HARVEY v REAL ESTATE AGENTS AUTHORITY [2022] NZCA 498

HARVEY v REAL ESTATE AGENTS AUTHORITY [2022] NZCA 498 [20 October 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA687/2021[2022] NZCA 498BETWEEN MICHAEL HENRY HARVEYAppellantAND REAL ESTATE AGENTS AUTHORITYFirst RespondentRICHARD LOWE ANDPETRONELLA LOWESecond RespondentsHearing: 19 July 2022 (further submissions received 9 August 2022)Court: Brown, Lang and Downs JJCounsel: P B McMenamin for AppellantP K Feltham and T W Wheeler for First RespondentNo appearance for Second RespondentsJudgment: 20 October 2022 at 10.30 amJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the first respondent costs for a standard appealon a band A basis and usual disbursements.____________________________________________________________________Table of ContentsPara NoIntroduction [1]Relevant background [2]The Tribunal's decision [3]The High Court judgment [7]The scope of the appeal [10]Breach of r 9.7 [13]Issue 1: Did the Judge err in law by misdirecting on the burdenof proof? [13]Issue 2: Did the Judge err in law by failing to consider the contentsof the agency agreement? [22]Breach of r 5.1 [24]The context to the finding of a breach of r 5.1 [25](a) The Lowes' complaint [25](b) The Committee's approach [28](c) The Tribunal's approach [31](d) Comment [33]Issue 3A: Did the Judge err in law by failing to give considerationto cl 19.0 of the agreement for sale and purchase? [36]Issue 3B: Did the Judge err in law by failing to give considerationto the purchasers' instructions for the preparation of the agreementfor sale and purchase? [48]Issue 4: Did the Judge err in law by giving consideration to anirrelevant matter, namely a hypothetical proposition which wasunsupported by any evidence? [55]Issue 5: Did the Judge err in law by making a factual finding(that the appellant did not recommend that the Lowes obtain legaladvice) which was unsupported by any evidence? [60]Issue 6: Did the Judge err in law by failing to consider r 6.4 ofthe PCCC Rules? [65]Result [71]REASONS OF THE COURT(Given by Brown J)Introduction[1] The Real Estate Agents Disciplinary Tribunal (the Tribunal) upheld findings ofthe Complaints Assessment Committee (the Committee) of two breaches byMr Harvey, a licensed real estate agent, of rr 5.1 and 9.7 of the Real Estate Agents Act(Professional Conduct and Client Care) Rules 2012 (the PCCC Rules).1 Mr Harvey'sappeal was dismissed in the High Court.2 Mr Harvey now appeals to this Court on theground that in several respects the High Court decision is erroneous in law.Relevant background[2] The salient facts are recorded in the High Court judgment:1 Harvey v Real Estate Agents Authority [2021] NZREADT 27 [Tribunal decision].2 Harvey v Real Estate Agents Authority [2021] NZHC 2915, (2021) 22 NZCPR 830[High Court decision].[3] Mr and Mrs Lowe (the Lowes), together with their solicitor, werethe Trustees of two trusts. They were the registered owners of two propertiesin Nelson, referred to as "No 28" and "No 26." Each Trust owned a half shareof each of the properties. The Lowes lived in No 28, which had a house on itand had extensive views of the sea and mountains. No 26 was a bare sectionin front of No 28, situated between No 28 and the view.[4] The Lowes met Mr Harvey in December 2017 after a visit to an openhome he was conducting. The Lowes told Mr Harvey that at the time they hadno intention or plans to build on No 26 but asked him for a market appraisalfor No 28, as they were considering whether they had sufficient funds tosubmit an offer on another property. They did not pursue that option howeverand advised Mr Harvey of this.[5] On 29 December 2017 Mr Harvey visited the Lowes and asked themif they wanted to sell their home as he had a prospective purchaser (Mr S) whowished to see the property that day. Mr Harvey drafted an agency agreementwhich the Lowes both signed. Two hours later Mr S was shown throughthe property. Mr Harvey also drew up a draft agreement for sale and purchase.This included a clause which dealt with the covenants and restrictions on thebare section at No 26. Mr S never made an offer for No 28.[6] Mr Harvey contacted the Lowes again in early January 2018.He wished to show another prospective purchaser (the Crowes) throughNo 28. A discussion took place between Mr Harvey and the Lowes about theirplans for No 26. The Tribunal summarised the discussion as follows: The Lowes said that Mr Harvey was aware they wouldconsider building on No 26 if they sold No 28, but had not madeany decisions or plans of any sort, and they told him if they wereto build on No 26, they would be mindful and considerate whenplanning any build, and that it would have to comply withCouncil and subdivision requirements.[7] On 7 January 2018, the Crowes were shown No 28. The next day,the Lowes accepted an offer to purchase, which was to become unconditionalon 10 January 2018. Although the Crowes had concerns about the potentialimpact on the view from No 28 being blocked by any build on No 26,the agreement for sale and purchase did not contain any provisions relating toany proposed development or easements on No 26. The reason for thatomission was that Mrs Crowe wanted to present a "clean" purchase offer.[8] On 10 January 2018, prior to the agreement for sale and purchasebeing made unconditional, Mr Harvey arranged for the Lowes and the Crowesto meet to discuss the prospect of any development on the bare section atNo 26. Mr Harvey was not present at this meeting. The sale was settled inApril 2018.[9] In 2019 the Lowes began building on the empty section. The Crowesbecame concerned about the height of the building and issued proceedings inthe High Court against the Lowes, alleging that Mr Harvey and the Lowes hadmade misrepresentations about the effect a building on the empty sectionwould have on their view. Mr Harvey provided an affidavit in support ofthe Crowes' proceedings, stating the Lowes told him they would not build astructure that would negatively impede the view from their old home.This proceeding has since been settled.(Footnote omitted.)The Tribunal's decision[3] On a complaint by the Lowes, the Committee found Mr Harvey had engagedin unsatisfactory conduct by:3(a) not recommending that the Lowes obtain legal advice and not givingthem a reasonable opportunity to obtain that advice before they signedthe agency agreement; and(b) failing to confirm in writing what was to be disclosed to prospectivepurchasers about the Lowes' intentions as to the empty section, and/orfailing to capture this in an appropriate clause in the sale andpurchase agreement.The Committee assessed the conduct as unsatisfactory conduct at a moderate level andmade orders censuring Mr Harvey, that he pay a fine of $2,500, and that he refund tothe Lowes $5,000 of his commission.4[4] On Mr Harvey's appeal the Tribunal upheld the Lowes' complaint thatMr Harvey did not recommend that the Lowes obtain legal advice or provide themwith a reasonable opportunity to do so, in breach of his obligation under r 9.7 ofthe PCCC Rules.5 Rule 9.7 states:Before a prospective client, client, or customer signs an agency agreement,a sale and purchase agreement, or other contractual document, a licenseemust—(a) recommend that the person seek legal advice; and(b) ensure that the person is aware that he or she can, and may need to,seek technical or other advice and information; and3 Complaint C33008, re Michael Harvey Decision finding of unsatisfactory conduct, 17 July 2020at [3.31]–[3.32] and [3.50]–[3.51]. The Committee also made a finding of unsatisfactory conducton a third ground that Mr Harvey failed to obtain a third trustee's signature, at [3.18]–[3.19].4 Complaint C33008, re Michael Harvey Decision on Orders, 13 November 2020 at [5.42], [5.47]and [5.53].5 Tribunal decision, above n 1, at [83].(c) allow that person a reasonable opportunity to obtain the advicereferred to in paragraphs (a) and (b).[5] The Tribunal also found that the Committee was correct to determine that,by failing to confirm the Lowes' instructions as to their intentions regarding the newbuild or to recommend the insertion of an appropriate clause in the agreement for saleand purchase, Mr Harvey breached his obligation under r 5.1 of the PCCC Rules.6Rule 5.1 states:A licensee must exercise skill, care, competence, and diligence at all timeswhen carrying out real estate agency work.[6] The Tribunal reversed the Committee on a third ground relating to Mr Harvey'sfailure to obtain a third trustee's signature and quashed the refund order as beingplainly wrong, but upheld the $2,500 fine and directed Mr Harvey to complete anappropriate course in consumer protection law related to real estate transactions.7The High Court judgment[7] On Mr Harvey's appeal from the Tribunal decision, Cull J identified two issuesfor determination:81. Did the Tribunal err in finding Mr Harvey failed to recommend theLowes obtain independent legal advice or provide a reasonable timefor them to do so?2. Did the Tribunal err in finding Mr Harvey breached r 5.1, in failing torecord his clients' instructions in writing and recommending a clausebe inserted into the agreement for sale and purchase?[8] The Judge did not find any error in the Tribunal's finding that there had been abreach of the r 9.7 obligation concerning the agency agreement. In so doing the Judgerejected criticisms of the Tribunal's approach to the burden of proof and itsconsideration of the evidence relating to the content of the agency agreement.96 At [105].7 At [53] and [117]–[118].8 High Court decision, above n 2, at [24].9 At [44], [50]–[53] and [56]–[57].[9] The Judge also rejected the challenge to the finding of a breach of r 5.1.10In so doing the Judge made a number of observations which are said to give rise toseveral of the alleged errors of law that are the subject of the present appeal.The scope of the appeal[10] Section 120 of the Real Estate Agents Act 2008 allows a party who isdissatisfied with a decision of the High Court on appeal from the Tribunal, on theground that the decision is erroneous in law, to appeal to this Court on a questionof law only.[11] In advance of the hearing Mr McMenamin, counsel for Mr Harvey, identifiedsix proposed questions. Each question referred to one or more of the three categoriesof standard errors of law explained in Brown v R, namely:11(a) A misdirection of law apparent in the decision (what Fisher J called"a conventional legal question on unchallenged facts");12(b) Oversight of a relevant matter, or consideration of an irrelevantmatter;13 or(c) A factual finding unsupported by any evidence, or an omission to drawan inference of fact which is the only one reasonably possible onthe evidence.14[12] The six proposed questions of law (slightly amended) are:(1) Did the High Court at [40] to [44] of the [judgment] misdirect itselfas to the application of the burden of proof? [Brown (a)].(2) Did the High Court fail to give consideration to relevant matters,namely the contents of the agency agreement and other evidentialmatters itemised in [40] to [49] of the judgment? [Brown (b)].(3) Did the High Court fail to give consideration to relevant matters,namely [cl] 19.0 of the agreement for sale and purchase and theinstructions which [the Crowes] gave to the appellant for thepreparation of the agreement for sale and purchase? [Brown (b)].10 At [60]–[72].11 Brown v R [2015] NZCA 325, (2015) 30 FRNZ 471 at [16].12 Auckland City Council v Wotherspoon [1990] 1 NZLR 76 (HC) at 86.13 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [25]; and VodafoneNew Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138, [2012] 3 NZLR 153 at [51].14 Bryson v Three Foot Six Ltd, above n 13, at [26]; and Vodafone New Zealand Ltd v TelecomNew Zealand Ltd, above n 13, at [52].(4) Did the High Court at [71] give consideration to an irrelevant matter,namely a hypothetical proposition which was unsupported by anyevidence? [Brown (b) and (c)].(5) Did the High Court at [67] make a factual finding (that the appellantdid not recommend that [the Lowes] obtain legal advice) which wasunsupported by any evidence? [Brown (c)].(6) Did the High Court at [69] fail to give consideration to a relevantmatter, namely rule 6.4 [of the PCCC Rules]? [Brown (b)].Mr McMenamin's submissions divided the third question into separate issuesaddressing (a) the implications of cl 19.0 and (b) the Crowes' instruction that theywanted to submit a "clean" offer. We will consider these discretely as issues 3Aand 3B.Breach of r 9.7Issue 1: Did the Judge err in law by misdirecting on the burden of proof?[13] In the High Court Mr Harvey submitted that the Tribunal had imposed on himthe burden of disproving the Lowes' allegations, thereby reversing the onus of proof.His contention was that the acknowledgment by the Lowes in a signed agencyagreement that they had received a recommendation to obtain legal advice was thebest evidence available but was ignored by the Tribunal.[14] While accepting that the Lowes carried the burden of proving the allegation onthe balance of probabilities, the Judge considered that there is an obligation on aprofessional person to co-operate in the investigative process.15 The Judge found noerror in the Tribunal's conclusion that it could not be sufficient, to avoid the stricturesof r 9.7, for there simply to be a clause stating that the licensee had complied with hisor her obligations. That would undercut the consumer protection function of the rule.The Judge concluded that the Tribunal had not reversed the burden of proof.1615 High Court decision, above n 2, at [40], citing Bolton v Law Society [1994] 1 WLR 512 (CA);Hart v Auckland Standards Committee 1 of The New Zealand Law Society [2013] NZHC 83,[2013] 3 NZLR 103 at [187]; and Morton-Jones v Real Estate Agents Authority [2016] NZHC1804 at [103].16 At [41]–[44].[15] While acknowledging that the Judge had correctly recognised that the burdenof proof rested on the Lowes, Mr McMenamin submitted that in the course of applyingthe burden the Judge was led astray and had in fact imposed the burden on Mr Harvey.Although rejecting the suggestion that it was Mr Harvey's case that theagency agreement was conclusive evidence, Mr McMenamin nevertheless submittedit was strong evidence. In effect the submission was that, given the signedacknowledgement, there was no need for Mr Harvey to go further and expressly statethat he had in fact recommended that the Lowes seek independent legal adviceconcerning the listing authority.[16] The Committee had sought a specific response on the issue. Its question andthe response were recorded in a letter from Mr Harvey's solicitor as follows:Legal advice prior to signing the agency agreementQ12. The [Lowes] allege Licensee Harvey did not recommend that theyobtain legal advice before they signed the agency agreement and thatLicensee Harvey did not allow them a reasonable opportunity toobtain legal advice. The [Committee] invites a response to thisallegation from Licensee Harvey.A12. See again attached page 16 of the REA disclosure bundle. Circled ingreen are the acknowledgements at 5.1, 5.1.1 and 5.1.2 which statethe Client acknowledges that prior to signing this agreement it hasbeen recommended to them to seek independent legal advice, andtechnical or other advice and information.You will note on page 18 of the REA disclosure bundle (also attached),I have circled in green where the clients signed in full, confirmingtheir acceptance of all the client acknowledgements contained withinthe agency agreement.[17] Mr Harvey's answer did not engage with that part of the question concerningthe provision of a reasonable opportunity to obtain legal advice. That omission needsto be viewed in the context of the relevant sequence of events. In his affidavit filed inthe litigation between the Crowes and the Lowes, Mr Harvey explained thaton 29 December 2017 he had met with persons from Christchurch at anotherNelson property. At the conclusion of the viewing Mr Harvey did not mentionthe Lowes' property to the Christchurch people, as he had yet to obtain a signed agencyauthority to represent that property. However he then visited the Lowes, who agreedto and did sign the agency authority. Mr Harvey proceeded to contact theChristchurch people, who viewed the Lowes' property later that same afternoon.That day, 29 December, was the last working day of 2017. Hence the timing was suchthat it is difficult to see how the recommendation to obtain legal advice, if given, couldhave readily been acted upon.[18] We consider that the Judge's proposition that there is an obligation ona professional person to cooperate in an investigative process and consideration ofwhether such obligation was discharged in this matter are something of a red herring.The issue was simply whether Mr Harvey made a recommendation to the Lowes thatthey should seek independent legal advice. The acknowledgement in the agencyagreement suggested that he did. However the Lowes denied that.[19] We consider that the real issue here concerns not the legal burden of proof butrather the shifting evidential burden. As Lord Bingham explained in NorbrookLaboratories Ltd v Bomac Laboratories Ltd:17In such a case [where a party seeks to establish a breach of contract] thelegal burden of proof lies on the Plaintiff and never shifts. But if the Plaintiffadduces evidence from which, in the absence of any adequate explanation oranswer, an inference of breach may properly be drawn, an evidential orprovisional burden falls on the Defendant, as explained by Lord Denning inBrown v Rolls Royce Ltd Lord Bingham described this as an approach to decision making which depended noton abstruse legal doctrine but on the application of common sense.18[20] In our view the Lowes' assertion, that contrary to the acknowledgement in thesigned agency authority Mr Harvey did not in fact recommend prior to their signingthat they seek independent legal advice, caused the evidential burden to shift toMr Harvey. The Tribunal and the High Court in effect held that Mr Harvey's relianceon the acknowledgement clause in the agency agreement was not sufficient withoutmore to shift the evidential burden back to the Lowes. The position may well havebeen different if Mr Harvey had expressly stated that he did provide that17 Norbrook Laboratories Ltd v Bomac Laboratories Ltd [2006] UKPC 25 at [31], citing Brown vRolls Royce Ltd [1960] 1 WLR 210 (HL) at 215–216.18 Norbrook Laboratories Ltd v Bomac Laboratories Ltd, above n 17, at [31].recommendation to the Lowes and when he did so. In that event the evidential burdenwould likely have reverted to the Lowes. However Mr Harvey did not do so.[21] Viewed in that way it is apparent that neither the Tribunal nor the High Courterred in their application of the burden of proof.Issue 2: Did the Judge err in law by failing to consider the contents of the agencyagreement?[22] Although the issue as originally framed included reference to "other evidentialmatters",19 the argument on appeal was confined to the agency agreement itself.Mr McMenamin contended that the agency agreement, comprising contemporaneous,objective documentary evidence, constituted the best evidence available as to whetherMr Harvey had provided the requisite recommendation and opportunity for takinglegal advice. He did not suggest that the agency agreement was the beginning and endof the matter. Indeed he submitted:To be clear, it is not argued that the licensee is shielded from his obligationsto provide the recommendation by including a clause in the agency agreementthat he has complied with them. The appellant contends that by imposingimproper preconditions to the admission of the evidence, the High Court andthe lower tribunals have wrongly excluded from consideration significantunchallenged evidence which, if accorded its proper weight, would bedecisive in the appellant's favour.In our view the critical feature of that submission is the reference to "weight".[23] The Judge stated that the Tribunal clearly had regard to the signed agreementgiven that Mr McMenamin had drawn the Tribunal's attention to the fact that this wasthe best evidence about the receipt of legal advice.20 Similarly it is obvious thatthe Judge also had regard to the signed agency agreement.21 Hence the thrust ofMr Harvey's complaint is not whether regard was had to the agency agreement butrather the weight which the Judge (and the Tribunal) accorded it. However a complaintthat insufficient weight was given to an item of evidence cannot give rise to an error19 See [12] above.20 High Court decision, above n 2, at [52].21 See at [45]–[53].of law. Consequently the attack on the finding of a failure to comply with r 9.7cannot succeed.Breach of r 5.1[24] The remaining five issues all comprise challenges to the Judge's reasoning inconfirming the Tribunal's conclusion that, as a result of the absence from theagreement for sale and purchase of a suitable provision concerning the future use ofNo 26, there was a breach by Mr Harvey of r 5.1. As a prelude to addressing thosefive issues, we consider it desirable to briefly traverse the course which the Lowes'complaint followed.The context to the finding of a breach of r 5.1(a) The Lowes' complaint[25] The impression gained from the material before us is that on commencing theirnew build on No 26, the Lowes departed from the indications they had previouslygiven to both Mr Harvey and the Crowes as to the intended dimensions of thenew house. When the Crowes sought an injunction to restrain the build the Loweswere "very surprised and upset" by the fact that Mr Harvey provided an affidavitsupporting the Crowes' contention.22[26] The last of the 11 grounds of the Lowes' complaint stated:[Mr Harvey] [s]hould have made sure the Crowes were aware of the potentialrisks when purchasing a property in a subdivision when there is an adjacentempty section. [Mr] Harvey should have informed the Crowes of the very reallikelihood that an empty section would be built on, that any build would havean impact on an existing home even if such a build complied with localcouncil rules and title covenants and that with such a risk they could obtainexpert advice. [Mr Harvey] never gave the Crowes that opportunity which isevidenced by the affidavit of [Mrs] Crow[e] and the fact that their lawyernever raised or considered the issue. Interestingly with the [Mr S] agreement[Mr] Harvey saw fit to include additional clauses in, but that agreement neverwent any further.22 As stated in the Lowes' complaint to the Real Estate Agents Authority.The Lowes' complaint was conspicuously silent concerning their meeting withthe Crowes on 10 January 2018, which Mr Harvey had arranged for the expresspurpose of discussing the nature of the development on the section at No 26.23[27] The draft offer for Mr S prepared by Mr Harvey to which the Lowes referredin ground 11 of the complaint contained 12 further terms of sale. The additionalclauses to which the Lowes alluded were cls 20.0 and 20.1, which read:20.0 This agreement is subject to and conditional upon the purchaser beingsatisfied in all respects with the covenants and restrictions that apply to thebare section at [No 26], within five (5) working days of the date of thisagreement.20.1 For the purposes of clarity the intention of this clause is to give thepurchaser the ability to gain satisfaction that any future dwelling establishedon the aforementioned title (currently a bare section, owned by the vendorssubject to this agreement) does not unduly or unreasonably impact onthe view, sun or quality of the living of the property subject to this offer.That draft offer, which was incomplete in that it did not state a purchase price, was notreturned by Mr S to Mr Harvey and hence was never submitted for acceptance.(b) The Committee's approach[28] The Committee recognised that the evidence of Mr Harvey and the Croweswas "substantially consistent".24 The Committee was not satisfied that Mr Harvey hadmisrepresented to the Crowes the Lowes' plans for building on No 26 or disclosedinformation inconsistent with the Lowes' instructions to him. The Committeeconsidered it was not credible that Mr Harvey would not have discussed withthe Lowes the concerns and expectations of the Crowes concerning the view fromNo 28 if and when the Lowes built on No 26.25[29] However, while deciding to take no further action on that ground of complaint,the Committee considered that was "not the end of the matter".26 Having concernsabout the way in which Mr Harvey had "dealt with this issue", it proceeded to issue anumber of written questions to Mr Harvey concerning the Lowes' instructions about23 See High Court decision, above n 2, at [8].24 Decision finding of unsatisfactory conduct, above n 3, at [3.40].25 At [3.41].26 At [3.42].the height of their intended build and whether Mr Harvey had confirmed the Lowes'disclosures in writing.27 Having received and considered Mr Harvey's responses inthe letter from his solicitor,28 the Committee made the finding of unsatisfactoryconduct, reasoning:3.49. It is of concern to the Committee that in the circumstances of this sale[Mr Harvey] did not suggest to [the Lowes] that there needed to be somethingin the [agreement for sale and purchase] dealing with this issue so that boththe vendors and the purchasers were clear on to what extent the view from[No 28] would be preserved in the face of future building by the [Lowes] onthe section. The clause in the prior prospective purchaser [agreement for saleand purchase] would not have been adequate, but it would not have beenoverly difficult to draft an appropriate clause.3.50. The Committee finds that [Mr Harvey] has failed to exerciseappropriate skill, care and competence by not confirming in writing withthe [Lowes] what was to be disclosed to prospective purchasers about theirbuild intentions and/or by not capturing the same with an appropriate clausein the [agreement for sale and purchase].(Footnote omitted.)[30] The reasons for the Committee's view that cls 20.0 and 20.1 in the draft offerfor Mr S were not adequate were explained earlier in the Committee's decision:3.37. The [agreement for sale and purchase] for the prior prospectivepurchaser (which was not signed) does deal with the view from [No 28], butin a rather ambiguous and unhelpful way. The [agreement for sale andpurchase] is conditional on the purchaser being satisfied with any covenantsor restrictions applying to the bare section with a further clause saying theintention of the clause is for the purchaser to gain satisfaction that any futuredwelling will not unreasonably impact on the view from [No 28]. If therewere no covenants or restrictions (title or Council) which restricted the heightof what could be built on the section this clause would not have protectedthe purchaser. (c) The Tribunal's approach[31] Before the Tribunal Mr Harvey contended that the insertion of a clause of thenature suggested by the Committee would have created a legal minefield.He contended that the information provided by the Lowes was far too inadequate andsubjective to allow for a comprehensive description and that it would be reckless fora licensee to engage in writing such a clause which would have to be highly complex27 At [3.43].28 Noted at [16] above.and detailed. Counsel for the Real Estate Agents Authority (the Authority) contestedthat submission, arguing that Mr Harvey's failures appeared to have led to the veryoutcome of a legal minefield which he claimed he was trying to avoid. Counsel furthersubmitted that, if it was beyond Mr Harvey's skill set to do so, then he should haverecommended that the Lowes take expert advice.[32] The Tribunal noted that the Committee's findings on this question arose out ofan inquiry on the Committee's own motion.29 The Tribunal concluded:[102] We are not persuaded that the Committee was wrong to conclude that,as part of his obligations both to his vendor client and to the purchaser, givenhow critical the issue of the view from No 28 was, a reasonably competentlicensee complying with r 5.1 and exercising skill, care, competence, anddiligence would have recorded instructions from the Lowes as to what theirbuilding plans were at the time of sale, and the disclosures he was authorisedto make as to their building plans, and would have attended the meeting andmade notes of what was said. Mr Harvey did not do this.[103] Further, in fairness to both parties (particularly in light of the Lowes'evidence that they had not decided whether to build on No 26 or sell thesection at time of sale of No 28) a reasonably competent licensee exercisingskill, care, competence, and diligence would have recommended the inclusionof a clause in the agreement for sale and purchase reflecting the Lowes'instructions. This may have been along the lines of placing a restrictivecovenant on the title to No 26 to protect the view from No 28, which wouldhave the effect of binding not only the Lowes, but any future purchaser ofNo 26. Again, Mr Harvey did not do this.[104] We are not persuaded that it was not practicable for Mr Harvey toconfirm the [Lowes'] plans for No 26 in writing. Further, having reviewedthe clauses inserted into the draft agreement for sale and purchase for Mr S,we are not persuaded that it was not practicable for him to draft a clause to beinserted into the Crowes' agreement for sale and purchase. We agree with[the] submission [of counsel for the Authority] that if Mr Harvey consideredit to be beyond his skill set, the significance of the issue as to the view fromNo 28 was such that Mr Harvey could (and should) have recommended thatthe [Lowes] obtain legal advice on the point.(d) Comment[33] Our traversal of the course of events serves to demonstrate that in theproceedings before both the Committee and the Tribunal Mr Harvey was confrontedwith moving goal posts. In particular, the suggestion that he should have made arecommendation to the Lowes to obtain legal advice concerning the content of the29 Tribunal decision, above n 1, at [96].agreement for sale and purchase (which suggestion in its own right would haveamounted to an allegation of a breach of r 9.7(a) and/or (b))30 was never put toMr Harvey by the Committee. Hence the record did not contain a response from himon that point.[34] However, in adopting the submission of counsel for the Authority, the Tribunaladded such an alleged omission as an alternative basis for upholding the Committee'sfinding of a breach of r 5.1. That alternative basis for the conclusion that Mr Harveywas in breach of r 5.1 involved an assumption that Mr Harvey had not recommendedthat the Lowes take legal advice on the content of the agreement for sale and purchase.In our view this resulted in a failure of natural justice which, as we explain below,31was carried through into the High Court judgment.[35] Against that background we turn to address the five specific alleged errorsof law.Issue 3A: Did the Judge err in law by failing to give consideration to cl 19.0 of theagreement for sale and purchase?[36] In addition to the general terms of sale, the agreement for sale and purchasecontained a single further term:3219.0 This agreement is subject to and conditional upon both the vendorsand the purchasers solicitors approval as to form, content and titlewithin five (5) working days of the date of this agreement.The draft offer prepared for Mr S had contained an identical term.[37] Clause 19.0 did not feature in the Tribunal's decision, which focused insteadon cls 20.0 and 20.1 of the draft offer for Mr S.33 After noting the Tribunal's reference30 This would have been a separate allegation from that discussed above at [13]–[23], concerning abreach of r 9.7 due to Mr Harvey's failure to recommend that the Lowes obtain legal advice beforethey signed the agency agreement.31 See [60]–[64] below.32 As originally drafted the offer provided for only three working days but a handwritten amendmentwas made to provide for five working days.33 See Tribunal decision, above n 1, at [5], where those clauses were set out together with cl 20.2,which provided for a first right of refusal to purchase No 26 in the event the Lowes decided tosell it.to those clauses,34 Mr McMenamin advanced the following submission in theHigh Court:In fact, the same if not greater protection is built into the Crowe contract whichprovided that "the agreement is subject to and conditional upon both thevendors and the purchase[r]s solicitors [approval] as to form, content and titlewithin five working days of the date of this agreement". This wouldencompass any issue concerning [No] 26 which the Crowes or their solicitorwished to raise as an objection, enabling cancellation or the insertion of aspecific clause referring to [No] 26. The addition of the clause [used in thedraft offer prepared for Mr S] would in no way have enhanced their ability towithdraw from the contract on these grounds.(Footnote omitted.)[38] Surprisingly, however, the High Court made no reference at all to cl 19.0.[39] Emphasising that omission Mr McMenamin submitted that if, as it appeared,the Judge had considered that the terms of the draft offer for Mr S would havedischarged Mr Harvey's obligations with regard to the Lowes' future building plans,then the Judge could not reasonably have found that cl 19.0 did not.Hence Mr McMenamin argued that the Judge could not reasonably have made afinding of unsatisfactory conduct if consideration had been given to cl 19.0.While acknowledging the omission, Ms Feltham,35 counsel for the Authority on theappeal, submitted that it could not give rise to a question of law because the merepresence of a nondescript clause, such as cl 19.0, could not have dischargedMr Harvey's obligations.[40] Given that the argument hinged in material part on the significance of thereference in the clause to the solicitors' approval of "content", we invited the partiesto file further written submissions on the interpretation of cl 19.0. The parties were inaccord that this Court's decision in Provost Developments Ltd v CollingwoodTowers Ltd is the leading case on the interpretation of solicitors' approval clauses.36Both parties drew attention to the following summary of the principles (relevant to thepresent appeal) by Wild J in Dashwood Vineyards Ltd v Hammond, where the34 See at [99] and [104]. See also [32] above.35 Ms Feltham, together with Mr Wheeler, appeared for the Authority in this Court.Neither Ms Feltham nor Mr Wheeler appeared in the hearings below.36 Provost Developments Ltd v Collingwood Towers Ltd [1980] 2 NZLR 205 (CA).agreement for sale and purchase contained a clause essentially similar to cl 19.0referring to solicitors' approval of "title, form and content":37[b] The wording of the particular clause (since solicitor's approvalclauses vary) needs to be interpreted, and in the context of theparticular agreement. What might be expected of a conveyancingsolicitor will vary according to the kind of parties involved and/or thetype of property being sold. The interpretation principles adopted bythe Court of Appeal in Boat Park [Ltd] v Hutchinson will applyi.e. the agreement is to be given the meaning it would have to areasonable person having all the background knowledge which wouldreasonably have been available to the parties at the time of thecontract.[c] The solicitor's approval function is limited to the "conveyancingaspects" or "legal implications" of the agreement. Although thosephrases are to be liberally construed, they are still restricted toconsiderations peculiarly within the solicitor's sphere. The solicitormay not act as a general or financial/business adviser. The solicitormay not review the "wisdom" or "appropriateness" of the bargain asa whole, or its commercial advantages/disadvantages. Nor may thesolicitor be "the alter ego" of the client in a commercial sense. Inshort, the solicitor is only entitled to refuse approval if there aregenuine legal objections or impediments to the bargain the partieshave made.[41] Counsel for the Authority submitted that the issue concerning the view fromNo 28 would have fallen well outside the scope of the lawyer's entitlement to withholdapproval on conveyancing grounds or on some legal aspect of the transaction.Consequently the Crowes' lawyer would not have been entitled to address the issue ofthe view from No 28 in reliance on the power of approval reserved in cl 19.0.Counsel reiterated the Authority's contention that the fact the Judge did not explicitlyconsider cl 19.0 could not have resulted in error because the clause could not havechanged the ultimate decision.[42] Mr McMenamin emphasised that the view from No 28 was an inseparableattribute of the property being purchased. He identified the relevant conveyancingissue as being "not the future development of the adjoining property, but the presentdeficiency in the written agreement which fails to adequately describe thesubject property". Hence he contended that cl 19.0 provided the Crowes' solicitorwith the right, if they so wished, to withhold approval of the contract "in default of the37 Dashwood Vineyards Ltd v Hammond HC Blenheim CP15/99, 21 July 2000 at [1] and [45], citingBoat Park Ltd v Hutchinson [1999] 2 NZLR 74 (CA).addition of such clauses that would reasonably reflect the oral agreement ofthe parties".[43] We do not consider that the present case is the appropriate vehicle for settlingthe definitive interpretation of a solicitor's approval provision which extends to "form,content and title". In our view the resolution of the present case lies in the timing ofthe execution of the agreement on 8 January 2018 and the subsequent meeting betweenthe Lowes and the Crowes on 10 January 2018, when it is said the consensus wasreached concerning the protection of the view from No 28. The "oral agreement" towhich Mr McMenamin refers was reached subsequent to the execution of theagreement for sale and purchase.[44] The status of a binding contract was emphasised by Richardson J in Provost:38Had the agreement in the present case been prepared in draft and not beenexecuted or had it been entered into as a tentative agreement only, no doubt itmight have been argued that a solicitor could be expected to reach a conclusionas to whether it was appropriate for his client to proceed with the transactionas provided in the agreement. In doing so he would consider each of the termsof the bargain as it affected his client. His advice might well extend to anassessment of all the terms of the contract and a weighing of the commercialadvantages and risks of proceeding with the transaction along with the legalimplications including any conveyancing complications.But is that what the parties provided for under cl 19: that each solicitor wasexpected to give his client a considered opinion, based on his overallassessment of the terms of the agreement, of the appropriateness of proceedingwith the transaction on those terms. Surely not. The parties had entered intoa binding contract. They had not left it to their solicitors to decide whether ornot there would be a contract. They had agreed on the sale of the propertieson the terms set out in the agreement. There was consensus between them.It was not a situation where the parties were undecided as to whether or notthe bargain was in their interests and were relying on their lawyers' advice asto that. They had passed the point where the commercial advantages anddisadvantages of the transaction were open for further consideration. So theymust be taken to have excluded the involvement of their solicitors asgeneral advisers.[45] Mr McMenamin submitted that a purchaser's solicitor desiring to incorporateinto a written agreement the vendor's oral undertaking would not be seeking toimprove the bargain but only to ensure that what was agreed by the parties wasaccurately recorded. However, in this instance the oral undertaking to which he refers38 Provost Developments Ltd v Collingwood Towers Ltd, above n 36, at 213–214.(assuming it was given) was subsequent to the execution of the agreement. That pointwas crystalised in his submission that:The importance of the view in the preconfirmation discussions39 formed asignificant part of the context of this particular agreement and [cl 19.0] mustbe considered within that context.(Emphasis added.)[46] Consequently we reject Mr McMenamin's submission that the Crowes'solicitor was fully empowered, had they so chosen, to require an amendment of thecontract as a condition of their approval of its content. We conclude that, althoughthe Judge overlooked consideration of cl 19.0, this did not result in an error of lawbecause consideration of the clause could not have resulted in a different conclusion.[47] Finally the point might also be made that, if cl 19.0 was as wide as Mr Harveycontended, then the inclusion of the additional cls 20.0 and 20.1 in the draft agreementprepared for Mr S would appear to have been redundant.Issue 3B: Did the Judge err in law by failing to give consideration to the purchasers'instructions for the preparation of the agreement for sale and purchase?[48] The Tribunal did not accept Mr Harvey's contentions that "both parties"wanted a "clean" agreement for sale and purchase, and that they would not have agreedto an agreement which included a clause similar to that which Mr Harvey drafted forMr S.40 The Tribunal stated that, while Mrs Crowe said that she wanted to submit a"clean" offer, there was no evidence that the Lowes were of the same view.41It concluded that "in fairness to both parties", a reasonably competent licenseeexercising skill, care, competence and diligence would have recommended theinclusion of a clause in the agreement for sale and purchase reflecting the Lowes'instructions.4239 In his submissions Mr McMenamin distinguished between execution of the agreement and itssubsequent "confirmation" by the Crowes. The suggestion was that the parties believed cl 19.0could be relied on to withhold "confirmation", and avoid the contract, if the Crowes were notgiven satisfactory assurances as to the Lowes' building plans.40 Tribunal decision, above n 1, at [99].41 At [99].42 At [103]. See also [32] above.[49] In his High Court submissions, having made the point that the draft offerprepared for Mr S was incomplete and was never returned by Mr S, Mr Harvey wenton to submit:In any event this is merely a quibble. Whether the Lowes would have accepteda condition is beside the point, because Mrs Crowe's firm instructions werethat no such condition was to be included in the contract and Mr Harvey hadan obligation to abide by those instructions and to present the offer [as]made.[50] This issue was the final matter addressed by the Judge, who stated:43[70] Lastly, I deal with the contention that the Crowes would never haveagreed to the inclusion of a "view" condition clause in the contract. Althoughthere is affidavit evidence from Mrs Crowe that they did not want to add aview clause in as a condition because they wanted a "clean offer," thatconsideration was fuelled by their concern that there was another interestedpurchaser. The submission that the Crowes would never have agreed to a viewcondition clause in the contract overstates their position.[71] I accept the Authority's submission that there is no indication thatthe Crowes would have resisted a view condition clause, had they understoodthe Lowes favoured its inclusion and that such a clause would not place theiroffer at a disadvantage. As a view condition clause would be designed largelyfor the Crowes' protection, it is more likely in those circumstances they wouldbe in favour of its inclusion.[51] On appeal Mr McMenamin emphasised that Mrs Crowe's evidence, that shewanted to present a clean offer, was clear and unequivocal. He submitted that factnegated any possibility of a finding of unsatisfactory conduct because an agent has noright to arrogate to himself the decision as to what a prospective purchaser mustinclude in an offer. The agent's duty is to record the offer and present it intact tothe vendor. It was contended that to insert a condition which the purchaser did notwish to include would be seriously unethical and would constitute gross misconduct.[52] Focusing on the Judge's reasoning at [70], Mr McMenamin submitted:The issue is that the offeror is entitled to dictate the terms of the offer and theagent has no right to insist on the insertion of a condition contrary to theofferor's wishes. In its rejection of a[n] argument that was not made, the Courthas answered a question that was not asked but, in doing so, has omitted toanswer the question that was asked.43 High Court decision, above n 2.[53] We accept of course that an offeror is entitled to dictate the terms of their offerand that an agent is not entitled to insist on the insertion of a condition contrary to anofferor's wishes. It does not follow, however, that the agent should refrain frommaking a recommendation to the agent's vendor client that the offer should beamended to include a provision which might provide greater certainty for the partiesgoing forward. As the Lowes were submitting a counter-offer increasing the price,there would have been no impediment to amending the agreement to also include sucha provision. Plainly the Tribunal had that outcome in mind in its reference to"fairness to both parties".44[54] In the context of the present appeal, however, the issue is simply whetherthe Judge failed to have regard to the fact of the purchasers' instructions. It is plainfrom [70] of the High Court decision that the Judge did consider those instructions.Mr Harvey's real complaint is that, having done so, the Judge did not then proceed toaccept the proposition that the Crowes' wishes as to the content of the offer dictatedthe extent of Mr Harvey's obligations to both parties. That ultimate conclusion is notsusceptible to attack on the ground of a Brown (b)45 error of law when it is apparentthat the Judge did not fail to have regard to the material relevant consideration.Issue 4: Did the Judge err in law by giving consideration to an irrelevant matter,namely a hypothetical proposition which was unsupported by any evidence?[55] Errors of law of both categories (b) and (c) in Brown46 are said to have occurredin the course of the Judge's reasoning at [71].47 Mr McMenamin contended thatthe submission of the Authority, accepted by the Judge, was pure speculation and thatthere was no evidence at all to support the hypotheses in the statement. The Judge hadproceeded on the basis of a purely hypothetical counterfactual. Had the decision beenbased solely on evidence, the Judge could not reasonably have made a finding ofunsatisfactory conduct predicated on the absence from the contract of a conditionomitted on the specific instructions of the purchaser.44 Tribunal decision, above n 1, at [103].45 See [11] above.46 See [11] above.47 See [51] above.[56] The discussion in [71] is merely explanatory of the concluding observation in[70] that Mr Harvey's submission, that the Crowes would "never" have agreed to aview condition, overstated their position. In our view the inference that the Croweswould have been prepared to entertain such a condition but for their concern about acompetitive offeror was available.[57] That Mr Harvey was well aware that the Crowes were keenly interested inthe Lowes' intentions concerning the section at No 26 is apparent from his affidavitfiled in the High Court proceeding between those parties:33 I informed the [Crowes] that the vendors owned the section at [No 26]and intended to build upon it. I recall Mrs Crowe asking me "what isgoing to happen on the section in front" and I informed Mr andMrs Crowe that the Lowes intended to build on it.34 I recall discussing the potential impact at length with the Crowes.We considered the potential effects from many angles and positionsaround the site and within the home.35 On the evening of the 7th of January 2018 I received a text fromMrs Crowe seeking more information on the position of the house on[No 26], how far forward it would be on the section and how high itwould be.36 On the morning of the 8th of January 2018, I responded confirmingthat I could meet the [Crowes] at the property at 12.30. I felt thatwould be the very best way to explore her questions further.37 On the 8th of January 2018 I visited the property in the company of[Mrs] Crowe and her mother. I was asked about the height andposition of the building and I reconfirmed what I had been told bythe vendors throughout my extensive discussions with them.[58] His understanding of the Crowes' concerns was underscored by hisrecommendation to Mrs Crowe that the parties should meet. As he explained:40 I strongly recommended to [Mrs] Crowe that she should meet withthe [Lowes] in order that she may gain a first hand appreciation ofexactly what the [Lowes] intended to build on their section at [No 26].41 [Mrs] Crowe asked me to arrange such a meeting whichI subsequently did.42 I strongly advocated for such a meeting between the [Crowes] andthe [Lowes] as I was aware that the [Crowes] were committed tomaking their offer as clean as they possibly could and I felt the degreeof responsibility in relation to this height issue went beyond the limitsthat I was comfortable with.43 It was my view that the [Crowes] should meet the [Lowes], so theycould form their own views and make their own decisions regardingthe sincerity of the [Lowes'] verbal undertakings prior to signingthe [Lowes'] countersigned offer.[59] The importance to the Crowes of the retention of the view from No 28 wasunderscored in Mr McMenamin's supplementary submissions concerning theinterpretation of cl 19.0. In our view the Judge's reasoning in the course of rejectingMr Harvey's "never" submission did not involve an error of law of the natureadvanced, namely addressing a hypothetical proposition which was unsupportedby evidence.Issue 5: Did the Judge err in law by making a factual finding (that the appellant didnot recommend that the Lowes obtain legal advice) which was unsupported by anyevidence?[60] The Committee's finding of unsatisfactory conduct turned on its view thatMr Harvey should have ensured there was a written record of the Lowes' buildingintentions for No 26. While endorsing that conclusion, the Tribunal added as analternative ground a recommendation for legal advice:48[104] We are not persuaded that it was not practicable for Mr Harvey toconfirm the [Lowes'] plans for No 26 in writing. Further, having reviewedthe clauses inserted into the draft agreement for sale and purchase for Mr S,we are not persuaded that it was not practicable for him to draft a clause to beinserted into the Crowes' agreement for sale and purchase. We agree with[the] submission [of counsel for the Authority] that if Mr Harvey consideredit to be beyond his skill set, the significance of the issue as to the view fromNo 28 was such that Mr Harvey could (and should) have recommended thatthe [Lowes] obtain legal advice on the point.[61] Given the terms of cls 20.0 and 20.1 of the earlier draft offer, the Judgeapproved the Tribunal's rejection of Mr Harvey's submission that it was notpracticable for him to draft similar clauses for the Crowes' offer.49 However it isthe Judge's further observation about the alternative course of recommendinglegal advice that is said to give rise to a Brown (c)50 error of law:[67] I also concur with the Tribunal that if Mr Harvey considered draftinga clause was beyond his skill set and the Crowes and Lowes had been opposed48 Tribunal decision, above n 1.49 High Court decision, above n 2, at [66].50 See [11] above.to the inclusion of such a clause, Mr Harvey would have discharged hisobligation to the Lowes and indeed the Crowes as customers, by simplyrecommending that the Lowes obtain legal advice on the issue. It is clear thatthe insertion of the equivalent clauses 20.0 and 20.1 would have givenprotection to both parties to ensure that their respective positions could be thesubject of advice by their respective legal advisors.[62] Mr McMenamin submitted that in order to find Mr Harvey guilty of such abreach it was necessary to find that he did not in fact recommend that the Lowes obtainlegal advice concerning their plan to build on No 26 in the future. Mr McMenamincontended that there was no evidence that Mr Harvey did not recommend thatthe Lowes obtain such legal advice, nor any evidence from which an inference to thateffect could properly be drawn. Hence the finding was unsustainable andthe determination of a breach of r 5.1 lacked foundation.[63] It is in this context that our earlier conclusion about the unfairness inthe process assumes significance.51 There was never an allegation of a breach byMr Harvey of r 9.7 concerning the absence of a recommendation to take legal advicebefore the Lowes' acceptance of the Crowes' offer. Mr Harvey was never askedthe question. There was no evidence that he failed to make that recommendation.Consequently we consider that the Tribunal erred in its conclusion based on anunwarranted assumption. In confirming the Tribunal's conclusion, the Judgesimilarly erred.[64] However that error in relation to the alternative basis for finding a breach ofr 5.1 did not invalidate the decision on the primary ground. It is clear (and indeedthere was no error of law challenge before us) that there was a failure by Mr Harveyto comply with r 5.1 as a consequence of his failure to take steps to ensure that thealleged oral agreement on 10 January 2018 was suitably documented. That omissionenabled the subsequent dispute to occur when it appears that the Lowes recanted ontheir prior oral agreement.51 At [33]–[34] above.Issue 6: Did the Judge err in law by failing to consider r 6.4 of the PCCC Rules?[65] Rule 6.4 states:A licensee must not mislead a customer or client, nor provide falseinformation, nor withhold information that should by law or in fairness beprovided to a customer or client.This rule was not referred to in the decisions of either the Committee or the Tribunal.It appears to have first emerged in Mr Harvey's submissions in the High Court.[66] In the course of its discussion of compliance with r 5.1, the Tribunal stated:52[102] We are not persuaded that the Committee was wrong to conclude that,as part of his obligations both to his vendor client and to the purchaser, givenhow critical the issue of the view from No 28 was, a reasonably competentlicensee complying with r 5.1 and exercising skill, care, competence, anddiligence would have recorded instructions from the Lowes as to what theirbuilding plans were at the time of sale, and the disclosures he was authorisedto make as to their building plans, and would have attended the meeting andmade notes of what was said. Mr Harvey did not do this.(Emphasis added.)The italicised passage above was described in Mr Harvey's written submissions in theHigh Court as a surprising statement by the Tribunal given the content of rr 6.4, 10.7and 10.8 of the PCCC Rules.[67] As the Judge noted, Mr Harvey submitted that the Tribunal did not point to aspecific basis for an obligation on Mr Harvey to have recorded the Lowes' instructionsin writing and he suggested that "any basis for the obligation could only behighly illogical".53 The Judge also recorded Mr Harvey's further contention that,pursuant to rr 6.4 and 10.7, he was required to provide all information he had relatingto the proposed build which had the potential to have a major impact on the value ofNo 28.54 Hence he did not need authorisation in order to provide information whichhe was required by law to impart.52 Tribunal decision, above n 1.53 High Court decision, above n 2, at [58(a)].54 At [58(a)].[68] On this point the Judge concluded:[68] Similarly, I reject the submission that any obligation on Mr Harvey toobtain the Lowes' instructions would have been inconsistent with hisobligations under rr 6.4 (licensee must not withhold information that shouldbe provided to a customer or client); 10.7 (obligation to inform a customer ofany hidden or underlying defects in the land); and 10.8 (a licensee must notcontinue to act for a client who directs defects to be withheld).[69] This submission can be answered briefly. Rules 10.7 and 10.8 are notengaged here. Nor was there an issue of withholding information from acustomer or client. Rather, it was an issue for Mr Harvey to ensure that he hada clear understanding and record of the Lowes' instructions so that he couldconvey these accurately to the purchasers.[69] In this Court, Mr McMenamin submitted that the High Court's treatment ofMr Harvey's submissions concerning the alleged requirement to record instructionswas relatively cursory. Although the conclusion that rr 10.7 and 10.8 were not engagedwas not challenged, it was submitted that, if the Judge had properly taken r 6.4 intoaccount, the Judge would have recognised that there was no reasoned basis forimposing a professional obligation on Mr Harvey to make a written record of hisinstructions concerning the Lowes' building plans.[70] However the error of law asserted is a failure to consider r 6.4, not a failure to"properly" take it into account. While Mr Harvey may not share the Judge's view asto the significance of r 6.4, it is apparent that the Judge did have regard to it. Hence thecontention that there was an error of law of Brown category (b)55 must necessarily fail.Result[71] The appeal is dismissed.[72] The appellant must pay the first respondent costs for a standard appeal on aband A basis and usual disbursements.Solicitors:K J McMenamin & Sons, Christchurch for AppellantLuke Cunningham Clere, Wellington for First Respondent55 See [11] above.