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

REAL ESTATE AGENTS AUTHORITY v PHILLIP JULIAN CAVANAGH [2021] NZHC 1692 [7 July 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-1368[2021] NZHC 1692IN THE MATTER of an appeal pursuant to s 116 of the RealEstate Agents 2008BETWEEN THE REGISTRAR OF THE REAL ESTATEAGENTS AUTHORITYAppellantAND PHILLIP JULIAN CAVANAGHRespondentHearing: On the papersAppearances: V Casey QC for the AppellantSRG Judd for the RespondentJudgment: 7 July 2021JUDGMENT OF FITZGERALD JThis judgment was delivered by me on 7 July 2021 at 3.00pm,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate..Solicitors: Real Estate Authority, Wellington (V Scott)Douglas Burgess, AucklandTo: S Judd, AucklandIntroduction[1] In a judgment delivered on 31 March 2021, I dismissed the Registrar's appealagainst a decision of the Real Estate Agents Disciplinary Tribunal (the Tribunal) whichhad concluded that Mr Cavanagh is a fit and proper person to hold a real estatesalesperson's licence.1[2] While I dismissed the Registrar's appeal, I did accept the Registrar'ssubmission that the Tribunal had erred in its assessment of whether Mr Cavanagh wasa fit and proper person by directly relying on a Scheme of Supervision in relation tohim. On the basis of the remainder of the evidence that had been put before theTribunal, however, I agreed with the Tribunal that Mr Cavanagh is now a fit and properperson to hold a salesperson's licence.[3] At the end of my judgment, I encouraged the parties to agree on the costs ofthe appeal. They have been unable to do so. This judgment accordingly determinesthat issue.The parties' submissionsMr 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 eventand that as Mr Cavanagh was the successful party on appeal, costs should be awardedto him in the ordinary way.[5] Mr Judd notes that although this Court accepted the Registrar's argument aboutthe Tribunal's reliance on the Scheme of Supervision, that had not been a part ofMr Cavanagh's application to the Tribunal. Mr Judd notes that Mr Cavanagh's casebefore the Tribunal was based on other evidence that he is now a fit and proper personto hold a licence, and it was the Tribunal, not Mr Cavanagh, who proposed the Schemeof 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'scase advanced before the Tribunal, he should not be penalised from a costs perspectivebecause 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 similarprofessional tribunals or agencies, in which costs have followed the event in theordinary way.2 Mr Judd notes in particular that although the Court of Appeal inReal Estate Authority v Domb partially allowed an appeal by the Registrar against aHigh Court declaration that the Registrar had exceeded her powers, the Courtnevertheless accepted that Mr Domb had succeeded in substance and awardedstandard costs in his favour.The Registrar's submissions[8] The Registrar's position is that costs in this Court (and in the Tribunal) shouldlie where they fall.3 Counsel for the Registrar, Ms Casey QC, submits that theRegistrar was successful on the substance of the appeal, being that the Tribunal erredin law in assessing Mr Cavanagh as a fit and proper person by placing direct relianceon the Scheme of Supervision. Ms Casey submits that this was an important issue ofpublic interest, not only in terms of the proper operation of the licencing regime, butalso because it meant the Tribunal did not exercise its judgement correctly in relationto Mr Cavanagh.[9] Ms Casey submits that in light of this aspect of the Registrar's appeal beingupheld, in an ordinary appeal, this would have resulted in the matter being referredback to the Tribunal. However, she notes that as the Act contemplates that this Courtwill 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 thefit 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 madesubmissions as to the costs of the proceedings before the Tribunal. Any costs award by thatTribunal, and whether it requires adjustment in light of my substantive judgment, is properly amatter for the Tribunal.[10] Ms Casey submits that the outcome of the case at this point in time is verydifferent from where matters stood following the Tribunal's decision, and the Registrarand the industry now have the benefit of a considered assessment by this Court of theevidence, applying the correct legal test.[11] In relation to Mr Cavanagh's submission that the Tribunal's error was not ofhis making, Ms Casey submits that this is not an unusual feature in an appeal, and hadMr Cavanagh wished to disclaim that aspect of the Tribunal's approach on the appealit 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 ifthe Court had not confirmed the outcome of the Tribunal's decision, the Registrarwould "no doubt" have sought costs against him. Ms Casey submits that the Registrarmakes decisions on litigation, including costs, on a case-by-case basis. She submitsthat, in any event, the position of a regulator who has a wider public interest isrecognised 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 beordered, the courts tend to look whether there is "something else", other than the otherparty has succeeded, before costs are awarded against a regulator properly exercisingits functions in the public interest. Ms Casey also submits that Mr Cavanagh's historyof criminal offending was always going to necessitate a careful review of his fitnessand while that process has necessarily required significant costs, they have beenproperly incurred by the Registrar in the public interest. In this context, she says theRegistrar (and thus the industry, given the Registrar is funded by way of an industrycontribution) 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 theHigh Court Rules 2016, which provides that on an appeal to this Court, the Court maymake any order the Court thinks just, "including as to costs". The High Court Rules2016 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 NewZealand, 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 therole of the respondent in that case, "compelling reasons" would be required beforecosts could be awarded to a successful appellant.4 The Court of Appeal rejected thatapproach, stating that:5[29] In our view, the correct and more principled approach is simply thatthe usual presumption still applies but, at the discretion of the Judge, thepresumption may be more easily displaced than usual on account of the publicfunction 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 conductcommittees are performing a public function and have an immunity at Tribunal levelmay properly be taken into account in determining whether costs may be awarded andif so, in what amount.[16] I note that the Registrar in this case does not suggest he enjoys immunity fromcosts at the Tribunal level.6 I also note the decisions referred to by Mr Judd, in whichcosts awards were made in favour of successful parties to appeals on professionalregistration and similar matters, including parties in Mr Cavanagh's position. I alsonote that in Real Estate Agents Authority v Domb, a costs award was made in therespondent's favour, being the successful party overall, despite the Court partiallyupholding the Authority's appeal and also despite that case being described as a "testcase".[17] Against these principles, I am satisfied that it is appropriate to make a costsaward 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 awardedto the successful party overall. There is no doubt that Mr Cavanagh was the successfulparty on the appeal. The Registrar appealed against the Tribunal's decision thatMr Cavanagh was a fit and proper person to hold a salesperson's licence. I dismissed4 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 tothe costs of "any proceedings under [the] Act". I am not aware of whether the Tribunal made acosts award in these proceedings.the Registrar's appeal, and concluded that Mr Cavanagh was, on the evidence beforethe Tribunal, a fit and proper person to hold such a licence. It is not correct, in myview, to characterise the Registrar as the successful party given my acceptance of itsargument on the Scheme of Supervision, and that in an "ordinary appeal", this wouldhave resulted in the matter being referred back to the Tribunal for determination. AsMs Casey notes, the Act contemplates this Court assessing the evidence as toMr Cavanagh's character and assessing whether the Tribunal was right to find he wasa fit and proper person. The parties also wanted me to make that assessment. Thepurpose of a costs award is to provide a reasonable contribution to a party's actualcosts. Costs in this case should not, therefore, be assessed on what might havehappened in another type of appeal. The fact remains that Mr Cavanagh was thesuccessful 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 awardin 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 thesubstance of the Registrar's appeal that the Tribunal had erred in assessingMr Cavanagh as a fit and proper person in reliance on the Scheme of Supervision (asis suggested in the Registrar's costs submissions). While reliance on the Scheme ofSupervision was one aspect of the Registrar's appeal, other (significant) aspectschallenged the Tribunal's decision more generally. As I noted in my substantivejudgment, the Registrar said that the Tribunal erred "in a number of respects",7namely:(a) failing to give proper consideration to the nature and seriousness of MrCavanagh's offending;(b) failing to recognise that Mr Cavanagh's own testimony before theTribunal demonstrated little insight by him into his offending;7 At [86].(c) not accepting that the character evidence before the Tribunal waswholly insufficient to establish that Mr Cavanagh is now a fit andproper person to hold a salesperson's licence;(d) displaying an approach to the evidence, including that of Mr Cavanaghhimself, which reflected a "disposition that is strongly favourable toMr 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 numberof matters raised by the Registrar on appeal.[22] Accordingly, while an aspect of the Registrar's appeal did have broaderrelevance beyond that of Mr Cavanagh, the thrust of the Registrar's appeal was thatirrespective of the Scheme of Supervision, Mr Cavanagh was simply not a fit andproper 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 mayhave been more appropriate had the sole issue before this Court been the relevance (orotherwise) of a Scheme of Supervision to the Registrar's assessment of whether anapplicant for a licence is a fit and proper person. In such a case, the sole purpose ofthe 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 Cavanaghhimself, his prior criminal offending, his rehabilitation and the Registrar's challengeto the evidence advanced by him in the Tribunal proceedings. I am also mindful thatMr 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 "broughtabout" 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 byway of an industry contribution. Ultimately, the Registrar did secure a ruling in itsfavour in relation to the Tribunal's reliance on the Scheme of Supervision, a rulingwhich is of broader relevance and importance to the industry. In my view, there is noreason why Mr Cavanagh, as the successful party on the appeal, should personallyfund that aspect of the appeal.[25] For these reasons, there will be a costs award in Mr Cavanagh's favour. Ishould emphasise that this does not mean it will never be appropriate for costs to liewhere they fall when the Registrar is an unsuccessful respondent in an appeal from adecision 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 costsfollow the event.[26] If I were to make a costs award in Mr Cavanagh's favour, there was nosuggestion by the Registrar that costs on a 2B basis (as sought by Mr Cavanagh) wasnot appropriate, nor any challenge to the quantum of costs claimed. I have examinedthe costs claimed and consider they are consistent with a scale 2B costs award for anappeal.[27] I accordingly make a costs award in Mr Cavanagh's favour, against theRegistrar, in the sum of $13,623.______________________________Fitzgerald J