Yan v Real Estate Agents Authority [2015] NZHC 2901 (19 November 2015)

Last Updated: 23 November 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKAND REGISTRY

CIV-2015-404-1662 [2015] NZHC 2901

BETWEEN	HUI JUAN YAN Appellant
AND	REAL ESTATE AGENTS AUTHORITY First Respondent
AND	TONY CHANG Second Respondent

Hearing:	4 November 2015
Appearances:	Appellant in person N Copeland for First Respondent (appearance excused T Rea for Second Respondent
Judgment:	19 November 2015

_{JUDGMENT OF DUNNINGHAM J}

Background

[1] In Spring 2013, the appellant, Hui Juan Yan (Ms Yan) was looking to purchase a property in Auckland. A friend of hers introduced her to Gincai (Tony) Chang (Mr Chang), a licensed real estate sales person, to help her with her search.

[2] Ms Yan was shown a townhouse in Puriri Avenue, Remuera. She was very interested in buying it. It was for sale by auction, but with Mr Chang’s assistance, she made two pre-auction offers of $470,000 and $491,000 respectively. Both were rejected by the vendor.

[3] She attended the auction on 11 September 2013 to bid for the property. It is here she asserts Mr Chang made bids without her authority, to eventually purchase

YAN v REAL ESTATE AGENTS AUTHORITY [2015] NZHC 2901 [19 November 2015]

the property for $540,000 and to deny her the opportunity, as the highest bidder, to negotiate a price of less than $540,000 with the vendor.

[4] Both before the Complaints Assessment Committee, and the Real Estate Agents Disciplinary Tribunal, Ms Yan’s complaints were dismissed.¹ In dismissing her complaint, both relied on the videotaped evidence of the auction which showed Mr Chang consulting with Ms Yan during the critical part of the bidding process, in a way that was “quite consistent with the proceedings as described to us by Mr Chang”.²

[5] Ms Yan now appeals the entire decision of the Tribunal.

Grounds of appeal

[6] The grounds of appeal in Ms Yan’s original notice of appeal focused on two issues. These were that:

(a) the Tribunal was in error as it did not realise an “important fact”, which is that Mr Chang made an unauthorised bid of $40,000 on Ms Yan’s behalf during the auction which she discovered on watching the video of the auction; and

(b) the Tribunal made a “wrong decision” when it found that Mr Chang did give her the relevant documents prior to the auction.³

[7] However, from a document subsequently filed by Ms Yan on 17 August 2015, it is apparent that her grounds of appeal are more extensive than that, and can be summarised as follows:

(a) the Tribunal erred when it found Mr Chang did give her important documents prior to the auction, as he failed to do this, including

1. Being the two statutory bodies established under Part 4 of the Real Estate Agents Act 2008 to deal with complaints against licencees.

² _{Yan v REAA and Chang [2015] NZREADT 47 at 22.}

³ This paraphrases Ms Yan’s grounds of appeal.

failing to give her the complete LIM report for the property which showed that the soil on the property is filled/weak ground;

(b) the Tribunal did not realise that Mr Chang made a bid for “$40,000 at one go” but this was clear from the video, therefore “Tony successfully cheated all of us include [sic] the Tribunal, that his last bidding money definitely isn’t $40,000” [sic];

(c) the Tribunal’s decision “fabricated” evidence as there was no evidence to prove that Ms Yan was dishonest in the hearing transcript;

(d) the Tribunal’s decision wrongly preferred Mr Chang’s evidence when his evidence did not have “substantial evidence to support it” and was a “lie”;

(e) Ms Yan provided evidence that she suffers from anxiety and depression and is on anti-depressants but “the Tribunal never called my psychiatrist and my GP doctor, they only insisted use [sic] Tony’s lies as evidence”.

[8] In terms of relief she sought:

(a) “a new unit for my daughter” which must be “fairly worth $540K” at

the time of the auction, being 11 September 2013; and

(b) compensation.

Jurisdiction on appeal

[9] Ms Yan has the right to appeal a decision of the Tribunal under s 116 of the

Real Estate Agents Act 2008.

[10] As this is a general appeal, this Court has the responsibility of considering the merits of the case afresh.⁴ In Austin, Nichols & Co Inc v Stichting Lodestar, Elias CJ

⁴ Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [31].

stated that the appellate Court must reach its own opinion “even where that opinion is an assessment of fact and degree and entails a value judgment”.⁵

[11] The Chief Justice continued:⁶

[16] ... If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.

[12] This does not mean I should approach the appeal “uninfluenced” by the reasoning of the Tribunal.⁷ Rather, it is a matter for my assessment what influence the Tribunal’s reasoning should have on my decision.

The Tribunal’s decision

[13] The Tribunal heard Ms Yan’s appeal of the Complaints Assessment Committee’s decision to take no further action with regard to her complaint against Mr Chang.⁸ It identified that the basis of the appeal was:

(a) Mr Chang acted contrary to Ms Yan’s instructions in conducting her bidding as she wanted to stop bidding and negotiate with the vendors after the auction in order to purchase the property at a lower price;

(b) Mr Chang knew Ms Yan suffered from depression and took advantage of her;

(c) Mr Chang failed to return a deposit he had collected off Ms Yan for the purpose of making pre-auction offers;

(d) Mr Chang failed to provide Ms Yan with the relevant documentation, including the auction documents, in advance of the auction; and

⁵ _{Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].}

⁶ _{At [16].}

⁷ _{Kacem v Bashir, above n 4, at [31].}

⁸ Under s 111 of the Real Estate Agents Act 2008.

(e) Ms Yan was misled into making two pre-auction offers.

[14] However, the Tribunal noted that “before us the appellant’s focus was confined to the bidding and deposit cheque issues”.

[15] The Tribunal then discussed the evidence of Ms Yan. It noted that “from some real estate source, since her purchase of [the apartment], the complainant has become convinced that its proper value was about $400,000; so she takes the view that the licensee has cheated her into paying $540,000 for it”.

[16] The Tribunal outlined Ms Yan’s explanation of the bidding sequence. It said that “there was a third party bid at $510,000 but the licensee on [Ms Yan’s] behalf then made a bid of $20,000 to $530,000 and she asks “why would the licensee have suddenly bid $20,000 on my behalf?” This explanation takes on some significance because, in the present appeal, Ms Yan relies heavily on the Tribunal’s error as to the amount of the bid made at this point, to call in to question the Tribunal’s decision.

[17] The Tribunal then goes on to explain that Ms Yan’s evidence was that “she was pressured by the licensee into making a further offer after she was told the vendor wanted $540,000”, saying that she agreed to do this but said “yes, but only a small amount of money, give them” [sic]. Ms Yan explained she meant Mr Chang could increase the bid by a sum such as $1,000 but Mr Chang immediately increased her offer by $5,000 and, when that was rejected, by a further $5,000. The property was then knocked down to her at $540,000, which was the vendor’s reserve.

[18] The Tribunal goes on to say that Ms Yan disputed Mr Chang’s account that she was “happy and excited” after the purchase. She also said that “she would never have authorised Mr Chang to pay more than $460,000 because she did not want to borrow money to complete the purchase”. The Tribunal then outlined the other evidence it heard, including the evidence of Ms Wang, a businesswoman who is a close friend of Ms Yan, and who introduced her to Mr Chang. Ms Wang confirmed that, prior to auction, Ms Yan and Mr Chang had agreed on a strategy that “if no-one bids during the auction, we won’t bid either, we can negotiate with the vendor after the auction”. She gave evidence of what Ms Yan said to her after the auction,

including that she was “very sad and that Tony forced her to buy the property and she told me that no-one was bidding and Tony was bidding against himself without her”. Ms Wang also said that Ms Yan told her that she had not received the contract or any policies or information about the auction before the auction.

[19] Mr Chang’s evidence is then summarised by the Tribunal. His evidence was that he did follow all proper procedures, including giving Ms Yan the booklet from the Real Estate Agents Authority (REAA), the Barfoot and Thompson document explaining its in-house complaint process, all the documents relating to the auction such as the particulars and conditions of sale, and the Code of Conduct required to be provided to purchasers in terms of the relevant rules. He confirmed that Ms Yan and he did discuss standard strategies, including the desirability of holding the last bid in the event the property was passed in so as to gain the exclusive right to negotiate with the vendor. He said they were surprised there was only one other serious bidder at the auction, being a “kiwi couple”, and that those bidders gave up when the bid was raised to $530,000 so that Ms Yan remained the only bidder.

[20] His evidence was that, at that point, the auctioneer came and spoke to Ms Yan and him and advised that the vendor’s reserve was $540,000. He said that Ms Yan agreed to offer $535,000. That bid was made and the auctioneer went to the vendor, but he came back saying the vendor insisted on $540,000. He said that Ms Yan so liked the apartment that she agreed to offer the price of $540,000. He then made the bid and it was knocked down to her at that price.

[21] In summary, he said that Ms Yan had chosen the unit, she happily went to auction, made the bids, agreed to increase the bids and won the bid within her budget.

[22] In respect of her mental illness, the Tribunal recorded that Mr Chang said he knew she had been ill in the past, but she seemed “absolutely normal to him at all stages of the purchase, and that included during the three previous weeks in which he had showed her that apartment and a number of other properties”. His evidence was that he did not take control of the bidding at the auction without her instructions.

Rather, at every step, she instructed him on what to do and he only did as she wanted.

[23] Evidence was also given from an experienced valuer that, at the auction date, the property had a value in the range of between $530,000 and $560,000, with an assessed value of $545,000.

[24] Having traversed the evidence and the submissions, the Tribunal made various findings. It noted there was a “stark conflict of evidence between Mr Chang and Ms Yan about whether he had instructions to make the bids he did”.

[25] In this regard, the video evidence of the auction took on a particularly important role. There was video footage taken from two camera angles. One showed the auctioneer at work, and was accompanied by a soundtrack which recorded the auction process. The other showed the audience and did not have a soundtrack. However, by correlating the times between the two videos with known events such as when the first bid was made, Mr Rea, the lawyer for Mr Chang, had prepared a table which allowed watchers to follow which bids were being made as they viewed the second silent video tape.

[26] The Tribunal concluded:

[85] We have carefully assessed credibility in this case and have no hesitation in finding that the licensee, Mr Chang, is an honest witness. We do not accept the evidence of Ms Yan insofar as it conflicts with that of Mr Chang. We prefer his version of relevant events. Sadly, we feel she is now not at all well but it seems that she was well at the time of the auction i.e. at all material times. Accordingly, she seems to be now rather confused about what actually happened in the auction process and, for some reason or other, from about a week after her purchase of the apartment very much has buyer’s remorse i.e. she regrets her purchase even though she seems to have been thrilled about it for the first seven or eight days after the auction. We simply do not find her evidence convincing.

[27] The Tribunal therefore confirmed the findings of the Committee and dismissed the appeal.

This appeal

[28] The present appeal is similarly wide-ranging and I now go on to address

Ms Yan’s various grounds of appeal.

Was Ms Yan provided with the relevant documents prior to auction?

[29] Having reviewed Ms Yan’s documents, it seems that her complaints under this heading are:

(a) she did not receive the “approved guide”⁹ before the auction, which would have directed her to the REAA website and the information about negotiating after the auction. She was the highest bidder at the auction but was not advised of her option to cease bidding and negotiate with the vendor instead;

(b) she did not receive a complete LIM report because, if she had, she would have realised this property was located in an area where the Auckland City Council maps showed there was a soil warning, because the area had filled or weak ground under it;

(c) she recorded a conversation she had with Mr Chang, after the auction, where he said “this is the contract, and then this is what we should give you according to the rules, you keep it here and keep the documents” which she says “reflects that he didn’t give me the documents he should have given to me before”.

[30] Mr Chang’s evidence is that, prior to the auction, he gave her “the auction documents, the REAA Guide Booklet (both seller’s and buyer’s guides), Barfoot & Thompson In-House Complaint Process, as well as the Real Estate Agent Code of Conduct all in a Barfoot blue folder so that she can read them before the auction”. He supports this with a copy of his diary entry for the day before the

_{auction which records that he did this.}

⁹ Presumably the New Zealand Residential Property Sale and Purchase Agreement Guide.

[31] Ms Yan’s response was that this was all “fabrication”.

[32] This ground of appeal is a simple contest of credibility. Mr Chang is a professional licensed real estate salesperson, and has been so for 10 years. He impressed the Tribunal as an honest witness. There was no evidence to suggest a reason for him not to follow normal practice and provide the relevant documentation prior to the auction which would include the complete LIM report for the property. It is implausible that she proceeded to make two pre-auction offers without substantial information about the property, and I do not find it credible that her copy of the LIM omitted just the page or pages regarding ground conditions in the area.

[33] In relation to the discussion which was taped by Ms Yan after the auction, where he provided her with a copy of the contract “as provided by the rules”, this was plausibly explained by Mr Chang as providing Ms Yan, as required, with a copy of the contract concluded at the auction.

[34] There is, therefore, nothing in the evidence which persuades me, on the balance of probabilities, that I should find against Mr Chang on this allegation.

What is the relevance of the Tribunal’s mistake over the $40,000 bid?

[35] Both in her initial notice of appeal, and in the more detailed grounds of appeal that she filed subsequently, Ms Yan argues that the Tribunal erred in its understanding of the bidding process and this is revealed in the video of the auction. She says “the said video unveil the biggest unknown secret that Tony made the last bidding for $40,000 at one go!” [sic]. Ms Yan then referred to the passages of the judgment, being paragraphs 17, 24 and 39, which all refer to there being “a third party bid at $510,00” at which point “the licensee on her behalf then made a bid of

$20,000 to $530,000”, when in fact the bid was $40,000.

[36] Ms Yan’s grievance seems to be both that the Tribunal erred when it thought there was just a $20,000 bid made on her behalf when it was $40,000 (raising the offered price from $490,000 to $530,000), and that she herself did not appreciate that such a big jump had been made on her behalf until she saw the video. At this point

in the auction the auctioneer says “Are you sure?”, at which point Mr Chang nods, but he did not check with Ms Yan before confirming the bid.

[37] Counsel for Mr Chang concedes the Tribunal’s understanding of the bid sequence, as recorded in its decision, was in error, but notes that this account of the bidding was taken from Ms Yan’s own evidence. In her initial complaint she explained the bidding steps in that way, saying “the last price is $510,000 Tony add

$20,000”. She then made the same error in her email complaint to Barfoot & Thompson on 19 September 2013 where she says “the very old guy gave the last price as $510,000, Tony request me add $20,000, then the old guy forever stop bid”.

[38] However, whether the jump was from $490,000 to $530,000, or from

$510,000 to $530,000 (and it is clear from the video evidence it is the former), it is not the amount which matters but rather whether this was a bid which was authorised by Ms Yan.

[39] There is evidence that, whatever the figure, Mr Chang suggested making a large bid to “forever stop” the opposing bidder. The video evidence shows that Mr Chang speaks with Ms Yan before making this larger bid although, of course, it is impossible to know what exactly was said. That said, there is nothing to indicate from Ms Yan’s demeanour that she is at all perturbed by the bid, which takes the offered price from $490,000 to $530,000, and she could be in no doubt as to what was then offered, because it was entered on the large display screen shown alongside the auctioneer.

[40] Further evidence to support her acquiescence to this jump in the bidding is her evidence of what follows, which was clearly critical to the Tribunal’s decision. Ms Yan’s evidence is that she then authorised Mr Chang to bid “a little bit more” after the amount of $530,000 was bid on her behalf. Consequently she had either authorised the $530,000 bid or, as the Tribunal said, ratified it by authorising Mr Chang to bid some more, after that bid was made.

[41] Her real complaint at the Tribunal hearing was not that he bid up to $530,000, but that he then bid $535,000 and $540,000 for the apartment rather than about

$1,000 more as she had contemplated would be offered when she said he could bid

“a little bit more”. She now seeks to impugn the earlier bid.

[42] I am therefore satisfied that, at the auction, Ms Yan did authorise Mr Chang to make the large bid up to $530,000 to put off the other bidder and the Tribunal’s misunderstanding as to the amount of the increased bid (thinking it was $20,000 not

$40,000) was not material to its decision. This ground of appeal fails.

Did the decision rely on “fabricated” evidence?

[43] This ground was not addressed by Ms Yan at the hearing at all. Essentially Ms Yan appears to be saying that the transcript of the evidence does not support the decisions the Tribunal came to and it did not demonstrate that she was dishonest. It must, therefore, have relied on “fabricated” evidence.

[44] However, there is nothing in the decision to suggest the Tribunal misunderstood Ms Yan’s evidence or relied on a “fabricated” version of any other party’s evidence. It was simply confronted by a stark divergence between her evidence and Mr Chang’s evidence and had to make credibility findings which necessarily involved rejecting one or other’s version of what happened. Those are matters that I address under the next heading. This ground of appeal fails.

Were the Tribunal’s findings on credibility supported by the evidence?

[45] Ms Yan argued that Mr Chang’s version of events was unsupported by evidence, whereas she had “provided large quantities [of] significant substantial evidence, and all of Tony’s [evidence was a] lie”. She is frustrated that the decision relied on Mr Chang’s evidence over hers.

[46] Having viewed the video evidence, and seen and heard Ms Yan in person, I am satisfied that the findings the Tribunal made as to credibility were open to it, and I would not have differed from them.

[47] A striking example of Ms Yan’s ability to recast events which are inconsistent

with her understanding was displayed at the hearing. When the two videos of the

auction were shown, Ms Yan protested that the video clips shown by the second respondent had been altered to change the time recording on the video footage, and to change what was shown in the video. The alteration included removing the footage where Mr Chang nodded in response to an auctioneer’s question. She was adamant that the video had been interfered with, despite Mr Rea’s assurances that it had not been and that was the same video that had been viewed at the Tribunal hearing. It took two further viewings of the video to identify where the nod by Mr Chang that she had remembered occurred, to satisfy her that the video had not been altered.

[48] Like the Committee and the Tribunal, I am satisfied that the video evidence clearly supported Mr Chang’s recollection of how the auction proceeded. There was a significant lapse of time between the $530,000 bid and the $535,000 bid, and between that bid and the bid at $540,000 which secured the property. At each stage there was clearly discussion with Ms Yan before the next bid was made. It was also obvious from the commentary that the property was not on the market until the bid of $540,000 was made, when the property was knocked down to Ms Yan.

[49] Fortifying my view that Ms Yan was willing to revise her account of what happened to fit her complaint that those bids were made without her instruction, is that she provided an explanation at this hearing (in contradiction to what she had said in the earlier hearings) that she and Mr Chang were “not talking about the auction”, but about something else that she could not now remember, before he made the two bids of $535,000 and $540,000. That struck me as an implausible and belated attempt to explain away the discussion which took place between her and Mr Chang before each of those last two bids was made.

[50] There is, therefore, no basis on which I would depart from the finding of the

Tribunal which preferred Mr Chang’s evidence over Ms Yan’s evidence.

Did the Tribunal fail to take account of Ms Yan’s psychiatric disorders?

[51] Ms Yan provided the Tribunal with a medical certificate from a Greenlane Hospital psychiatrist, Helen Sayer, which confirmed that Ms Yan was an outpatient of hers and “she is being treated with medication which she needs to take

indefinitely for psychiatric symptoms including depression”. She also provided a medical certificate from her GP confirming that she suffered from anxiety and depression and was on anti-depressants.

[52] Ms Yan explained that she made it clear to the Tribunal that the Tribunal could contact her psychiatrist and her GP, but they did not do so. Finally, she said that her medication caused drowsiness and this meant she had “no mental energy to do other things”.

[53] There is no doubt that Ms Yan suffers from the conditions identified although it appears she can function satisfactorily by taking medication. However, as the Tribunal recognised, the critical issue was whether she presented as mentally unwell to Mr Chang at the time of the auction and he took advantage of that. If he had he would be in breach of his professional obligations as the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 state, at r 9.8, that “a licensee must not take advantage of a prospective client’s, or customer’s inability to understand relevant documents where such inability is reasonably apparent” and, at r 9.2, that a licensee “must not engage in any conduct that would put a prospective client, client, or customer under undue or unfair pressure”.

[54] In relation to Ms Yan’s mental issues, Mr Chang’s evidence was that, during the time he was dealing with her:

... she was absolutely normal. She told me she suffered depression 2 years ago. That has been cured. She never told me or showed any sign of mental problem. I would not in my rightful mind spend 3 weeks of my precious time and effort to show a person properties if I had noticed slight of sign of abnormal behaviour.

• During the whole time I had been with her she told me a lot about herself and her family. My impression of her is that she was very smart, an extremely alert, quick in response, independent and well educated.

...

[55] Mr Chang noted, too, that immediately after signing the contract at the auction she asked to meet the vendor in the neighbouring room and discussed with her the possibility of purchasing the furniture, and asked whether the unit was cold in

winter, which he considered showed that she was lucid and able to focus on the decision she had just made.

[56] This issue was not raised in the Complaints Committee hearing, but was clearly a live issue in the Tribunal hearing. They concluded that “sadly we feel that she is not at all well but it seems that she was well at the time of the auction i.e. at all material times. Accordingly she seems to be now rather confused about what actually happened in the auction process”. Thus, I am satisfied that the Tribunal accepted that Ms Yan “suffers from a difficult chronic mental illness”, saying “to us it still seemed to be a problem for her when we resumed the hearing on

15 May 2015”.

[57] As the Tribunal clearly accepted that she suffered from mental illness, there was no need for them to call for evidence from either the GP or her psychiatrist about this. That was not in issue. What was in issue was how she presented at the time she was dealing with Mr Chang and bidding at auction.

[58] I accept Mr Chang’s evidence that Ms Yan presented to him as an intelligent and strategic person. He had, of course, been dealing with her for three weeks prior to auction, and been involved in discussing and making the two pre-auction offers they presented to the vendor, so would have had a reasonable basis on which to make this assessment.

[59] While Ms Yan’s efforts in preparing for this hearing were not well focused, they nevertheless showed a depth and breadth of research which indicated an able mind. After the auction she undertook considerable investigation to support her claim that she was an unwitting purchaser at $540,000. She managed to obtain the vendor’s listing documents, which included a market appraisal by Barfoot and Thompson placing the “comparative market value range at $420,000 to $470,000”, which appears to be what sparked her concern that she could have negotiated a cheaper price for the property. She also researched relevant materials on the REAA website, and the Council LIM documentation to identify factors which might support her claim that she was let down by Mr Chang.

[60] I consider it is quite plausible that she presented as a capable and strategic buyer at the time of the auction and I have no reason to depart from the Tribunal’s finding that Mr Chang had no basis for doubting her ability to make a reasoned decision about her purchase.

Conclusion

[61] I have found no reason to depart from the Tribunal’s decision on any of the matters which the appellant has raised. Accordingly her appeal is dismissed.

[62] I therefore need not consider the relief which she seeks. However, for completeness, I note that there is no evidence to support her claim that she has suffered a loss. The valuation evidence indicates she did not purchase a property which was worth less than the price she paid for it. Furthermore, although one of her main complaints is that she lost the right to negotiate a cheaper price with the vendor, again, there is no evidence that the vendor would have accepted a lesser price. Perhaps, at best, had I found in her favour, she lost the opportunity to look for another property where she may, indeed, have been able to negotiate to purchase for undervalue. However, that is mere speculation.

[63] The second respondent is entitled to costs.¹⁰ If costs are sought then the following directions apply:

(a) the second respondent is to file and serve submissions on costs within

20 working days of the date of this decision;

(b) the appellant is to file and serve any submissions in response within

30 working days of the date of this decision;

(c) any submissions in reply are to be filed and served within 35 working days of this decision;

¹⁰ Noting the first respondent did not participate in the hearing and abides the decision of the

Court.

(d) memoranda are not to exceed seven pages in length.

Solicitors:

Meredith Connell, Auckland

Glaister Ennor, Auckland

Copy to: Appellant