Edwards v Bridge
[2019] NZHC 2286
•12 September 2019
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2018-454-000106
[2019] NZHC 2286
BETWEEN HEATHA EDWARDS
Appellant
AND
GRAEME HASTINGS BRIDGE
First Respondent
THE REAL ESTATE AGENTS AUTHORITY
Second Respondent
Hearing: 2 September 2019 Appearances:
A Darroch for the Appellant First Respondent in Person
M Mortimer for the Second Respondent
Judgment:
12 September 2019
JUDGMENT OF DOOGUE J
EDWARDS v BRIDGE [2019] NZHC 2286 [12 September 2019]
Introduction
[1] This is an appeal and cross-appeal from a decision of the Real Estate Agents Disciplinary Tribunal (“the Tribunal”) upholding a finding of unsatisfactory conduct by the Complaints Assessment Committee (“the Committee”) against the appellant, Ms Heatha Edwards, and ordering her to pay a sum of $10,000 to the first respondent, Mr Graeme Bridge, as contribution towards relief from the consequences of her errors and omissions. This order was made pursuant to s 93(1)(f)(ii) of the Real Estate Agents Act 2008 (“the Act”).
[2] The second respondent, the Real Estate Agents Authority (“the REAA”), was named as a party to the proceedings before the Tribunal and now this Court.
[3] Ms Edwards does not challenge the Tribunal’s finding of unsatisfactory conduct. Rather, she appeals the order for relief made by the Tribunal. Mr Bridge cross-appeals the quantum of the order and also seeks the removal of the REAA as a party to these proceedings.
Background
[4] Ms Edwards is a licensee for the purposes of the Act.1 She was the licensee who facilitated the sale of a property at 41 Bibby Street, Waipawa (“the Property”) to Mr Bridge.
[5] A comparative market analysis was provided for the Property on 8 April 2016, and a listing agreement was signed on 14 April 2016 between the vendors and the real estate agency (“the Agency”) where Ms Edwards was employed at the relevant time.
[6] The flyer used by Ms Edwards to advertise the Property (“the Flyer”) described it as follows:
A little starter Lifestyle
Would you look at this? Over half an acre, all flat land with a paddock, big garage with auto door, lock up workshop, store shed, laundry room and a 3- bedroom home with office! Separate lounge has heat pump and opens out to
1 Real Estate Agents Act 2008, s 4(1).
the patio. Modern bathroom, separate loo, kitchen has a wet back chippie and the entire property is very tidy indeed! Come and have a look!
·Built 1964
·Galley style original kitchen with dining has loads of bench space and cupboards, with wet back chippie
·Separate lounge gets all the afternoon sun, and has a new heat pump, and sliders out to the patio in the afternoon sun
·Separate toilet
·Separate office at the back door
·3 double bedrooms, master is very large
·Standard chattels included, SKY TV dish
·Garage has power, concrete floor, new auto door, separate lock up workshop, woodshed bunker and laundry room
·Circular driveway
·Securely fenced all round with new solid fence
·An easy walk to town
·Separate flat paddock at the back
[7] Mr Bridge first contacted Ms Edwards to inquire about the Property on 30 April 2016. At this time, Mr Bridge was living in the Bay of Islands with his wife and owing to prior commitments and health problems, could not view the Property himself. He did, however, have a friend who lived near to the Property and who had agreed to view it on his behalf. When Mr Bridge’s friend attempted to view the Property, he was turned away by the then-tenants as he had not arranged an appointment through Ms Edwards. As a result, Mr Bridge’s friend did not view the Property either, except from the front door.
[8] Notwithstanding this and relying instead on the information in the Flyer, Mr Bridge made an offer of $195,000 on 2 May 2016. This offer was rejected by the vendors. The following day, Mr Bridge revised his offer to $207,500, which was once again rejected. On 4 May 2016, Mr Bridge made a final offer of $209,000, which was accepted.
[9] An agreement for sale and purchase was signed between the vendors and Mr Bridge on 4 May 2016, conditional upon:
...the Purchaser undertaking, and being entirely satisfied with (at the Purchaser’s sole and absolute discretion) a due diligence investigation into all matters relating to this Agreement and the Property including (but not necessarily limited to) the title, the condition of the Property, leases or cross leases, resource management or building compliance issues and the Purchaser’s ability to secure finance, within seven (7) working days from the date of this Agreement.
[10] On 5 May 2016, Mr Bridge engaged Timely Building Consultants Ltd to provide a building report for the Property (“the Building Report”). The Building Report, dated the same day, indicated that:
(a)the boundary fences were made predominantly from corrugated iron with some steel pipe and wire netting, and some sections required remedial work;
(b)the external wall cladding was masonry veneer;
(c)the garage spouting needed to be replaced as it had corroded, and the garage roof required rust treatment;
(d)there was no hot water in the laundry as the hot water cylinder had been removed and the water pipes had been capped off at the wall;
(e)the roof on the Property required some remedial work such as replacement of nails which had begun to lift;
(f)the chip heater was not safe to use as there was a small hole in the metal flue; and
(g)the kitchen range hood was not ducted to the exterior of the house.
[11] Notwithstanding the findings in the Building Report, Mr Bridge’s solicitors wrote to the vendors’ solicitors on 10 May 2016 seeking a price reduction of $7,500
to account for the likely cost of the required remedial work. This offer was rejected by the vendors through their solicitors the following day.
[12] Mr Bridge did not invoke the due diligence clause within seven days of signing the sale and purchase agreement and so the agreement became unconditional on 12 May 2016.
[13] On 21 June 2016, Ms Edwards advised Mr Bridge that the vendors had themselves repaired the metal flue in the chip heater. Mr Bridge wrote back thanking Ms Edwards, requesting that Ms Edwards take photos of the Property sometime during the following week, and confirming settlement for 6 July 2016. Ms Edwards sent an email to Mr Bridge on 1 July 2016 stating that the Property looked “tidy” and attaching various photos. Mr Bridge wrote back two days later indicating that “all look[ed] good”.
[14]The sale of the Property settled on 6 July 2016.
[15] On 14 September 2016, Mr Bridge made a complaint to the Agency’s Regional Manager in Wellington alleging the Property’s advertising had been misleading and informing the Agency that the issues identified in the Building Report were worse than he first thought.
[16] Mr Bridge considered that the Agency and Ms Edwards did not respond adequately to his complaint and on 30 October 2016, he lodged a complaint with the REAA. He sought compensation of $49,381 for the cost of bringing the Property up to the standard advertised in the Flyer.
The Committee’s decision
[17] The Committee enquired into the complaint and issued a substantive decision on 28 September 2017 in which it made a finding of unsatisfactory conduct against Ms Edwards but decided to take no further action in respect of the Agency.2
2 Re Edwards: Decision finding unsatisfactory conduct asking for submission on orders in the matter of Heatha Edwards and Decision taking no further action in the matter of the Agency Complaints Assessment Committee C17911, 28 September 2017 at [2.2]–[2.4].
[18]The Committee found that Ms Edwards:
(a)misled Mr Bridge in her characterisation of the fence in that it could not reasonably be described as “new” or “solid”;3
(b)failed to exercise due skill and care in following up and advising Mr Bridge on the repair of the chip heater;4
(c)misled Mr Bridge when she failed to flag in the advertising and to advise him that the laundry had no hot water;5
(d)failed to disclose the corroded spouting to Mr Bridge;6
(e)misled Mr Bridge as to the material of the roof with incorrect advertising;7
(f)failed to discover and disclose to Mr Bridge the defective range hood;8 and
(g)misled Mr Bridge when she failed to clarify the removal of the fireplace and capping of the chimney.9
[19] However, the Committee was satisfied Mr Bridge was aware of the true condition of some aspects of the Property prior to the sale and purchase agreement becoming unconditional given he had obtained the Building Report.10
[20] After calling for submissions on the appropriate penalty, the Committee issued its penalty decision on 13 December 2017 (“the Committee’s Penalty Decision”).11
3 At [3.8].
4 At [3.19].
5 At [3.28].
6 At [3.38].
7 At [3.39].
8 At [3.45].
9 At [3.53].
10 At [3.9] in respect of the fence, at [3.25] in respect of the hot water, at [3.40] in respect of the roof; and at [3.46] in respect of the range hood.
11 Re Edwards: Decision on orders Complaints Assessment Committee C17911, 13 December 2017.
The Committee censured Ms Edwards, ordered her to undertake further education by completing a unit standard on demonstrating knowledge of misleading and deceiving conduct and misrepresentation, and imposed a fine of $5,000.
[21] The Committee did not award the relief sought by Mr Bridge under s 93(1)(f). This was on the basis that rectification under s 93(1)(f) could only be ordered if Ms Edwards’ errors or omissions caused the consequences claimed. If there was some intervening event, the causal chain had to be considered broken. The Committee found that the findings of the Building Report sufficiently put Mr Bridge on notice of the true condition of the Property such that Mr Bridge “ceased to be misled” in respect of the true state of the Property.
[22] I pause here to note that on the same day as the Committee’s Penalty Decision, a sale and purchase agreement for the Property, which Mr Bridge had entered into, became unconditional. That agreement subsequently settled on 4 February 2018.
[23] Mr Bridge appealed both decisions of the Committee on the grounds the fine imposed on Ms Edwards was inadequate, the Committee should have awarded the relief sought in addition to the fine, and on the basis he was not satisfied with the characterisation of some of his complaints as “disingenuous”.
The Tribunal’s decision
[24] The Tribunal dismissed Mr Bridge’s appeal on the quantum of the fine but allowed his appeal on the issue of relief and the characterisation of his complaints. The REAA specifically submitted, and was heard, on the issue of relief.
[25] The Tribunal upheld the Committee’s finding of unsatisfactory conduct in respect of the fence, absence of hot water in the laundry, and condition of the spouting.12 However, the Tribunal found no evidence supporting the Committee’s finding that some of Mr Bridge’s complaints were not genuine.
12 Bridge v Real Estate Agents Authority (CAC 409) [2018] NZREADT 61 at [41].
[26] On the issue of relief, the Tribunal rejected the notion that the Building Report corrected the misrepresentations made by Ms Edwards in respect of the Property:13
[57] The action of making an offer and entering into an agreement for sale and purchase should not be conflated with that of settling the purchase. Leaving aside for the moment the situation at the time Mr Bridge made the agreement unconditional we accept that there is a causal connection between Ms Edwards' errors and omissions in the advertising and Mr Bridge's decision to make an offer to buy the property, that the cost of addressing the errors and omissions may properly be seen as consequences, and that an order may, in principle, be made that Ms Edwards must provide relief in whole or part, from those consequences.
[58] Whether an order for relief should have been made and if so, in what amount, would remain to be determined, but the Committee was wrong to decline claims on the basis that Ms Edwards' errors or omissions had been "corrected", or that Mr Bridge was aware of them and "ceased to be misled" when he made the agreement for sale and purchase unconditional then settled the purchase. Those matters may be relevant to the quantum of the order, but they do not necessarily preclude an order being made.
[27] The Tribunal concluded the Committee should have found that Mr Bridge’s decision to buy the Property, notwithstanding the condition of the fence, absence of hot water in the laundry, and condition of the spouting, was a consequence of Ms Edwards’ representations (and therefore, her unsatisfactory conduct).14
[28] The Tribunal ordered Ms Edwards to contribute $10,000 towards relief from the consequences of her misrepresentations.
Approach on appeal
[29] The appeal and cross-appeal are brought pursuant to s 116 of the Act. They are general appeals from the decision of the Tribunal.15
[30] The proper approach of an appellate court when determining a general appeal was summarised by Elias CJ in Austin, Nichols & Co Inc v Stichting Lodestar as follows:16
[16] Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is
13 At [57]–[58].
14 At [59]–[64].
15 Nottingham v Real Estate Agents Authority [2017] NZCA 1 at [36].
16 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].
an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.
[31]Accordingly, this appeal is to be determined by way of rehearing.17
Issues on appeal
[32]There are effectively three issues for me to determine:
(a)Whether the REAA’s submissions to this Court should be struck out, and the REAA be removed as a party to this appeal;
(b)Whether the Tribunal’s order that Ms Edwards pay $10,000 by way of relief should be set aside; and
(c)If the Tribunal’s order for relief should not be set aside, whether the quantum of that order should be increased.
Issue one: the REAA as a party to the appeal
Mr Bridge’s submissions
[33] Mr Bridge contests the inclusion of the REAA as a party to these proceedings and submits that the REAA’s submissions be struck out because they are not neutral and are intentionally misleading.
Discussion
[34] During the hearing, I indicated my preliminary view to the parties that r 20.9(2) of the High Court Rules 2016 supports Mr Bridge’s submission that the REAA be removed as a party to this appeal.18
17 See also High Court Rules 2016, r 20.18.
18 Rule 20.9(2) provides that a notice of appeal must not name the decision-maker as a respondent.
[35] During further submissions on this issue, Mr Mortimer for the REAA drew my attention to the decision of Wylie J in Zhao v Legal Complaints Review Officer.19 That case concerned a judicial review of a decision of the Legal Complaints Review Officer (“LCRO”), upholding a decision of the National Standards Committee which had found the appellant to have breached various standards under the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.
[36] Mr Mortimer submitted that the relevance of Zhao related to the role of individual Committees vis-à-vis the REAA, which resembled the disciplinary structure within the New Zealand Law Society (“NZLS”). In Zhao, Wylie J held that in professional disciplinary litigation, the relevant regulatory body should generally be named as a party to defend decisions of its decision-making bodies.20 In the context of disciplinary proceedings for legal practitioners, LCROs are independent of the NZLS. Further, if the relevant regulatory body is not named, the decision-making body’s decision cannot be the subject of any Court order.21
[37] Mr Mortimer submitted that while the REAA is the overarching regulatory body and is charged with convening panels as Committees for the purposes of hearing complaints against licensees, each Committee is independent of the REAA.
[38] Further, Mr Darroch for Ms Edwards submitted that inclusion of the REAA would also go to the question of costs and would assist Mr Bridge should the Court decide any point of appeal in his favour. Mr Darroch relied on the decision in Quin v Real Estate Agents Authority, in which the REAA was named as the first respondent and Brewer J sought submissions on costs from all parties.22
[39] In light of counsel’s submissions, I agree and therefore conclude that the REAA should remain the second respondent in these proceedings.
19 Zhao v Legal Complaints Review Officer [2017] NZHC 1561, [2017] NZAR 1760.
20 At [9](a).
21 At [9](c).
22 Quin v Real Estate Agents Authority [2012] NZHC 3557, [2013] NZAR 38 at [87].
[40] Irrespective of its status as a party to these proceedings, there are several reasons why the REAA should in any case be heard:
(a)I do not accept Mr Bridge’s submission that the REAA’s submissions to this Court are biased and misleading. While they may not favour Mr Bridge’s cross-appeal, they do not stray into the minutiae of the parties’ dispute. Rather, they are confined to the legal interpretation and application of s 93(1)(f) of the Act. Further, the REAA has stated it will abide by the decision of the Court. I see the REAA’s submissions as being within the appropriate bounds as they do not exhibit traditional partisan advocacy.23
(b)There is an issue of natural justice in prohibiting the REAA from being heard. The REAA was named as a party to the proceedings before the Tribunal in Mr Bridge’s notice of appeal. It addressed the Tribunal without exception from either Mr Bridge or Ms Edwards. Prohibiting it from being heard now would deny the REAA the ability to respond to the Tribunal’s determinations on aspects of its submissions before that body. These submissions were confined to the interpretation of s 93(1)(f), which has a direct impact on the REAA’s disciplinary powers.
(c)In both his case management memorandum to the Court dated 10 December 2017 and his submissions to the Court dated 17 April 2019, Mr Bridge indicated he was aware of apparent industry interest in these proceedings and an expectation that these proceedings may be precedent-setting. While he did not elaborate on these points, the REAA’s submissions better enable the Court to come to a fully- informed decision if that is indeed the case.
23 See generally The Secretary for Internal Affairs v Pub Charity [2013] NZCA 627, [2014] NZAR 177 at [27].
Issue two: Ms Edwards’ appeal
[41] Both Ms Edwards’ appeal and Mr Bridge’s cross-appeal relate to the Tribunal’s order for relief.
[42] Ms Edwards appeals the Tribunal’s order on the ground it exceeds the scope of s 93(1)(f) of the Act in that it amounts to compensation, not relief. Mr Bridge cross- appeals on the quantum of the Tribunal’s order. Therefore, my ability to consider the cross-appeal is dependent on my decision on the appeal.
The relevant law
[43] The Act categorises a licensee’s misbehaviour in three ways. Complaints that do not involve breaches of professional standards may be dismissed by a Committee.24 Complaints alleging the most egregious behaviour may be referred to the Tribunal which may in turn make a finding of misconduct.25 Sub-standard behaviour that requires reprimand, but which falls short of misconduct, is deemed unsatisfactory conduct.26 If, on the balance of probabilities, the Committee is satisfied the licensee has engaged in unsatisfactory conduct, it may make such a determination under s 89(2)(b).
[44] Where a finding of unsatisfactory conduct is made, the orders available to the Committee are those in s 93, which provides:
93 Power of Committee to make orders
(1)If a Committee makes a determination under section 89(2)(b), the Committee may do 1 or more of the following:
(a)make an order censuring or reprimanding the licensee:
(b)order that all or some of the terms of an agreed settlement between the licensee and the complainant are to have effect, by consent, as all or part of a final determination of the complaint:
(c)order that the licensee apologise to the complainant:
(d)order that the licensee undergo training or education:
24 Real Estate Agents Act 2008, s 74(3).
25 Section 73.
26 Section 72.
(e)order the licensee to reduce, cancel, or refund fees charged for work where that work is the subject of the complaint:
(f)order the licensee—
(i)to rectify, at his or her or its own expense, any error or omission; or
(ii)where it is not practicable to rectify the error or omission, to take steps to provide, at his or her or its own expense, relief, in whole or in part, from the consequences of the error or omission:
(g)order the licensee to pay to the Authority a fine not exceeding
$10,000 in the case of an individual or $20,000 in the case of a company:
(h)order the licensee, or the agent for whom the person complained about works, to make his or her or its business available for inspection or take advice in relation to management from persons specified in the order:
(i)order the licensee to pay the complainant any costs or expenses incurred in respect of the inquiry, investigation, or hearing by the Committee.
(2)An order under this section may be made on and subject to any terms and conditions that the Committee thinks fit.
[45] In contrast, if the Tribunal makes a finding of misconduct, the orders available to it are those in s 110 of the Act. These orders include those available to the Committee, but also give the Tribunal the ability to order the licensee to pay compensation not exceeding $100,000.27
Ms Edwards’ submissions
[46] Ms Edwards submits that the Tribunal’s order for relief amounted to an order for compensation and was outside the scope of s 93(1)(f). This is based on the following factors:
(a)Ms Edwards’ misrepresentation in respect of the fence, the hot water and the roof spouting were not operative causes of Mr Bridge’s decision to make the sale and purchase unconditional. Rather, he knew the true state of these aspects of the Property by virtue of the Building Report.
27 Section 110(2)(g).
Accordingly, the Committee’s reference to Mr Bridge ceasing to be misled related to Mr Bridge’s knowledge of the true state of the Property.
(b)Mr Bridge has not expended any money to rectify deficiencies in the Property. On the contrary, he has now sold the Property for a profit. Any relief ordered under s 93(1)(f) would not go towards rectification of a mistake or its monetary equivalent. Rather, it would be akin to compensation.
Mr Bridge’s submissions
[47]Mr Bridge submits that his claim for $49,381 is for relief, not compensation.
[48] He further submits that he purchased the Property based on the Flyer used by Ms Edwards. While several issues were brought to his attention by the Building Report, he submits the Building Report “did not raise any alarm bells” and that he was not fully aware of the extent of the issues until after he took possession of the Property.
[49] In other words, Mr Bridge’s position is that the Tribunal was correct to find that Ms Edwards’ misrepresentations in respect of the fence, absence of hot water in the laundry, and condition of the spouting had not been corrected at the time he made an offer to purchase the Property, and were in fact causal factors in his decision to purchase the Property. Had he known the true extent of the issues, he says that he would not have purchased the Property.
[50] Finally, Mr Bridges submits the fact he sold the Property is of no consequence to his claim for relief as the Tribunal made its order with knowledge of the sale.
The REAA’s submissions
[51] The REAA has provided submissions to assist the Court on the interpretation and application of the Committee’s power to make orders under s 93(1)(f). Its submissions are confined to this legal issue and the REAA has expressly stated it
remains neutral as to the outcome of the appeal and the factual findings on which it is based.
[52]By way of summary, the REAA submits that:
(a)following the principles set by previous authorities which have considered the operation of s 93(1)(f), a Committee does not have the power to order compensation under this provision;
(b)an order pursuant to s 93(1)(f) is not available where intervening events or decisions mean that relief sought can no longer be considered a “consequence” of a licensee’s unsatisfactory conduct;
(c)an order pursuant to s 93(1)(f) does not extend to payments to bring a property up to the status at which the licensee had misrepresented it; and
(d)an order pursuant to s 93(1)(f) is only available where the consequences of an error or omission are still operative at the time the order is made.
Discussion
[53] The appeal and cross-appeal turn on the interpretation and application of s 93(1)(f) of the Act.
[54] Both Mr Darroch for Ms Edwards and Mortimer for the REAA have referred me to Quin v Real Estate Agents Authority, which is the leading decision on s 93(1)(f). Mr Darroch submits that this Court should follow Brewer J’s reasoning in that case which supports Ms Edwards’ appeal, while Mr Bridge submits that the reasoning in Quin is confined to the facts of that case.
[55] Quin concerned a licensee who misrepresented the boundary of a property to the purchasers. During a visit to the property, the purchasers stated the location of the boundary was important because they wanted to build a workshop and an access way on the property. A location was identified for this purpose. It was only after settlement
that they discovered the boundary had been misrepresented. The purchasers therefore paid to relocate the access way. Their evidence was that they would not have purchased the property had they known the correct property boundaries.
[56] The Committee found that the licensee’s actions constituted unsatisfactory conduct and ordered relief under s 93(1)(f)(ii). The Tribunal upheld the finding and increased the quantum of the order.
[57] The licensee successfully appealed to the High Court. Brewer J outlined the following principles in respect of orders under s 93(1)(f):
(a)The primary focus of the Act is not to provide a forum in which complainants can seek monetary compensation. Rather, its focus is the regulation of the real estate industry so as to promote and protect the interests of consumers.28
(b)Section 93(1)(f) does not align with concepts like “loss” or damages”. Only s 110(2)(g) does this, though orders under that provision are only available to the Tribunal.29 This distinction makes it clear that a “limited jurisdiction” is conferred on s 93(1)(f).30
(c)The Act does not give the Committee the power to order a licensee to pay compensatory damages, either by way of indemnity or for loss of expectation.31
(d)While there is no monetary limit on an order under s 93(1)(f), factors bearing on the amount to be awarded include whether such an order would be costly, the culpability of the licensee compared to other parties, the complexity of the issues of causation, and the remedies available to the complainant under the general law.32
28 Quin v Real Estate Agents Authority, above n 22, at [44].
29 At [55].
30 At [58].
31 At [66].
32 At [67].
[58] Applying these principles, Brewer J overturned the Tribunal’s decision. Given the purchasers would not have purchased the property had they known of the its actual boundaries, the consequences of the licensee’s misrepresentation were that they were denied the opportunity not to purchase in the first place.33 Brewer J went on to say:
[72] ...The relief the second respondents seek comes under a different doctrine of the law. It is the right of a party to a contract, in some circumstances, to compensation for the loss of what the party reasonably anticipated to gain from the contract.
...
[75] If I am wrong in my view that s 93(1)(f) does not empower a Committee to order compensatory damages, I would nevertheless accept the appellant’s submission that the power does not extend to expectation damages.
[59] While the outcome in Quin may have turned on the facts in that case, the principles established in respect of s 93(1)(f) are more widely applicable. Particularly pertinent to the present appeal are the issues of causation and what constitutes a “consequence” for the purposes of the provision.
Causation
[60] I accept that at the time Mr Bridge made an offer to purchase the Property, the Flyer was misleading and misrepresented the Property. I also accept that at this time, Mr Bridge did not have knowledge of the true state of the fence, the absence of hot water in the laundry and the garage spouting, aspects of the Property for which he now seeks relief.
[61] However, I do not accept that this state of knowledge remained once Mr Bridge received the Building Report. While he says it did not raise alarm bells for him, I am satisfied it put him on notice that the Property’s condition was not necessarily that advertised.
33 At [72].
[62]I come to this conclusion based on the following factors:
(a)Mr Bridge’s solicitors acknowledged the “obvious issues” identified by the Building Report and sought a reduction in the price to help contribute towards remediation of these issues.
(b)Once his offer to reduce the price was rejected, Mr Bridge had the opportunity to cancel the sale and purchase agreement. He elected not to do this and instead made the agreement unconditional.
[63] I consider the Committee was justified in finding that Mr Bridge “ceased to be misled” prior to making the sale and purchase agreement unconditional. I agree with Mr Darroch that the Committee was referring to Mr Bridge’s knowledge about the true state of the Property, rather than any actual correction to the Flyer.
[64] I note that the Tribunal rejected the Committee’s finding on the basis of Ms Edwards’ email to Mr Bridge on 1 July 2016 in which she attached 22 photos of the Property, the majority of which were of the fence. That email stated:
Hi there...have been...and everything looks very tidy to me...all clean and nothing has changed since the tenants vacated.
Please check the photos attached and let me know if there is anything to be concerned about.
You have been sent 22 pictures.
[65] The Tribunal rejected the Committee’s finding that Mr Bridge had ceased to be misled in part due to Ms Edwards’ pre-settlement report that “everything look[ed] tidy”.34 When read in context however, this phrase refers to the state of the Property following the vacation of its previous tenants. It cannot reasonably be interpreted as a reaffirmation of the state of the Property as advertised in the Flyer, nor as trumping the findings of the Building Report.
[66] My conclusion on Mr Bridge’s level of knowledge is relevant to the application of s 93(1)(f) in that I consider receipt of the Building Report to have constituted an
34 Bridge v Real Estate Agents Authority (CAC 409), above n 12, at [44].
intervening event in the purchase of the Property. In other words, there was no causal connection between Ms Edwards’ misrepresentations and the cost of remedying the issues with the Property once the sale and purchase agreement became unconditional.
[67] A purchaser who has been misled by unsatisfactory conduct, and who later learns of the true state of a Property within the timeframe to exercise their right of cancellation but who elects to proceed with the purchase, cannot receive the benefit of an order under s 93(1)(f). I do not see any principle that supports a strict liability approach to s 93(1)(f) such that a licensee should always be subject to an order for relief at some level of quantum, even if the purchaser has decided to proceed in the knowledge they had been previously misled, and where those misleading statements can no longer be said to be operative in any causative sense.
[68] Because of this, I consider that it was not open to the Tribunal to make an order under s 93(1)(f).
[69] For completeness, I note that Mr Bridge claims he would not have purchased the Property had he known of its true state. While I do not accept that claim for the reasons already outlined above, if that were the case and if an order under s 93(1)(f) were available to him, Brewer J noted in Quin that rectification in such circumstances would have involved putting the Property back on the market and reselling it, with the cost of marketing the Property and conveying it to the new purchasers falling on Ms Edwards.35
Consequences
[70] Even if there was a causal connection between Ms Edwards’ misrepresentations and the cost of remedying the issues with the Property once the sale and purchase agreement became unconditional, an order under s 93(1)(f) would not have been open to the Tribunal as the consequences of Ms Edwards’ misrepresentations were not operative at the time the order was made.
35 Quin v Real Estate Agents Authority, above n 22, at [70].
[71] An agreement for the sale and purchase of the Property, which Mr Bridge had entered into, became unconditional on the same day the Tribunal made the order for relief. Because of this, neither an order under s 93(1)(f)(i) nor (ii) was possible. Using the fence as an example, Ms Edwards could have neither provided a solid fence for the Property which Mr Bridge no longer owned, nor could she have paid him for repairs to the fence which had not actually been undertaken.
[72] I therefore do not agree with Mr Bridge’s submission that the sale of the Property is irrelevant. On the contrary, it relates directly to the question of whether “consequences” existed for the purposes of s 93(1)(f). I agree with Mr Mortimer that the term “consequences” suggests a current state of affairs, where those consequences are active at the time the order is made.
[73] The logical exception to this is that contemplated by s 93(1)(f)(ii) where repairs have been made by the purchasers at the time they owned the property. In that case, the purchasers would be entitled to reimbursement. As already mentioned, Mr Bridge has not provided proof of repairs. If in this case an order were made for reimbursement under s 93(1)(f)(ii), it would amount to a compensatory payment, as opposed to relief, which is an order outside the scope of the provision.
[74] It follows then that any “consequences” for the purposes of s 93(1)(f) must still be operative, either because the purchaser still owns the property in question or has expended money to rectify those consequences. In either of those situations, the appropriate amount of relief will depend on the factors outlined by Brewer J in Quin being whether an order would be costly, the culpability of the licensee compared to other parties, the complexity of the issues of causation, and the remedies available to the complainant under the general law.
Conclusion on issue two
[75] For the reasons given, the Tribunal’s order for $10,000 (and therefore Mr Bridge’s claim for $49,381) is properly categorised as a claim for compensation, not relief. This is outside the scope of s 93(1)(f).
[76]The order is therefore set aside.
Issue three: Mr Bridge’s cross-appeal
[77] Given my findings on Ms Edwards’ appeal, Mr Bridge’s cross-appeal must be dismissed. I am therefore not required to make a determination on the issue of quantum.
Result
[78] The application to remove the REAA as second respondent in these proceedings is dismissed.
[79]The appeal is allowed.
[80] The Tribunal’s order for relief is set aside and the decision of the Committee is restored.
[81]The cross-appeal is dismissed.
[82] I invite the parties to agree on costs but failing agreement, direct that Ms Edwards’ costs submissions (not exceeding 5 pages) are to be filed within 14 days of the date of this decision, and Mr Bridge is to have 14 days to reply.
Doogue J
Solicitors:
Darroch Forrest, Wellington for Appellant
Meredith Connell, Auckland for Second Respondent
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