IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-003045 [2017] NZHC 1875
BETWEEN COMMERCE COMMISSION
Plaintiff
AND
LODGE REAL ESTATE LIMITED First Defendant
LUGTONʼS LIMITED
Second DefendantMONARCH REAL ESTATE LIMITED Third Defendant
ONLINE REALTY LIMITED Fourth Defendant
SUCCESS REALTY LIMITED Fifth Defendant
BRIAN KING Sixth Defendant
JEREMY OʼROURKE
Seventh Defendant
Hearing: 2 August 2017 Appearances:
L C A Farmer and J Carlyon for Plaintiff
G H J Brant for Fourth DefendantJudgment:
8 August 2017
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 8 August 2017 at 3.00 pm
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date…………………………
COMMERCE COMMISSION v LODGE REAL ESTATE LTD & ORS [2017] NZHC 1875 [8 August 2017]
Introduction
[1] Online Realty Ltd (Online) is one of several real estate agents facing proceedings by the Commerce Commission for breaches of s 27 of the Commerce Act 1986 arising from the co-ordinated response of various agents to Trade Me’s decision to revise its pricing model for listing residential properties on its website.
[2] A number of agents have admitted that their conduct was in breach of the Act and have had penalties imposed on them.1 Online has also now admitted that it engaged in conduct that breached s 27. Online and the Commerce Commission have jointly recommended a penalty of $1,050,000 which they say recognises the nature of the conduct and the relevant mitigating factors. They seek the Court’s approval and imposition of a penalty at that level.
The contravening conduct
Relevant statutory provisions
[3] Section 27 of the Commerce Act prohibits certain types of conduct which have the effect of substantially lessening competition:
(1) No person shall enter into a contract or arrangement, or arrive at an understanding, containing a provision that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.
(2) No person shall give effect to a provision of a contract, arrangement, or understanding that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.
(3) Subsection (2) of this section applies in respect of a contract or arrangement entered into, or an understanding arrived at, whether before or after the commencement of this Act.
(4) No provision of a contract, whether made before or after the commencement of this Act, that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market is enforceable.
1 Commerce Commission v Lodge Real Estate Ltd [2016] NZHC 3115 (Lugton’s); Commerce Commission v Lodge Real Estate Ltd [2016] NZHC 1494 (Success); Commerce Commission v Unique Realty Ltd [2016] NZHC 1064 (Unique Realty); Commerce Commission v Property Brokers Ltd [2016] NZHC 2851 (Manawatu 1994); Commerce Commission v Property Brokers Ltd [2017] NZHC 681 (Property Brokers and Mordaunt); Commerce Commission v Bayley Corp Ltd [2016] NZHC 1493 (Bayleys); Commerce Commission v Barfoot & Thompson Ltd [2016] NZHC 3111 (PPL).
[4]…
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- Case
- [2017] NZHC 1875
- Decision Date
CaseChat Overview and Summary
The court was required to decide whether the proposed penalty was appropriate and whether Online should be granted permission to pay the penalty in instalments. The court assessed the appropriateness of the penalty by considering the nature of the market, the nature and seriousness of the conduct, the role of the defendant, the deliberateness of the conduct, the seniority of personnel involved, the duration of the conduct, the potential gain to the defendants, and the harm caused by the conduct. The court found that Online, while an active participant, was not a ringleader or initiator of the agreement and that the most senior of Online's personnel were involved. The court also found that the Hamilton agreement had a lasting effect on the real estate market in Hamilton, which supported the appropriateness of the penalty.
The court found that the recommended penalty of $1,050,000 was appropriate and fell within the correct range. The court accepted Online's application for staged payment of the penalty, finding that it would allow Online to continue trading in an orderly way. The penalty is to be paid in four instalments over three years. The court made a declaration that Online's conduct contravened s 27, via s 30, of the Commerce Act 1986 and imposed a pecuniary penalty of $1,050,000. The penalty is to be paid in four instalments over three years. The parties have agreed that costs will lie where they fall.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
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