HAO YING CHO AND REAL ESTATE AGENTS AUTHORITY (CAC 2108) X

[2024] NZHC 2812

ORDER SUPPRESSING THE IDENTITY OF THE SECOND RESPONDENT

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-231

[2024] NZHC 2812

UNDER

an appeal under s 116 of the Real Estate Agents Act 2008

BETWEEN

HAO YING CHO

Appellant

AND

REAL ESTATE AGENTS AUTHORITY (CAC 2108)

First Respondent

X

Second Respondent

Hearing:

2 September 2024

Counsel:

C T Walker KC and E G Thom for Appellant

S McMullan and M P Morrison for First Respondent Mr X in person

Judgment:

27 September 2024

Reissued:

6 November 2024 to give effect to order suppressing identity of second respondent

JUDGMENT OF RADICH J

[1]    A Real Estate Agents Authority Complaints Assessment Committee found Mr Cho to have engaged in unsatisfactory conduct. As a result, it had the power to make certain orders.

[2]    One was an order referring the matter to the Real Estate Agents Disciplinary Tribunal for the Tribunal to consider whether compensation should be paid.

CHO v REAL ESTATE AGENTS AUTHORITY [2024] NZHC 2812 [27 September 2024]

[3]    The Committee decided not to exercise that power. On appeal from that decision, the Tribunal found that the Committee had erred in law when it made that decision. The Tribunal found that the matter should have been referred to it by the Committee and that, as a result, it would go on to consider the issue of compensation as if the matter had been referred to it by the Committee.

[4]    Mr Cho appeals from that decision. He says that the Committee’s decision was in order and that the Tribunal erred in finding that it was not.

The underlying complaint

[5]    Mr X, as purchaser, dealt with Mr Cho, as real estate agent, over the purchase of a property in Hamilton. The agreement for sale and purchase, dated in November 2020, expressed the purchase price, on the first page, to be “inclusive of GST (if any)”. The relevant entries are initialled by both Mr X and by the vendor.

[6]    Schedule 1 to the agreement deals with the GST status of the vendor and of the purchaser. In both cases in schedule 1 the word “Yes” has been circled to indicate that they were each registered for GST at the time the agreement was signed. In Mr X’s case, the word “Yes” has been circled also in the schedule to indicate that he intended at the time of settlement to use the property for making taxable supplies.

[7]    Mr X complained to the Real Estate Agents Authority on the basis that he had told Mr Cho that, to the contrary, he was not registered for GST, that schedule 1 had not been filled out when he signed the agreement, that he had not circled or authorised the circling of the words “Yes” in the schedule, that he had not initialled the page and that, therefore, Mr Cho had altered the agreement after he had signed it.

[8]    The GST entries in schedule 1 mattered. If both vendor and purchaser were GST registered, then GST would not be payable on the transaction. However, if the vendor was GST registered and the purchaser was not, the vendor would need to pay GST on the sale price. The GST payable was significant.

[9]    When Mr X’s solicitors raised with the vendors’ solicitors the fact that he was not in fact GST registered, the vendor indicated that he would be looking to Mr X to

compensate him for his loss. That, in turn, led to Mr X deciding that he would register for GST in advance of the settlement of the transaction. That, it is said, caused him financial loss, including through having to register a company for GST purposes which had not been his intention.

[10]   In its 22 July 2022 decision, the Committee accepted Mr Cho’s admission that he completed the GST schedule erroneously.1 But it found that he did so on the basis of an incorrect assumption that Mr X was GST registered and that, while he completed the schedule in front of Mr X, he did so without taking proper or informed instructions. It found that there was insufficient evidence to establish that Mr Cho altered the agreement after it was signed by Mr X.

[11]   The Committee made a finding of unsatisfactory conduct against Mr Cho due to this failure to explain the GST schedule to Mr X and to obtain his informed consent to its content.

[12]   A separate decision was issued by the Committee on penalty on 21 February 2023.2 The decision is discussed in [36]–[39] below, but for these introductory purposes it may be summarised by saying that the Committee censured Mr Cho and fined him but declined to make any further orders.

[13]   Mr X’s successful appeal to the Tribunal from that penalty decision is the subject of this appeal.3 Before considering the decisions of the Committee and the Tribunal, it is necessary to describe the relevant statutory scheme which the Committee and the Tribunal sought to apply in their decisions.

The statutory scheme

[14]   Section 3 of the Real Estate Agents Act 2008 explains that its purpose is to promote and protect the interests of consumers in relation to real estate transactions and to promote public confidence in the performance of real estate agency work. It goes on to provide that the Act achieves its purpose by, among other things, “providing

1      Re Complaint No C42202 REAACAC, 22 June 2022 [Committee liability decision].

2      Re Complaint No C42202 REAACAC, 21 February 2023 [Committee penalty decision].

3      X v Real Estate Agents Authority [2024] NZREADT 07 [Tribunal decision].

accountability through a disciplinary process that is independent, transparent, and effective”.

[15]   The Act provides for two types of conduct that can be the subject of disciplinary action – unsatisfactory conduct and misconduct. Under s 72, a licensee4 is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that:

(a)falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or

(b)contravenes a provision of this Act or of any regulations or rules made under this Act; or

(c)is incompetent or negligent; or

(d)would reasonably be regarded by agents of good standing as being unacceptable.

[16]   Misconduct is more serious. Under s 73, a licensee is guilty of misconduct if, among other things, the licensee’s conduct would reasonably be regarded by agents of good standing, or reasonable members of the public, as disgraceful, as constituting seriously incompetent or seriously negligent real estate agency work, consists of a wilful or reckless contravention of the Act or other relevant provisions or constitutes an offence for which the licensee has been convicted and which reflects adversely on fitness to be a licensee.

[17]   Complaints may be made against licensees under s 74. What is essentially a three-layered system then comes into play. Triaging processes are in action within the first two layers.

[18]   The first layer involves the registrar considering a complaint to determine whether it should not be pursued under the Act at all because, for example, it is inconsequential, vexatious, should be referred to another agency or has been resolved.5

4      Defined in s 4 of the Real Estate Agents Act 2008 as meaning, by way of summary, the holder of a licence as a real estate agent, as a branch manager or as a salesperson under the Act.

5      Section 74(3).

[19]   A complaint moves up to the second layer if the registrar decides to refer the complaint on to a Complaints Assessment Committee. Members of Complaints Assessment Committees are drawn from a panel of people who have experience in and knowledge of the law, the real estate agents industry and consumer affairs.6 A committee may, following its own assessment, decide that no further action should be taken if it sees the subject-matter of the complaint as being inconsequential or if there has been prejudicial delay.7 Otherwise, following a decision-making process8 it may, under s 89 of the Act, make one or more of the following determinations:

(a)a determination that the complaint be considered by the Disciplinary Tribunal;

(b)a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct;

(c)a determination that the committee take no further action on the complaint.

[20]   If it decides that there has been unsatisfactory conduct, then it has the power under s 93 to make one or more of a range of orders. I will come back to this power in a moment.

[21]   If a committee decides that all or some of the conduct is more serious – in other words, that it is misconduct – then it will frame a charge and lay it before the Disciplinary Tribunal. That is the third layer in the triaging process. While a committee has the ability to impose a range of penalties for unsatisfactory conduct, the Tribunal, following its own hearing process,9 can impose one of a number of more significant penalties under s 101(2), including the cancellation of a licence.

[22]   The Tribunal consists of a legally qualified chairperson and three other members, one of whom must be a licensee.10

6      Section 76. They need not be qualified in any of those areas.

7      Section 80.

8      Involving an inquiry by the Committee in a manner prescribed in ss 82–91.

9      Prescribed in ss 101–110 of the Act.

10     Section 100.

[23]   This case turns upon the Committee’s decision that it would not exercise one of its s 93 powers. Under s 93, committees may make orders that include orders censuring or reprimanding a licensee, for the licensee to pay a fine, for the licensee to rectify, at their own expense, an error or omission and orders to pay the complainant any costs or expenses incurred in the committee’s process. There is no power under the provision for a committee to make orders requiring a licensee to pay compensation to an aggrieved party.11

[24]   But, while there is not a power to make a compensation order at this, second, layer, s 93(1)(ha) gives the power to committees to refer a matter up to the Tribunal, for the Tribunal to consider whether or not compensation should be granted.

[25]Paragraph (ha) provides that a committee may:

… if the Committee is satisfied that the unsatisfactory conduct involves more than a minor or technical breach of this Act or of any regulations or rules made under this Act, make an order referring the matter to the Disciplinary Tribunal for the Tribunal to consider whether to make a compensation order under section 110(5).

[26]   Typically, a matter will reach the third, Tribunal, layer where a committee has laid a charge before it. However, the s 93(1)(ha) power provides an alternative pathway to the third layer; a pathway that involves unsatisfactory conduct, rather than misconduct, but which enables the Tribunal to order the payment of compensation.

[27]   The Tribunal’s processes differ from those of a committee. Committees “inquire into and investigate complaints”12 while the Tribunal is to “hear” applications made by committees, appeals or reviews. The Tribunal has a broad power to receive fresh evidence and otherwise to regulate its proceedings as it thinks fit, whether it is hearing an application, an appeal or a review.13

11 Rectification orders, guided by s 93(1)(f) of the Act, and compensation orders are different. Rectification orders are more limited in scope and cannot be orders for payment in the nature of compensatory damages: see the discussion in Quin v Real Estate Agents Authority [2012] NZHC 3557, [2013] NZAR 38 at [55]–[68].

12 Section 78(1).

13 Sections 105 and 109.

[28]   The s 93(1)(ha) pathway  from the second layer  to the third layer leads  to     s 110(5) of the Act. The subsection provides:

(5)If a Complaints Assessment Committee refers a matter to the Tribunal under section 93(1)(ha), the Tribunal may, if satisfied that the requirements of subsection (4)(b) (except paragraph (b)(i)) are met, make a compensation order under that subsection.

[29]   The subs (4)(b) requirements, of which the Tribunal must be satisfied to make a compensation order, are an appearance to the Tribunal that a person has suffered loss by reason of the licensee’s unsatisfactory conduct. In those circumstances, the Tribunal can order a licensee to pay to that person a sum of up to $100,000 by way of compensation but only if the order is one that a court of competent jurisdiction could make in relation to a similar claim in accordance with principles of law. Accordingly, the assessment of compensation is a relatively detailed task.

[30]   The final piece in the statutory scheme, as it relates to the issues on appeal, is s 110(6), which is in the following terms:

110Determination of charges and orders that may be made if charge proved

…

(6)For the purposes of subsection (5), the Disciplinary Tribunal—

(a)must apply, and may not overturn, a Complaints Assessment Committee determination that there was unsatisfactory conduct involving more than a minor or technical contravention of this Act or of any regulations or rules made under this Act; and

(b)must apply, and must not overturn, a Complaints Assessment Committee determination of any substantive matter in the case; and

(c)has no jurisdiction to inquire into a determination described in paragraph (a) or (b).

[31]   As well as being the third-layer decision-maker, the Tribunal hears first-level appeals against determinations of committees under s 111. In this case, the Tribunal, in the exercise of its appellate functions under that provision, was considering the exercise by the Committee of its s 93 powers.

The purpose of s 93(1)(ha)

[32]   I deal with the purpose of s 93(1)(ha) here, by reference to Parliamentary materials, because of the significance of the provision in the descriptions and discussion that follows.

[33]   Section 93(1)(ha) of the Act was inserted on 29 October 2019.14 The explanatory note to the first version of the bill that went on to amend the Act included the following:

The Tribunals Bill will also enable some Tribunals to provide better consumer protection and redress, and greater access to justice by providing a simpler, quicker, and cheaper alternative to a court case. For example,—

…

·the Real Estate Agents Disciplinary Tribunal will be able to award monetary compensation of up to $100,000 for financial losses arising from a real estate agent’s unsatisfactory conduct:

[34]   When subs (ha) was first drafted, it contained a discretion but no threshold requirement.15 It was amended after Ministry of Justice Departmental Report noted the process would be more efficient if conduct involving minor or technical breaches was not referred to the Tribunal and if the Tribunal had to accept committees’ factual findings on unsatisfactory conduct to avoid relitigating issues unnecessarily.16 The commentary at the beginning of the second version of the bill provided:

We agree that the READT [the Tribunal] must be responsible for awarding compensation due to its expertise and the complexity of the legal issues involved. However, the process would be more efficient if conduct involving only a minor or technical breach did not need to be referred to the READT. We recommend that clauses 219 and 227 be amended to require that CACs [Committees] only refer cases of unsatisfactory conduct to the READT, for consideration of compensation, which they assess as more than minor or technical breaches. We further recommend that clauses 219 and 227 be amended to require that the READT must accept, and cannot overturn, the CAC’s assessment that the unsatisfactory conduct is more than minor or technical.

14     Tribunals Powers and Procedures Legislation Act 2018, s 233(2).

15     Tribunals Powers and Procedures Legislation Bill 2017 (286-1), cl 219(1).

16     Tribunals Powers and Procedures Legislation Bill 2017 (286-2) (Commentary) “Amendments to the Real Estate Agents Act 2008”.

[35]   This approach demonstrates that Parliament saw committees as not being well placed to themselves assess compensation claims due, in a material way, to the complexity of the issues involved. Efficiency is achieved through the Tribunal not being troubled with unsatisfactory conduct involving more than a minor or technical breach. That assessment can be made at the second layer. But the compensation assessment itself is for the Tribunal.

The Complaints Assessment Committee’s decision

[36]   In its penalty decision, the Committee found Mr Cho’s conduct to have fallen “within the mid-range of unsatisfactory conduct”.17 It censured him and ordered him to pay a fine of $3,500.

[37]   The Committee went on to consider the request in Mr X’s complaint for compensation of $100,000. It observed that his penalty submissions were short and it said that there was insufficient evidence to support the claimed monetary loss. Those conclusions led the Committee to say:18

The  Committee  considers  that  such  a  referral  [to  the  Tribunal  under     s 93(1)(ha)] is unwarranted. Such referrals are rare and are made in limited circumstances. Something more than mid-level unsatisfactory conduct is required … conduct that approaches a high level of unsatisfactory conduct which is not present here.

[38]   The Committee went on to consider whether an order for rectification under  s 93(1)(f) was appropriate and concluded that it was not. It was not satisfied that loss had been caused to anyone in circumstances, in particular, in which the GST issue was discovered before the agreement became unconditional and in which Mr X had elected to proceed with it nonetheless.

[39]Mr X appealed to the Tribunal.

17     Committee penalty decision, above n 2, at [4.5].

18     At [4.8]

The Disciplinary Tribunal’s decision

[40]   Mr X’s appeal was expressed in broad terms but the Tribunal, in a minute of 15 September 2023, said that the following issues could be addressed on appeal:

1.Were the GST statements in section 2 of schedule 1 of the agreement completed by Mr Cho in the presence of Mr  X on 24 October or     2 November 2020, or in his absence?

2.Did Mr X inform Mr Cho on or before 2 November 2020 that he was not GST registered?

3.Did Mr Cho state to Mr X prior to settlement that the vendor would pay the GST?

4.Do the answers to issues 1 to 3 identify the additional breach of any rule and/or amount to unsatisfactory conduct?

5.Do the answers to issues 1 to 4 affect the penalty orders?

6(1)Was the Committee correct not to refer to the Tribunal the matter of a compensation order?

(2) If the answer to (1) is ‘no’, what loss did Mr X suffer, if any, and what compensation, if any, should be ordered?

[41]   The Tribunal expressed a provisional view that the “next step” should be to determine question 6(1). Following submissions from the parties (essentially abiding the Tribunal’s decision on the order in which it would address the issues on appeal), the Tribunal confirmed its provisional approach in a minute of 29 September 2023.

[42]   Accordingly, the Tribunal has restricted itself at this stage to considering whether or not the Committee erred in not referring the matter of compensation to the Tribunal. It is the Tribunal’s decision on that point that is in issue here.

[43]   In its March 2024 decision, the Tribunal found that the Committee had made an error of law in describing the conduct threshold for referral under s 93(1)(ha) as “more than mid-level” and which “approaches a high level of unsatisfactory conduct”.19 It found that once the “more than a minor or technical breach” threshold in the provision had been met, the discretion afforded to the Committee did not extend to it then assessing the merits of a claim for compensation, even in a provisional way.

19     Tribunal decision, above n 3, at [44].

The complainant did not, it found, need to prove an entitlement to compensation before the Committee because the Committee had no power to determine any such claim.

The positions of the parties

[44]   Mr Cho says that the Tribunal erred by finding that the Committee had erred in law. He argues, by way of summary, that the effect of the Tribunal’s decision is that committees will have to refer any matter for compensation to the Tribunal so long as the unsatisfactory conduct involved was more than a minor or technical breach. An approach of that sort would, it is said, narrow improperly committee’s discretion under s 93(1)(ha) and would be at odds with Parliament’s intention when it added the provision in 2019.

[45]   Mr Cho’s position is that the Committee did not err in law in the way described by the Tribunal when it said that his conduct did not approach a “high level of unsatisfactory conduct”. Rather, in saying that, the Committee was exercising its discretion.

[46]   Mr Cho argues also that the Tribunal, in finding an error, then had no ability to refer the matter to itself for the purposes of considering compensation. It should, he says, have referred the matter back to the Committee.

[47]   The Authority abides the Court’s decision but has made submissions that are intended to assist the Court on the interpretation of the Act.

[48]   It accepts that the Committee had a discretion on whether or not to refer the matter, once the statutory threshold test had been met, and it has provided a non- exhaustive list of examples of circumstances in which, in the exercise of its discretion, a committee might not refer a matter. While, it says, committees must undertake a basic assessment of a compensation claim in order to discharge their discretion properly, a detailed assessment of the merits would be inappropriate. Assessing the seriousness of a claim in exercising that discretion would, it is said, undermine the threshold set by Parliament.

[49]   Mr X appeared in person, by VMR. He was assisted throughout the hearing by an interpreter and his submissions were given through the interpreter.20

[50]   Mr X supports the Tribunal’s decision on a similar basis. He says that the Committee exceeded the terms of its discretion when it said that conduct needed to be “something more” than mid-level in order to be referred.

[51]   Mr X was concerned, in particular, to be able to explain his position on the underlying facts – on what he had said to Mr Cho about not being GST registered, on what Mr Cho had done and why, and on the trouble that the GST issue had caused him. While these underlying factual matters are not the subject-matter of this appeal, they led on to Mr X’s submission that the provision of compensation under the Act must be an integral part of achieving its purposes to promote and protect the interests of consumers and to promote public confidence in the performance of real estate agency work. The interpretation of the Act should not, he has said, leave those who suffer harm without a remedy.

The nature of an appeal against the decision of the Tribunal

[52]   Under s 116 of the Act, any person affected by a decision of the Tribunal has a broad right of appeal to the Court. It is not, for example, limited to appeals on questions of law.21

[53]   Mr Walker has submitted that an appeal from a decision under s 93(1) is an appeal from an exercise of discretion, referring to Quin v Real Estate Agents Authority.22 However, Quin was concerned with a first appeal to the High Court from a penalty decision of the Tribunal. Accordingly, the appeal was from the exercise of a discretion. The position here is different. It is a second appeal from a decision of

20 On Mr X’s application in advance of the hearing, the Court appointed an interpreter to assist him during the hearing. Mr X has a reasonable level of proficiency in the English language but the use of the interpreter enabled him to understand properly what was being said. During the delivery of submissions by the appellant and by the first respondent, the interpreter (who was in the Wellington courtroom) did not provide sequential interpretation for Mr X but summarised what was being said from time to time and assisted Mr X as was required. When Mr X delivered his submissions, the interpreter provided sequential interpretation.

21 As appeals from the High Court to the Court of Appeal are, under ss 119(2) and 120 of the Real Estate Agents Act.

22 Quin v Real Estate Agents Authority, above n 11, at [38] and [68].

the Committee. Although s 93(1) involves an element of discretion on the part of a committee, the Tribunal itself was not, in this case, exercising a discretion.

[54]   The nature of an appeal to the High Court will, accordingly, depend upon the nature of the Tribunal’s decision that is in question. There is no one size that fits all. Here, where the Tribunal was not exercising a discretion, it can be said that the appeal should be a general appeal by way of rehearing – on the basis described in Austin, Nichols requiring the Court to come to its own view on the merits while paying deference to the decision below in certain circumstances.23

[55]   The view I take on this appeal is such that this is not a point on which a firm conclusion is needed.

Did the Tribunal err?

[56]   A potential threshold issue in considering the errors the Tribunal is alleged to have made is whether an appeal from a committee to the Tribunal on a refusal to refer under s 93(1)(ha) is a general appeal or an appeal against the exercise of a discretion.

[57]   The answer to the issue is not really determinative because, as the Tribunal said, the error it found to exist would form the basis either of a general appeal or of an appeal against the exercise of a discretion. I agree.

[58]   Accordingly, and on the basis of the findings I come on to make, it is not necessary for me to form a conclusive view on the nature of the appeal that this level either. However, there is much to be said for the view that it is a general right of appeal. Cases on the issue that were referred to the Tribunal, during its appeal hearing, all related to appeals to the High Court from penalty decisions of the Tribunal. In addition, they predated the introduction of s 93(1)(ha) which, as I have said already, involves the exercise of a different kind of power.24

23 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13].

24 The power is different, for example, to anything that a Standards Committee may do under the Lawyers and Conveyancers Act 2006 (where Standards Committees themselves have the power to order compensation) and so comparisons with cases in that jurisdiction are not necessarily helpful either.

[59]   Section 111(3) provides that an appeal from a committee to the Tribunal is “by way of rehearing”. Interpreted from its text and in the light of its purpose,25 the provision provides for a general appeal, whether there is a discretionary element to the committee’s decision or not. But a firm conclusion should await a case in which the point is argued fully.

The Committee’s decision not to refer

[60]   In  summary,  the  fundamental  features  of  a  committee’s  decision  under  s 93(1)(ha), in my view, are these:

(a)Unsatisfactory conduct that does not involve more than a minor or technical breach of the Act or regulations or rules cannot be referred to the Tribunal. That is the baseline filter that Parliament intended when adding those words to the provision during the 2019 reforms.

(b)Once that filter is applied, a committee’s residual discretion under     s 93(1)(ha) is limited. Parliament has decided that committees are not well placed to assess compensation claims, as I have described in [33]– [35]. Committee members need not be legally qualified, unlike Tribunal members. Consideration of a compensation order involves, in addition to an assessment of evidence, a conclusion on whether a court of competent jurisdiction could make an order of the type under consideration in accordance with principles of law.26

(c)Accordingly, beyond the “more than minor or technical” threshold, a committee should only be filtering out claims where it is abundantly clear on its face that it is not the type of claim that the Tribunal should assess under s 110(5). I do not endeavour to provide a defined set of examples but claims that do not properly fit within the statutory language of ss 110(4) and (5) might be excluded, as might matters that are clearly vexatious or brought for an improper purpose.

25     Interpretation Act 1999, s 5(1).

26     Real Estate Agents Act, s 110(4)(b)(ii).

(d)If a claim is not filtered out on the basis described, then it must go up to the third layer of the statutory process and be assessed by the Tribunal.

[61]   I agree with the Tribunal that this is where the Committee erred. It applied a further layer of assessment – believing that it should only refer up if, on its own assessment of eligibility for a compensation order, there was a high level of unsatisfactory conduct and sufficient evidence of loss. That was to go too far.

[62]   Accordingly, in my view the Tribunal was right to say that the Committee made an error of law in declining to refer the question of whether a compensation order should be made to the Tribunal.

[63]   Mr Walker has referred to Quin v Real Estate Agents Authority as supporting a proposition that the culpability of a licensee is a relevant factor for a committee and exercising its discretion under s 93(1). However, Brewer J’s comments in Quin were about a committee’s discretion to order rectification under s 93(1)(f). That is a different statutory power to order the payment of costs or expenses, rather than compensation, and is a power that the committee itself can exercise.

[64]   There is in my view nothing to suggest that only serious unsatisfactory conduct should be referred on by a committee after an evidential assessment. That would be to undermine the statutory scheme.

The consideration of merits by the Committee

[65]   The operation of the statutory scheme in the way I have described in [60] above is such that the Tribunal was in my view correct to say that the Committee should not have taken into account the merits of the claim for compensation, even in a provisional way. There was nothing that would have justified the Committee doing so in this case, although I do acknowledge that a committee may need to look at the merits in a provisional way where that is necessary to filter out a claim that the Tribunal clearly should not be assessing. As mentioned in [60](c)], that might include, for example, a claim that appears to be clearly vexatious or to have been brought for an improper

purpose. A committee might well need to assess the merits to some extent to determine whether that is indeed the case.

[66]   Mr Walker advances the view that a complainant must do enough to persuade a committee that they have a good claim for compensation before the Tribunal in the first instance and that committees need to be able to consider the merits of a compensation claim. They must, it is said, be entitled to consider whether or not there is a plausible case for compensation. An approach of this sort would, it is said, minimise the number of referrals to the Tribunal which would, in turn it is said, promote efficiency through limiting the number of claims that make their way to the Tribunal which.

[67]   The efficiencies that are sought in the statutory scheme – through the 2019 amendments in particular – are achieved through the layered system I have described. Compensation orders are determined at Tribunal level, not at committee level. However, committees act as a filter to ensure that more than minor or technical breaches are not passed on and to ensure that only claims that, as described in [60] above, should properly be the subject of a compensation order are passed on. There is real efficiency in this filtering mechanism; an efficiency that would not be present if a Committee made an assessment – to an ill-defined level – of evidence and merits in the first instance and then passed it on to the Tribunal to repeat the exercise.

The Tribunal’s referral to itself

[68]   The issue under this head is whether, when the Tribunal upholds an appeal from a committee under s 93(1)(ha) not to refer to the Tribunal, the Tribunal then has the jurisdiction to refer the matter to itself or whether it needs to refer the matter back to the committee for reconsideration.

[69]   The Tribunal must have jurisdiction to go on to consider the making of a compensation order in those circumstances.

[70]   While Mr Cho’s position is that the Tribunal may only consider compensation if it has itself heard a charge against a licensee or if the issue is referred to it by a

committee, the point is resolved entirely by s 111(5) of the Act which is in the following terms:

If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.

[71]   That must include a committee’s power to refer it to the Tribunal. Reconsideration by a committee would add an unnecessary step. It would be inefficient.

The significance of the Committee’s findings on the compensation claim

[72]   As outlined in [28] and [29] above, under s 110(5) of the Act, if a committee refers a matter to the Tribunal under s 93(1)(ha), the Tribunal may make a compensation order if it is satisfied that certain of the requirements in s 110(4)(b) are met. Section 110(6), set out in [30] above, then goes on to say that, for the purposes of subs (5), the Tribunal must apply, and not overturn, a committee’s determination on unsatisfactory conduct involving more than a minor technical contravention g or on “any substantive matter in the case”. The Tribunal does not, the provision adds, have any jurisdiction to enquire into determinations of that type.

[73]   For the reasons I have given, the factual assessment made by the Committee was an assessment that it was not in a position to make ought not to have made. In those circumstances, s 110(6) cannot apply here.

[74]   This point underlines the inefficiency that would result if the position advanced for Mr Cho was upheld. The Tribunal – being the decision-maker charged with considering compensation orders – would be bound by a committee’s lower level and preliminary assessment of the merits of the compensation claim. It’s hearing powers would be limited.

Outcome and orders

[75]   For these reasons, there was in my view no error in the Tribunal’s finding that the Committee misinterpreted the statutory threshold, and erred in law accordingly, when exercising its power under s 93(1)(ha) of the Act. Having made that finding, it

was in order for the Tribunal to put in place a process to consider whether or not it would make a compensation order under s 110(5) of the Act.

[76]The appeal is dismissed.

[77]   Costs are payable by Mr Cho to the Authority and to Mr X on a 2B basis. It is my preliminary view that costs should be calculated and paid both to the Authority and Mr X, bearing in mind that Mr X will only be able to recover costs for steps taken on or after 1 September 2024 and at a daily recovery rate that is lower than that to which the Authority will be entitled.27 I would encourage the parties to proceed on that basis. However, if costs cannot be resolved, then Mr Cho may file a memorandum within 15 working days of the date of this decision and the Authority and Mr X may file memoranda in response within 20 working days from the date of this decision. Such costs memoranda, including schedules, should be no longer than five pages in length.

Radich J

Solicitors:

Wootton and Kearney, Wellington for Appellant Meredith Connell, Auckland for First Respondent

27 From 1 September 2024, parties acting in person became able to recover costs at a blanket per day rate of $500 under changes made by the High Court Amendment Rules 2024. There is no express transitional provision in the amendments, but the default approach for amendments to the costs regime is that the changed provisions only apply to steps taken on or after the date of commencement of the amendments: see Delegat v Norman [2014] NZHC 1099; FM Custodians Ltd v Pati [2012] NZHC 1902; EA v Rennie Cox Lawyers [2020] NZHC 1372 at [18]; and Rules Committee Minutes of Meeting of 21 September 2020 (Provisional) (Judicial Office for Senior Courts, Wellington, 23 September 2020) at Item 10.