Cornerstone Group Limited v OPM Financial Solutions Limited
[2006] NZCA 38
•20 March 2006
IN THE COURT OF APPEAL OF NEW ZEALAND
CA11/05
BETWEENCORNERSTONE GROUP LIMITED
First AppellantANDTAMARIKI LIMITED
Second Appellant
ANDOPM FINANCIAL SOLUTIONS LIMITED
First RespondentANDJ E NICHOLLS
Second RespondentANDD M FOLEY
Third Respondent
Hearing:20 February 2006
Court:Robertson, Randerson and Panckhurst JJ
Counsel:J Long and T J Herbert for Appellants
J Strauss for Respondents
Judgment:20 March 2006
JUDGMENT OF THE COURT
AThe appeal is allowed to the extent that the judgment of Laurenson J is varied to provide that it has effect solely in relation to the second appellant.
BThe cross-appeal is dismissed.
CCosts on the appeal and cross-appeal will lie where they fall.
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REASONS
(Given by Randerson J)
Introduction
[1] This appeal and cross-appeal arise from the development of a block of apartments at Orewa known as the “The Nautilus”. The developer was the first appellant Cornerstone, a company whose principal shareholder and director was a Mr Martin.
[2] In August 2001, Cornerstone entered into a conditional agreement to purchase a property at Orewa for the development with settlement due on or before 1 April 2002. Cornerstone nominated an associated company (the second appellant Tamariki) to take the land upon which the development was to occur. The ANZ Bank and Strategic Investment Bankers were to fund the development. The funding arrangements were dependent on Cornerstone concluding a specified percentage of unconditional agreements for the purchase of units in the development before it commenced.
[3] In November 2001, when Cornerstone was having difficulty in achieving the required level of pre-sold units, Mr Martin approached the first respondent OPM through its principal, the second respondent Mr Nicholls. Mr Nicholls is described in the pleadings as an experienced sales person skilled in training sales people and with particular expertise in a marketing method known as “negative gearing”.
[4] OPM alleged it made two oral agreements with Cornerstone towards the end of 2001. These were described in argument as the Marketing Agreement and the Commission Agreement. Under the former, OPM agreed to set up a sales team, trained in negative gearing, to market the development. The purpose of the Marketing Agreement was to assist Cornerstone in achieving the necessary level of pre-sales which had been set at 75% of the units in the development. It is not in dispute that Cornerstone agreed to pay OPM a fee of $200,000 if the required pre-sales level was achieved. Cornerstone was to pay OPM $1,600 per week plus GST from November 2001 as an advance on the $200,000 fee. Under the Commission Agreement, OPM alleged Cornerstone agreed to pay commission of 2% of the sale price for each unit sold.
[5] There was a key point of difference between the parties about the time by which the required level of unit pre-sales was to be met under the Marketing Agreement. Cornerstone maintained through the evidence of Mr Martin that payment of the fee of $200,000 was conditional upon the required level of pre-sales being achieved by 28 February 2002. In contrast, Mr Nicholls’ evidence for OPM was that it was agreed at a meeting between himself and Mr Martin in late January or early February 2002 that OPM would continue to market the project until 75% of the units had been pre-sold and that payment of the fee was not conditional on the required percentage of the units being pre-sold by 28 February.
[6] Mr Nicholls also gave evidence that the parties agreed at this meeting that the fee of $200,000 (less any of the accrued weekly payments) would be credited to the purchase price of four units in the development which Mr Nicholls and his then associate (the third respondent Ms Foley) had agreed to buy. This evidence was disputed.
[7] OPM proceeded with the agreed marketing arrangements and Cornerstone made ten weekly payments of $1,600 plus GST to OPM. However, by February 2002, only about 10% of the units had been pre-sold. Mr Martin had discussions with the development’s financiers which resulted in a revised underwriting agreement with Strategic Investment Bankers on 9 April 2002. On the same day, solicitors representing Tamariki wrote to Mr Nicholls and Ms Foley informing them that the financiers required a cash deposit of 10% or a complying home bond application in respect of each of the four agreements they had signed for the purchase of units in the development. The solicitors advised that the deposit of 10% or the approved home bond application was required by 16 April 2002, failing which Tamariki would cancel the agreements under a clause making the agreement conditional upon “obtaining by 30 April 2002 a minimum level of sales of units in the Development which in the Vendor’s sole opinion justifies completion of the Development”. When Mr Nicholls and Ms Foley failed to comply with these demands, Tamariki purported to cancel the purchase agreements on 17 April 2002.
[8] On 19 April 2002, Tamariki received the necessary finance and the development has since proceeded. The four units to be purchased by Mr Nicholls and Ms Foley have since been sold to others resulting in a dispute between the parties over the purported cancellation of the agreements relating to those units and claims for the recovery of marketing fees and sales commission.
The claims and cross-claims
[9] The respondents issued proceedings against the appellants in 2003. The trial proceeded before Laurenson J on 18 and 19 October 2004 on the basis of an amended statement of claim dated 29 October 2003 which set out six separate heads of claim:
(1)A claim in respect of the fee alleged to be payable under the Marketing Agreement calculated at $184,000 plus GST (the $200,000 fee less $16,000 paid in monthly fees). The relief sought was a declaration that this sum be credited to the purchase price of the apartments or alternatively, payment of the specified sum plus interest.
(2)A claim under the Commission Agreement for commission on the sales of five units calculated at $37,646.17 ($41,866.87 less an amount paid of $4,220.70). The relief sought was an order for payment of the specified figure and a declaration that the commissions due be credited to the purchase price of the four units to be purchased by Mr Nicholls and/or Ms Foley.
(3), (4), (5) and (6). These four claims related to the units which were to be purchased by Mr Nicholls and/or Ms Foley. Effectively it was claimed that the agreements for sale and purchase had been wrongly cancelled. The relief sought was a declaration that the agreements remained extant and further declarations that the commission and fees due to OPM under the first and second claims be credited to the purchase prices of the units. Neither specific performance nor damages in lieu were claimed.
[10] Cornerstone counter-claimed against Mr Nicholls over the alleged conversion of a laptop and customer database. Cornerstone’s first claim was for $5,000 representing the value of the laptop and $50,000 as damages for conversion. A second claim of $45,000, representing the value of the customer database, was withdrawn. Thirdly, Cornerstone and Tamariki counter-claimed against OPM for $4220.70 being an amount paid under protest pursuant to a judgment of the Court in relation to OPM’s claim for commission on sales of units. Finally, Cornerstone and Tamariki counter-claimed against OPM and Mr Nicholls for $101,584.91 alleging misrepresentation by them which was said to have induced Cornerstone and Tamariki to pay marketing expenses.
[11] Two issues which assumed importance at the hearing were not pleaded by Cornerstone or Tamariki. These were:
(a)A submission that the Court did not have jurisdiction to grant declarations as sought by the respondents; and
(b)A submission that the claim for commission was barred by virtue of s 62 Real Estate Agents Act 1976 because none of the respondents was a licensed real estate agent under the Act.
The judgment under appeal
[12] In a reserved decision delivered on 8 December 2004, Laurenson J rejected the first and second claims of the respondents for fees and commission but allowed the third, fourth, fifth and sixth claims, declaring that the four agreements for sale and purchase had been wrongly cancelled by Cornerstone and Tamariki.
[13] All the counter-claims were dismissed other than the claim for the value of the laptop ($5000) and the claim for the return of $4,220.70. The Judge ordered that the respondents were entitled to costs assessed on a Category 2 Band B basis under the High Court Rules together with disbursements and witness expenses to be determined if necessary by the Registrar.
[14] In dismissing the claim for fees under the Marketing Agreement, Laurenson J noted there was a complete conflict between the parties as to whether the original arrangement for OPM to receive the sum of $200,000 continued after 28 February 2002 or not. He decided that the arrangement did not continue beyond that date, taking into account a number of circumstances he considered to be inconsistent with any on-going arrangement.
[15] The Judge found that it was clear by 13 February 2002 there was little likelihood of the required level of pre-sales being achieved and that this led to the discussion between Mr Nicholls and Mr Martin in that month. The Judge noted that the marketing seminars which had been conducted by OPM up to that point ceased on 26 February 2002; that the weekly payments of $1600 ceased shortly afterwards on 18 March 2002; and that Mr Nicholls was content to join with a newly incorporated company (Investment Innovations Limited) to undertake marketing for Cornerstone in a number of projects being promoted by the Cornerstone group in addition to The Nautilus. Mr Nicholls had joined in these new arrangements from 20 March 2002.
[16] The Judge’s views were summarised in two key paragraphs:
[28] I cannot see that any of these arrangements were consistent with an on-going arrangement as set out in document 17. On the contrary they are far more consistent with the version of events provided by the defendants. Once again, I suspect that Mr Nicholls may have thought that he had clarified the position. I fear that this was wishful thinking on his part. My impression of Mr Martin, having heard him give evidence, is that he would be a very difficult person to tie down to an arrangement if he could see an advantage in leaving it on a basis which fell short of precise definition. I have concluded that whatever Mr Nicholls may have thought as being the position, the later events which I have referred to simply do not support his allegations now that a firm arrangement was reached. Quite apart from any other factor, as from the time the marketing of CGL and other Cornerstone properties was undertaken by IIL the plaintiff, Mr Nicholls, could no longer say that he, through OPM, was continuing to assist the defendant to achieve the 75 per cent pre-sales requirement. That assistance, apparently with the consent of Mr Nicholls was thereafter provided by an entirely different entity, namely IIL. He said in evidence that, despite the introduction of IIL, he still remained independent of IIL. I do not see how this could have been the case.
[29] This being the case the plaintiffs have not satisfied me on the balance of probabilities that there was any on-going arrangement for the payment of $200,000 after 28 February 2004 [This appears to have been a typing error and should have read 28 February 2002]. This being the case the plaintiffs’ first claim must fail.
[17] In relation to the claim for commission on the sales of units, the Judge found there was ample evidence that a Commission Agreement was reached but he accepted the argument raised by the appellants that the claim was barred by s 62 Real Estate Agents Act. That followed, the Judge determined, because neither OPM nor Mr Nicholls were licensed as real estate agents yet, they were nevertheless acting as such and fell within the definition of “real estate agent” in s 3 of the Act.
[18] Laurenson J observed that the s 62 issue had not been pleaded and that Mr Nicholls had not been cross-examined on the point. The defence was first raised when the appellants opened their defence at the conclusion of the plaintiffs’ case. The Judge nevertheless decided that the plea could still be raised because the claim for commission necessarily required proof of compliance with s 62 and because he considered a party could raise any point of law even if not pleaded (citing Bullen, Leake & Jacobs, Precedents of Pleadings (12th ed) pg 49) and Independent Automatic Sales v Knowles and Foster (1962) 3 All ER 27. The Judge did not consider the lack of cross-examination on the point was an issue because he was confident Mr Nicholls would have informed the Court if he had been qualified as a real estate agent. There has been no assertion by any of the respondents that they were licensed real estate agents.
[19] In finding that the four agreements for sale and purchase had not been validly cancelled, Laurenson J essentially found the cancellation had occurred prematurely on 19 April 2002. By Clause 2.1(a) of the agreements, the appellants were not entitled to make the assessment (about whether the level of sales of units justified completion of the development) until the date specified in the relevant clause namely, by 30 April 2002. His Honour considered that the cancellation of the agreements on 19 April 2002 necessarily implied that on that day, the appellants were of the opinion there were sufficient other pre-sales to justify completion of the development.
[20] The Judge considered in some detail whether a declaration in the form sought by the respondents could and should be made. He noted that a declaration could be made either under the Declaratory Judgments Act 1908 or in the Court’s inherent jurisdiction. He cited the following passage from Blanchard, Civil Remedies in New Zealand, Brookers, 2003, at 13.3:
Court’s inherent jurisdiction to make declarations
Similar principles apply to the obtaining of declarations under the court’s inherent jurisdiction as apply to the obtaining of them under statute (s 10 Declaratory Judgments Act):
The declaratory judgment is a judicial statement confirming or denying a legal right to the applicant. Unlike most rulings, the declaratory judgment merely declares and goes no further in providing relief to the applicant than stating his rights.
For that reason, applications for declarations alone are sought under the court’s special procedure (Parts IV and IVA of the High Court Rules). Declarations are also frequently sought as ancillary relief.
[21] Laurenson J considered that the declaration sought in relation to the agreement for sale and purchase was by way of ancillary relief in an ordinary action. While, in his view, it was unusual to prosecute a claim for relief in two stages, the Judge did not consider this to be a disentitling factor. There was a real and genuine dispute between the parties and the relief sought was not merely theoretical. Laurenson J could see no reason why the respondents could not have sought relief based on the alleged unlawful cancellation of the agreements. While specific performance was no longer available, it is implicit in the Court’s decision that a claim for damages could be pursued at a later stage. Laurenson J did not consider there were any disentitling factors and determined that a declaration that the agreements for sale and purchase had been unlawfully cancelled by the appellants was appropriate.
The issues on appeal
[22] The appellants raised the following issues on appeal:
(a)Whether the Court had jurisdiction to grant a declaration in relation to the agreements for sale and purchase and, if so, whether the Court wrongly exercised its discretion to do so.
(b)Whether the declaration ought to have been made only against Tamariki.
(c)Whether the Court was wrong to order costs against Cornerstone and Tamariki.
[23] The respondents raised two further issues:
(d)Whether the Court was wrong to find that the fee under the Marketing Agreement would be payable only if 75% of the units had been pre-sold by 28 February 2002.
(e)Whether the claim for commission was precluded by s 62 Real Estate Agents Act or whether, in the alternative, the respondents were entitled to recover on a quantum meruit basis.
(a)Was there jurisdiction to grant the declaration and should it have been granted as a matter of discretion?
[24] It was submitted on behalf of the appellants that Laurenson J should have dismissed the application for a declaration as being outside the inherent jurisdiction of the Court. It was submitted that the declaration was the only relief sought and could not therefore be classified as ancillary in nature. Effectively, it was the substantive relief. It was also submitted, in reliance on Henderson v Henderson (1843) 3 Hare 100, that the proceeding should have been defeated for failure by the respondents to “bring forward their whole case”. Finally, counsel submitted that declaratory relief was inappropriate since the claim raised mixed questions of fact and law.
[25] In response, Mr Strauss for the respondents accepted that the declaration could not be classified as ancillary and that a claim for damages could have been brought in addition. But he submitted that the relief granted was declaratory of the respondents’ rights under the agreements for sale and purchase and that it was now open for them to decide whether to bring a claim for damages in consequence. He acknowledged such a claim would have to be brought by way of a separate proceeding, the time for which under the Limitation Act 1950 does not expire until six years from the date of the breach i.e. until April 2008.
[26] We regard the argument on this point as a somewhat arid debate. We agree it is unusual for a party to a cancelled agreement for sale and purchase simply to seek declaratory relief as to the validity of the cancellation. Normally, the relief sought would be specific performance or in the alternative, damages. In such a case, a finding of invalid cancellation would be determinative of liability and a necessary step on the way towards the grant of the other relief sought.
[27] But, in the present case, the respondents sought only a declaration as to the validity of the cancellation. This was not merely a theoretical exercise because it remains open for the respondents to bring damages claims if they wish to do so. While we would not encourage the splitting of issues in this way between proceedings, we agree with Laurenson J that there was no jurisdictional bar to the grant of the declaration. After all, it is not uncommon for liability and quantum issues to be split, albeit that this normally occurs in the context of a single proceeding and by judicial direction.
[28] Henderson v Henderson does not address the matter at issue. It was concerned with the doctrine of res judicata which is not relevant. The respondents are not seeking to re-open the declaration (liability) issue at any future hearing.
[29] Nor, for the reasons Laurenson J gave, do we see any reason why the declaration should not have been granted. If nothing else, it finally determined the issue of the validity of the cancellation of the agreements and was declaratory of the rights of the parties in that respect. The Judge heard evidence over a number of days and it would have been wasteful of resources not to have made the liability finding. Certainly, this was the view which the Judge formed. We agree with it.
(b) Whether the declaration ought to have been made solely against Tamariki
[30] Counsel informed the Court that the issue of the proper parties to the declaration was not canvassed before Laurenson J. Mr Strauss did not oppose a variation of the declaration to omit reference to Cornerstone. We agree that the declaration could only properly have been made against Tamariki Limited. It was the party to the agreements for sale and purchase, not Cornerstone.
(c)Whether the Court wrongly ordered costs against Tamariki and Cornerstone
[31] Laurenson J awarded costs in favour of the respondents on the basis that, although they had failed on their first and second claims, they had succeeded on the third, fourth, fifth and sixth claims relating to the agreements for sale and purchase. He noted as well that the appellants had failed in respect of their principal counter-claim.
[32] It was submitted that, in terms of r 47 of the High Court Rules, the appellants were effectively the party who succeeded or alternatively the parties were equally successful. It was further submitted the Judge had overlooked r 52 which provides that, where a plaintiff succeeds on the claim and the defendant succeeds on a counterclaim, the Court must award costs as if each party had succeeded in an independent proceeding except where, in the opinion of the Court, the justice of the case otherwise requires. Finally, it was submitted the appellants had succeeded on those parts of the claims and counterclaims which involved the majority of preparation and hearing time.
[33] We are not inclined to interfere with the costs award. The respondents succeeded on a substantial portion of their claims while the recoveries achieved by the appellants on their counterclaim were relatively trivial. The major parts of their counterclaim failed. While it is true that the first and second claims by the respondents failed, one of them did so following the failure of the appellants to plead the point under s 62 Real Estate Agents Act.
[34] We are of the view that this point should have been pleaded or, at the least, should have been raised as an issue in pre-trial conferences. One of the aims of the case management system is to avoid wasting the time of the courts and the parties through the late raising of issues such as occurred in this case. An issue by issue approach to costs may sometimes be justified but we do not consider that this was appropriate in the circumstances of this case.
(d)Whether the Court was wrong to find that the fee under the Marketing Agreement would be payable only if 75% of the units had been pre-sold by 28 February 2002
[35] Mr Strauss informed the Court that he now had instructions not to pursue this ground of appeal with any vigour although he was not instructed to abandon the point. We must say that we regard an approach of this kind as unhelpful. The Court is left in the position where it must make some assessment without the assistance of oral argument from counsel. The issue is purely one of fact and largely dependent on the assessment made of Mr Nicholls and Mr Martin as witnesses. Having reviewed the Judge’s decision, we consider there were adequate grounds for his conclusion on this issue.
(e)Whether the claim for commission was precluded by s 62 Real Estate Agents Act or whether, in the alternative, the respondents were entitled to recover on a quantum meruit basis
[36] Section 62(1) Real Estate Agents Act provides:
No person shall be entitled to sue for or recover any commission, reward, or other valuable consideration in respect of any service or work performed by him [or her] as a real estate agent, unless—
(a) He [or she] was the holder of a licence as a real estate agent under this Act or the holder, or the partner of a holder, of a licence as a real estate agent under the Real Estate Agents Act 1963 at the time of the performing of the service or work; and
(b) His [or her] appointment to act as agent or perform that service or work is in writing signed either before or after the performance of that service or work by the person to be charged with the commission, reward, or consideration or by some person on his [or her] behalf lawfully authorised to sign the appointment.
[37] Section 62 is clear in its terms. It prohibits anyone from suing for or recovering any commission, award or other valuable consideration in respect of any service or work performed as a real estate agent unless both the requirements of sub-paragraphs (a) and (b) are met. These require that the person seeking to recover must have been the holder of a licence as a real estate agent under the 1976 Act or the 1963 Act at the time of the performing of the service or work. It also requires that the person’s appointment to act as an agent or to perform the service or work is authorised in writing, signed by the person to be charged or by some person on his or her behalf who is lawfully authorised to sign the appointment.
[38] As noted, Laurenson J rejected the commission claim on the basis that the respondents were not licensed as real estate agents within the meaning of the Act yet were acting as such. As such they were in breach of s 62. Section 3 relevantly defines real estate agent:
For the purposes of this Act, every person shall be deemed to be a real estate agent who acts, or who holds himself [or herself] out to the public as ready to act, for reward as an agent in respect of the sale or other disposal of land or of businesses (either with or without any interest in land) or the purchase or other acquisition of land or of businesses (either with or without any interest in land), or in respect of the leasing or letting of land, whether or not that person carries on any other business.
[39] Mr Strauss submitted that OPM’s conduct fell outside the spirit of the Real Estate Agents Act. He submitted that the marketing of the units formed part of a larger transaction; the respondents were not engaged as real estate agents; they functioned as employees of the vendor; and did not handle any money since deposits were payable to the vendor’s solicitor as stakeholder.
[40] Mr Strauss referred to Previews Inc v UEB Industries Limited [1985] 1 NZLR 468. This Court held that the question whether a person has acted as a real estate agent in any particular case is a matter of fact and degree. At 477, Cooke J writing for the majority stated:
…that a person is not within the Act unless in substance you can be fairly said to be so. That is to say, in substance he must carry on the business of acting for reward as agent in respect of the sale or other disposal or the purchase or other acquisition of land or businesses; or the leasing or letting of land.
[41] The majority rejected the submission that Parliament intended that, ordinarily or generally, an agent is not within the Act unless prepared to attend to the completion of the contract personally or by arranging for someone else to do so: 477. The Court held on the facts that the appellant (an overseas corporation) was acting as a real estate agent in circumstances where the commission was payable on a sale or, in certain circumstances, on the production of a buyer ready, willing and able. Since the appellant was not licensed in New Zealand as a real estate agent, recovery of any commission was properly denied.
[42] The respondents’ contentions face a number of difficulties. First, the pleadings do not support the respondents’ contentions. Paragraph 20.4 of the amended statement of claim states specifically that OPM “was appointed as agent to market units in The Nautilus and would earn commission amounting to 2% of the selling price of each unit sold”. It is then claimed in paragraph 25 that Mr Nicholls, on behalf of OPM, marketed the units and “during February 2002 he was the effective cause of the sales of the following units …”. And in paragraph 27 it is pleaded that all the sales had become unconditional. Secondly, in agreeing to market the units and to the appointment as agent, OPM through Mr Nicholls was necessarily agreeing to hold itself out to the public as ready to act for reward as an agent in relation to the sale of the units. Thirdly, it does not matter that there was a separate flat fee arrangement for the marketing of the units. While it was no doubt convenient to separate the Marketing Agreement and the Commission Agreement for the purposes of argument, the pleadings (particularly paragraph 20) treated both matters as part of a single oral transaction. Fourthly, it does not matter that OPM was not to handle any money. That follows from the definition of real estate agent in s 3 and from Previews Inc v UEB Industries Limited. Fifthly, the submission that the respondent were acting as employees of Cornerstone is simply not available on the pleadings. The relationship, as pleaded, was clearly that of principal and agent. We see nothing of the usual indicia which would characterise a relationship of employer and employee.
[43] We conclude that the Judge was correct to find that s 62 was not complied with and recovery of the commissions was barred.
[44] Mr Strauss submitted finally that if we rejected the cross-appeal on this point then the claim should be upheld nevertheless on a quantum meruit basis. In that respect he submitted there would be no prejudice to the appellants if the respondents were permitted leave to amend the pleadings to include such a claim. Mr Strauss relied on a decision of the Full Court of South Australia in Upjay TL Pty Ltd v MJK Pty Limited t/as Klobas Prop Group & Klobas [2001] SASC 62 in which the Court upheld a claim based on quantum meruit despite a finding that a claim for commission was unenforceable through lack of authorisation in writing under the Land Agents Act 1994 of South Australia.
[45] In Upjay, the Full Court upheld a finding by the trial judge that there was an oral agreement in terms of which the appellant would pay commission to the respondents in relation to the conclusion of certain leases. Section 6 of the South Australian legislation provided that a person who was required to be registered as an agent was not entitled to commission or other consideration for services as an agent unless registered as an agent and authorised in writing to act as an agent by the person for whom the services were rendered or someone authorised to act on that person’s behalf. In the case before that court, the respondents were registered as land agents under the relevant legislation but the commission agreement was oral. The Full Court held there was no authorisation in writing as required. It followed that the oral contract for payment of commission was unenforceable. Nevertheless, applying a decision of the High Court of Australia in Pavey & Matthews Pty Limited v Paul (1987) 162 CLR 221, the Full Court upheld an alternative claim by the respondents based on quantum meruit.
[46] The appellants submitted that Upjay was distinguishable because, in the present case, our Real Estate Agents Act not only prohibits recovery of commission or other reward if the requirements of s 62 are not met but also forbids a person carrying on the business of a real estate agent unless licensed: s 16(1). As well, s 16(2) provides that a person carrying on business as a real estate agent without a licence not only commits an offence but shall also be “liable to forfeit to Her Majesty the Queen all money received by him or her by way of commission, profit or remuneration for any services or work performed by him or her as an unlicensed real estate agent”. The appellants relied on Sutton v Zullo Enterprises Pty Limited [2000] 2 Qd R 196 where the Queensland Court of Appeal held that the principle in Pavey & Matthews Pty Limited v Paul did not permit recovery on a quantum meruit basis where the statute in question (in that case a statute prohibiting the undertaking of building work by unlicensed persons) prohibited both the contract and the carrying out of the work.
[47] In the absence of full argument, we are reluctant to express any final conclusion on this aspect of the case. Suffice to say there is a substantial argument for the proposition that our Real Estate Agents Act has firmly set its face against the recovery of commission or reward in the case of unlicensed persons carrying out the work of a real estate agent.
[48] We consider it is now too late for the respondents to seek an amendment to the pleadings to bring an alternative claim based on quantum meruit. Although the Real Estate Agents Act issue was raised only at the conclusion of the respondents’ case at trial, there was ample opportunity at that stage for an amendment to have been sought by the respondents to include the alternative claim. Had leave been sought and granted at that stage, it would have been necessary for the respondents to produce evidence in support of their claim for a quantum meruit award and the appellants would have been entitled to call opposing evidence on that topic. It is not in the interests of finality of litigation, nor appropriate, to permit the point to be raised on appeal: Savill v Chase Holdings(Wellington) Ltd [1989] 1 NZLR 257 at 307 and 316 (CA).
Summary
[49] The appeal is allowed to the extent that the judgment of Laurenson J is varied to provide that it has effect solely in relation to the second appellant.
[50] The cross-appeal is dismissed.
[51] Costs on the appeal and cross-appeal will lie where they fall since the only point on which the appellants have been successful is a minor one which, in the end, was conceded.
Solicitors:
Lee Salmon Long, Auckland, for Appellants
Kirkby Law, Auckland, for Respondents
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