Kelly v Portfolio Property NZ Ltd

[2017] NZHC 915

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2016-485-748 [2017] NZHC 915

BETWEEN

FIONNUALA MARY KELLY AS

PERSONAL REPRESENTAITVE OF THE ESTATE OF TYNAN FIACHRA KELLY

Appellant

AND

PORTFOLIO PROPERTY NZ LTD Respondent

On the papers
Counsel:	F M Kelly for Appellant
Judgment:	9 May 2017

JUDGMENT OF THOMAS J

[1]      Ms Kelly appeals on behalf of the Estate of Tynan Kelly from the decision of Judge Tompkins in the District Court.1    That decision concerned an appeal from a Tenancy Tribunal ruling dated 15 December 2015.   She also applies for leave to bring this application out of time.

Background Facts

[2]      Around 5 March 2015 Mr Kelly signed a tenancy agreement for a room in a boarding house on Aurora Terrace, Wellington.  The landlord was Property Portfolio Management Ltd (PPML).  When Mr Kelly signed the agreement he was required to pay a bond of $630 and a “success fee” of $210.  His rent was $210 per week which included $35 of expenses.  The expenses portion of the rent included internet use, however,  Mr  Kelly  did  not  have  internet  access  for  around  three  weeks  after

moving in.

1      Kelly v Portfolio Property NZ Ltd [2016] NZDC 10815.

KELLY v PORTFOLIO PROPERTY NZ LTD [2017] NZHC 915 [9 May 2017]

[3]      In mid-April 2015, an incident occurred which led to blood being found in Mr Kelly’s room and in his shared bathroom.  In late June 2015 he moved from his initial room (Room 24) to an allegedly inferior room (Room 19).  This tenancy was never documented.

[4]      On  30  July  2015  PPML  served  Mr  Kelly  with  a  notice  of  breach  for behavioural issues following several complaints it received from other tenants about Mr Kelly knocking on their doors and trying to open them.

[5]      On 3 August 2015 PPML served Mr Kelly with a further notice of breach for alleged rent arrears.   On 17 August 2015 PPML served Mr Kelly with a 48-hour eviction notice.  Around this time he was admitted to hospital.  He was then given a five-day notice to remove his belongings.

[6]      Mr Kelly, represented by Ms Kelly, in her capacity as his mother rather than as his legal representative,2 brought a claim in the Tenancy Tribunal against PPML. PPML, represented by Mr Relph, brought a counter-claim against Mr Kelly.  Each party advanced a great number of claims.

[7]      In the time between the Tenancy Tribunal hearing and the District Court appeal,  Mr  Kelly  died.    His  estate  took  over  the  appeal,  also  represented  by Ms Kelly, this time in her capacity as a lawyer.

Tenancy Tribunal decision

[8]      A number of claims were advanced by each side in the Tenancy Tribunal hearing and the adjudicator made a number of factual findings. Overall the result was that Mr Kelly was required to pay PPML $236 in rent arrears, the Bond Centre was required to pay Mr Kelly $394 and PPML was required to pay Mr Kelly $236. No exemplary damages were awarded.  The adjudicator declined to award costs due

to a number of vexatious claims brought by both parties.

2      Ms Kelly is a barrister and solicitor.

District Court Procedure

[9]      Ms Kelly appealed to the District Court.  This was called in a civil list at the Wellington District Court on two occasions.  PPML failed to appear on both of these occasions.  On 12 May 2016, the second call of the matter, Ms Kelly made brief oral submissions. Judge Hastings then issued the following orders and directions:

DECISION/ORDERS/DIRECTION

1.        No further appearances by respondent today.

2.        Summons to issue – Craig Relph.

3.        Audio to be reviewed to allow for full and complete transcription.

4.To be set down for a full day appeal hearing (Mr Relph to be cross- examined). 3rd June 2016 at 10am.

[10]     On  3  June  2016  the  appeal  hearing  took  place  before  Judge  Tompkins. Ms Kelly expected the proceeding to be run as a full rehearing and had prepared on this basis.  However, the Judge restricted the hearing to an assessment of the grounds for the appeal.

[11]     Later that day, Ms Kelly filed a memorandum in the District Court stating her concern.  It said:

4.Prior to appearing today in the District Court, I had understood a full days hearing would take place.   I had expected, following the two previous callovers and the issues raised at those, that the court was ready  to  hear  the  proceedings  fully  at  the  appeal  hearing  date. Section 118(1)(b) of the Residential Tenancies Act 1986 provides for such a re-hearing.

5.The directions issued by Judge Hastings on 12 May give weight to that understanding.  A full day was set down – which would greatly exceed an anticipated simple appeal hearing, and a summons was issued to have Mr Relph attend, with a note that he was to be cross examined.

6.His Honour Judge Tompkins was, however, of the view that  the matter was not to be a rehearing, but an appeal hearing, and so proceeded in that manner.  I did note that was at odds with what I had expected to occur.   I was not prepared for the way today’s hearing actually proceeded.

[12]     The decision of Judge Tompkins was released on 17 June 2016 upholding the decision of the Tenancy Tribunal.

District Court decision

[13]     The Judge noted Ms Kelly’s submission that the Tenancy Tribunal’s decision was flawed because it rested on “improper foundations” and “failed to properly appreciate or assess the question raised around the veracity of oral evidence and the authenticity of documentary evidence”.   Ms Kelly challenged 20 of the Tribunal’s findings on appeal.  The Judge stated “[i]t is difficult to avoid the conclusion that Ms Kelly is trying to re-litigate this tenancy dispute in the District Court.”

[14]     The Judge noted Ms Kelly’s submission that she expected the appeal to take place by way of a “rehearing” rather than an “appeal hearing” relying on s 118(1)(b) of the Residential Tenancies Act 1986 (the Act).  He questioned why Ms Kelly relied on  s  118  which  concerns  the  District  Court’s  power  on  appeal,  rather  than prescribing the form appeals take.3

[15]     The Judge reviewed the analysis of the different types of appeal hearing in Housing New Zealand v Salt4 which says a “rehearing” in this context connotes that the appellate body is not limited to the correction of errors in the judgment below, but  may  take  into  account  developments  which  have  taken  place  since  trial. However, this does not mean the court will hear all the evidence again as though it were a re-trial.   He noted what Ms Kelly really desired was an appeal de novo, saying “at a traditional rehearing the appellate body will only differ on findings of fact if the conclusions were unavailable on the evidence or plainly wrong”.5

[16]     The Judge reviewed the evidence from the Tenancy Tribunal and stated:

[33]      Having read over the evidence and the Tribunal’s decision, I am not prepared  to  class  the  adjudicator’s  factual  findings  as  plainly  wrong  or wholly unsupported.   It is important to stress the adjudicator’s distinct advantage  assessing  the  parties’ evidence  at  the  earlier  hearing.    I  am reluctant to supplant the adjudicator’s finding of fact with my own.   In particular, I record that the adjudicator carefully and patiently sets out each

3 At [26].

4      Housing New Zealand Corporation v Salt [2008] DCR 697 at [7]–[21].

5      Kelly v Property Portfolio Management Ltd, above n 1, at [32].

party’s position on each contested issue, traverses in appropriate detail the crucial and/or contested evidence, and reaches a conclusion clearly open to the adjudicator.

[17]     He therefore held there was no proper basis upon which this Court could or

should interfere with the Tribunal’s findings and dismissed the appeal.

Submissions

[18]     Ms Kelly appeals to the High Court against that decision.  She submits there are two grounds on which a court can overturn a factual finding on appeal – either the conclusions were unavailable on the evidence or they were plainly wrong.  She submits both of these grounds are present in this case.   She submits the accepted evidence is so questionable that any findings flowing from it are inherently flawed. On this basis she submits both the District Court and Tenancy Tribunal decisions are in error.  She further submits Judge Tompkins did not have adequate evidence before him as the Notes of Evidence he reviewed were not complete.

[19]     Ms Kelly also submits it was clear she was expecting a de novo hearing based on the directions and orders provided by Judges Hastings at the previous call over hearing.  She says it was inappropriate for Judge Tompkins not to give effect to these directions and this resulted in unfairness and a further miscarriage of justice.

[20]     Ms Kelly confirms by way of affidavit that the respondent was served.  No submissions have been filed on behalf of the respondent.

High Court’s power on appeal

[21]     Section 119 of the Act states:

119      Appeal on questions of law to High Court

(1)       Any party to an appeal under section 117 who is dissatisfied with the decision of the District Court Judge as being erroneous in point of law may appeal to the High Court on that question of law.

(2)       Every appeal under this section shall be dealt with in accordance with the High Court Rules 2016.

[22]     Any appeal to the High Court under s 119 is confined to whether the Judge in the District Court was “erroneous in point of law”.  The Court has no jurisdiction to review findings of fact unless it can be shown that the Judge misunderstood the statutory language, the proper construction of the statute being a matter of law, or the Judge made a finding for which there was no evidence or which was inconsistent

with the evidence and contradictory to it.6

Law

[23]     The Act allows any party to any proceeding who is dissatisfied with the decision of the Tribunal to appeal to a District Court against that decision (s 117 of the Act).  It does not specify the manner in which the appeal is to be heard.

[24]     Rule 18.19 of the District Court Rules 2014 (the Rules) provides that appeals are by way of rehearing.

[25]     Rule 18.17 specifies when a party may give further evidence:

18.17   Further evidence

(1)       Without leave, a party to an appeal may adduce further evidence on a question of fact if the evidence is necessary to determine an interlocutory application that relates to the appeal.

(2)       In all other cases, a party to an appeal may adduce further evidence only with the leave of the court.

(3)       The  court  may  grant  leave  only  if  there  are  special  reasons  for hearing the evidence. An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal.

(4)       Further evidence under this rule must be given by affidavit, unless the court otherwise directs.

[26]     Rule 18.20 specifies when the court will rehear evidence on appeal:

18.20   Powers of court in relation to evidence heard on appeal

6      Collins v Housing New Zealand Ltd HC Christchurch CIV-2004-409-717, 2 July 2004 at [23]– [24]; and McLeod v Housing New Zealand Ltd (High Court, Auckland, AP50/02, 16 July 2001) at [30].

(1)       The court has full discretionary power to rehear all or any part of evidence taken before the decision-maker.

(2)       The court must rehear the evidence of any witness if the court has reason to believe that any note of the evidence of that witness made by direction of the decision-maker is or may be incomplete in any material particular.

(3)       The court has full discretionary power to hear and receive further evidence on questions of fact, either by oral evidence or by affidavit.

(4)       The  court  must  also  have  regard  to  any  report  lodged  by  the decision-maker under rule 18.16, including any matters referred to in the report and any evidence tendered on the report, whether or not those matters would otherwise be admissible in evidence.

(5)      The court may, in exercising its powers under this rule and rules

18.21  to  18.24,  receive  as  evidence  any  statement,  document, information,  or  matter  that  the  decision-maker  would  have  been

entitled to receive at the hearing at first instance.

[27]     Rule 18.3 specifies a judge’s powers to give directions as to the manner an appeal will be heard:

18.3     Judge may call conference and give directions

(1)      For the purpose of ensuring that any appeal is determined in a convenient and expeditious manner, and that all matters in dispute are effectively and completely determined, a Judge may hold a conference of parties or counsel presided over by the Judge—

(a)      at any time, and on any terms the Judge thinks fit:

(b)      on the application of any party or without application. (2)  A Judge presiding at a conference may—

(a)      settle the issues to be determined:

(b)      direct which persons are to be named as the respondents, or direct that the name of any party be added or struck out:

(c)      fix a time for the filing of affidavits or other documents: (d)         fix a time and place for the hearing of the appeal:

(e)      make an order in accordance with rule 18.15:

(f)       give directions as to the manner in which evidence is to be brought before the court at the hearing of the appeal:

(g)      give   any   other   directions   necessary   for   the   proper determination of the appeal.

(3)       At any time before the hearing of an appeal has started, a Judge may, for  the  purposes  of  subclause  (1),  exercise  any  of  the  powers specified in subclause (2) without holding a conference.

[28]     A number of cases have considered whether appeals under s 117 of the Act are de novo or by way of rehearing.  In Collins v Housing New Zealand Ltd, Keane J in an obiter statement, confirmed that the correct approach was “the evidence before the tribunal will be before the court and, while the court has the ability to accept further evidence, that may be the only evidence necessary, and the decision of the Tribunal under appeal deserves respect”.7

[29]     The issue was given thorough consideration in Housing NZ Corp v Salt.8  The

Judge set out the essential features of a rehearing as follows:9

[11]      The appeal is heard on the record of the oral evidence given below, subject to discretionary powers to rehear the whole or any part of the evidence or even to receive further evidence.

[12]      In this context the expression “rehearing” connotes that the appellate body is not limited to the correction of errors in the judgment below, but may take into account developments since the trial.  But it does not mean that the Court will hear all the evidence again as through it were a new trial.

[13]     On  an  appeal  by  way  of  rehearing,  the  appellate  body  is  not restricted  by any findings  which the lower court or  tribunal  has made, but the appellate body nevertheless acknowledges the advantage enjoyed by the decision maker at first instance, which may have seen and heard the witnesses.

[14]     There is something akin to a presumption that the decision appeal from is correct and it is also customary for the appellate body to exercise restraint in interfering with discretionary decisions.

[15]      Thus, ordinarily, the appellate body will only differ from the factual findings of the decision maker at first instance if:

·    The conclusion reached was not open on the evidence, that is where there was no evidence to support it; or

·    The lower body was plainly wrong in the conclusion it reached. [16]   Most appeals in New Zealand are appeals by way of this kind of

rehearing.

7      Collins v Housing New Zealand Ltd above n 6 at [21] citing Shotover Gorge Jetboats Ltd v

Jamieson [1987] 1 NZLR 427 (CA); and Nelson Education Board v Williams [1990] DCR 337.

8      Housing New Zealand v Salt above n 3.

9      At [11] – [16].

[30]     The correct position is that a “rehearing” will generally involve a review of the oral evidence given in the proceeding below with the judge having discretion to receive further evidence.  It does not involve a full rehearing of all the evidence.

Analysis

[31]     The Judge was correct to conclude the appeal was to take place by way of a rehearing and correctly summarised the procedure for a rehearing.   Applying this approach there is discretion for the Judge to rehear any part of the evidence or to decide to receive further evidence. The Judge declined to do so in this case.

[32]     Rule  18.20  of  the  Rules  confirms  that  on  appeal  the  court  has  “full discretionary  power  to  rehear  all  or  any  part  of  the  evidence  taken  before  the decision maker”.  It goes on to state that “[t]he court must rehear the evidence of any witness if the court has reason to believe that any note of the evidence of that witness made by direction of the decision-maker is or may be incomplete in any material particular”.

[33]     As submitted by Ms Kelly the Notes of Evidence before the District Court Judge were largely incomplete due to the evidence being inaudible when transcribed. For example the evidence of Mr Relph:10

MR RELPH:

Okay,  so  the  next  event  that  took  place  was  another  event  which  also impacted on the reasonable peace and enjoyment of the tenants in that it is alleged  that  Tynan,  on  the  early  hours  of  (inaudible 10:35:24-10:35:32). This caused quite significant damage to the carpets in Tynan’s room. (inaudible 10:35:40)         establishes         that         he,         that         he (inaudible 10:35:47-10:36:00)     which     cover     that     particular     event. Unfortunately,      we’re     not      allowed      to     be      provided      the (inaudible 10:36:09-10:36:10:36:28).

…

MR RELPH:

– (inaudible 10:53:45) submission.   And we want to make it categorically clear that (inaudible 10:53:52) obviously did take place and that Tynan was responsible.   The police report confirms that.   There’s the affidavits that support it.   There’s photos of the incident.   There’s cleaning, there’s the

10     NOE at 31 and 41 - 42.

blood stained carpet and there’s the quote for the replacement of the carpet. I think it categorically proves that the event did take place and that the event did cause significant damage to property along with the breach of the quiet enjoyment  (inaudible 10:54:23).     So  I  think  we’ll  (inaudible 10:55:44-

10:55:553) but, so, perhaps (inaudible 10:5:57) the report which covers the section 66K(1) which is the (inaudible 10:56:03-10:56:17) being (inaudible

10:56:18) damage to the property by, ….  (Inaudible 10:56:24-10:56:38) and

it caused damage to (inaudible 10:56:40-10:57:06) breached the quiet enjoyment of the other tenants.  (Inaudible 10:57:11-10:57:22).  We’re not seeking the (inaudible 10:57:30-10:58:16) that time has (inaudible 10:58:18) the problem.   We had two witnesses that were going to be talking to that particular     scenario     (inaudible     10:58:27-10:58:57)     obviously     66 (inaudible 10:59:00)   obviously   covering   into   the   fire   escape   there (inaudible 10:59:11) so it was just the introduction of the fire escape as I’ve already alluded to

[34]     And the evidence of Mr Kelly:11

Q.       Tell me more about why you chose that room. A.  It was primarily (inaudible 11:40:32-11:40:42).

Q.       Can you tell the Tribunal about the agreement and the requirements for entering into the tenancy?

A.        (inaudible 11:40:57-11:41:24).

Q.       Just on the facts, how many rooms were in the building roughly and what was the sort of occupancy at that point?

A.       Maybe 30 rooms.  (inaudible 11:41:36-11:41:47). Q.        So what payments were asked from Portfolio?

A.        Initially it was a (inaudible 11:41:57-11:42:13).

Q.        Did you meet anybody from Portfolio at this point?

A.       There was just a, there was an initial (inaudible 11:42:22-11:42:28). Q.     And tell us about the circumstances of moving in out of that…

A.        I wanted the place (inaudible 11:42:34-11:42:46).

Q.       And when you first moved in, what happened then? A.     I (inaudible 11:42:54-11:43:13).

Q.        How – was there any charges associated with that?

A.       A portion of the (inaudible 11:43:20) associated with my weekly payments but (inaudible 11:43:24-11:43:31).

11     NOE at 50.

[35]     As the evidence is incomplete in a material way the District Court Judge should have allowed the relevant evidence to be reheard in accordance with r 18.20. Because of the state of the transcript, and the errors identified above, there was insufficient evidence for the Judge to conclude that the findings of the Tenancy

Tribunal were not plainly wrong or wholly unsupported.12

[36]     By his directions on 12 May 2016, Judge Hastings recognised there was a need for further evidence to be provided.   Judge Hastings had the power to give these directions under r 18.3.  The directions should have been given effect at the hearing.  Unfairness arose as Ms Kelly prepared her case on the basis that this is how the hearing would be conducted and this did not occur.

Result

[37]     For these reasons, the appeal is allowed and leave to appeal out of time is granted.  The matter is to be remitted back to the District Court to be reheard in the manner set out by the direction of Judge Hastings on 12 May 2016.

Thomas J

12     Refer [22] above.