Lloyd v Pangani Properties Limited - [2019] NZCA 314

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA518/2018
[2019] NZCA 314

BETWEEN	GRANT ROBERT LLOYD AND PHILIP JAMES LESLIE NEVILL Appellants
AND	PANGANI PROPERTIES LIMITED Respondent

Hearing:	4 June 2019
Court:	Courtney, Stevens and Wild JJ
Counsel:	R J B Fowler QC and A B Darroch for Appellants J V Ormsby and S S R Meares for Respondent
Judgment:	16 July 2019 at 4 pm

JUDGMENT OF THE COURT

AThe appeal is allowed to the extent that the High Court’s award of $100,000 in damages for costs incurred by the respondent in the disciplinary proceeding before the Complaints Assessment Committee is reduced to $38,260.

B The appeal is otherwise dismissed.

CThe appellants must pay the respondent costs for a standard appeal on a band A basis, but reduced by 25%, and usual disbursements. We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Wild J)

Introduction

This appeal from a judgment of Ellis J given in the High Court at Palmerston North on 6 August 2018 concerns a breach of fiduciary duty by the appellant real estate agents.[1] They admit the breach, though perhaps not its seriousness. There is agreement as to the relevant legal principles.
[1]Pangani Properties Ltd v Lloyd [2018] NZHC 1982.
At the outset of argument, Mr Fowler QC for the appellants abandoned the first ground of appeal: that the Judge erred in holding the “narrow escape route” was not available to the appellants. In other words, Mr Fowler abandoned any argument that the breach was inconsequential.
The questions on appeal were thus limited to identifying the correct measure of damages and quantum.

Facts

Malden Street — sell, or develop for the tenant?

The respondent (Pangani) developed and owned commercial properties. Mr Olsen was the managing director and the driving force behind the company. One of Pangani’s properties was a warehouse in Malden Street, Palmerston North (the Malden Street property). It was leased to Steel and Tube Ltd (Steel). Steel needed more space and told Mr Olsen it was considering shifting when its lease expired in November 2013. In August 2010 Mr Olsen unsuccessfully attempted to accommodate Steel’s need by purchasing additional land from the adjoining owner, Mr Jones. Mr Jones was willing to sell, but not at the price offered. Mr Olsen then put the Malden Street property on the market, listing it with The Professionals (not the appellants) in November 2010 at an asking price of $4 million. It did not sell.
Two years later, in late 2012, Steel reiterated to Mr Olsen its need for more space and its intention to move when its lease expired. Discussion ensued about the possibility of Pangani purchasing additional land from Mr Jones. When Mr Olsen explained that Mr Jones was seeking an unrealistic price, Steel told him not to pursue the matter. Nevertheless, Mr Olsen kept open the possibility of buying more land from Mr Jones so that Pangani could retain Steel as a tenant. Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NZCA 314
Decision Date: 16 July 2019 at 4 pm

CaseChat Overview and Summary

The appeal was brought by two real estate agents against a judgment of the High Court that they had breached their fiduciary duty to their principal, Pangani Properties Limited, and should pay damages of $100,000 plus costs. The agents admitted the breach but disputed the correctness of the measure of damages and quantum. The appeal was allowed in part, reducing the damages for costs incurred in the disciplinary proceeding from $100,000 to $38,260, and dismissing the appeal in all other respects. The agents were ordered to pay costs of the appeal. The Court held that it was wrong in principle for the High Court to award costs claimed in a different forum as damages in a separate proceeding, especially when that forum had jurisdiction to award costs and chose not to exercise it. The Court also held that the High Court had erred in its assessment of the lost opportunity, in the adjustment it made for site management costs, and in its consideration of the chance of Pangani realising the lost opportunity.

Orders