Cooke v Valuers Registration Board

[2014] NZHC 323

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-000610 [2014] NZHC 323

UNDER  the Judicature Amendment Act 1972 Part 1

IN THE MATTER OF       the Valuers Act 1948

BETWEEN  K R COOKE Plaintiff

ANDVALUERS REGISTRATION BOARD First Defendant

ANDG J CLAPCOTT Second Defendant

Hearing:                   22 August 2013

[Further Submissions (on the Papers) on 12 September 2013 and 1 October 2013

Appearances:           K R Cooke (Self-represented Plaintiff) in Person

P K P Stewart for the First Defendant
P J L Hunt for the Second Defendant

Judgment:                28 February 2014

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 28 February 2014 at 3.30 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:    Izard Weston, Wellington

McElroys, Auckland

Copy To:     K R Cooke, Auckland

COOKE v VALUERS REGISTRATION BOARD [2014] NZHC 323 [28 February 2014]

[1]      The first defendant (the Board) is a statutory body with responsibility for regulating the professional conduct of registered valuers.   The second defendant, Mr Clapcott, is a registered valuer.  The plaintiff, Kenneth Cooke, complained to the Board  about  a  valuation  report  that  Mr  Clapcott  had  prepared.     The  Board determined that there was no reasonable ground for holding an inquiry and accordingly  it  refused  to  do  so.    Mr  Cooke  now  seeks  judicial  review  of  this decision.

[2]      The proceeding raises the following issues:

(a)       Does the Board’s decision not to prosecute Mr Clapcott involve the exercise of a statutory power?

(b)      Is this decision reviewable?

(c)      Does the Board’s decision not to prosecute reveal a reviewable error?

Background facts

[3]      In February 2009, Mr Clapcott prepared a valuation report in relation to two properties owned by Mr Cooke for Mr Cooke’s mortgagee, the ASB Bank Limited. Later in May 2009, when Mr Cooke obtained a copy of the valuation report from the ASB Bank Limited, he formed the view that it did not comply with the professional standards that applied to Mr Clapcott.   On 24 September 2009, he sent a letter of complaint  to  the  Property  Institute  of  New  Zealand  in  which  he  alleged  that Mr Clapcott had:

… breached the NZ Institute of Valuers Code of Ethics when preparing a valuation  of  our  properties  at  86  and  86A  Kitchener  Road,  Milford, North Shore City, which was for the purposes of determining a market value for ASB Bank Limited.

… as a minimum, breached Code of Ethics Clause A.2 in that he did not observe the requirements of impartiality, objectivity and professionalism thereby directly contributing to the loss we have suffered, both financially and mentally.

[4]      There is no dispute that the complaint was sent to the wrong body.  However, it was then passed to the New Zealand Institute of Valuers.  There is also no dispute that Mr Cooke confused the Property Institute of New Zealand’s code of ethics with the New Zealand Institute of Valuers’ code of ethics.  However, when the Institute received the complaint, it acted in accordance with the statutory scheme in the Valuers Act 1948 (the Act) by appointing John Reid to investigate and report on the complaint.   Mr Reid conducted investigations, including inviting further comment from Mr Cooke.   Mr Reid produced a written report, which was provided to the Board, and considered by the Board at a meeting on 22 February 2010.  Mr Reid and the Board treated the complaint as one that alleged unethical conduct on the part of Mr Clapcott.   At the meeting, the Board concluded that there was no reasonable ground for the complaint and, therefore, that no formal enquiry would be held.

Relevant legislation

[5]      The Board is a statutory body constituted under s 3 of the Act.  Sections 31 to

33B of the Act vest the Board with disciplinary powers in respect of registered valuers.   Section 31 sets out three categories of misconduct, the relevant category here being that found in s 31(1)(c), which is where a registered valuer has been found guilty of “improper, unethical, or incompetent conduct in the performance of his duties as a valuer as in the opinion of the Board renders him unfit to be registered under the Act”.

[6]      Section 32 provides for the conduct of investigations into complaints about a registered valuer’s conduct.  Under s 32(1), investigations into complaints involving allegations of misconduct specified in s 31 are to be referred to and investigated by either the Valuer-General or a person appointed by the Council of the Institute of Valuers.  Under s 32(2), once the Board receives a report on the alleged misconduct, unless it is satisfied that there is no reasonable ground for a complaint, it shall hold an inquiry into the complaint.   The remaining provisions of s 32 provide for the conduct of any such inquiry.

Exercise of a statutory power

[7]      The Judicature Amendment Act 1972 provides for judicial review of statutory powers and statutory powers of decision.  In this case, pursuant to s 32(1) of the Act, Mr Cooke’s complaint was acted on by the Council of the Institute of Valuers, which appointed John Reid to investigate and to report in writing to the Board regarding the complaint.   Following receipt of Mr Reid’s report, pursuant to s 32(2), the Board considered the matter and decided not to prosecute Mr Clapcott.

[8]      I am satisfied that in deciding not to prosecute Mr Clapcott, the Board was exercising a statutory power in terms of s 3 of the Judicature Amendment Act 1972. Any decision regarding prosecution of a registered valuer before the Board is a decision that falls within s 3 of the Judicature Amendment Act 1972: see Hallett v Attorney-General (No 2) [1989] 2 NZLR 96 (HC) at 100 where Henry J found that a decision by the Department of Labour not to prosecute a construction company for alleged offences under the Construction Act 1959 was the exercise of a statutory power:

In my judgment it is clear that the Department, being charged with a duty to administer the Act, is clothed with the power and also the duty to decide in any particular fact situation of which it is properly seized whether or not to prosecute.

I see nothing to distinguish the statutory power in issue in Hallett from the power given to the Board under s 32(2) of the Act.

Is the Board’s decision not to prosecute Mr Clapcott reviewable?

[9]      This is the same issue that arose in Hallett.  In that case, the Department of Labour had decided not to prosecute Mainzeal Corporation Ltd for the demolition of a building in the Auckland central business district without the necessary permission. Henry J found that the positive exercise of the discretion not to prosecute by the appropriate enforcement agency was not reviewable.  In reaching this conclusion, the Judge drew a distinction between circumstances where there has been a failure to exercise the discretion and those where the discretion has been clearly exercised.  He

considered that the decision in Hallett fell into the latter category.  At 102-103, he said:

I do not think it could possibly be said that here there has been a failure to exercise the discretion whether or not to prosecute - on the contrary that discretion clearly has been exercised. There are no statutory requirements to be obeyed in reaching it which could be said to have been breached so as to make it a nullity, and on examination what is really being suggested is that the weighing of the various factors which go to making the decision was erroneous, and that in my view is an area not open to review by this Court. That is not to say, and I do not say, that the decision is free from criticism, but that is quite different from saying it is open to review in the equivalent of extraordinary remedy proceedings.

My conclusion in this regard is reinforced by the difficulties which became apparent in considering the form of any declaration which could be made. What is "proper consideration"? What are  the "relevant  considerations"? What   are   the   "irrelevant   considerations"?   Mr   Wallis   suggested   an amendment to prayer (b) directing the defendant to take into account, inter alia, as relevant considerations those factors set out as such in the amended statement of claim, and not to give undue weight to those described as irrelevant. I think such a direction is fraught with obvious problems and goes to emphasise the necessity to apply the principle to which I earlier referred.

When the present claim is analysed it becomes clear that it breaches that principle. The very substance of the claim is that a decision not to prosecute could not reasonably have been made in the circumstances of this case. To accede to that claim in effect requires the Court to find that the defendant's obligation was to prosecute, a step which as I understood him Mr Wallis acknowledged was beyond the Court's proper area of involvement, as well as being the form of relief earlier struck out by Gallen J. The remaining declarations sought in the particular circumstances are really saying the same thing, based as they are on the premise that the decision not to prosecute Mainzeal for its actions was unreasonable. The Department has in fact exercised its discretionary power and made a decision and in my judgment that decision is not reviewable on the ground that factors leading to it have not been properly weighted.

[10]     The difficulty which Mr Cooke faces in the present case is that, as was the case in Hallett, the statutory powers available to the Board under s 32 are broad.  A decision not to prosecute hinges on the Board being satisfied that there is no reasonable ground for the complaint.  Under s 32, it is left to the Board to determine the considerations it will take into account when deciding whether to prosecute a registered valuer or not.

[11]     I accept that if there was evidence of bad faith or abuse of process, it would be open to the Court to review the Board’s exercise of its prosecutorial discretion. But that would be because a decision that was tainted by bad faith or abuse of

process  would  amount  to  a failure to  exercise  the discretion  whether  or not  to prosecute.

[12]     There is no suggestion that what has happened in this case can be viewed as a failure to exercise the discretion whether or not to prosecute.  The evidence shows that the necessary investigation and report under s 32(1) was completed, and that the Board considered the matter as it was required to do under s 32(2).

[13]     The essence of Mr Cooke’s complaint was that Mr Clapcott “did not observe the requirements of impartiality, objectivity and professionalism”.    These requirements form part of the Property Institute of New Zealand’s code of ethics. When  the  complaint  was  passed  to  the  New  Zealand  Institute  of Valuers,  they matched requirements in their code of ethics with Mr Cooke’s complaint.

[14]     Mr Cooke contends that the Board in reaching its decision not to prosecute Mr Clapcott failed to take into account relevant considerations, was influenced by irrelevant considerations, made errors and mistakes of fact, and reached a decision that no reasonable board in the circumstances could reach.  The Board, on the other hand, has accepted in the main that the relevant considerations Mr Cooke relies on are relevant considerations which it did address when reaching its decision.  Though in making this acknowledgement, the Board has not conceded that the relevant considerations identified by Mr Cooke are the type of considerations that it was obliged under the Act to take into account.   The Board denies that it took into account irrelevant considerations and contends that it made no material errors of fact. It also contends that its decision was a reasonable decision.

[15]     When dealing with a broad discretionary statutory power, it is necessary to distinguish  considerations  that  the decision-maker has  treated as  relevant  to  the exercise  of  the  power  from  those  that  are  made  mandatory  by  statute.    The distinction is made clear in CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 (CA) at 183 per Cooke J:

What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the Court holds  a decision invalid on ... [that ground].  It is not enough that a consideration is one that

may properly be taken into account, nor even that it is one which many people, including the Court itself, would have taken into account if they had to make the decision.

[16]     There are no express relevant considerations stipulated in s 32; nor do  I consider that there is room to imply any requirement other than that the power be exercised reasonably.   Accordingly, a challenge based on not taking relevant considerations into account cannot succeed.  The same applies to the challenge based on taking irrelevant considerations into account.   Unless the statutory power in question either expressly or impliedly identifies what is extraneous, this ground of review cannot succeed: see CREEDNZ at 197.

[17]     With powers such as s 32, it is well settled that provided the decision-maker has demonstrated a reasonable exercise of the power and there is no evidence of bad faith or acting for a collateral purpose (neither of which have been alleged here), a court on judicial review will not interfere with how the power has been exercised.

[18]     The evidence of one of the Board members, Michael Gambie, makes it clear to me that, at all times, the Board proceeded on the basis of the detail in Mr Cooke’s letter  of  complaint,  treating  the  matter  as  an  ethical  complaint,  rather  than  a complaint about the competence of Mr Clapcott.  The result was that the investigator did not call for a retrospective valuation of the property at the comparative date of Mr Clapcott’s valuations (being 24 February 2009).

[19]     The Board accepted that there may have been mistakes in Mr Clapcott’s report but noted that a number of the reports that are the subject of a complaint have some deficiencies.  But in this case, there was nothing to suggest that Mr Clapcott had behaved unethically.

[20]     Under s 31(2) of the Act, unethical conduct is defined as meaning “conduct in breach of the code of ethics prescribed by the rules of the Institute”.   Once the complaint  was  viewed  through  the  lens  of  alleged  ethical  misconduct,  that necessarily impacted on the way in which the investigation was run and the way in which the Board reached its decision.

[21]     From what I read of Mr Cooke’s complaints, a better approach would have been for him to have complained on the ground of incompetent conduct.  This is not to  say that  the  information  before  me  suggests  that  Mr  Clapcott  was  guilty of incompetent conduct.   But it seems to me that any complaint which involves criticisms of the way in which a valuer has reached his valuations is more likely to fall within the category of incompetency than unethical conduct.   Nonetheless, I consider it was reasonable for the Board at the time to view the complaint as one based on unethical conduct and the Board’s conclusion to be confined to that ground of complaint.

[22]     Mr   Cooke’s   complaints   alleged   that   Mr   Clapcott   had   breached   the requirements of impartiality, objectivity and professionalism.  I will deal with each allegation in turn.

[23]     Under the relevant code of ethics, the requirement for impartiality is dealt with at clause 1.7(a) to (d).  The Board said it could find no basis in Mr Clapcott’s report to indicate he had performed his valuation in other than an impartial manner. There is nothing in the evidence provided by Mr Cooke which suggests to me a lack of impartiality on Mr Clapcott’s part.   I find, therefore, there is no evidence to contradict that of the Board.

[24]     Regarding objectivity, clause 1.6 of the code provides that a valuer must not give an “unconsidered answer”.   Professional advice can be rendered only “after having properly ascertained and weighed the facts”.  The Board considered this was a best fit with the notion of objectivity.  The Board considered that Mr Clapcott had provided an objective opinion.  Again, there is nothing in Mr Cooke’s evidence to suggest that Mr Clapcott did not provide an objective opinion.

[25]     The problem that Mr Cooke faces is that Mr Clapcott is an expert valuer.  In order to show that his report did not have the expected level of objectivity, Mr Cooke would need to provide a report from an independent valuer, which, when lined up against Mr Clapcott’s, would reveal a lack of objectivity in his report.  Mr Cooke has not done this.  He expressed at the hearing the difficulties he had had in attempting to find persons to give such evidence.   There are occasions when complaints are

made to the Board, which result in the Board obtaining an independent valuer’s report.   This is more likely to occur when the allegation is one of incompetence. Although this was possible, it was not done at the investigation stage because, from the outset, those responsible for dealing with the complaint treated it as an ethical complaint.   I do not think they can be criticised for this because that is how the complaint was presented to them.

[26]     As a layman, Mr Cooke should not be expected to identify precisely the relevant provisions in s 31 of the Act when making a complaint.   This has been accepted  by  the  Board.    But  the  difficulty  is  that  the  general  impression  the complaint gave of unethical conduct steered the complaint down that track.  When the Board came to assess the complaint on any other basis, it simply lacked the material to inform it as to whether the complaint had merits under the heading of incompetent conduct.   In this regard, it also needs to be noted that the Board is comprised of valuers who have their own expertise and, therefore, a report that is seriously incompetent is likely to be recognised whether there is an independent valuation to reveal that or not.   But beyond examples of egregious incompetency, without independent valuations, it would be difficult for the Board to recognise a report that had been incompetently prepared.

[27]     Regarding the complaint of professionalism, the Board saw that as falling within the subclauses of clause 1 of the code.  The Board accepted that there were mistakes in the report, but it did not see the mistakes as being material.  The report was not one that the Board considered could be described as having been prepared in an unprofessional manner.  Again, Mr Cooke has provided no evidence that could undermine this conclusion.

[28]     At the hearing, as a result of an exchange between Bench and bar, there was an amendment to the statement of claim to include an allegation that the Board had failed to provide adequate reasons for its decision not to hold an inquiry into the plaintiff’s  complaint.    On 16  March  2010,  the Registrar of the Board  wrote to Mr Cooke advising that the complaint had been investigated and reported to the Board.  The letter then noted that for it to proceed with an inquiry in respect of a complaint, the Board “has to be convinced that the evidence before it is potentially

capable of proof to the standard required by law”.  The Board then concluded that the evidence before it (which includes the details of the complaint and the investigator’s report) “does not enable it to conclude that a formal inquiry should proceed”.  No reasons why the Board reached that view are stated in the letter.

[29]     It is regrettable that a more fulsome explanation for why there would not be an  inquiry was  not  provided to  Mr Cooke.   He believes  that  the valuations  of Mr Clapcott were too low and had an effect on the property achieving what he considers to be an unacceptably low price at a mortgagee sale.  On the other hand, there  is  no  evidence  that  the  persons  who  bid  at  the  mortgagee  sale  saw Mr Clapcott’s  valuation  before  they made  their  bids.    Nonetheless,  whether  the valuation report influenced the mortgagee sale or not, if it had been prepared in a manner that breached s 31(1)(c) of the Act, Mr Cooke would be entitled to complain about that.

[30]     It would have been helpful if the Board had explained in their letter that, on receipt of the complaint, it had from the outset treated it as a complaint of unethical conduct.  Further, the initial investigation into the complaint had been conducted on that basis, so that by the time the Board came to the matter, there was little before the Board that could assist it when it came to considering the other aspects of s 31(1)(c). It must be recognised that there is nothing at all to suggest that Mr Clapcott was guilty of improper conduct.  Whilst there were aspects of his report that might have triggered the Board’s attention to the question of whether Mr Clapcott was guilty of incompetent conduct, there was insufficient solid evidence to warrant the Board going further down this track.   I also consider that there was insufficient evidence before the Board to cause it to make further enquiries before reaching a decision.

[31]     If, however, the Board had given detailed reasons to Mr Cooke, he might have been able to understand why the matter was not taken any further and why no prosecution was launched.   The Board could have made it clear that, in its view, there was nothing unethical about the manner in which Mr Clapcott had prepared the report.   Also, before the Board could form the view that Mr Clapcott had acted incompetently, it needed an independent valuer’s report, which when lined up with Mr Clapcott’s, revealed his incompetence.

[32]     I have considered whether there would be any benefit in sending the matter back to the Board for reconsideration, with a view to providing reasons for its decision.  On the evidence currently before the Board, I cannot see it reaching any decision other than the one that has been made.  Regarding provision of reasons, I consider that the reasons for the Board deciding not to prosecute Mr Clapcott are apparent in the evidence it has put forward in this proceeding.  I can see no purpose in sending the matter back to the Board for it to provide reasons.  It can say no more on this topic than what has already been said in its affidavits.

[33]     It follows that the application for judicial review is dismissed.

Duffy J