Patel v Real Estate Agents Authority
[2023] NZHC 2047
•3 August 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2022-404-2124
[2023] NZHC 2047
IN THE MATTER OF an appeal against the Real Estate Disciplinary Tribunal BETWEEN
PRAKASH PATEL
Appellant
AND
REAL ESTATE AGENTS AUTHORITY
First Respondent
MARK PHILLIPS
Second Respondent
Hearing: 31 July 2023 Counsel (via VMR):
Appellant in person
J Ah Koy for First Respondent J Moore for Second Respondent
Judgment:
3 August 2023
JUDGMENT OF CHURCHMAN J
Introduction
[1] The appellant, Mr Patel, has filed a substantive appeal against a decision (the Tribunal decision) of the Real Estate Agents Disciplinary Tribunal (the Tribunal).1 In that decision, the Tribunal dismissed an appeal brought by Mr Patel against a decision (the Committee decision) by Complaints Assessment Committee 1902 (the Committee). In a separate decision (the costs decision), the Tribunal also ordered
1 [Tribunal decision]. The Tribunal decision is subject to non-publication orders.
PATEL v REAL ESTATE AGENTS AUTHORITY [2023] NZHC 2047 [3 August 2023]
Mr Patel to pay costs of $11,560 as a contribution to Mr Phillips’ costs (the costs order).2
[2] This judgment deals with the three interlocutory applications argued before me on 31 July 2023.
[3] The first is an application by Mr Patel to adduce further evidence on appeal. This is opposed by Mr Phillips (the licensee), the second respondent. The Real Estate Agents Authority (the Authority) abides the Court’s decision on this issue, but filed submissions for the Court’s assistance and Ms Ah Koy spoke to those submissions. Mr Moore, for the second respondent, adopted all of Ms Ah Koy’s submissions.
[4] The second is an application from the licensee to strike out the appeal on the grounds that he has not been properly served, and that the appeal has no merit. This is opposed by Mr Patel. The Authority takes no position on this application.
[5] The third is an application by Mr Patel to stay the enforcement of the costs order made in the Tribunal’s costs decision, pending determination of the appeal. This is opposed by the licensee. The Authority abides the Court’s decision.
Background
[6] The background is set out in full in the Tribunal decision and summarised in the costs decision.3
Background and sale of the property
[7] Mr Patel owned a property (the property) with Mr Kirti Kumar (the co-owner). The property had leaks and other defects. The appellant sought to buy the half interest in the property that he did not own but was unable to reach agreement with the co-owner. The co-owners stopped paying the mortgage and the bank issued a notice of default. The co-owners did not rectify the default and on 24 October 2017, the High
2 [Costs decision]. The costs decision is also subject to non-publication orders.
3 Tribunal decision, above n 1, at [3]–[65]; and costs decision, above n 2, at [4]–[31].
Court ordered the sale of the property and authorised a solicitor (the solicitor) to sell it.
[8] The solicitor appointed the second respondent in these proceedings, the licensee, to market and auction the property. The licensee is a licensed salesperson under the Real Estate Agents Act 2008, who was engaged at the time by Redcoats Ltd, trading as Professionals Redcoats (the agency). An agency agreement was signed by the solicitor and the agency on 9 February 2018.
[9] The property had leaks and other defects. The appellant made it clear to the solicitor and the licensee he was concerned the property would be marketed dishonestly without disclosure of the defects. In order that any purchaser would be aware of the defects, the solicitor decided the property would be sold on an “as is, where is” basis and with various vendor warranties deleted. This would put prospective purchasers on notice to make their own inquiries. He instructed the licensee to market the property accordingly.
[10] The appellant was living in the property at the time. The solicitor wished to market it with vacant possession, following advice from the licensee that if the property was not vacant, that could materially impact the sale price. The solicitor required the appellant to vacate the property, but the appellant declined to do so. Ultimately, the property was marketed with the appellant still living in it. The licensee marketed the property and it was sold at auction on 24 May 2018. There were two bidders at the auction. The sale price of $465,000 was some $65,000 more than the value at which the appellant had offered to buy the co-owner’s share out.
[11] In the Particulars and Conditions of Sale by Auction, a number of the standard vendor’s warranties and undertakings were deleted. The particulars also incorporated the following clause:
21.0As Is Where Is
21.1The parties agree that the Property is sold on an “as is where is” basis regardless of any warranty or representation to the contrary in this agreement whether express or implied.
21.2In deciding to purchase the Property the purchaser has relied on its own judgement and not on any representation made by the vendor or by any person on the vendor’s behalf. The purchaser will raise no objection to, or requisition in respect of, the Property, its condition or any matters affecting the Property.
[12] Before bidding at the auction, prospective purchasers signed disclosure forms notifying certain defects in the property. The evidence in the Tribunal was that the bidders acknowledged having been “told that there may be a leak in the upstairs bathroom from around the base of the shower that may cause a leak through the ceiling below.”4
[13] In his oral submissions to me, Mr Patel claimed that the successful purchaser at auction would only have known that the property was being sold “as is where is” and that the warranty conditions had been deleted after they had purchased the property. That claim is directly contradicted by all of the evidence before the Tribunal and I reject it.
[14] Following the sale of the property, the co-owner applied to the High Court for costs and orders against the appellant under s 343 of the Property Law Act 2007. The High Court ordered the appellant to pay the co-owner occupational rent for a period and to pay for the cleaning costs over the weekend at the time of settlement.5
Complaint
[15] As early as 16 February 2018, the appellant had been in contact with the Authority about his concerns that the property would be marketed without full disclosure of certain defects. On 28 August 2018, the appellant made a formal complaint against the licensee.
[16] Principally, the appellant alleged that the licensee intentionally did not disclose to prospective purchasers that there was a leak in the ceiling of the lounge (the ceiling leak). This would, if established, constitute a breach of r 10.7 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules), which
4 Tribunal decision, above n 1, at [28].
5 Kumar v Patel [2018] NZHC 1725.
requires licensees to disclose known defects to potential purchasers and to make further enquiries if it appears likely there are hidden or underlying defects.
[17] In his complaint, the appellant also alleged that the licensee failed to act in good faith by recommending that he vacate the property for marketing, that the appellant was wrongly blamed by the agency for delaying the sale process and settlement of the sale, and that he was wrongly charged for cleaning costs.
[18] An investigator from the Authority investigated, and the appellant, licensee and solicitor provided further evidence and information.
Committee decision
[19] On 5 August 2019, the Committee issued a decision concluding it would take no further action (the Committee decision).6
[20] The Committee concluded the licensee did not fail to disclose known defects in relation to the property and determined there had consequently been no breach of r 10.7.7 The Committee did not refer to the ceiling leak specifically, but found that the licensee had disclosed defects in the property,8 and that the licensee marketed the property on an “as is where is” basis, as he had been instructed to by the solicitor “out of an abundance of caution”.9 The Committee noted marketing the property on this basis meant no purchaser could be misled about the state of the property.10
[21] The Committee also concluded that the licensee did not fail to act in good faith and deal fairly with the appellant in respect of the transactions for the property.11 The Committee found it was the licensee’s professional duty to advise the solicitor how he thought the property should best be presented for sale, and the licensee’s advice (that the property be marketed vacant) was standard in the circumstances.12 The Committee also found no evidence that the licensee blamed the appellant for delays in the sale or
6 Re Phillips C24297, 5 August 2019 [Committee decision].
7 At [3.1(a)] and [3.11].
8 At [3.6] and [3.10].
9 At [3.9].
10 At [3.9]–[3.10].
11 At [3.1(b)].
12 At [3.19].
settlement of the property, or that the licensee was involved in the decision to clean the property (and charge the appellant for those costs).13 The Committee also found that as the licensee was acting for the solicitor and not the appellant, the licensee had no obligation to the appellant in respect of the agreed marketing costs.14
Tribunal appeal
[22] In his appeal to the Tribunal against the Committee’s decision, the appellant challenged the Committee’s conclusions on four allegations made in his complaint, namely:
(a)the failure to disclose the ceiling leak;
(b)the requirement or request to vacate the property;
(c)a false allegation that the appellant delayed:
(i)the listing of the property; and
(ii)settlement; and
(d)overcharging the marketing costs.
[23] The appellant also applied to admit further evidence, including the evidence that is sought to be adduced in this appeal to show the ceiling leak. The Tribunal issued an interlocutory decision (the Tribunal interlocutory decision) declining to admit the evidence.15 The Tribunal held that the videos were not fresh. The appellant had had a chance to submit the videos to the Authority investigator but did not do so.16 The Tribunal also held in respect of the videos of the ceiling leak that they were not cogent or relevant.17 The Tribunal stated it was not in dispute that the licensee knew there was a leak. Rather, the issue was whether he disclosed it (which the evidence
13 At [3.28] and [3.30].
14 At [3.34].
15 Patel v Real Estate Agents Authority [2020] NZREADT 45 [Tribunal interlocutory decision].
16 At [15]–[16].
17 At [17]–[22].
sought to be adduced in the appeal did not go to prove or disprove). The Tribunal also noted that other evidence already showed the ceiling leak, and the videos did not add to this. Mr Patel did not appeal this decision, notwithstanding the Tribunal advising him of his right to do so.18
[24]On 7 September 2022, the Tribunal issued its decision dismissing the appeal.19
[25] The Tribunal regarded it as unfortunate that the Committee did not expressly refer in its decision to the ceiling leak.20 Nevertheless, however, the Tribunal found that there was in fact a ceiling leak, the licensee did know about the ceiling leak, and he had disclosed it.21 In particular, the Tribunal found the evidence showed that the licensee had plainly disclosed the leak to the underbidder and there was “no reason to believe he would not have also disclosed it to other prospective purchasers with whom he dealt.”22 As such, for largely the same reasons as the Committee, the Tribunal agreed there was no breach of r 10.7 or any other rule in respect of the ceiling leak.
[26] In relation to the solicitor’s requirement for the appellant to vacate the property, given the Tribunal had found that the licensee did disclose the ceiling leak to prospective purchasers, the Tribunal rejected the appellant’s claim as to a bad faith motive for the licensee’s advice behind the request to vacate, namely to prevent the appellant from taking photos of the ceiling leak which he alleged the solicitor and licensee were not going to disclose to prospective purchasers.23 The Tribunal agreed with the Committee that in any case the licensee’s advice that the appellant vacate the property was appropriate in order to achieve the best price, and was standard industry advice in the circumstances, given the condition of the property and the background to the sale.24 Accordingly, there was no breach of r 6.2 or any other rule in respect of his advice.
18 At [26].
19 Tribunal decision, above n 1.
20 At [118].
21 At [120]–[124].
22 At [123].
23 At [134].
24 At [135].
[27] Next, the Tribunal found that the appellant had not pointed to any evidence that the licensee had accused the appellant for delaying the sale process by filing a complaint with the Authority. Neither was there any evidence that the licensee blamed the appellant for the delay in settlement, notwithstanding settlement was delayed by a weekend and this was contributed to in part by the appellant.25
[28] Finally, in relation to the marketing costs, in respect of which the appellant contended he had been overcharged, the Tribunal disagreed with the Committee’s finding that the licensee owed no obligation to the appellant. However, the Tribunal found the appellant had produced no corroborative evidence nor any independent evidence of any professional wrongdoing by the licensee in relation to the marketing costs charged. As such, albeit for a different reason from that of the Committee, the Tribunal agreed no further action should be taken on that aspect of the complaint.26
[29] The Tribunal concluded there was no evidence before it of any breach by the licensee of his professional obligations and the Committee’s decision to take no further action on the appellant’s complaint was correct.
Costs
[30] The licensee, as the successful party, sought costs, and the appellant also claimed costs against the licensee on the stated basis of what was said to be the licensee’s misconduct, bad faith and baseless allegations. On 25 October 2022, the Tribunal delivered its decision as to costs, ordering the appellant to pay the licensee a contribution towards his costs.27
[31] The Tribunal observed it was “difficult for the Tribunal to understand the appellant’s motive [in bringing the complaint and the appeal]”, particularly as there was no basis on which the appellant could claim he suffered any loss from any concealment by the licensee, even if such concealment had occurred (which the Tribunal found it had not).28 The Tribunal continued:
25 At [146]–[147].
26 At [151].
27 Costs decision, above n 2, at [73].
28 At [66].
[67] As difficult as it is to fathom the appellant’s motivation, we accept that he pursued the complaint in good faith and not because he saw the process as an opportunity to recover any perceived financial loss. The allegations made against the licensee and the solicitor had no reasonable basis, but we find that he believed them to be true and continues to believe them to be true.
[32] Turning to the principles applicable to costs, the Tribunal accepted there was no principle in the Tribunal that costs follow the event or that the licensee was entitled to costs merely because he was successful.29 Rather, the Tribunal noted it had a discretion as to whether to award costs to the successful party.30
[33] Nevertheless, the Tribunal considered this was an appropriate case for costs to follow the event and be awarded to the successful licensee.31 This was because there was no reasonable basis for the appeal, particularly in regards to the dishonesty and bad faith allegations made by the appellant against the licensee. The Tribunal said there was “no proper basis for such allegations or the appellant’s continued belief in them.”32
[34] The Tribunal considered the licensee was therefore entitled to a reasonable contribution towards his costs, but in the absence of bad faith or obstruction by the appellant, the licensee was not entitled to indemnity costs.33 The Tribunal considered the costs claimed by the licensee were reasonable having regard to the serious allegations against him, and that the appropriate award was two-thirds of the claimed costs.34
[35] The Tribunal ordered the appellant to pay the licensee the sum of $11,560 as a contribution towards his costs, and noted there was no basis on which the appellant could be awarded costs against the licensee.35
29 At [69].
30 At [69].
31 At [70].
32 At [70].
33 At [71].
34 At [71].
35 At [71]–[73].
Substantive appeal
[36] The appellant states the decision of the Tribunal undermines the purpose of the Act. The appellant appeals the Tribunal’s decision in relation to the following matters:
(a)overcharging marketing costs;
(b)the licensee’s alleged failure to disclose the ceiling leak, in breach of r 10.7; and
(c)the requirement to vacate the property.
[37] In respect of the first ground, the appellant submits the appellant violated the rules by overcharging for the costs of marketing the property, when a number of the items in respect of which he was charged were not in fact done. The appellant says that although the Tribunal stated there was “no breakdown of the costs charged and no evidence before the Tribunal of the costs incurred”, the evidence was in fact before the Tribunal but the Tribunal failed to consider it.
[38] In respect of the second ground, the appellant submits that in failing to disclose the ceiling leak, the licensee breached r 10.7. In support of this argument, in summary the appellant submits the Tribunal erred in:
(a)failing to find as a matter of fact that the source of the ceiling leak came from the roof, as opposed to the shower;
(b)finding that the licensee’s disclosure of the ceiling leak fulfilled his obligations under r 10.7, because he did not identify and advise potential purchasers that the leak came from the roof; and
(c)finding that the marketing of the property on an “as is where is” basis was in any case sufficient to discharge the licensee’s obligations under r 10.7.
[39] In respect of the third ground, the appellant submits the licensee failed to treat him fairly, in breach of r 6.2, in particular in failing to treat him fairly as to why the property could not be staged while the appellant was still living in the property and why his moving out was necessary. The appellant says the Tribunal only addressed one side of the issue and failed to address these points. The appellant suggests it is “noteworthy that the desired result was achieved without [his] vacating [the property]”.
[40] The appellant submits the licensee has therefore breached a number of rules and seeks for this Court to overturn the Tribunal’s decision accordingly. The appellant also seeks costs and compensation for the inconvenience and stress he said that he has had to go through during this process.
Interlocutory applications
[41] I now turn to consider the three interlocutory applications currently before the Court for determination.
First interlocutory application – application to adduce further evidence on appeal
[42] Mr Patel seeks in this application to admit as further evidence two video files. The first video is not dated. It is one minute and one second long. The second video appears to be dated by showing a close-up of the Dominion Post dated 26 April 2018. It is one minute and seven seconds long. Both videos appear to show, for almost the entire duration of each, a closely zoomed-in tracking shot of a white painted ceiling, with a visible seam or crack running along the length of the ceiling which could appear to be consistent with being caused by water.
[43] Mr Patel also seeks to admit a property floor plan annexed to his written submissions, coloured annotations on which have been added by Mr Patel himself.
Legal principles
[44] The admission of further evidence on appeal is governed by r 20.16 of the High Court Rules 2016, which provides:
20.16 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.
[45] Wylie J distilled principles from case law about the admission of further evidence in B v A:36
[25] The relevant principles governing the receipt of further evidence are straightforward:
(a)the Court can receive further evidence if it thinks that the interests of justice require it to do so;
(b)it is wrong to allow an appellant to bolster his or her case with additional evidence that was available at the lower Court hearing, but not adduced because of the particular view of the case being taken at the time;
(c)admitting further evidence on appeal is exceptional rather than routine. A change of heart about how a case should have been run will not suffice. The prospect of further evidence triggering a substantial re-litigation before the appellate Court of the substantive case will count against admitting the further evidence;
(d)generally, the further evidence must be fresh, credible and cogent;
(e)evidence will not be regarded as fresh if it could, with reasonable diligence, have been produced at the trial;
(f)the absence of freshness is not an absolute disqualification. When the further evidence is not fresh, it will not generally be admitted unless the circumstances are exceptional and the
36 B v A [2020] NZHC 580, (2020) 26 PRNZ 58, citing Hodgson v Hodgson [2015] NZCA 404, [2015] NZFLR 979 at [39]–[44]; Nation v Nation [2005] 3 NZLR 46 (CA); Telecom Corp of NZ Ltd v Commerce Commission [1991] 2 NZLR 557 (CA); Comalco NZ Ltd v TVNZ Ltd (1996) 10 PRNZ 573 (HC); and Complaints Committee No 1 of the Auckland District Law Society v P (2007) 18 PRNZ 760 (HC).
grounds compelling. In addition, the further evidence needs to pass the tests of credibility and cogency;
(g)the interests of justice require the parties to put their best case forward at trial, in order to avoid wasting the Court's limited time and resources. A high value is placed on finality when the parties have been afforded the opportunity and failed to take it; and
(h)the standard to be met is “rightly high”.
[46] In considering whether the evidence ought to be adduced, I address the freshness, cogency and relevance of the evidence, as well as other matters such as whether the interests of justice require it.
Freshness
[47] The videos date from 2018. They are not fresh, neither are the floor plans. They appear to have been copied from a building permit issued in 1976.
[48] The appellant has clearly been aware of the videos for a very long time. In 2020, he unsuccessfully applied to the Tribunal to admit them (along with other material) in the appeal before the Tribunal.37
[49] That decision at [15] records that the appellant and the investigator actually discussed the videos. Mr Patel said that the videos were too large for him to transfer electronically. The investigator suggested putting them on a USB stick and sending them in. Mr Patel chose not to do that.
[50] As well as finding that the videos were not fresh, the Tribunal also found that they were not cogent and were not relevant to any live issue in relation to the appeal. The Tribunal’s decision refusing to admit this further evidence specifically drew to the appellant’s attention his right to appeal. He chose not to appeal.
[51] Although the fact the appellant did not appeal the Tribunal decision on admissibility does not prohibit him from attempting to raise the same issue in this Court it is inevitable that the videos are inadmissible for exactly the same reasons
37 Tribunal interlocutory decision, above n 15.
found by the Tribunal: they are not fresh, they are not cogent and are not relevant to any matter in issue in the appeal.
[52] In terms of the floor plans Mr Patel seeks to be adduced, Mr Patel explains that he has received them from the local council only recently. However, there is nothing to suggest he could not have obtained them with reasonable diligence at an earlier time. Mr Patel has not, for example, provided any evidence suggesting that he had contacted the council and they had refused or failed to provide him with the floor plans. As such, although the floor plans may be new to Mr Patel himself, they are not fresh in the sense required for their admission at this stage. Neither are they relevant to any issue on appeal. The fact that the ceiling had leaks was clearly disclosed to prospective purchasers. It was the disclosure of the fact of the leak not its precise source that was required. The application to admit further evidence is therefore dismissed.
Second interlocutory application – application to strike out the appeal
[53] The licensee has cross-applied to strike out the appeal on two grounds: firstly that he has not been properly served, service of the appeal has not been dispensed with and he is prejudiced by the delay; and secondly that the appeal has no merit and amounts to an abuse of process.
Legal principles
[54] The principles relating to strike out of proceedings are well-established. Rule 15.1 of the High Court Rules provides:
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
…
[55] The jurisdiction to strike out a claim is to be exercised sparingly, and only in clear cases where the Court is satisfied it has the requisite material.38 The cause of action must be clearly untenable – the Court must be certain that it cannot succeed.39
[56] Rule 15.1(4) is clear that the Court’s inherent jurisdiction to strike out a claim is not affected, although given the express power to strike out under the High Court Rules, resort to the inherent jurisdiction ought to be rare.40
Discussion
[57] The licensee submits that while Mr Patel is a self-represented lay litigant, he is nevertheless an experienced litigant. He duly filed an appeal within the 20-day period required but made no attempt to serve either the second respondent or the first respondent, as required by r 20.6 of the High Court Rules.
[58] Rule 20.7 provides that the court may dispense with service on a party of a notice of appeal on any terms the Court thinks just. The licensee correctly notes that service of the appeal has not been dispensed with. Rule 20.7 enables the Court to cure irregularities, such as a failure to serve within the required time period. However, as the Court held in Sayer v Commissioner of Inland Revenue, the power is likely to be exercised only where no prejudice has been suffered.41
[59] Considering prejudice, it appears the licensee only learned of the existence of the appeal by chance two months after it had been filed. This was, it appears, a result of the Court registrar emailing the licensee’s counsel, having identified him as counsel involved in the Tribunal proceedings. The statutory time period in which an appeal must be filed operates for a reason. A party who has been successful in defending
38 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267, endorsed in Couch v Attorney- General [2008] NZSC 45, [2008] 3 NZLR 725 at [33] per Elias CJ and Anderson J.
39 Attorney-General v Prince, above n 38, at 267, endorsed in Couch v Attorney-General, above n 38, at [33] per Elias CJ and Anderson J.
40 Robert Osborne and others McGechan on Procedure (online looseleaf ed, ThomsonReuters) at [HR15.1.11], citing CED Distributors (1988) Ltd v Computer Logic Ltd (in rec) (1991) 4 PRNZ 35 (CA), in which the Court stated: “Now that [the rule at that time] of the High Court Rules provides expressly for striking out of pleadings which disclose no reasonable cause of action there is no need to rely upon the inherent jurisdiction in the absence of special circumstances.”
41 Sayer v Commissioner of Inland Revenue (1998) 12 PRNZ 471; and see Waikato Bay of Plenty District Law Society v Osmond (1998) 11 PRNZ 657.
proceedings brought against them is entitled to expect that the case they have been required to defend is at an end following the statutory period of 20 working days. This is particularly so where a defendant or respondent has had to face serious accusations against them, and the matter is only compounded even further when those accusations are found to be “baseless”. The licensee says he has had to live with the accusations made against him in these proceedings for five years now, and that he has been “tormented” by this proceeding.
[60] I am satisfied that the failure to serve the second respondent has resulted in prejudice to him. I do not consider it is appropriate to dispense with the requirement for service. I therefore decline to exercise my power under r 20.7 dispensing with service.
[61] The next question is whether Mr Patel’s failure to serve of itself warrants the striking out of the appeal.
[62] Although Mr Patel’s failure to serve the notice of appeal on the second respondent or the first respondent resulted in prejudice, the respondents have now received the notice of appeal and have had sufficient time to now consider that notice of appeal. I do not think the failure to serve the appeal is likely to cause further prejudice or delay, as is required to strike out the claim on this basis. Neither do I think the failure to serve meets any of the other grounds for strike out. However, the failure to serve does raise the issue of a potential abuse of process which I address further below.
[63] I now turn to consider the broader grounds for strike out that have been advanced. I start by considering what the appellant’s complaint to the Committee was actually about. At [19] of the Tribunal’s ruling on the appellant’s application to adduce further evidence,42 it set out the complaint as summarised by the Committee:
(a)The Licensee did not disclose defects in the Property to potential buyers.
(b)The Licensee failed to act in good faith by recommending the Complainant vacate the Property for marketing.
42 Tribunal interlocutory decision, above n 15.
(c)The Complainant was wrongly blamed by the Agency for delaying the sale process and settlement of the sale and, wrongly charged for cleaning costs.
[64] The matters that the appellant challenges are essentially findings of fact. The facts now challenged have been considered by both the Committee and Tribunal. In carefully considered decisions, both bodies have arrived at exactly the same decisions on the facts. The facts upon which grounds (b) and (c) of the complaint are based have also been considered by the High Court in Kumar v Patel43 and resolved against the appellant.
[65] In relation to the complaint that the licensee did not disclose defects in the property, I start by identifying what ethical obligations there are on licensees in relation to disclosure. Rule 10.7 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 requires licensees to disclose known defects to potential purchasers and to make further enquiries if it appears likely there are hidden or underlying defects.
[66] The appellant’s claim before the Tribunal and in this Court is that the licensee’s disclosure of a ceiling leak without identifying the source of the ceiling leak as coming from the roof was inadequate to discharge the obligations under r 10.7 and that the specific disclosures made by the licensee as well as the property being listed on “as is where is” basis were also inadequate to comply with r 10.7.
[67] While the existence of the ceiling leak is, and was, common ground, its precise source is a matter of conjecture. The appellant’s theory is that it came from a leak in the roof. He acknowledged, in response to a question from me, that he had no qualifications that are relevant to the determining of the source of leaks. There was no evidence before the Tribunal that established the source of the ceiling leak as being the roof.
[68] The Tribunal expressly addressed the issue of the source of the ceiling leak in its decision. It said:44
43 Kumar v Patel, above n 5.
44 Tribunal decision, above n 1. Note the builder’s report referred to is a report obtained by the unsuccessful bidder at the auction. As a result of the licensee alerting him to the defects in the
[127] The evidence before the Tribunal does not allow us to determine the source of the lounge ceiling leak. Moreover, it is highly unlikely the licensee would have known precisely where it came from. He knew about the lounge ceiling leak, as we find, and rightly or wrongly appears to have believed it came from the shower (as the builder’s report of 11 May 2018 states). The licensee was required to specifically disclose that leak as a known defect to prospective purchasers, but he was not required to investigate the gravity of the leak or its source. Importantly, the auction terms and the bidder disclosure form imposed on the bidders themselves the responsibility for further investigating the lounge ceiling leak or indeed any other leak or defect, if of any concern to them.
[69] On the evidence available to the Tribunal, the only conclusion it could have come to was that the precise source of the leak was unknown and, in any event, was irrelevant to the allegations r 10.7 had been breached. In respect of this issue, the appeal discloses no reasonably arguable case.
[70] Turning now to the claims that the licensee failed to act in good faith by recommending the complainant vacate the property for marketing, this was an issue dealt with by the High Court in Kumar v Patel.45
[71] In 2018, the co-owner, Mr Kumar, sued the appellant seeking to recover rental for the period after the appellant refused to vacate the property. The decision of Mallon J discusses a number of matters that provide useful background information. The decision at [11] records that, after having obtained his own valuation of the property, the appellant then frustrated the attempts by Mr Kumar to get a valuation by telephoning the valuers engaged by Mr Kumar and threatening them that he would sue them if their valuation was not the same as the one he had already obtained. It records that the appellant caused difficulties in relation to the licensee having access to the property to photograph it46 and that the appellant’s actions caused the auction date to be postponed from 24 March 2018 to 24 May 2018.47
building, he had commissioned his own builder’s report and that report had identified a shower leak as having damaged the laundry and lounge ceiling downstairs.
45 Kumar v Patel, above n 5.
46 At [16].
47 At [40].
[72] The appellant was by this time living in the upstairs part of the property. The recommendation from the licensee to the solicitor was that it would be best if the property was marketed vacant.48 However, the appellant refused to vacate.49
[73] The High Court found that in refusing to vacate the property as requested by the solicitor, the appellant had breached his obligations to Mr Kumar and that, in order to do equity between the parties, the appellant should pay occupation rent to Mr Kumar for the period 25 February 2018 to 15 June 2018.50
[74] While the appellant is clearly still aggrieved that he was found liable to pay occupation rent, that is not the fault of the licensee but the result of his breach of the obligations he owed the co-owner.
Appellant’s claim
[75] The appellant’s claim that the licensee acted in bad faith in recommending to the solicitor that the best sale price would be achieved if the property was vacant rests on the appellant’s theory that the reason that the licensee said this was to prevent him taking photos of the lounge ceiling leak. An allegation of bad faith action is serious and must be supported by an appropriate evidential foundation. The appellant’s claim that the licensee wanted to stop him taking photographs of the ceiling and that was why he recommended the property be vacated is entirely bereft of any evidential basis. It is also contrary to the clear evidence that the licensee disclosed the defects and facilitated a prospective purchaser obtaining a builder’s report on those defects.
[76] The obvious reason why the licensee recommended marketing the property vacant is that it would enhance the sale price. The Tribunal noted this in its decision when it said:51
[131] The Committee noted that the solicitor had agreed with the licensee’s advice that a sale would be more easily achieved if the property was vacant. The solicitor had been given the same advice by another real estate agency.
48 At [13].
49 At [14].
50 At [42].
51 Tribunal decision, above n 1 (footnote omitted).
[132] It found that it was the licensee’s professional duty to advise the solicitor how he thought the property should best be presented. Furthermore, it was standard industry advice in the circumstances …
[77] There is no reasonably arguable basis for asserting that the licensee acted in bad faith in recommending that the property be marketed vacant.
[78] The third aspect of the complaint by the appellant against the licensee, that the appellant was wrongly blamed by the agency for delaying the sale process and settlement of the sale and wrongly charged for cleaning costs, has also already been litigated. There are two reasons why this proposition is untenable. Firstly, as discussed above, the High Court in Kumar v Patel has already made specific findings as to what caused the delay in the sale. They were the actions of the appellant in obstructing the sale, complaining to the Authority and resisting the request of the solicitor to move out so the property could be marketed in a vacant state. The decision in Kumar v Patel was not appealed. It is simply not tenable for the appellant to assert he was not responsible for any of the delays that occurred.
[79] Secondly, and more importantly, as the Tribunal noted,52 the appellant was unable to point to any evidence that the licensee accused him of being responsible for any delay to any other person.
[80] The Tribunal also addressed the fact that settlement was delayed over the weekend so the property could be cleaned. Again, it specifically found that there was no evidence that the licensee had blamed the appellant for this or communicated such a comment to anyone.
[81] The Tribunal’s factual finding that there was no evidence that the licensee ever blamed the appellant for any delay in the sale is unimpeachable.
[82] That brings me to the appellant’s final claim that there was overcharging by the licensee in relation to cleaning costs. When I asked the appellant to explain what loss he said the licensee had caused him, the only thing he could refer to was the fact that cleaning of the rodent droppings apparently had to be done twice. The appellant
52 At [139].
expressly acknowledged that there was a rodent problem at the property and that there were mouse droppings that it was necessary to get cleaned. He asserted that the fact that the cleaning needed to be done twice in order to completely remove the mouse droppings was somehow the fault of the licensee but he was unable to explain how.
[83] As noted by the Tribunal,53 the Court in Kumar v Patel had considered that the property had required cleaning, that the need for that was attributed to the appellant and that justified debiting the appellant’s share of the sale proceeds with those costs. They also rejected the appellant’s claim that the invoice was a “fake” and that the property did not require cleaning.
[84] The appellant was unable to point to any evidence that supported his theory that the licensee needlessly incurred cleaning costs.
[85] The Committee and the Tribunal both reached their conclusions following consideration of the complaints in some depth. Those conclusions have been expressed in strong terms, finding clearly and unequivocally no element of wrongdoing on the part of the licensee. Nevertheless, the appellant continues to make serious allegations against the licensee that simply have no evidential foundation. That is regrettable. I am satisfied, for the reasons I have set out, that the appeal does not give rise to any reasonably arguable point and cannot succeed.
[86] In addition to my finding that the appeal does not raise any reasonably arguable point, I also consider there is an extent to which the present appeal constitutes an abuse of process.
[87] In Reid v New Zealand Trotting Conference, the Court of Appeal summarised the rationale for striking out a proceeding as an abuse of process as follows:54
Misuse of the judicial process tends to produce unfairness and to undermine confidence in the administration of justice … The public interest in the due administration of justice necessarily extends to ensuring that the Courts’ processes are fairly used and that they do not lend themselves to oppression and injustice. The justification for the extreme step of staying a prosecution or
53 At [143].
54 Reid v New Zealand Trotting Conference [1984] 1 NZLR 8 (CA) at 9.
striking out a statement of claim is that the Court is obliged to do so in order to prevent the abuse of its processes …
[88] As this case and r 15.1 envisages, a Court is “obliged” to strike out a claim in order to prevent an abuse of process. An abuse of process may take several different forms. This includes an attempt to relitigate matters already determined.55 The appellant is entitled to appeal the conclusions reached by the two bodies. However, such a challenge must be brought on good grounds, and there must be some evidential basis upon which to the factual findings of the Tribunal. Here, there is none. In a number of instances, the appeal is effectively a collateral challenge to factual findings made by the High Court in other proceedings involving the appellant. That is also an abuse of process. I also note that the obligation in r 10.7 has the purpose of protecting a purchaser of a property. Here, there is no suggestion that the purchaser had any concern about the licensee’s conduct. Neither is there a suggestion that the Court- appointed solicitor who engaged the licensee or the co-owner have ever had any concerns.
[89] It is difficult to identify a rational motive for the appellant’s actions in lodging and pursuing this complaint. He cannot identify any loss caused by the licensee. Indeed, the licensee achieved a sale at $65,000 more than the appellant’s top estimate of the value of the property.
[90] It is hard to avoid the conclusion that the appellant’s motive in lodging the complaint and pursuing the appeals is that he wanted to be able to purchase the property for the lowest price possible so that what he might have to pay for the co-owner’s half share was minimised, and that he blames the licensee for having frustrated that objective. The licensee’s obligation was to sell the property for the best obtainable price. The fact that it did not suit the appellant for such a price to be obtained does not mean that the licensee breached any obligation, nor does it justify the appellant harassing the licensee with baseless appeals.
[91] I conclude that there is an element of vexatiousness in the appellant bringing this appeal. As the Court held in Commissioner of Inland Revenue v Chesterfields
55 Hunter v Chief Constable of the West Midlands Police [1982] AC 529 (HL) at 541; and Collier v Butterworths of New Zealand Ltd (1997) 11 PRNZ 581 (HC) at 586.
Preschools Ltd, the key factor in this regard is an element of impropriety, particularly a procedural impropriety.56 In his notice of appeal, the appellant indicated that he is willing to withdraw his appeal if the Tribunal was willing to change its decision, and not to award any costs against him. The appellant is entitled to appeal a decision made by the Tribunal to this Court, and may withdraw his appeal at any time. But for the appellant to suggest that he would be willing to withdraw his appeal if the Tribunal were willing to reverse its decision on costs is to attempt to exercise leverage against that body by improper means. The Tribunal’s decision may be overturned by this Court on appeal. However, it is inappropriate for the appellant to attempt to get the Tribunal to reconsider its decision through filing an appeal and offering to withdraw it in this way.
Conclusion as to strike out application
[92] I am satisfied that there are no reasonably arguable grounds of appeal and that the appeal is an abuse of process. The high threshold for striking out a claim is met in this case. I therefore strike the claim out.
Third interlocutory application – application for stay
[93] Although not required to do so as a result of my decision to strike the proceedings out, for the sake of completeness, I address the third application.
[94] Mr Patel has applied to stay enforcement of the costs order made by the Tribunal in its costs decision, pending determination of his substantive appeal. The Tribunal directed that Mr Patel pay the licensee the sum of $11,560 as a contribution towards his costs.57
[95] As to why that order should be stayed, he states he is afraid that as he has moved overseas, if he pays the licensee the costs awarded and the costs order is ultimately reversed, he is unsure whether and how he will recover the full amount from the licensee, whom he claims he does not trust and he says he is concerned the licensee
56 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [89].
57 Costs decision, above n 2.
will cause “all possible delay”. He does not explain the basis for these views and there is nothing that would justify the Court in accepting either proposition.
[96] The licensee opposes the application. He says the application does not identify any grounds that would justify the granting of a stay, the appeal will not be rendered nugatory by the payment of costs, and the appellant’s residence overseas does not inhibit him from pursuing any application to refund costs should such be ordered.
[97] The Authority abides the Court’s decision, on the basis the application does not affect the Authority and the enforceability of the costs order is a matter between Mr Patel and the licensee.
Legal principles
[98] A stay of enforcement of a judgment or order pending determination of an appeal is governed by r 20.10 of the High Court Rules. Rule 20.10(1)(b) provides that an appeal does not operate as a stay of enforcement of any judgment or order appealed against. Notwithstanding this, under r 20.10(2)(b) the Court may, on application, order a stay of enforcement of any judgment or order appealed against pending determination of an appeal.
[99] The starting point is the general rule that a party is entitled to enjoy the fruits of a judgment in its favour. A party seeking a stay has to persuade the Court that if a stay were not granted, its appeal rights would be rendered nugatory.58 The Court has to balance the position of both parties.59
Discussion
[100] There is nothing in Mr Patel’s application to suggest that if a stay is not granted, his appeal rights would be rendered nugatory. Mr Patel does not express concern that he will be unable to continue with his appeal if he is required to make the costs payment. Rather, Mr Patel has expressed willingness to make the payment of the costs
58 Philip Morris (NZ) Ltd v Liggett & Myers Tobacco Co (NZ) Ltd [1977] 2 NZLR 41 (CA).
59 Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA); and Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd [1999] 3 NZLR 239, (1999) 13 PRNZ 48 (HC).
order or at least to make a payment into Court, although is concerned about doing so for other reasons mentioned above.
[101] Turning to consider the balance of factors in respect of both Mr Patel and the licensee, I cannot find anything in Mr Patel’s application that suggests the balance falls in his favour. There is nothing in the fact of Mr Patel now living overseas that means he will be unable to recover the costs paid.
[102] The application for stay of enforcement pending determination of the appeal is dismissed. Mr Patel is to make the payment of $11,560 as ordered by the Tribunal, payable immediately.
Result
[103]The appellant’s application to adduce further evidence on appeal is dismissed.
[104]The second respondent’s application to strike out the appeal is allowed.
[105] The appellant’s application to stay the enforcement of the costs order made in the Tribunal’s costs decision pending determination of the appeal is dismissed.
Costs in this proceeding
[106] I encourage the parties to agree on costs. If that is not possible, any applications for costs are to be filed within 14 days, with the appellant’s response to be filed and served within 14 days. Costs will then be dealt with on the papers.
Orders
[107]The appeal is struck out.
[108] The appellant is to make the payment of costs of $11,560 to the second respondent immediately in terms of the Tribunal’s costs order.
Churchman J
Solicitors:
Meredith Connell, Auckland for First Respondent
Thomas Dewar Sziranyi Letts, Lower Hutt for Second Respondent
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