IN THE DISTRICT COURT
RAFAL PIONTECKI, SYLWIA PIONTECKA & JCRB (PIONTECKI) TRUSTEES LIMITED Plaintiffs
FERGUSSON LOCKWOOD & ASSOCIATES LIMITED Fourth Defendant
Appearances: M D Branch and J Gilbey-Todd for Plaintiffs
S M Hunter and Z Fuhr for 1st and 2nd Defendants R L Scott and J Higgins for 3rd and 4th Defendants
RESERVED JUDGMENT OF JUDGE P R SPILLER
In this matter the plaintiffs seek $200,000 and costs against each of the four
above-named defendants. The plaintiffs rest their claims against all parties on section
9 of the Fair Trading Act 1986, alleging misleading and deceptive conduct. In
addition, the plaintiffs rest their claims against the third and fourth defendants on the
bases of negligent misstatement and the failure to exercise due skill and care under
RAFAL PIONTECKI, SYLWIA PIONTECKA & JCRB (PIONTECKI) TRUSTEES LIMITED V ANGELA DAVIES DC HAM CIV-2012-019-000406 [15 May 2013]
The plaintiffs are purchasers of a property at 164 Tamahere Drive, Tamahere,
Hamilton. The first and second defendants are (respectively) the real estate agent and
real estate agency that arranged the sale of the property. The third and fourth
defendants are (respectively) the valuer and the valuation firm that provided the
plaintiffs with a valuation in relation to the property.
Mr Rafal Piontecki and Mrs Sylwia Piontecka (the plaintiffs) are of Polish
descent and presently permanent residents of New Zealand. In 2011 they began
looking for a new property to purchase. They met the real estate agent Ms Angela
Davies (the first defendant). On the weekend of 6/7 August 2011, Mr and
Mrs Piontecki and Ms Davies met at 164 Tamahere Drive to view the property.
On 8 August 2011, the parties met at the property again. Mr and
Mrs Piontecki were under some time pressure to sell their existing home that was
subject to them agreeing to purchase another property by the following Friday.
Mr and Mrs Piontecki entered into a conditional agreement with the vendor that
morning. The agreement was conditional on a builder’s report, a LIM report and
finance. Ms Davies recommended as a valuer for finance purposes John Sweeney
(the third defendant) of Fergusson Lockwood & Associates (the fourth defendants).
On the afternoon of 8 August 2011, Mr Piontecki, Ms Davies and
Mr Sweeney met at the property. They were joined by Mr Bob Cullinane, one of the
owners of the property. Mr Sweeney conducted an inspection for valuation purposes.
On 12 August 2011, Mr and Mrs Piontecki obtained Mr Sweeney’s valuation of the
property, and this satisfied the finance condition of the sale, which went
unconditional. On 16 September 2011, Mr and Mrs Piontecki moved into the
In November 2011, Mr and Mrs Piontecki received notice of a meeting at the
Tamahere Community Centre for residents affected by the proposed Southern Link
motorway. The scoping phase of this project, undertaken between September 2010
and April 2011, had identified an “investigation envelope” that contained three
indicative networks. This information was first presented to the Tamahere
community in April 2011. The property at 164 Tamahere Drive was within the
“investigation envelope” and was very close to one of the three indicative networks.
The property was then presented as being clearly affected in the
November/December 2011 information days.
On 1 December 2011, Mr and Mrs Piontecki attended the meeting and were
told that it was planned that a motorway would go through their property. Following
this advice, Mr and Mrs Piontecki decided to take legal action against the four
named defendants. The claim as formulated by the plaintiffs is for $170,000 financial
loss and $30,000 for distress damages, plus costs.
The dispute is essentially whether the plaintiffs:
were properly advised of the risk that the property would be
materially affected by the roading project known as the Southern
Links By-Pass, and/or the effect that risk had on the value of the
the extent to which the plaintiffs suffered loss as a result.
Misleading/deceptive conduct by the first and/or second defendants?
The plaintiffs rest their case against the first and second defendants on s 9 of
the Fair Trading Act 1986, which provides that “no person shall, in trade, engage in
conduct that is misleading or deceptive or is likely to mislead or deceive”.
The plaintiffs allege that Ms Davies, the real estate agent, failed to advise
Mr and Mrs Piontecki that the property in question was directly affected by one of
the three indicative routes for the motorway project. The plaintiffs allege that Mr and
Mrs Piontecki were led to believe that the project would have no impact on the
property, and in particular, Ms Davies told them that the two possible routes were
approximately 500 metres away from the property. It is this conduct which the
plaintiffs claim amounts to misleading and deceptive conduct.
The second and third defendants reply that the conduct of Ms Davies in
relation to Mr and Mrs Piontecki was entirely and appropriate and was not
misleading or deceptive in any way. Ms Davies denies that she told Mr and
Mrs Piontecki that the two possible routes were approximately 500 metres away
from the property. The defendants say that Ms Davies properly drew the roading
issue to the plaintiffs’ attention and advised them to make their own further
enquiries. The defendants say that the Court should not absolve the purchasers from
their responsibility to carry out due diligence on the property by placing that
In deciding the question whether Ms Davies’ conduct as agent amounted to
misleading or deceptive conduct, attention must first be focussed on the discussion
that she had with Mr and Mrs Piontecki on the weekend of 6/7 August 2011. This
was when they first met at 164 Tamahere Drive to view the property.
The relevant part of Mr Piontecki’s evidence as to what transpired at this
Our children came with us to view the property. While looking at the property, Sylwia, Sebastian, Angela and I were standing outside by a large tree toward the back of the house. . Sylwia made a comment about there not being a motorway, which had been an issue for us with some properties before being too close to noisy roads (Sylwia will present in her evidence what some of those properties were). Angela then mentioned that in the future (some 15 to 20 years away) there may be a joining road between State Highway 1 and State Highway 3. We asked her where this would be and she said that either on Airport Road or Pencarrow Road but at least 500 metres from the property. To demonstrate, as we stood by a tree she pointed to the direction of the Airport Road and then Pencarrow Road and we discussed how we couldn’t see or hear either road from the property. As a comparison, we also took the existing distance from State Highway 1 to the property (Bundle of Briefs (“BOB”) p. 3).
The relevant part of Mrs Piontecka’s evidence as to what transpired at this
At this time, I asked Angela whether there was noise from airplanes (due to the nearby airport) and also said something to her like “and of course there won’t be any problems with the motorway”. I said this in a kind of joking manner as Angela knew that we did not want to be near a busy main road.
Angela replied that actually there were some plans to join the Ohaupo motorway to State Highway 1. This made me worried immediately and I couldn’t believe it as with every property there seemed to be a problem, and this was one that we really liked.
I asked her when and where that would be and she said that it would be in 15 to 20 years and that it would be on either Airport Road or Pencarrow Road, so at least 500 metres from the property.
I asked Rafal to point out how far away 500 metres was. He pointed to State Highway 12 (which we could see from the property). We both agreed that we couldn’t hear the road and that this wouldn’t be a problem. From then on I didn’t think the motorway would be an issue and I put it from my mind.
If we had got the correct information from the agent and the valuation we would never have proceeded with the purchase which leaves me and my family stuck for a number of years without the possibility of retrieving our investment.
Had we known that a motorway was going to go through our home, or anywhere close to it, we would never have bought this property (BOB pgs. 9-10, 11).
Angela . made us feel comfortable that the property was not at risk of being anywhere near the proposed road (BOB, p. 28).
The relevant part of Ms Davies’ evidence as to what transpired at this
In July 2011, I was engaged by the owners of the property 164 Tamahhere Road to market and sell it. . It was located within the area under investigation by NZTA and was very near one of the three routes identified on the map, the route coloured blue.
I met Mr and Mrs Piontecki at the Tamahere Drive property on the morning of Sunday 7 August 2011. I explained to them that the NZTA was planning to construct part of the Southern Links project in the area broadly bounded by Pencarrow Road, Airport Road and State Highway 1. I explained that three routes were being investigated at the time but emphasised that the NZTA made it clear at the public meeting that the network could go anywhere within the area marked green on the map. I gave Mr and Mrs Piontecki a flyer for the property and at the same time I gave Mr and Mrs Piontecki an A3 colour copy of the NZTA map and information sheet and pointed out on the map where the property was in relation to the areas under investigation and the proposed routes. The black dotted line represented State Highway 12. The red line which intersected that black dotted line and crossed the river was Airport Road. Pencarrow Road linked Airport Road to State Highway 1. I very clearly recall Mrs Piontecki’s
giving the flyer and the map to her son to hold after we had been discussing the issue.
I made it clear that the final route had not yet been determined and could fall anywhere within the investigation area. I also told them that they should visit the NZTA website for a clearer version of the map and more information on the Southern Links project. .
At no time did I tell Mr and Mrs Piontecki that any new road would be built at least 500 metres from the Tamahere Drive property and that it would be either Airport Road or Pencarrow Road. I would never have said this as I knew that the final route had not yet been determined (BOB, pgs. 33-35).
The meeting between Mr and Mrs Piontecki and Ms Davies, on the weekend
of 6/7 August 2011, was followed by a meeting between Mr Piontecki, Ms Davies,
Mr Sweeney and Mr Cullinane on 8 August 2011.
The relevant part of Mr Piontecki’s evidence as to what transpired at this
At one point, Robert, Angela and John were having a discussion as I walked into the room they were in. John asked whether I understood what they were talking about – they were talking about a future motorway. I said Angela had mentioned it and John further explained that there would be a motorway extension that will join State Highway 1 and 3 in the future and that it would be on either Airport Road or Pencarrow Road. John said it would most likely be Airport Road as the government had already bought some land there. I recall that I said something like “so how will this affect this property?” and John replied something like “nah, can’t see how it would”. .
If anyone had told us all of the information about the Southern Link bypass or the valuation had identified that our property was in the path of one of the proposed motorway routes, or that it was within an area where the motorway could possibly go, we would not have continued with the purchase (BOB, pgs. 4-6).
The relevant part of Ms Davies’ evidence as to what transpired at this
I wanted to ensure that Mr Piontecki fully understood that the Southern Links project could affect the property so I raised the topic again while Mr Sweeney and Mr Cullinane were present. I told Mr Piontecki that the NZTA was investigating the area in which the property was situated, that three routes were presently being investigated but that the final route had not been determined (BOB, pgs. 34-35).
The relevant part of Mr Sweeney’s evidence as to what transpired at this
I wanted to bring up the Southern Links Investigation. I wanted some debate or comment about this from the parties present including Angela and the topic came up in conversation. .
I recall both Angela and I said to Mr Piontecki that it was unclear about where the final route of the Southern Links was to go. .
From what I knew at the time, the route was no-where near the property and according to the information I now have, the preferred route didn’t include the property at 164 Tamahere Drive until November 2013. I am positive that both Angela and I said to Mr Piontecki that the final route had not yet been determined (BOB, pgs. 59-60).
The relevant part of Mr Cullinane’s evidence as to what transpired at this
On 8 August 2011, I met with Ms Davies, Rafal Piontecki and John Sweeney at the property. Mr Piontecki and his wife were interested in the property. Mr Sweeney was a valuer.
While we were in the master bedroom looking over the gully, Ms Davies brought up the Southern Links project. She told Mr Piontecki that the road could take one of three routes under investigation or another route entirely; no one yet knew.
Ms Davies did not say that the route would follow either Airport or Pencarrow Road. I am certain that I heard her tell Mr Piontecki that the new road could take any of the three routes under consideration or another route altogether (BOB, p. 37).
Mr Grant Eccles, a planning consultant, was involved in providing consulting
services in relation to the motorway project. On 1 December 2011 he met with
Mr and Mrs Piontecki at a public information day at the Tamahere Community
quite upset about the location of the preferred network over the top of their recently purchased property. I think there was . probably a mixture of anger, uncertainty and just unfamiliarity with process and not really knowing what was, how things had come about and what was to come (NOE, p. 61).
Ms Gina Woodfield, a lawyer, stated that on 2 August 2011, she and her
husband were taken by Ms Angela Davies to view the property at 164 Tamahere
Drive, Hamilton. During the visit Ms Davies provided a brochure prepared by the
New Zealand Transport Agency and a map showing the investigation area for the
proposed Southern Links roading project. Ms Davies showed Mr and Ms Woodfield
where the property was on the map and explained that it lay in the investigation area.
Ms Davies said that there were three preferred routes for the new road but that the
final route had not been determined. Ms Davies suggested that they make further
enquiries of the Transport Agency and look at its website. They decided not the
purchase the Tamahere Drive property, and the risk that it would be affected by the
roading project was an important factor. But Ms Woodfield said that Ms Davies
provided the available information about the roading project and they understood
that there was a risk that it might affect the Tamahere Drive property (BOB, pgs. 40-
I take, as my primary interpretation of section 9 of the Fair Trading Act 1986,
the Supreme Court judgment in Red Eagle Corporation Ltd v Ellis
 2 NZLR
That section is directed to promoting fair dealing in trade by proscribing conduct which, examined objectively, is deceptive or misleading in the particular circumstances. Naturally that will depend upon the context, including the characteristics of the person or persons said to be affected. Conduct towards a sophisticated businessman may, for instance, be less likely to be objectively regarded as capable of misleading or deceiving such a person than similar conduct directed towards a consumer or, to take an extreme case, towards an individual known by the defendant to have intellectual difficulties. . The question to be answered in relation to s 9 in a case of this kind is accordingly whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. It is not necessary under s 9 to prove that the defendant’s conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive the hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.
I find that Ms Davies, a real estate agent employed by Success Realty Ltd, in
trade, engaged in conduct that was misleading or was likely to mislead. I find that
Ms Davies did not properly advise Mr and Mrs Piontecki of the risk that the property
would be materially affected by the roading project known as the Southern Links
By-Pass, and/or the effect that risk had on the value of the property. I find that
Mr and Mrs Piontecki were misled by Ms Davies as to the risk of the roading project
in relation to the property purchased. I further find that a reasonable person in the
situation of Mr and Mrs Piontecki – that is, with the characteristics known to
Ms Davies or of which she ought to have been aware – would likely have been
misled. I make this finding for the following reasons.
First, I find that the crucial evidence on this issue relates to the meeting on
the weekend of 6/7 August 2011 involving Ms Davies and Mr and Mrs Piontecki.
Here I prefer the evidence of Mr and Mrs Piontecki to that of Ms Davies to the effect
that they were misled by her into believing that the property being viewed was not at
risk of being near the proposed roading. I do so in light of the following factors. I
note that Mrs Piontecka herself (rather than Ms Davies) raised the issue of whether
there might be any problems with the motorway as they did not want to be near a
busy main road. (Ms Davies recalled something to this effect: NOE, p. 109). Both
Mr and Mrs Piontecki deny that they were given a map by Ms Davies, or that she
showed them where the proposed routes went (BOB, pgs 23 and 27). Ms Davies
accepted that she was conscious of the need to be satisfied that potential purchasers
have understanding, if English is their second language (NOE, p. 103). Ms Davies
admitted that she told Ms Woodfield, but did not tell Mr and Mrs Piontecki, that the
property being viewed “falls within the blue line” (one of the possible routes being
investigated) (NOE, p. 103). This was despite the fact that she knew that the
property was very near the route coloured blue (BOB, pg. 33). At the end of the
interchange with Ms Davies, Mrs Piontecka, having been so concerned at the start of
the meeting about not wanting to be near a busy main road, was made to feel
comfortable that the property was not at risk of being anywhere near the proposed
roading. Mrs Piontecka from then on did not think the motorway would be an issue
and put it from her mind. I find it inconceivable that she would have reached this
position without having been misled by Ms Davies.
Secondly, I refer to the meeting of 8 August 2011. I accept that Ms Davies
told Mr Piontecki that the NZTA was investigating the area in which the property
was situated, that three routes were presently being investigated, but that the final
route had not been determined. But I find it reasonable that the attitude of
Mr Piontecki towards the roading issue, going into the meeting of 8 August 2011,
would have been shaped by the interchange with Ms Davies in the meeting of 6/7
August. Further, I find that the meeting of 8 August 2011 would have further
reinforced the misleading of Mr Piontecki. I find that Mr Piontecki said something
like “so how will this affect this property?” and Mr Sweeney replied (in the presence
of and without apparent contradiction by Ms Davies) something like “nah, can’t see
Thirdly, I find that the evidence of Mr Eccles further supports the finding that
Mr and Mrs Piontecki were misled. Mr Eccles noted that, on 1 December 2011, they
showed upset, anger, uncertainty, unfamiliarity and lack of knowledge about the
location of the preferred network over the top of their recently purchased property.
Finally, I find that the evidence of Ms Woodfield as to her experience in
relation to Ms Davies to be of little relevance. Ms Woodfield, in terms of her
English language and legal expertise, has very different characteristics from Mr and
Mrs Piontecki. She was not a party to any of the discussions or interchanges
involving Mr and Mrs Piontecki. Further, Ms Davies accepted that she told
Ms Woodfield, but did not tell Mr and Mrs Piontecki, that one of the proposed routes
(the “blue line”) in the investigation area crossed the Tamahere Drive property
Misleading/deceptive conduct by the third and/or fourth defendants?
The plaintiffs rest their case against the third and fourth defendants partly on
s 9 of the Fair Trading Act 1986, which provides that “no person shall, in trade,
engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.
The plaintiffs allege that they were led to believe that the Southern Links
roading project would have no impact on the property being purchased. In
particular, the plaintiffs allege that the valuer told one of the plaintiffs that the project
would not affect the property. It is this conduct which the plaintiffs claim amounts to
misleading and deceptive conduct. The plaintiffs argue that, if the valuer had not
misled them, they would not have proceeded with the purchase.
The third and fourth defendants argue that their conduct was not misleading.
They argue that the plaintiffs were not misled by the conduct of the third and fourth
defendants. They argue that the plaintiffs entered the property purchase as a willing
buyer, choosing not to rely upon the valuer’s written report, but relying on a verbal
As noted above, on 8 August 2011, Ms Davies recommended as a valuer for
finance purposes John Sweeney (the third Defendant) of Fergusson Lockwood &
Associates (the fourth Defendants). On the afternoon of 8 August 2011,
Mr Piontecki, Ms Davies and Mr Sweeney met at the property. They were joined by
Mr Bob Cullinane, one of the owners of the property. Mr Sweeney conducted an
inspection for valuation purposes. I refer to paragraphs  to  above, for the
evidence of the parties as to what transpired at the meeting of 8 August 2011.
Following the meeting of 8 August 2011, Mr Sweeney prepared the valuation
for finance purposes. His evidence is as follows:
In preparing the valuation for Mitchell Smith at BNZ, I did consider whether I should include anything at all about the Southern Links bypass project. I decided that I would not simply as I could not at that time determine whether it had or would affect the value of the property. That is it wasn’t a property that had a designation or at that stage been likely to have a designation.
I did not at the time think it was material enough to mention it as there would be no comparable sales to arrive at a valuation. I possibly could have included a one line statement about the Southern Links bypass but again this would have only been cursory and wouldn’t have impacted on the actual value I arrived at.
I did not include information in my written report about the bypass because I would have had to reflect this in my valuation figure, and I could not at that time make any assessment, based on comparable sales, as to what the value would be. When making my assessment I did not perceive the value would be materially different with only the general cursory investigation area known at the point in time of the valuation (BOB, pgs. 60-61).
As to whether Mr Sweeney should have referred to the roading project in his
report, Mr Ken Stevenson, an expert witness called by the third and fourth
Although the matter was discussed at the site, I consider a reasonably competent, careful and prudent valuer would have mentioned the on-site discussion in his written report and outlined what was known at the time of the Southern Links bypass. If it had been my report, I would have mentioned the implications of the Southern bypass route as then known and the potential to receive compensation under the Public Works Act (BOB, pg. 70).
On this same issue, Mr Christopher Coakley, an expert witness called by the
However I understand Mr Sweeney was generally aware of the project and he did communicate this to the Pionteckis. In my view, a reasonably competent, careful and or prudent valuer would have found this to be a trigger to include something in the report about the Southern Links project.
It also seems to me that once it was discussed, it would have been prudent for it to be reported to the financial institution that was to use the property for security for a mortgage. It seems likely that a lender would have wanted to know this information when deciding whether or not to lend money on the property regardless of whether it has an effect on the property’s value.
However, I also want to say, that the defect in not mentioning the project in the written report, may not have had any material effect on the actual valuation figure reached or even if included, may not have had a major impact. It is possible that a reasonably competent valuer could include this information in the report and conclude it does not have a material effect on market value (BOB, pgs. 77-78).
On 12 August 2011, Mr Piontecki spoke to Mr Sweeney on the telephone,
and Mr Sweeney advised that he valued the property at about $900,000.
Mr Piontecki asked Mr Sweeney to email the valuation to the bank and to Ms Judith
Wake, Mr and Mrs Piontecki’s solicitor.
Mr Sweeney duly telephoned the bank to provide the valuation figure. His
I understand that finance was approved on this basis which probably triggered the finance clause in the sale and purchase agreement. It seems to me at that point, they would have been committed to the purchase once the other conditions in the agreement were satisfied. They certainly didn’t wait to see my written valuation (BOB, pg. 62).
Also on 12 August 2011, the bank confirmed to Ms Judith Wake, solicitor for
Mr and Mrs Piontecki, that finance was approved. Ms Wake commented:
If the valuer had identified in the report the fact that the property could be affected by the Southern Links bypass and/or there would be a material effect on value, and Rafal and Sylwia did not wish to proceed with the agreement in light of that information, then I would have taken the following steps:
I would have advised the vendor’s solicitor that approval of the LIM was withheld because there was insufficient information in the LIM for our clients to assess the effect of the Southern Links bypass on their intended ownership of the property.
If that matter was capable of remedy it would be by providing the relevant information and once that information was received I would have had no hesitation in avoiding the sale and purchase agreement on their behalf by disapproving the LIM.
Alternatively I would have advised at the outset that the LIM was not approved because it failed to identify the possible effect of the Southern Links bypass on the property and that matter was not capable of remedy (BOB, pgs. 16-17).
I find that Mr Sweeney, a valuer employed by Fergusson Lockwood &
Associates, in trade, engaged in conduct that was misleading or was likely to
mislead. I find that Mr and Mrs Piontecki were misled by Mr Sweeney as to the risk
of the roading project in relation to the property purchased. In particular, I find that
Mr Sweeney told Mr Piontecki that the project would not affect the property, and
that Mr and Mrs Piontecki were further misled by Mr Sweeney not including any
reference to the roading project in his valuation. I further find that a reasonable
person in the situation of Mr and Mrs Piontecki – that is, with the characteristics
known to Mr Sweeney or of which he ought to have been aware – would likely have
been misled. I make this finding for the following reasons.
First, I refer to the evidence of Mr Piontecki as to the meeting that he had
with Mr Sweeney and other parties on 8 August 2011. Mr Piontecki says that
Mr Sweeney raised the issue of a future motorway extension in the area.
Mr Piontecki asked how this would affect the property being viewed, and
Mr Sweeney replied to the effect that he “can’t see how it would”.
Secondly, I refer to the evidence of Mr Sweeney himself as to what was said
at the meeting. He confirmed that he raised the issue of the investigated motorway
extension with Mr Piontecki. He recalled that, from what he knew at the time, the
route was no-where near the property. I find that this evidence is consistent with and
Thirdly, I refer to the evidence of the third and fourth defendants’ own expert
witnesses that a reasonably competent, careful and/or prudent valuer, in
Mr Sweeney’s position and with his knowledge, would have included information in
the valuation about the roading project.
Fourthly, I note that Mr and Mrs Piontecki reasonably relied upon the
valuation figure arrived at by Mr Sweeney in obtaining finance and entering the sale
and purchase agreement for the property. Mr Sweeney himself accepts that finance
was approved on the basis of his valuation and this probably triggered the finance
clause in the sale and purchase agreement; and that, at that point, Mr and
Mrs Piontecki would have been committed to the purchase once the other conditions
in the agreement were satisfied. Ms Wake confirms that, if the valuer had identified
in the report the fact that the property could be affected by the Southern Links
bypass and/or there would be a material effect on value, and Mr and Mrs Piontecki
did not wish to proceed with the agreement in light of that information, then she
would have taken the steps to withhold approval of the LIM report.
In view of my finding that Mr Sweeney, a valuer employed by Fergusson
Lockwood & Associates, in trade, engaged in conduct that was misleading or was
likely to mislead, it is not necessary for me to consider the alternative causes of
action relied upon by the plaintiffs against the third and fourth defendants.
However, based on the above evidence, I would have found that the plaintiffs have
proved that the valuer made negligent misstatements in his valuation and also failed
to exercise reasonable skill and care under his contract with Mr and Mrs Piontecki.
Quantum of loss caused to the plaintiffs by the defendants?
The plaintiffs argue that loss is to be assessed at the time of the breach. The
plaintiffs argue that the loss suffered was the difference between the value of what
the plaintiffs received and what they paid. The evidence from the plaintiffs’
independent valuer is that the property purchased by Mr and Mrs Piontecki was
worth only $675,000, whereas they paid $845,000. The plaintiffs therefore claim that
their loss is $170,000. The plaintiffs also seek general damages in the sum of
$30,000, which they submit are clearly appropriate given the circumstances of this
The defendants argue that loss under the Fair Trading Act does not have to be
assessed at the time of the breach, and that a flexible approach is required which
does justice to the parties. The defendants argue that Mr and Mrs Piontecki have not
suffered any loss. On their own evidence, they do not wish to sell the property until
their children are in tertiary education which is some 5 to 7 years away. The best
evidence available to the Court is that by this time the property will have been
subject to a notice of requirement. The plaintiffs will have the right to sell to the
Crown at market value (disregarding any impact of the roading project) under the
Resource Management Act 1991. Any award to the plaintiffs now will therefore
come as a windfall. The defendants further argue that, if loss is to be awarded, this
should be on the basis of the expert evidence of Mr Coakley. His evidence is that any
discount in value, taking into account any effect of the roading project, is no more
than $30,000 in total. The defendants also argue that any loss awarded to the
plaintiffs should be discounted to take into account the failure of Mr and Mrs
Piontecki to investigate the roading project and protect their position as prudent
purchasers. As to the claim for stress damages, the defendants argue that moderation
is necessary in such awards which are to compensate not to punish.
Section 43 of the Fair Trading Act 1986 provides that:
(1) Where, in any proceedings under this Part of this Act, or on the
application of any person, the Court finds that a person, whether or not that person is a party to the proceedings, has suffered, or is likely to suffer, loss or damage by conduct of any other person that constitutes or would constitute— (a) A contravention of any of the provisions of Parts 1 to 4 of this Act . the Court may . make all or any of the orders referred to in subsection (2) of this section.
(2) For the purposes of subsection (1) of this section, the Court may
make the following orders— (d) An order directing the person who engaged in the conduct, referred to in subsection (1) of this section, to pay to the person who suffered the loss or damage the amount of the loss or damage:
The remedy under section 43 is flexible. The Supreme Court has confirmed
that the assessment under s 43 is “a matter of doing justice to the parties in the
circumstances of the particular case and in terms of the policy of the Act” (Red Eagle
Corporation v Ellis
 2 NZLR 492, 504).
In Cox & Coxon Ltd v Leipst
 2 NZLR 15, 26, the Court of Appeal
Where there has been an actionable wrong, it is a general and basic principle of law that the remedy by way of monetary award is to put the wronged party in the same position as he or she would have been but for the wrong. Where the wrong is misrepresentation leading to a contract for purchase of property, the position to be restored is that which would have enured had the misrepresentation not been made. . If they would not have purchased at all, then prima facie the loss would be based on the difference between the value of the property and the price paid or, in some circumstances, the loss of an opportunity to buy a different property.
In Clark Boyce v Mouat
 2 NZLR 559, 569, Richardson J stated, with
regard to claims for damages for inconvenience, worry and stress:
By way of example there are numerous recent cases in which moderate awards have been made in respect of discomfort and inconvenience and associated anxiety and distress sustained by plaintiffs where damage to buildings has occurred due to carelessness on the part of local body building inspectors .
I can see no objection in principle or in terms of public policy to the award of such damages so long as the kinds of harm suffered were reasonably foreseeable consequences of the particular breaches of duty and were caused by those breaches of duty.
Mr Geoffrey Tizard is a valuer and an expert witness produced by the
plaintiffs. He produced a valuation which assessed the property as it was configured
in August 2011, which was when Mr and Mrs Piontecki purchased the property
(BOD, pg. 116). He assessed the current market value of the property as $840,000.
He considered that the effect of the proposed Southern links roadway on the property
was a “reduction in value of more than 10% but probably not more than 20%”. He
assessed that the current market value was $165,000 less than what it would
otherwise have been if it was not affected by the roading proposal (BOD, p. 118). He
In undertaking the valuation, I compared recent sales of similar properties, but taking into account the effect of the proposed Southern Links arterial roading development that will extend through the centre of the property requiring demolition of the dwelling.
I assessed the value of the property to be $675,000 which is a reduction of $165,000 from what we would otherwise have considered the value of the property to be if it was not directly affected by the Southern Links roading. A copy of the valuation is annexed.
My opinion is that the inclusion of the property within the area required for the Southern Links network materially affects the value of the property prior to the moment of compulsory purchase. The reasons for this are:
A purchaser prior to acquisition will recognise the risks that are attached to the property in terms of both timing and equity, and the emotional turmoil that often accompanies such a process;
The owner of the property will not wish to undertake long-term developments due to the relatively short-term life remaining in the property;
The market does recognise the risks associated with compulsory purchase including a reversal of stated intent due to withdrawal of funding;
Any purchaser of the property after it has been designated does not have the ability to request acquisition prior to the eventual compulsory purchase date.
Mr Ken Stevenson is a registered valuer and was an expert witness called by
I also want to address the issue of compensation. Once a Notice of Requirement is issued in respect of a property; there is provision for an owner to obtain compensation as provided under the Public Works Act, a valuation under that Act requires the property to be assessed on the basis of the value had the public works not been contemplated.
Valuation is always a matter of opinion. The courts have long held that when establishing a value in terms of the Public Works Act, the benefit of any doubt should be in favour of the dispossessed owner. This complies with the Act’s requirement to provide full compensation.
Confirmation the subject property would be required was confirmed in November/December 2011 and this is after the date of purchase and Mr Sweeney’s valuation. A notice of requirement that would trigger the owner’s right to compensation is not expected until September 2013. During that period, the owners have the disadvantage of having their property being in a state of “limbo” where they do not know when their land is to be acquired and at what price.
It is my experience that when land is in a state of “limbo” the owners are often disadvantaged. Prospective purchasers will often veer away from a property which is potentially affected, especially in a slow market when there are other alternatives.
Were the property to be sold during that period, it is likely a lower price would be received, if only as a means of attracting a buyer. The quantum of discount, if any, could only be assessed after comparison with sales on properties similarly affected with sales on property that have no potential for any impediment.
However, given the right for an owner to receive full compensation, it is my view that land to be acquired for a public work should not suffer any permanent loss in value. Once a Notice of Requirement has been issued, there are provisions under s185 of the Resource Management Act for an owner to obtain full compensation as provided under the Public Works Act. Furthermore, I am aware there are some circumstances where properties can be acquired before a Notice of Requirement is issued.
Were the owners paid for the perceived loss in value as assessed by Mr Tizard, and within a few months receive full compensation for the property as assessed under the Public Works Act, they would in effect be getting “two bites of the cherry”.
It is therefore my opinion that although the plaintiffs may be disadvantaged during the period between November/December 2011 and when the Notice of Requirement is issued, they will not suffer any permanent loss in value due to the Southern bypass route as proposed.
Mr Christopher Coakley, a registered valuer, was called as an expert witness
by the defendants. He authored a report for Quotable Value Ltd (BOD, pg. 139). The
report assessed that the market value of the property, as if it was not situated within
the Southern Links roading project investigation envelope, was $860,000. The report
then assessed that the market value of the property, as if it was situated within the
Southern Links roading project investigation envelope, was $830,000 (BOD, pg.
141). The conclusion to the report noted as follows:
In our opinion the inclusion of the subject property within the Southern Links project investigation envelope has some negative [effect] on the property’s value.
Even though this project is many years from fruition, some fully informed prospective purchasers may be put off from purchasing the property altogether. Others may realise that should the market be eventually required for the road that they will be fully compensated for the market value of the property excluding any influence of the proposed works, however they may still [expect] a discount due to unforeseen risks and a restriction on the development of the property once designated. As the property is already well developed any effect due to a restriction on development would be relatively minor.
We have attempted to show some relativity between properties possibly affected by proposed roading projects and those unaffected by any roading project. This analysis has shown a discount range of between 4% and 21% to the land value for various [effects].
This project is in the very early stages of planning and the time frame for commencement of the project is greater than ten years. Should the property be required for road and designated, the property would be totally acquired with full market value compensation which we believe lowers the risk of purchasing the property.
In our opinion the discount to be applied in this instance will be towards the middle of the range. We assess that the appropriate discount to be applied is 10% to the land value which calculates to 3.5% discount to the market value (BOB, pg. 149).
Mr Christopher Coakley commented in evidence as follows:
In my opinion, the material difference in value is no more than $30,000 in the market value. As I see it, whatever discount that Mr Sweeney ought to have arrived at in terms of the value, if he took into account the possible impact of the Southern Links bypass project, should be determined by an independent retrospective valuation as if the property had been valued as at 8 August 2011 taking into account any comparable property sales in the area.
The method of valuation used is usually referred to as the direct comparison approach. This approach involves the analysis of sales and making comparisons with the subject property after allowances for differences such as location, dwelling size, quality, views, other buildings, layout, other improvements, building platform, land size contour and special features.
In my opinion using market evidence to establish both valuations is the only way to arrive at a fair value in this instance. To do otherwise in my opinion makes the assessment very subjective.
My conclusion reached is that there is no great effect on the property’s value however as the market would rather purchase a property that is not in an investigation area there must be some discount. I have indicated how I have reached the figure of $30,000 in the difference in the market value taking into account any impact of the property being situated within the Southern Links investigation envelope.
Mr Barry Dowsett is employed by the New Zealand Transport Agency as a
principal advisor, transport planning, in the Highways and Network Operations
group. He was called as an expert witness by the defendants. He commented:
In summary, in my opinion there are remedies to owners of 164 Tamahere Drive that allow them to be compensated under the Public Works Act to a situation of being “no worse off” than they were prior to the Southern Links proposal being made public and the time frame for negotiation on compensation is flexible (ie there are no time limits). It is fair to say though that the NZTA is not currently actively seeking property acquisitions, but will consider all situations (BOB, pgs. 49, 50, 55).
Mrs Sylwia Piontecka commented as follows:
I want to say further that this whole situation has caused our family a lot of stress and anxiety. From the moment when I found out about the road going through our house, at the meeting in the Tamahere hall where I was physically sick with shock, I have had to get medication from the doctor. I have not been sleeping properly and this issue with the road has been hanging over me every day. I am currently taking Citalopram, for anxiety and Seroquel to help me sleep (BOB, pg. 28).
I find that the breaches of the Fair Trading Act by the four defendants caused
loss to the plaintiffs and that they are jointly and severally liable for this loss. I
further find that this loss is assessed as $30,000 for the difference between the value
of what the plaintiffs received and what they paid, together with $5000 as stress
damages. These amounts are inclusive of interest. My reasons for these findings are
First, I refer to the evidence which supports the finding that the breaches of
the Fair Trading Act by the four defendants caused loss to the plaintiffs. I refer to the
evidence of the expert witness Mr Geoffrey Tizard that the inclusion of the property
within the area designated for the roading network materially affected the value of
the property, and that this effect continues prior to the moment of compulsory
purchase. I refer to the evidence of the defendants’ expert witness Mr Ken Stevenson
that when property is in a state of limbo (as in this case) the owners are often
disadvantaged. I also refer to the evidence of the defendants’ expert witness
Mr Christopher Coakley, that the inclusion of the subject property within the
Southern Links project investigation envelope has some negative effect on the
Secondly, I refer to the evidence which supports the finding that the loss is
assessed as $30,000 for the difference between the value of what the plaintiffs
received and what they paid. I refer to the report compiled by Mr Christopher
Coakley, that the material difference to the property is no more than $30,000 in the
market value. I am persuaded by the balanced reasoning of his report, the method of
valuation and market evidence that was used, and his answers to questions posed in
court. I have also borne in mind the cautions contained in the evidence of the expert
witnesses Mr Ken Stevenson, Mr Barry Dowsett and Mr Coakley, to the effect that
there is a prospect of compensation accruing to Mr and Mrs Piontecki in the future,
which would mitigate their long-term loss. In light of these factors, I have adopted
the differential figure proposed by Mr Coakley rather than the figure proposed by
Thirdly, I find, in light of the evidence outlined in relation to breaches of the
Fair Trading Act (paragraphs [12-22] and [32-38], that there should be no discount
for alleged contributory negligence by the plaintiffs. They reasonably relied on what
Fourthly, I refer to the evidence which supports the award of $5000 as stress
damages. I note the evidence of Mrs Piontecka as to the degree of stress which the
roading issue has caused to her. I have assessed the damages at a figure below that
claimed in view of the case-law directing caution in this area.
I find the first, second, third and fourth defendants jointly and severally liable
I invite counsel to submit memoranda as to costs on scale 2B, within 10
working days of receipt of this judgment.
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