Agents’ liability cut by $62,000
Two senior commercial real estate agents, who failed to keep a client fully informed about interest from New Zealand Post in a building they were selling, have managed to shave $62,000 off their legal payout to the now-former client.
However, they are still left with a six-figure bill to deal with.
Colliers International agents Grant Lloyd and Philip Nevill have been embroiled in court action with Pangani Properties Ltd since 2014 over a Palmerston North commercial property deal.
The agents never denied they failed to act in the best interests of the company, but Pangani took them to court to claim lost potential earnings and commission from the property.
The property was in Malden St, Palmerston North, which New Zealand Post ended up moving into.
The saga involves multiple companies, properties being listed for sale then taken off the market, and meetings between real estate agents and regular coffee dates, taking place over more than a decade.
Pangani was interested in the Malden St property, but was sidelined in dealings over it involving Lloyd and Nevill.
That resulted in another company owning the property when New Zealand Post moved in, with that company making money Pangani could have made if it had been kept fully informed by Lloyd and Nevill.
The High Court ruled in 2018 that Lloyd and Nevill had to pay Pangani $813,150 – a mixture of lost potential income and investigation costs – and 5 per cent interest on top.
That court ruled in April that the agents also had to pay legal costs.
The agents took the case to the Court of Appeal, arguing their bill was too big.
They claimed the High Court applied damages incorrectly; calculated the potential loss to Pangani incorrectly; wrongly found Pangani had a reasonable chance of realising the lost opportunity; and the costs Pangani incurred when compiling its complaint to the Real Estate Agents Authority were not recoverable in the High Court.
In its lengthy judgment, released this week, the Court of Appeal ruled almost totally against the agents.
Pangani’s lost opportunity was calculated to be worth $650,000, which was easy to assess because the different company actually capitalised on the lost opportunity, Justice John Wild said in the court’s judgment.
The High Court’s work when finding Pangani had an 80 per cent chance of realising the lost opportunity was ‘‘unassailable’’, Wild said.
However, the Court of Appeal agreed Pangani was incorrectly awarded $100,000 by the High Court for costs Pangani incurred investigating the situation.
Pangani hired a private investigator after becoming suspicious about the property deal.
It then used the investigator’s report to complain to the Real Estate Agents Authority.
The authority’s complaints assessment committee heard the case, but found issues about costs should be dealt with through civil action.
The committee noted the scale of costs and claims were well beyond what it usually dealt with.
The High Court accordingly awarded those costs.
Wild said it was wrong for the High Court to do that, as the costs were from a different jurisdiction.
Furthermore, the complaints assessment committee served a different purpose than the High Court in the case – real estate conduct, rather than civil litigation – so the costs should not be awarded by the High Court, Wild said.
The $100,000 costs order was reduced to only incorporate the private investigator and accounting expenses, which totalled $38,260.
Colliers International agents Grant Lloyd and Philip Nevill have been embroiled in court action with Pangani Properties Ltd since 2014 over a Palmerston North commercial property deal.