Premium Real Estate Ltd v Stevens - [2008] NZCA 82

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA31/07
[2008] NZCA 82
BETWEENPREMIUM REAL ESTATE LTD

Appellant

ANDMARK MONCRIEFF STEVENS, DEBORAH RUTH STEVENS AND MELVA BEATRICE WALKER (AS TRUSTEES)

Respondents

Hearing:25 September 2007

Court:O'Regan, Arnold and Wilson JJ
Counsel:M A Gilbert and P J Napier for Appellant

W Akel and N M Alley for Respondents

Judgment:11 April 2008 at 11.30 am

JUDGMENT OF THE COURT

A The appeal against liability is dismissed.
BThe appeal against the quantification of damages is allowed and the cross-appeal is dismissed.
CThe judgment of the High Court as to damages is set aside. We award the respondents (jointly) damages in the amount of $225,000, plus interest at 7 per cent from the date of settlement of the Stevens/Mahoenui sale.
DThe respondents (jointly) must pay the appellant costs of $3,000 in this Court, together with usual disbursements. We certify for two counsel.

REASONS OF THE COURT
(Given by Arnold J)

Table of Contents
Para No.

Introduction  [1]
Factual background  [8]
Discussion  [22]
Fair Trading Act – misleading and deceptive conduct  [23]
         Breach of fiduciary duty  [57]
         Damages  [82]
Decision  [101]
Introduction
[1]       Mr and Mrs Stevens owned a valuable residential property in Auckland (through a family trust of which they and the remaining respondent were trustees). They sold the property to Mahoenui Valley Trust (Mahoenui) for $2.575m in April 2004.
[2]       Before the transaction had settled, Mahoenui took steps to resell the property, advertising it with a price guide between $3.8m and $4.8m. In November 2004 Mahoenui sold the property for $3.555m, having undertaken some superficial improvement (such as repainting) in the meantime.
[3]       The appellant, Premium Real Estate Limited (Premium), acted for the Stevens on the sale. Premium also acted for Mahoenui on the resale, although another agency also became involved. In particular, one of Premium’s agents, Ms Riley, brought the offer from Mahoenui to the Stevens, and discussed it with them. Soon after the offer was accepted, she was appointed by Mahoenui to act on the resale. Ms Riley had acted for Mahoenui’s principal, Mr Larsen, previously and knew that he was a property speculator who attempted to buy desirable properties at an undervalue and on-sell them soon after at a higher price. In addition, both of Ms Riley’s daughters had a professional association with Mr Larsen.
[4]       The Stevens were most upset when they learnt what had happened. They issued proceedings against Premium seeking the return of the real estate commission on the sale ($67,050) and damages ($995,000, being the difference between the sale price ($2.575m) and a contemporaneous valuation of the property ($3.57m)). They alleged breaches of the Fair Trading Act 1986 (FTA), negligence, breach of contract and breach of fiduciary duty.
[5]       They succeeded before Courtney J on one aspect of their FTA claim and on their breach of fiduciary duty claim: (2006) 11 TCLR 854. The Judge found that the value of the property as at April 2004 was…

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: [2008] NZCA 82
Decision Date: 11 April 2008

CaseChat Overview and Summary

Premium Real Estate Limited (Premium) appealed against liability and damages awarded to Mr and Mrs Stevens and Ms Walker, the respondents, who are trustees of a family trust. The respondents had owned a residential property in Auckland, which they sold to Mahoenui Valley Trust (Mahoenui) for $2.575m in April 2004. Premium had acted for the Stevens on the sale, and also for Mahoenui on the resale. The respondents alleged breaches of the Fair Trading Act 1986 (FTA), negligence, breach of contract, and breach of fiduciary duty. They succeeded before Courtney J on one aspect of their FTA claim and on their breach of fiduciary duty claim. The Judge found that Premium's failure to disclose its relationship with Mahoenui did amount to misleading and deceptive conduct and it was liable for the loss consequent on that breach which was $337,500. Premium's failure to disclose its relationship with Mr Larsen also amounted to a breach of its fiduciary duty to the Stevens. Premium failed to show that the Stevens would have proceeded with the transaction in any event and was therefore liable for the loss on the transaction which was $67,050 (the commission) and $675,000 (the extent of the under-value at which the property was sold). The Judge awarded the Stevens interest at 7 per cent on the judgment sum and costs. Premium appealed against the Judge's findings on liability and damages. The Stevens cross-appealed against the amount of damages awarded. The Court dismissed the appeal against liability, and allowed the appeal and dismissed the cross-appeal against the damages award. The Court set aside the High Court's judgment on damages and awarded the respondents damages in the amount of $225,000, together with interest on that sum at 7 per cent from the date of settlement of the Stevens/Mahoenui sale. The respondents were to pay Premium $3,000, plus usual disbursements.

Orders