Registrar of the Real Estate Agents Authority v Cavanagh

[2021] NZHC 1692

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1368

[2021] NZHC 1692

IN THE MATTER

of an appeal pursuant to s 116 of the Real Estate Agents 2008

BETWEEN

THE REGISTRAR OF THE REAL ESTATE AGENTS AUTHORITY

Appellant

AND

PHILLIP JULIAN CAVANAGH

Respondent

Hearing:	On the papers
Appearances:	V Casey QC for the Appellant SRG Judd for the Respondent
Judgment:	7 July 2021

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 7 July 2021 at 3.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date………………………..

Solicitors:             Real Estate Authority, Wellington (V Scott)

Douglas Burgess, Auckland

To:  S Judd, Auckland

REAL ESTATE AGENTS AUTHORITY v PHILLIP JULIAN CAVANAGH [2021] NZHC 1692 [7 July 2021]

Introduction

[1]    In a judgment delivered on 31 March 2021, I dismissed the Registrar’s appeal against a decision of the Real Estate Agents Disciplinary Tribunal (the Tribunal) which had concluded that Mr Cavanagh is a fit and proper person to hold a real estate salesperson’s licence.1

[2]    While I dismissed the Registrar’s appeal, I did accept the Registrar’s submission that the Tribunal had erred in its assessment of whether Mr Cavanagh was a fit and proper person by directly relying on a Scheme of Supervision in relation to him. On the basis of the remainder of the evidence that had been put before the Tribunal, however, I agreed with the Tribunal that Mr Cavanagh is now a fit and proper person to hold a salesperson’s licence.

[3]    At the end of my judgment, I encouraged the parties to agree on the costs of the appeal. They have been unable to do so. This judgment accordingly determines that issue.

The parties’ submissions

Mr Cavanagh’s submissions

[4]    Mr Cavanagh seeks costs on a scale 2B basis totalling $13,623. Mr Judd, counsel for Mr Cavanagh, submits that the usual principle is that costs follow the event and that as Mr Cavanagh was the successful party on appeal, costs should be awarded to him in the ordinary way.

[5]    Mr Judd notes that although this Court accepted the Registrar’s argument about the Tribunal’s  reliance on the Scheme of Supervision, that had not  been a part of  Mr Cavanagh’s application to the Tribunal. Mr Judd notes that Mr Cavanagh’s case before the Tribunal was based on other evidence that he is now a fit and proper person to hold a licence, and it was the Tribunal, not Mr Cavanagh, who proposed the Scheme of Supervision.

1      Registrar of the Real Estate Agents Authority v Cavanagh [2021] NZHC 680.

[6]    Mr Judd accordingly submits that as this Court has accepted Mr Cavanagh’s case advanced before the Tribunal, he should not be penalised from a costs perspective because this Court disagreed with the Tribunal on the Scheme of Supervision.

[7]    Mr Judd also refers to decisions on costs in the context of appeals from similar professional tribunals or agencies, in which costs have followed the event in the ordinary way.2 Mr Judd notes in  particular that although the Court of Appeal  in  Real Estate Authority v Domb partially allowed an appeal by the Registrar against a High Court declaration that the Registrar had exceeded her powers, the Court nevertheless accepted that Mr Domb had succeeded in substance and awarded standard costs in his favour.

The Registrar’s submissions

[8]    The Registrar’s position is that costs in this Court (and in the Tribunal) should lie where they fall.3 Counsel for the Registrar, Ms Casey QC, submits that the Registrar was successful on the substance of the appeal, being that the Tribunal erred in law in assessing Mr Cavanagh as a fit and proper person by placing direct reliance on the Scheme of Supervision. Ms Casey submits that this was an important issue of public interest, not only in terms of the proper operation of the licencing regime, but also because it meant the Tribunal did not exercise its judgement correctly in relation to Mr Cavanagh.

[9]    Ms Casey submits that in light of this aspect of the Registrar’s appeal being upheld, in an ordinary appeal, this would have resulted in the matter being referred back to the Tribunal. However, she notes that as the Act contemplates that this Court will go on and make its own assessment of the evidence of Mr Cavanagh’s character (and as both parties submitted the Court ought to do in this case), the substance of the fit and proper person assessment was carried out in this Court.

2      Real Estate Agents Authority v A [2018] NZHC 1934; Grant v Restructuring Insolvency & Turnaround Association New Zealand Inc [2021] NZHC 801; and Real Estate Authority v Domb [2017] NZCA 199, [2017] NZAR 871.

3      I note, however, that I am only determining costs on the appeal. The parties have not made submissions as to the costs of the proceedings before the Tribunal. Any costs award by that Tribunal, and whether it requires adjustment in light of my substantive judgment, is properly a matter for the Tribunal.

[10]   Ms Casey submits that the outcome of the case at this point in time is very different from where matters stood following the Tribunal’s decision, and the Registrar and the industry now have the benefit of a considered assessment by this Court of the evidence, applying the correct legal test.

[11]   In relation to Mr Cavanagh’s submission that the Tribunal’s error was not of his making, Ms Casey submits that this is not an unusual feature in an appeal, and had Mr Cavanagh wished to disclaim that aspect of the Tribunal’s approach on the appeal it was open to him to do so, which would have reduced the Registrar’s costs.

[12]   The Registrar also rejects a submission made on Mr Cavanagh’s behalf that if the Court had not confirmed the outcome of the Tribunal’s decision, the Registrar would “no doubt” have sought costs against him. Ms Casey submits that the Registrar makes decisions on litigation, including costs, on a case-by-case basis. She submits that, in any event, the position of a regulator who has a wider public interest is recognised as being different from that  of  a  private  litigant  seeking  a  benefit.  Ms Casey submits that in exercising their discretion as to whether costs should be ordered, the courts tend to look whether there is “something else”, other than the other party has succeeded, before costs are awarded against a regulator properly exercising its functions in the public interest. Ms Casey also submits that Mr Cavanagh’s history of criminal offending was always going to necessitate a careful review of his fitness and while that process has necessarily required significant costs, they have been properly incurred by the Registrar in the public interest. In this context, she says the Registrar (and thus the industry, given the Registrar is funded by way of an industry contribution) should not be expected to contribute to Mr Cavanagh’s costs.

Discussion

[13]   The starting point for assessment of costs in this matter is r 20.19(1)(c) of the High Court Rules 2016, which provides that on an appeal to this Court, the Court may make any order the Court thinks just, “including as to costs”. The High Court Rules 2016 contain a detailed costs regime which will apply in this context, namely Part 14.

[14]   In Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand, the Court of Appeal determined an appeal from a costs decision of this Court,

in which the High Court had held that because of the public interest dimension to the role of the respondent in that case, “compelling reasons” would be required before costs could be awarded to a successful appellant.4 The Court of Appeal rejected that approach, stating that:5

[29]  In our view, the correct and more principled approach is simply that  the usual presumption still applies but, at the discretion of the Judge, the presumption may be more easily displaced than usual on account of the public function of professional conduct committees. A successful appellant is not, however, required to satisfy a “compelling reasons” threshold.

[15]   In that case, the Court of Appeal noted that the fact professional conduct committees are performing a public function and have an immunity at Tribunal level may properly be taken into account in determining whether costs may be awarded and if so, in what amount.

[16]   I note that the Registrar in this case does not suggest he enjoys immunity from costs at the Tribunal level.6 I also note the decisions referred to by Mr Judd, in which costs awards were made in favour of successful parties to appeals on professional registration and similar matters, including parties in Mr Cavanagh’s position. I also note that in Real Estate Agents Authority v Domb, a costs award was made in the respondent’s favour, being the successful party overall, despite the Court partially upholding the Authority’s appeal and also despite that case being described as a “test case”.

[17]   Against these principles, I am satisfied that it is appropriate to make a costs award in Mr Cavanagh’s favour. I say this for the following reasons.

[18]   First, the starting point is that costs follow the event and thus will be awarded to the successful party overall. There is no doubt that Mr Cavanagh was the successful party on the appeal.   The Registrar appealed against the Tribunal’s  decision that   Mr Cavanagh was a fit and proper person to hold a salesperson’s licence. I dismissed

4      Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand [2013] NZHC 442, (2013) 21 PRNZ 493 at [18].

5      Roberts v A Professional Conduct Committee of the Nursing Council of New Zealand [2014] NZCA 141, (2014) 21 PRNZ 753.

6      The Real Estate Agents Act 2008, s 110A confers a broad discretion on the Tribunal in relation to the costs of “any proceedings under [the] Act”. I am not aware of whether the Tribunal made a costs award in these proceedings.

the Registrar’s appeal, and concluded that Mr Cavanagh was, on the evidence before the Tribunal, a fit and proper person to hold such a licence. It is not correct, in my view, to characterise the Registrar as the successful party given my acceptance of its argument on the Scheme of Supervision, and that in an “ordinary appeal”, this would have resulted in the matter being referred back to the Tribunal for determination. As Ms Casey notes, the Act  contemplates  this  Court  assessing  the  evidence  as  to Mr Cavanagh’s character and assessing whether the Tribunal was right to find he was a fit and proper person. The parties also wanted me to make that assessment. The purpose of a costs award is to provide a reasonable contribution to a party’s actual costs. Costs in this case should not, therefore, be assessed on what might have happened in another type of appeal. The fact remains that Mr Cavanagh was the successful party and will have incurred costs in responding to the appeal.

[19]   On this basis, the presumption is that Mr Cavanagh is entitled to a costs award in his favour. Is there anything which ought to displace this?

[20]   I do not consider there is. It is not correct in my view to categorise the substance  of  the  Registrar’s  appeal  that  the  Tribunal  had  erred  in  assessing  Mr Cavanagh as a fit and proper person in reliance on the Scheme of Supervision (as is suggested in the Registrar’s costs submissions). While reliance on the Scheme of Supervision was one aspect of the Registrar’s appeal, other (significant) aspects challenged the Tribunal’s decision more generally. As I noted in my substantive judgment, the Registrar said that the Tribunal erred “in a number of respects”,7 namely:

(a)failing to give proper consideration to the nature and seriousness of Mr Cavanagh’s offending;

(b)failing to recognise that Mr Cavanagh’s own testimony before the Tribunal demonstrated little insight by him into his offending;

7 At [86].

(c)not accepting that the character evidence before the Tribunal was wholly insufficient to establish that Mr Cavanagh is now a fit and proper person to hold a salesperson’s licence;

(d)displaying an approach to the evidence, including that of Mr Cavanagh himself, which reflected a “disposition that is strongly favourable to Mr Cavanagh”; and

(e)as noted, wrongly relying on the Scheme of Supervision.

[21]   As can be seen, reliance on the Scheme of Supervision was but one of a number of matters raised by the Registrar on appeal.

[22]   Accordingly, while an aspect of the Registrar’s appeal did have broader relevance beyond that of Mr Cavanagh, the thrust of the Registrar’s appeal was that irrespective of the Scheme of Supervision, Mr Cavanagh was simply not a fit and proper person to hold a real estate salesperson’s licence.

[23]   I am also not persuaded that because the Registrar has a public interest role, that ought to mean it is immune from a costs award in this case. That outcome may have been more appropriate had the sole issue before this Court been the relevance (or otherwise) of a Scheme of Supervision to the Registrar’s assessment of whether an applicant for a licence is a fit and proper person. In such a case, the sole purpose of the appeal would have been to obtain a ruling for broader guidance to the industry. But for the reasons outlined above, much of this appeal was focussed on Mr Cavanagh himself, his prior criminal offending, his rehabilitation and the Registrar’s challenge to the evidence advanced by him in the Tribunal proceedings. I am also mindful that Mr Cavanagh had not proposed the Scheme of Supervision before the Tribunal. Rather, it was the Tribunal’s suggestion. It is not, therefore, Mr Cavanagh who “brought about” the issue which the Registrar wished to test on appeal.

[24]   For similar reasons, I do not consider it relevant that the Registrar is funded by way of an industry contribution. Ultimately, the Registrar did secure a ruling in its favour in relation to the Tribunal’s reliance on the Scheme of Supervision, a ruling

which is of broader relevance and importance to the industry. In my view, there is no reason why Mr Cavanagh, as the successful party on the appeal, should personally fund that aspect of the appeal.

[25]   For these reasons, there will be a costs award in Mr Cavanagh’s favour. I should emphasise that this does not mean it will never be appropriate for costs to lie where they fall when the Registrar is an unsuccessful respondent in an appeal from a decision of the Tribunal. What is important is that every case is examined on its merits, and whether there is a proper basis to displace the “usual presumption” that costs follow the event.

[26]   If I were to make a costs award in Mr Cavanagh’s favour, there was no suggestion by the Registrar that costs on a 2B basis (as sought by Mr Cavanagh) was not appropriate, nor any challenge to the quantum of costs claimed. I have examined the costs claimed and consider they are consistent with a scale 2B costs award for an appeal.

[27]   I accordingly make a costs award in Mr Cavanagh’s favour, against the Registrar, in the sum of $13,623.

Fitzgerald J