REAL ESTATE INSTITUTE OF NEW ZEALAND INC v ELLISON'S REAL ESTATE LIMITED [1999] NZCA 181 (9 September 1999)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca287/98

	between	REAL ESTATE INSTITUTE OF NEW ZEALAND INC
		Appellant

	and	ELLISON'S REAL ESTATE LIMITED
		Respondent

Hearing:	2 September 1999
Coram:	Elias CJ Gault J Anderson J
Appearances:	D.R. Bigio for Appellant No Appearance for Respondent
Judgment:	9 September 1999

judgment of the court delivered by ELIAS CJ

[1] The Real Estate Institute appeals a judgment of the High Court setting aside a decision of the Real Estate Agents' Licensing Board by which the respondent, Ellison's Real Estate Limited, was declined a renewal of its real estate licence.The appeal comes before this Court by way of case stated.The respondent was not represented at the hearing.The case is now moot as far as it is concerned because it has not applied for renewal of its real estate licence in the current year.

[2] There are difficulties in the way the case has been framed.In part, they reflect the fact that the Board did not explicitly address the central questions on an application for renewal under s.23 of the Real Estate Agents Act 1976:whether the applicant is qualified under the Act and whether the applicant is a fit and proper person to carry on the business of a real estate agent.

[3] When the respondent's application for renewal of its licence was heard, the appellant objected on the basis that the respondent had, while a licensed real estate agent, failed to comply with s.54 (2) of the Real Estate Agents Act 1976.That section provides:

Every branch office of a real estate agent (as specified in the agent's licence) shall be under the effective control of a person approved by the Board, in accordance with sections 54B to 54D of this Act, as a Branch Manager.

[4] Under s.54 (1), a licensee is required to be in "effective control of the principal place of business of a real estate agent".

[5] Under s.94 (1) of the Act, the Real Estate Agents Licensing Board may cancel a real estate agent's licence on a number of grounds.They include:

(b) That a licensee or, in the case of a licensee company, the Chief Executive Officer of the company, has failed to be in effective control of any place of business in respect of which it is that person's duty to be in effective control or has failed to ensure that any branch manager of a branch office has been in effective control of that branch, and it is in the interests of the public that the licence be cancelled.

[6] In the present case the Real Estate Institute of New Zealand contended that the respondent had not been in effective control of its New Lynn branch office. That complaint was accepted by the Board even though it is acknowledged that the manager of the New Lynn office was a licensed branch manager under the Act. In those circumstances, the Judge in the High Court held that the respondent was not shown to have been in breach of s.54 of the Act.It was in effective control of its principal place of business in Henderson.The New Lynn office was under the effective control of a licensed branch manager.Since no other ground was explicitly referred to by the Board in declining the application for renewal of licence, the Judge allowed the appeal and directed that the application for renewal be granted.

[7] On the appeal by way of case stated, Mr Bigio sought to argue that it was implicit in the Board's determination that it was of the view that the New Lynn office was not a branch of the respondent at all, but an independent enterprise designed to circumvent the fact that the branch manager did not hold a real estate agent's licence as principal.Mr Bigio also seeks to argue that the High Court Judge was in error in treating the Board's consideration of the respondent's application for renewal of its licence as being limited to the grounds of objection raised by the appellant, based on non-compliance with s.54 of the Act.

[8] We are satisfied that the proceedings being moot, there is no occasion for the appeal to proceed.Since it is urged upon us by Mr Bigio, however, that the judgment of the High Court may cause some practical difficulties for the future, we think it appropriate to comment on two matters.

[9] It does not appear that the Judge intended to suggest that the Board's consideration of an application under s.23 of the Act for renewal of the licence was limited to the grounds of objection put forward by the appellant. The Judge dealt with the matter on the basis upon which the Board had decided it.The Board treated the question of non-compliance with s.54 as determinative of the question.Under s.23 it was necessary for the Board to be satisfied that the applicant for renewal was not disqualified under s.17 of the Act and that the applicant "is a fit and proper person to carry on the business of a real estate agent".If satisfied of those matters, the Board is required to grant the licence.The Board seems to have treated breach of s.54 as determinative that the applicant was not a fit and proper person.That does not seem an adequate response to s.23.The Board should have addressed the question whether such non-compliance made the respondent unfit to hold a licence.In any event, the Judge was correct to hold that s.54 had not been breached.Since its breach underlay the Board's decision, the appeal was rightly allowed.

[10] In dealing with the matter on the basis of the Board's reasons, the Judge is not properly to be taken to have confined the Board to the terms of the Institute's objection.The Board itself did not however go further.It was open to it to do so in considering the wider question of whether the applicant was a fit and proper person.

[11] In that enquiry, the Board could well have considered, in addition to the suggested breach of s.54, whether the operation and structure of the New Lynn office was in breach of the scheme of the Act.Real estate agents are licensed to operate from principal places of business (under the control of the person licensed as principal) and from branch offices (under the control of licensed branch officers).Because of the way the Board dealt with the matter, the status of the branch, as opposed to the question of its "effective control", was not central to its decisionIt was not dealt with at all in the High Court judgment.The Judge is not however to be taken to have suggested that a "branch" which is a distinct and financially independent entity, complies with the Act.That would plainly not be the case.Whether non-compliance in this respect meant that the respondent was not a "fit and proper person" to hold a real estate agent's licence is a question of fact and degree which the Board did not address and upon which we express no view.

[12] Because the questions posed are moot, the appeal is dismissed.

Solicitors for Appellant: Ellis Gould, Auckland