Summary

Christine Elizabeth Barber sought an extension of time to appeal a judgment delivered by Mallon J on 13 March 2008, with the application being filed on 8 October 2009. The appeal was against the decision which found that Suzanne Lynne Cottle, who was Barber's real estate agent, did not breach any fiduciary obligations owed to Barber in relation to the sale of a block of land. The court considered the application as if it was an application for leave to appeal, with the primary consideration being whether an extension of time would meet the overall interests of justice. Factors considered included the length of the delay and the reason for it, the merits of the appeal, and whether the appeal raises any issue of public importance. The appeal was denied, as the delay was considered to be too long and the merits of the appeal were not strong. The reasoning for this decision was primarily based on the length of the delay and the reasons for it, as well as the merits of the proposed appeal.

The Court of Appeal considered two main reasons for refusing an extension of time. Firstly, the length of the delay, which was 18 months, was considered to be a lengthy period. Secondly, the merits of the proposed appeal were not strong, as it was at least arguable that Cottle breached her fiduciary obligations. However, the difficulty was that Barber sought damages representing the under-value at which she claimed the property was sold, rather than an account of profits. Mallon J found that the sale price did reflect a fair market value. Accordingly, Barber suffered no loss apart from the payment of the commission, which Mallon J ordered to be re-paid. Unfortunately for Barber, it is now too late to re-cast the claim.

The Court of Appeal declined leave for an extension of time within which to appeal. Baragwanath J dissented, expressing sympathy for the view of the majority that it is simply too late to pursue an application which would require on appeal a claim for a remedy never sought below or indeed in argument in this Court. However, he preferred to permit the plaintiff, if so advised, to formulate a disgorgement case, the defendants to reply, and then restore the leave application for further argument. This is because he did not share the majority’s view that because Barber sought damages for the alleged sale at undervalue rather than an account of profit, the case as pleaded had little prospect of success. In his view, there was a very substantial argument that the High Court erred in finding there was no such breach.

Orders