A major national company leased and badly damaged a 2.5 hectare industrial property. They also failed to repair other major damage that should have been covered by insurance. The insurance policy they took out had a $10,000,000 excess so they did not do the work. In July 2015 the landlord sent them a Repair Notice under the lease but they ignored it for over a year and ignored the many requests and deadlines to carry out repairs.
When arranging the lease the tenant said in writing that they would pay for special features provided in a new building to suit their needs and they would be a very long term tenant and that they would have a regular repair and maintenance programme but none of this happened. When they vacated on the last day of the initial lease term, they left behind a huge amount of deferred maintenance and damage and they would not co-operate with the many attempts to get them to help determine the work to be done and the costs involved. They had committed numerous breaches of the lease over many years.
When the landlord read and signed the lease they thought that it meant what it said. They knew that the Auckland District Law Society lease had been refined through many editions and had probably been used a million times by landlords to try to ensure that they were protected against a bad tenant and would always receive a known and acceptable rate of return on their investment. What they did not realise was that the clause requiring disputes to be settled by arbitration was a scam designed to help lawyers make huge profits. Arbitration meant that there were no precedent cases created relating to the lease. This undermined the rule of law and meant that the lease could be easily disputed and it was wide open to interpretation and abuse by lawyers. In the absence of precedent cases, lawyers turned to quoting from decisions in ancient overseas cases which were about different leases and from a different era, culture and property market. The arbitration process is free from judicial oversight so lawyers can ensure that it goes on for many years and is extremely expensive.
The landlord found from written evidence that the tenant leased numerous properties and they said that they left the maintenance and repairs, which the ADLS lease required them to do promptly, until they vacated. Prior to vacation, they ‘aimed to negotiate’ with the landlord to reach a settlement. They offered the landlord about half what their expert advice said would be the cost of the repair process and this was without the full extent of damage being known. This shows how the legal process is used by large organisations to avoid some or all of their legal obligations and this is at the expense of innocent parties.
The landlord was not able to claim compensation for the huge amount of work they put into getting the repairs done and enforcing the lease or for any of the negative impacts of litigation over many years.
The landlord had accepted many assurances by the tenant that they had monthly audits to ensure that all maintenance and repairs were promptly carried out
The landlord realised that when you get dragged into a dispute created by litigation lawyers, you have to accept that you will suffer big losses. As the landlord had some other major issues to deal with when the tenant’s vacated, they several times offered to settle for 75% of their costs and losses. These offers were not accepted so it indicates just how confident the tenant’s lawyers were that a lawyer arbitrator would ignore the numerous breaches of the lease by the tenant and would also ignore or minimize the rights of the landlord under the lease. In order to try to counter this, the landlord did a huge amount of work to ensure that they had all the relevant facts and documents for the witness evidence. They also checked to make sure that the lawyers did not leave anything important out of their correspondence, submissions and the witness evidence but the lawyers made the final decisions on what was included.
The law firm that the tenant used was one of the largest in the country and they had the advantage of being able to copy what they had done for the tenant in numerous previous cases.
Clause 3 of the lease required the tenant to pay all property expenses including maintenance and repairs.
Clause 5 provides for the payment of interest on overdue money.
Clause 6 provides for the tenant’s to pay for the legal costs of enforcement or attempted enforcement of the lease.
Clause 8 detailed the maintenance to be done and the requirement to promptly repair any damage.
Clause 22.1 prevents the tenant bringing anything onto the property which could contaminate or damage it.
Clause 12 required the tenant to advise the landlord of any damage to the property but this never happened.
Other lease clauses which protect the landlord include those relating to insurance, essentiality of payments, repudiation of lease obligations. etc
Under Clause 14.1 of the lease, if the tenant fails to repair damage, the landlord has the right to do the work without consulting the tenant and then charge the tenant with the cost plus interest. There is no provision for the tenant’s to let the landlord do the work and for the tenant to at a later date come up with claims about how the work could be done in a different way or at a lower cost. There is no provision for the tenant to be able to request that repair items be quantified or for a contractor to provide documentation. There is no provision for the tenant to dispute the materials used, the costs or the time taken. A bad tenant who does not pay for repairs, causes a lot of problems for a landlord so should not be able to challenge any work done except in exceptional circumstances.
The tenant ignored 11 email requests to allow their experts to meet the landlord’s experts and reach agreement on the work and costs. They forced the landlord into doing the work without their involvement so they should not have been able to question what work was done in order to try to avoid paying for most of the work. This would not be acceptable behaviour in any other situation but lawyers and the arbitrator ignored it because they wanted to encourage bad tenants to create as many money making disputes as possible.
The landlord had to mitigate losses so put a lot of time and money into getting on with the work. Several years later they should not have been open to being penalized for doing the work which was recommended by experts.
The lease required the tenant to pay all the costs and losses which occurred as a result of their numerous breaches of the lease. The landlord did nothing wrong so should not have had to pay for any of the repairs and suffer any of the losses which arose as a result of their acts and omissions. If the landlord had had a normal tenant, they would have complied with the lease and the landlord could have sold the property in 2015 when they advised real estate agents that they wanted to sell all of their commercial properties. The landlord would not have had to devote a large amount of time and money to getting repairs done and enforcing the lease and would not have lost a lot of money because the market value of the property had gone down by the time they sold it three and a half years later.
Normally, when a business is given the opportunity to do something and they do nothing, then they have no right to question what happens. For example, failing to submit a tender or make a Resource Consent submission. In this case, the tenant would not co-operate and ignored many requests. They allowed the landlord to go ahead and do the work so they should never have been allowed to question what was done unless there was clear evidence that some work was not necessary.
The tenant knew from past experience that they would not be penalized for their numerous breaches of the lease, as would happen with some other contracts if one party ignored their legal obligations or failed to do what they had signed up to do. This encouraged the tenant to ignore the lease and then create a dispute.
The lease appears to completely protect the landlord from a bad tenant but the litigation industry has arranged for the points made above to be ignored. The tenant was fanatical about complying with health and safety rules in order to avoid the possibility of a small fine but had no problems ignoring the lease. Large organisations know that it is more profitable to ignore a lease and create work for lawyers than it is to comply with the lease.
There are building surveyors and others who work full time providing evidence for lawyers in disputes created between tenants and landlords. Clearly, a big industry has been created throughout the country.
The landlord was forced to recognise that when an innocent party is up against the litigation industry, they have to expect to suffer big losses. As a result, the landlord tried to settle the dispute that had been created by making four offers to accept 75% of their costs and losses but these offers were rejected. the tenant and their lawyers must have been confident that the litigation industry would deliver them a much better result than only having to pay for 75% of the costs and losses they had inflicted on the landlord.
In 2016 the tenant tried offering a full and final settlement even though they had a report showing that the repairs and other costs would be far higher. The tenant’s lawyers later made a full and final Calderbank offer but this was 38% of the costs and losses so was not acceptable.
In early January 2017, an online search was done by the landlord to find a barrister.
The barrister put forward to the tenant’s lawyers two retired judges with knighthoods as possible arbitrators but these were rejected because they might know the barrister and want to favour him in order to get future work.
Application was then made to the NZ Law Society and they appointed an elderly retired judge on 13 April 2017. As he lived close to the tenant’s lawyers , this would have pleased them. He was in his late seventies and lived in a retirement village. Most people have declining cognitive ability from the age of 50. After making the main decisions he withdrew from the case before he could make a decision on legal costs.
The arbitrator required a Statement of Claim to be filed on 15 May 2017 and this was done by the barrister without consulting the landlord. It was 6 pages plus schedules.
the tenant’s lawyers said on 12 June 2017 that the Statement of Claim was very inadequate and requested a new Statement of Claim. The landlord’s barrister then wanted to go to mediation but the landlord did not want to do this because they knew that it was a splitting the difference exercise. He then said that it would be best for the landlord to engage a QC to deal with the tenant’s lawyers.
The QC recommended Karen from the firm that he had worked for to be employed to do most of the basic work. She prepared a revised Statement of Claim which was 35 pages plus schedules. This was filed on 4 September 2017. One problem which had to be dealt with later by the next lawyer, was that she did not say that GST had to be added to the amounts claimed.
The delay in appointing an arbitrator, which was caused by the tenant’s lawyers was longer than the delay in appointing a new lawyer.
The tenant’s lawyers requested further particulars on 27 September 2017 and these were supplied on 2 October 2017 but the owner of the construction company doing the repairs was overseas until the end of October so some details could not be supplied.
On 28 October 2017 the tenant’s lawyers complained because they had decided to go to the arbitrator when the landlord wanted an informal agreement about supplying the further particulars.
On 31 October 2017 the remaining further particulars were sent but on 1 November 2017 the tenant’s lawyers said that they wanted until 24 November to consider them.
The landlord supplied information which had been requested directly by the tenant’s property manager that the landlord had dealt with hundreds of times and they agreed to a site visit in December.
In late 2017 the landlord’s lawyer, Karen, moved 500 km away to a country area and started working from home.
The tenant’s lawyers asked to have until 29 January 2018 to supply the Statement of Defence. This meant that they created at least a six working week delay in supplying the Statement of Defence.
In March 2018 the landlord asked to have a settlement meeting with the tenant’s Property Manager so the tenant’s lawyers requested that the discovery period be extended by two weeks. After the meeting a lump sum settlement offer was made by the landlord on 14 March 2018 which was less than 75% of their costs and losses. the tenant’s lawyers kept delaying making a decision on this offer for six weeks until the offer was withdrawn.
Discovery was to be completed by 4 April 2018 and then 23 April but the tenant’s lawyers requested that it be delayed until 28 May but then agreed to 23 May. In their Memorandum of 9 August 2019, they stated that they had provided the bulk of discovery by 23 May. Their discovery documents were actually filed on 24 May and 25 June. They did not provide a satisfactory explanation for the delays which occurred so the landlord requested more documents. Over three quarters of their discovery documents were actually filed in November 2018.
They complained about the landlord’s discovery not being provided by 23 May but failed to mention that the landlord made a settlement offer on 14 March 2018 and the tenant’s lawyers held up work on discovery for six weeks while they kept delaying giving a decision.
Karen, had all the discovery documents prior to 23 May 2018 but still had to get photos, provided by the Contractor, numbered. She decided to not provide the discovery documents when they were ready at the end of May.
Note on 9 May 2018 the tenant’s lawyers were asked for discovery documents relating to the insurance excess and the insurance claim. These documents, like a lot of other documents that were later requested, were not supplied but the landlord did not complain to the arbitrator.
Starting in February 2018, Karen made several attempts to get the landlord to agree to pay for some door damage done by wind which occurred while repairs were being done. She also tried several times to get the landlord to pay for a report on the risks of not accepting an 18 month old inadequate settlement offer which amounted to 38% of the landlord’s costs and losses. These attempts were resisted and reasons were given. On 15 May 2018 the landlord advised her that an insurance company had made payment for the door damage and questioned whether she was working in their best interests when trying to get them to pay for a report which they considered to be unnecessary and a waste of money. Subsequent payments by the tenant’s vindicated the landlord not agreeing to pay for a report on the risks of not accepting the old offer.
The landlord’s discovery documents could have been sent in on 23 May 2018 or soon after but Karen stopped work and avoided communications until a partner got around to writing to the landlord on 12 June. He said that the landlord had lost trust and confidence in them so they were terminating their retainer. The landlord rejected this claim and asked for work to continue. Further emails were received on 24 June and on 12 July by the landlord and on each occasion they did not accept termination and asked for work to continue. At no time did they request that work be stopped on the discovery process.
As Karen had sometimes replied to emails outside normal business hours, the landlord was not sure what work she was actually doing and whether she might want to concentrate on alternative work or take on a more lucrative client or what ulterior motives she and her firm might have for terminating the engagement. It could have been that the firm wanted to phase out her employment or wanted to concentrate on a more lucrative dispute.
The landlord finally realised that there was no point trying to force her to continue work so on 17 July 2018 decided to engage a new lawyer.
The landlord could easily have agreed to pay for what they regarded as being an unnecessary report on the basis that the cost could be later claimed from the tenant but they were not prepared to waste money in this way. The saving made ended up being offset by the cost of employing new lawyers.
The landlord subsequently complained to the NZ Law Society about being terminated but the complaint was rejected. This was just another example of how the priority of the Law Society is to look after lawyers and it seems clear that it is in need of reform.
On 19 July 2018 the landlord contacted a medium size law firm which had six litigation lawyers to ask them to take over the case. They agreed to do this and thereafter the landlord had to pay for a litigation partner at $400 per hour and a senior solicitor at $295 per hour. Twenty months later the landlord discovered that since the senior solicitor had left in January 2017 the landlord had been charge for a senior associate at $385 per hour and the partner at $415 per hour. It would have been a waste of time and money complaining about not being advised of the changes so the landlord did nothing.
The landlord had already invested a lot of time and money in two lawyers getting to know the case but that was all wasted because they did not offer to give a refund. The chances of a new lawyer not making basic mistakes when a new Statement of Claim and all the evidence had to be submitted within a short time, was not good.
After dealing with several lawyers preparing the case, the landlord realised that they all had different ideas on what should be in a Statement of Claim and which documents should be discoverable or privileged. There was no simple set of rules to follow. This prevented clients asking for the rules and doing the donkey work themselves. It turned a clerical task into something secret, uncertain and complicated where they could do as much work as they wanted to do at high fees and mistakes would not matter.
On 17 July 2018 the tenant’s lawyers complained to the arbitrator about the delays and another matter which predated the commencement of arbitration. As the landlord did not have representation, these complaints were not responded to in detail in a memorandum.
Karen completed discovery work on 2 August 2018 and sent the documents to the new lawyers. They found that hundreds of documents had not been correctly classified.
A total of 1274 discovery documents were sent to the tenant’s lawyers on 14 September 2018.
The tenant’s lawyers had supplied 296 discovery documents on 24 May and a further 88 documents on 25 June 2019. These documents were not reviewed until after they had been received by the new lawyers on 3 August 2018. A total of 384 documents were received and on 22 August 2018 a request was made for further documents. Three months later 1405 documents were received from the tenant’s lawyers on 23 November. These documents should have been provided with the initial discovery documents in May. There were three and a half times more documents than they had supplied in May and June.
Holly, supervised by Mark, dealt with the case. After six months Holly left so the work and money the landlord had put into her getting to know the case was wasted.
On 12 December 2018 a request for documents which should have been supplied in May was made by the landlord’s lawyers and on 22 January 2019, the arbitrator ordered that these documents be supplied by 22 February 2019.
The above and the following are examples of the extra work lawyers can create for themselves and how they can make a lot of mistakes.
The landlord supplied 191 emails which they had sent to agents and potential tenants or buyers prior to repairs being completed and another 95 after that. The lawyers prepared a Marketing Schedule to summarise these.
The landlord went through the schedule and corrected spelling and grammatical mistakes. It was not possible to check each email to find out how correct the description was but there were about ten emails where the description incorrectly said that the email stated that the property was only available for occupancy and not for sale. The offer to pay three month’s rent had not been included in the description. About ten other emails said that the landlord would pay less commission amounting to three month’s rent so this had to be changed to more commission. Three months commission was 50% higher.
The descriptions did not mention that the landlord provided details of the property and the rental rates so the landlord had to insert under the main heading that three quarters of emails contained information promoting the property and rental rates for all or part of the property.
It is not normal to refer to industrial properties as being relet and the landlord said in emails that they wanted to lease or sell all or part of the property. The heading on each page was Attempts by the landlord to relet the property so this was changed to lease or sell part or all of the property.
The landlord initially provided 191 marketing emails and separately scanned 26 advertising invoices. The total on the marketing schedule was 144 so the other documents had not been included for some reason so the landlord had to fix this.
The landlord could have easily and more accurately prepared the schedule if they had been asked to do this relatively simple clerical task. There was no need to pay hundreds of dollars per hour for the grossly inaccurate work to be done and then pay for it to be fixed up.
Richard took over when Holly left in January 2019.
On 22 February 2019 the landlord provided 486 documents which they had originally not anticipated would be regarded as being relevant. These were about marketing the property etc and had been requested by the tenant’s lawyers. There were some documents which the construction company could not supply because the owner was overseas for an extended period. These were 127 internal documents and they were supplied on 11 April 2019. This made a total of 613 documents.
At this point, it should be stated that the tenant’s lawyers waited until their Closing submissions and then stated in 17 paragraphs that the property was not suitable to lease to a tenant. This ignored the marketing schedule, subdivision plan and emails and the 14 lease or sale options. The arbitrator copied what the tenant’s lawyers said and he denied the rent for the repair period of $815,000
The tenant’s lawyers supplied only 5 requested documents on 22 February 2019 but a lot more should have been discovered in accordance with the Joint Memorandum. The landlord could have complained to the arbitrator but continued to refrain from doing this and instead kept asking the tenant’s lawyers for these documents. The tenant’s lawyers moved 17 documents from privileged to discovered and these were supplied by them on 17 May 2019. This was a year after all the basic discovery documents were required. The landlord’s lawyers could have complained about the delays but did not do so.
The second amended Statement of Claim was filed on 15 March 2019. This was a week late and was with the agreement of the arbitrator and the tenant’s lawyers. As a result, the tenant’s lawyers should have filed their Statement of Defence on 4 April 2019 but this did not happen until 16 April. The document failed to comply with the arbitrators directions to quantify amounts and some further particulars had been omitted. The landlord made several requests for these details to be provided in order to assist with preparation of evidence. An amended Statement of Defence was not filed until 5 July 2019. This was a delay of three months.
The landlord’s lawyers had not been able to file and serve a Reply to the Statement of Defence and to finalise briefs of evidence. The evidence had to be driven from the extent of the denials by the tenant’s lawyers and the reasons given for those. There was certainly no attempt by the landlord to delay the exchange of evidence.
The tenant’s lawyers did not properly plead so this created delays.
When Holly started on the case in August 2018 she ignored the sequence of events that the landlord sent her and prepared her own sequence of events which was sent to the QC. It appeared that with this and with other things that the lawyers thought that taking on the case gave them the right to make money from each part of the traditional process.
In February 2019 the landlord had written to Mark to find out whether they could claim for the losses suffered and for the false assurances given about monthly audits and maintenance schedules and property audits and about the tenant being a long term tenant. Three months later the QC gave an opinion that it would be very difficult to do anything about the false assurances but he had not been asked about the losses.
Richard prepared the evidence and Mark checked it and the QC was then asked to check it. This very expensive checking contrasts with other rough and ready aspects of the whole process.
The QC had a lot of experience with court processes and case law and gave advice on the second cause of action.
At the time when the hearing started the elderly QC would have forgotten what he had been told over a year earlier and there would have been a lot of facts he did not know about or could remember.
The way a case is presented by lawyers is totally abnormal by modern report writing and decision-making standards.
Our four different lawyers had different ideas about what should be in the Statement of Claim. The third Statement of Claim set out the numerous breaches of the lease and the costs and losses incurred. The landlord made sure that it had headings so was easier to read and understand than earlier draft versions.
The tenant ignored 11 email requests to have their representative or their expert reach agreement on the work to be done. The landlord was forced to go ahead with the work and it is unacceptable by normal standards that they were able to challenge what the landlord did.
Legal researchers said that court staff had told them that when work dried up for lawyers in 2008, after that there was a huge increase in the size of Statements of Claim and Defence. The landlord was told that the Statements of Claim and Defence are not part of the evidence. And as they are not treated seriously by the other side, they are largely a waste of time and money.
The tenant’s lawyers denied everything in their Statement of Defence, including a lot of agreed items, but in January 2019 paid for 92 repair items amounting to about $300,000. These dishonest behaviours are regarded as normal by lawyers because they extend disputes and help them make money. The remaining 41 repair items amounted to about $1,500,000.
In July 2019 they paid $433,000 and in December 2019 $46,000.
The tenant’s lawyers denied almost all of the landlord’s claims in their Statement of Defence but they did not try to make the usual claim that some of the work done was betterment. They failed to give reasons for denying the numerous breaches of the lease and reasons why they denied most of the repair items so the document was of little value to the landlord.
The landlord had to make several requests for further information and then only received a limited response.
When the third lawyer took over she said that they had to check the discovery documents. They found that 485 documents had been classified as privileged but most should have been discoverable so they ended up with 149 privileged documents. Nine out of 58 documents which were classified as irrelevant had to be moved to discoverable. The discoverable documents had to be increased from 704 to 1086.
The tenant’s lawyers provided 380 documents and these did not include some of the basic correspondence the landlord had included. About one third of their documents were not relevant to the case. The landlord asked for some more documents and five months later they provided another 1400 which were mainly photos. About 50 of these had nothing to do with the case but showed that the lawyer checking the documents had no real understanding of the case.
When the landlord sent in discovery documents, they were in date order and searchable. The lawyers could have used an open source program to number them but chose to use a lawyer owned business to number them. After that they could not be read in sequence because they had been shuffled up and they were not searchable in the normal way. The landlord ended up paying about $20,000 for the documents to be numbered and stored for little or no benefit. When it came to the hearing, the initial numbers were not used and the documents were renumbered.
There was absolutely no need in the digital age to pay someone to renumber the agreed bundle of documents.
There was no need to print the huge number of documents and photos but the lawyers said that some people might prefer paper copies so they spent over $10,000 on printing. They also charged for buying three new bookcases that might have already been charged to many other clients. There were thousands of document and photo numbers in the landlord’s evidence so these were changed for the hearing at their expense. This is just one more way for lawyers to exploit clients and make extra money.
At the hearing lawyers and witnesses had to get folders from bookcases and look up documents so this took extra time. The document could have easily been put up on a screen which was being used for one witness and some of the photos and video clips. As only some of the discovered documents were in the agreed bundle of documents, when some tenant’s witnesses came up with new lies, it was not possible to refer to documents not in the bundle in order to refute what they said.
During the discovery process the landlord requested some internal documents several times but they were not supplied so the landlord gave up in the end.
There were a few useful documents which the landlord had been aware of but only received due to discovery. The landlord was able to use these to help their case a little. The tenant’s lawyers probably did not get anything extra for their case. It is doubtful whether discovery is worth the time and expense. Often there is a guilty party and an innocent party and the guilty party will want to avoid losing money or their job so will be dishonest when providing evidence and will not give up any documents which could be a problem for them.
The landlord was told that privileged documents included correspondence with lawyers and those documents with details of what had been discussed or agreed in settlement discussions.
The landlord did not label any of their emails as being without prejudice because they thought that they had nothing to hide. However, the tenant’s made a lot of emails that they wrote during the tenancy as being without prejudice, even though this only should have applied to a few which contained details of settlement negotiations and offers.
Some lawyers seemed to think that any email which mentioned the word lawyer or settlement or meeting was privileged. Even those emails which included a total settlement figure were well out of date and not relevant to the current claim. The landlord several times offered to settle for 75% of costs and losses due to trustees having major health problems at the time. Not allowing these settlement offers to be mentioned could create the impression that they were not prepared to compromise. Some emails which contained important information but had a paragraph about a settlement which could have been redacted, were not used in evidence because the landlord’s lawyers made them privileged and would not change this.
Lawyers write out evidence for witnesses even though they have little knowledge of the subject and the circumstances. The result is that they make basic mistakes and fundamental errors. If their client does not carefully check what they have prepared, false and potentially damaging information could be included or vital information could be left out.
The lawyer working on evidence puts it in their own words which can be quite different to the way a witness would put it and they can use words which the witness would never use and words which would never be used in the particular industry the witness works in. There are factual witnesses and expert witnesses. Most of the expert witnesses are in the business of making money out of disputes and it does not matter to them how accurate the information written by a lawyer is and what the result is. They can sometimes be motivated by the need to look after and retain a major client or they may want to get more work from lawyers who create disputes. Under normal circumstances, anyone with a conflict of interest is expected to declare it but lawyers choose to ignore this because these witnesses help create money- making disputes for all the lawyers involved.
A witness may have considerable knowledge of the industry in which they operate but lawyers may want them to just list a sequence of events and could be reluctant to let them state their experience and their areas of expertise.
It does seem ethically and morally wrong for lawyers to prepare evidence for witnesses but it is a profitable part of their business so they and judges and the N Z Law Society ignore this. Lawyers should only be able to check evidence and suggest in writing any changes they think are required.
In another case a witness said that he had written out evidence and sent it to a lawyer. When six months later he received his evidence to sign he discovered that some sentences which did not suit the case the lawyer was trying to make had been deleted. In other places new sentences had been added and words like ‘ very’ and ‘ extremely’ had been inserted. Lawyers should only provide each witness with a list of items they want them to deal with. The list should be attached to their evidence and lawyers should not be permitted to tamper with any evidence.
The landlord prepared background information for a few witnesses when they had a good knowledge of what they had done. The lawyers could have changed and added to this but they ignored it and wrote out their own evidence, including a lot of mistakes. The landlord then had to suggest changes before the witnesses saw their evidence.
Lawyers usually set out the evidence as a long sequence of events. There is no contents or sections covering all the details relating to each significant issue. This makes it almost impossible for anyone making decisions to find and work out what all the facts and significant considerations relating to a particular issue are.
Instead of quoting a sentence from a document and giving a document number, lawyers make up their version of the sentence and give the document number. This means that anyone reading what was written would not know how accurate it was and would either have to find and check the sentence in the document or otherwise regard it as being an uncertain statement. The landlord insisted on having some actual quotes in evidence but the tenant’s lawyers complained about this.
The huge amount of time required for the arbitrator to read through all the evidence, meant that it was very unlikely that he would look up any of the documents. Taking into account how unreliable unsworn evidence prepared by lawyers can be, he would not know whether the lawyer/witness version of a document quote was reliable.
Documents are more readable if they do not have jarring abbreviations of names and terms which take time to interpret and adjust to and can be confusing. The amount of digital space taken up is minuscule. This practice like the many other outdated methods being used should be abandoned or restricted.
The landlord’s impression was that the legal system did nothing to discourage dishonesty and distortion on the part of lawyers and witnesses. In fact dishonesty seemed to be encouraged in order to create more uncertainty which would then make it easier for the creator of a dispute to be rewarded. The hotchpotch of information put before the person making the decision creates so many uncertainties that it is easy for them to make an arbitrary decision which will suit the lawyers involved but will not result in a fair and just outcome for an innocent party.
When the landlord sent the lawyer background information, she ignored it and researched her own version from documents. The landlord then had to correct some fundamental errors and a lot of mistakes and try to work out what important information had been left out. This happened with another lawyer when the landlord sent in details of issues which they needed to have two witnesses deal with. The lawyer failed to include in the evidence he wrote out for the two witnesses the main reasons why they were being asked to provide evidence. There have been other instances of this type of thing happening and lawyers creating work for themselves. It does appear that lawyers think that they have the right to make money at every stage of a case and may aim for a good percentage of the total amount involved.
In April 2019 the landlord was given the short evidence of a few minor witnesses which had been prepared by young lawyers in the firm. Each document had some fundamental errors and omissions and a lot of mistakes and some poorly written sentences.
The person who took videos and photos of the property had a brief of evidence prepared but in the end did not have to appear as a witness. the tenant’s lawyers wanted an application made to the District Court to require the person from the BNZ who wrote to the landlord a one sentence email stating their current base lending rate to be a witness but the arbitrator did not agree. This providing of proof of minor details by a witness contrasts with lawyers preparing evidence for witnesses when they have little or no knowledge of the facts or subject involved.
It is very easy for a witness to concentrate on checking spelling and grammar in a document and not realise that important information has been left out. This information can be critical to a case but a lawyer who does not know much about the subject may decide that it need not be included or may not know to ask the witness about it.
The landlord prepared their main evidence with a contents and it was divided into sections which dealt with each important issue. This happens with any book or multi page document and is essential and logical but the litigation industry does not allow this. It makes it extremely difficult for anyone having to prepare a decision to have access to all the facts so it is easy to reward the party who created the money-making dispute. An arbitrator can make major factual errors in their decision but under the Arbitration Act no appeals are possible unless on a point of law.
Over two months after the landlord’s evidence was sent in, they got it back on the day when it was supposed to be submitted. They were expecting that some sentences could be cut out or changed but they were not expecting the large scale rewriting with many fundamental errors, numerous mistakes, bad grammar and some garbled language. What was worse was that they had assembled all the facts about a particular issue under one heading but a lot of this was moved and mixed around due to ignorance of the facts and issues. Some sections were deleted including those on the list of main participants. Other sections which were important in terms of the lease and the Statement of Defence were deleted or information was inserted elsewhere due to lack of knowledge of the issues. While some good rewriting was done to give expression to the landlord being disappointed etc, the sentences were not those which they would have written and included lack of punctuation and frequent use of words like given which they would not normally use. The landlord had to spend five days trying to fix up and unscramble the mess. It was difficult to work out which important paragraphs had been deleted for no good reason or had been moved or changed.
After two months the landlord got their evidence back close to the new time when it had to be submitted. Long hours had to be spent going through it to try to get it into shape.
Several months before evidence was due the landlord had commented on the draft evidence of three witnesses. This included suggesting some additions and alterations and the correction of spelling, grammar and other mistakes. A few weeks before the evidence was due, the evidence was received again but it appeared that little or no notice had been taken of what had been suggested. Some minor mistakes were still there and the landlord noted about 30 minor word mistakes in an 89 page document. The lawyers had to check, correct, renumber and reformat the documents before they went to the QC for checking.
Five days before the lawyers had to send in a response to an amended Statement of Defence and ten days before all the witness evidence had to be submitted, the landlord wrote to Richard who did most of the work on the case. An auto reply was received saying that he was in court for the next two weeks. He would have known about this for a long time and would have been preparing for the court case but never told the landlord. It was then over to Mark, the supervising partner, to get everything ready by the due dates if he had time. This mainly involved finalising the evidence of 8 witnesses.
To ensure that the evidence got in on time, Mark worked outside normal hours and the landlord received emails some evenings and at the weekend over the last two weeks when Richard was in court. However, the case would have been negatively impacted at this critical time.
It did appear that the tenant’s lawyers had written into the evidence of some of their expert witnesses the same false claims. This included the valuer and real estate agent saying that a potential tenant would not mind taking on a damaged property and doing over $2 million of work, etc. A valuer is not involved in the leasing of properties so his opinion should not have been included.
Their witnesses were keen to keep their jobs and to retain a major client. The landlord’s witnesses were not going to get any future work and could have lost some future work from the former tenant. The landlord was not allowed to mention the conflicts of interest.
The witnesses talked to Richard and he wrote out their evidence. While he did a good job of writing the evidence, there could have been fundamental facts or issues he left out or mistakes he made due to lack of expertise or knowledge.
It would have been better and more honest if witnesses had written their own evidence. They could have been given a list of topics to cover and this list could have been attached to their evidence.
What happened could be typical of the way lawyers regard their work and their clients. Whether or not the best possible case is put forward depends on who in the office does different parts of the work and what they know about the case and what time they have available. The client has to pick up a lot of mistakes but may overlook some and may later be cross examined on them. Huge fees are charged for poorly prepared evidence that does not require any legal expertise.
On 8 April 2019 the tenant’s lawyers sought documents relating to the sale of the property. As the sale was 16 months after the repair work had been completed, the landlord considered that this information was not relevant. After making further requests, the tenant’s lawyers said that the documents were required to show that there had not been a loss on the sale of the property. The landlord then decided that if the losses on the sale of the property had to be worked out, then those losses should be claimed. After receiving legal advice on 26 June 2019, the landlord took into account the possible delay to the hearing and other factors and ended up making the decision to proceed with the second cause of action. There was no delay in advising this second cause of action. The landlord thought that, if the arbitrator was going to have to reward the creator of the dispute, he could do this by knocking back the second cause of action and could then agree to most of the original main claim. The arbitrator did end up not allowing the losses on the sale of the property and made decisions on the main claim that cost the landlord over $2,780,000.
The tenant’s lawyers claimed in a Memorandum dated 4 July 2019 that the arbitrator had ordered that documents relating to the actual sale of the property be provided by 22 February 2019 but this was not correct. They falsely claimed that the marketing documents which had been provided only referred to lease of the property despite the fact that 147 emails included the word sale or the word sell. It appears that they were trying to imply that the landlord should have added to the marketing documents, the documents relating to the actual sale of the property but these were in a different category and in a different folder. The marketing emails were provided to show the efforts made by us to lease or sell all or part of the property. The tenant’s lawyers only requested the actual sale documents on 8 April 2019.
The arbitrator directed on 8 July 2019 for the first time that the sale documents be provided and that this was to be on 22 July 2019. The landlord complied with this but as some documents had to be obtained from an agent who was away, some were not provided until 26 July 2019. The tenant’s lawyers knew about the 4 day delay and raised no objection to it. However, they later complained to the arbitrator that the landlord had not complied with the timetable and said that no sale documents had been provided until 26 July 2019. This was not correct.
The arbitrator agreed to the inclusion of a second cause of action on 8 July 2019.
The tenant’s lawyers pleaded to the second cause of action in its Statement of Defence dated 23 July 2019 so they lost the right to object by doing this. Three and a half weeks after the second cause of action was allowed to proceed, the tenant’s lawyers objected to the decision in a memorandum and then raised this again a week later in another memorandum on 9 August 2019.
The tenant’s lawyers did not accept four emails and a letter from the BNZ setting out the base lending rate on unsecured lending at different times. They made an application to the arbitrator for Catherine Chu of the BNZ to appear as a witness but their request was declined. They then tried to introduce the base lending rate on secured lending which was a much lower rate.
The tenant’s lawyer’s requested 73 working days to do work which when the landlord did the work took the available 22 working days to complete. The hearing was delayed for one month to give them extra time.
Despite the many delays created by the tenant’s lawyers, no complaints were made by the landlord’s lawyers.
At the tenant’s lawyers there was one change of lawyer working on the case prior to it being transferred to the tenant’s new lawyers three weeks before the hearing.
In their memorandums, the tenant’s lawyers made some false and misleading statements to try to support their complaints against the landlord. They even blamed the landlord for delays they caused and they did not acknowledged the delays they created. Their complaints seem to be a strategy to divert attention away from the main issue which was the completely unacceptable behaviour of the tenant when it committed numerous breaches of the lease and failed to promptly remedy them.
When the landlord decided to claim for losses on the sale of the property, this did create some extra work in the six weeks before the evidence was due but it was mainly an extension of what was already being done. Just as much time was taken up by the tenant’s lawyers complaints to the arbitrator about the new cause of action. These were rejected but the arbitrator said that the future timetable had to be strictly adhered to.
When the tenant’s lawyers received the landlord’s evidence they sent a memo to the arbitrator complaining about delays an saying that the landlord had significantly expanded the scope of the arbitration by a very late amendment to the claim and had produced an enormous amount of evidence that went far beyond the scope of the reinstatement dispute between the parties.
Mark prepared a memo responding to their two memos but mainly dealt with the delays they had caused. He did not say that anything they had said was untrue. The landlord sent him a long email refuting the several untrue statements they had made. He did not change his memo and failed to show the small amount of time spent on the second cause of action and that there was no need for them to be given extra time.
The only extra evidence the landlord put forward was about the negotiation of the lease and brief details of some of the extra work done for the tenant and some of their attempts to avoid costs. These were almost all brief facts which would have needed little or no additional work by their lawyers. The damage and lack of maintenance occurred over many years so the evidence about this and how they were generally not a good tenant, was relevant to the breaches of lease and to them paying for the repairs carried out. Therefore, the evidence should have been no surprise to them. They did not prepare any evidence on what they could have regarded as being unnecessary evidence and the tenant’s lawyers did not later cross examine on it so there was no need for them to have extra time.
The landlord’s lawyer failed to put up a good case to stop the hearing being delayed so the tenant’s lawyers were given an extra 7 weeks and were allowed to put in a challenge to some paragraphs in the landlord’s evidence.
The tenant’s lawyer’s had over three months to deal with the landlord’s evidence, but the landlord was given one month before the hearing to deal with their evidence.
They objected to about 25 paragraphs in the evidence provided. The arbitrator said that about 8 paragraphs had to be removed because they were not relevant. However, the lack of precedent cases meant that the landlord needed to refer to what they knew had happened in other situations as a way of showing what normally happens.
Making quick decisions on paragraphs which have been taken out of context is not very satisfactory. For example the evidence of the construction company about what 20 insurance assessors have done in other cases might not seem to be relevant. However, it was relevant because elsewhere in the evidence it was stated that the tenant did not claim on its insurance policy so an insurance assessor did not inspect the property and make decisions in the same way an insurance assessor would do. What an insurance assessor accepts as damage can be quite different to what an engineer would accept.
The lease requires disputes to go to arbitration so there are no case law precedents. This allows lawyers around the country to create disputes using the same dodgy arguments time after time and to carry them on for as long as they like. As there were no precedents the landlord used examples of what other tenants had done to contrast with the behaviour of the tenant but these were said by the arbitrator to be not relevant.
The landlord wanted a court case but was told that the lease required disputes to go to arbitration and that this would be quicker and cheaper than a court case. This was false because the case took many years longer than a court case and the parties had to pay for the arbitrator, his travel and accommodation and the venue for a long hearing.
The landlord was originally told that the hearing would be in 2017 but it was postponed several times until mid- November 2019.
The arbitrator or judge is supposed to have read all the factual witness and expert witness evidence before the hearing. This could involve a thousand or more pages of written evidence an documents and photos. It could take many days so might be skimmed over. The written evidence should form the basis of the case but a lot may not be remembered. As a picture is worth a thousand words, the written evidence could be swamped by what goes on at the hearing. The lawyers only deal with a limited number of issues at the hearing so a lot of very important facts could get overlooked when decisions are being made months after the hearing.
The lawyers make opening and closing submissions which summarize the case and the legal arguments. The hearing is mainly about the witnesses being cross examined about some aspects of their written evidence. This can mainly be a test of memory, quick thinking and verbal ability and it usually does not expose dishonesty. A barrister said on radio that court lawyers bullied witnesses into giving them the answers they wanted.
The arbitrator makes brief notes which will leave out a lot of important information. Weeks or months after a hearing they will remember little of the written evidence they read and what happened at the hearing. They will have difficulty sorting out a jumble of facts. The arbitrator is unlikely to remember and pull together all the facts on a particular issue and may not realise the significance of some facts.
The easy way out for the arbitrator is to reward the creator of the dispute so that all the lawyers involved are happy and the lawyers are encouraged to create plenty more work for him and other lawyers.
From mid- 2015 the tenant’s Property Manager several times claimed that he had been given legal advice about their obligations but the various advice was clearly wrong. He would not have made this up so the tenant’s lawyers must have provided the advice in order to start a dispute.
At the hearing, the arbitrator asked the parties to dispose of the smaller items. The landlord agreed to not claim or split the difference on about $40,000 of smaller items but should not really have had to do this.
The landlord asked their lawyers to start preparing the Opening Submission two and a half months before the hearing. Five weeks before the hearing and a week before all the defence witnesses evidence was due, the landlord was sent a copy of a draft document.
Some basic mistakes indicated that two people could have been involved in writing the document.
It appeared that the 11 pages of notes the landlord sent in had been ignored. These notes included all relevant lease clause numbers and some notes on important items which they did not want left out. As important information was omitted, the landlord moved important details in a summarised form into the Opening Submission and also attached the list of the relevant lease clauses so that any important clauses which had been left out could be inserted.
The landlord increased the 37 page Opening Submission by about 4 pages of suggested information. This was important information supporting their case on various issues. Two important issues had not been dealt with. One of these was that the landlord had made many requests for experts to meet and decide on the work and costs but these requests were ignored. Under normal circumstances it would not then be possible to challenge the work done and the costs. Some critical errors had been made which could have caused a problem. In addition, six dates had to be corrected.
A few days later the landlord read the Opening submissions. the landlord realised that important information had been left out and that some information which was needed to support some critical issues was only included earlier in the document. The breaches of lease relating to maintenance and damage had been dealt with but no mention was made of other breaches of lease including clauses on the essentiality of payments, repudiation and making insurance ineffective by taking out a $10,000,000 excess. The lease stated that the tenant must pay the landlord the insurance excess when damage happened but the landlord’s lawyers refused to mention this. Anything in the lease that did not favour the tenant was going to be ignored and important clauses were going to be cancelled out by unrelated old overseas cases.
The average client would not carefully check Opening Submissions so these are probably riddled with errors and omissions. It is difficult to know whether anything which happens at the hearing makes any difference. Lawyers may just go through the motions in order to make a lot of money. The outcome may be pre-determined by a lawyer arbitrator who has to look after the lawyers who created the dispute.
The landlord’s lawyers let slip that they had had phone calls with the tenant’s lawyers to make arrangements about various things.
Their lawyers had 10 weeks to deal with the landlord’s evidence. This included making objections and adapting their evidence to counter what the landlord said. The landlord only had 3 weeks to deal with their evidence (including Labour Day). This included putting in any objections within one week and a response to their evidence within another two weeks. This was then two weeks before the hearing.
The landlord had to do a lot of work to make sure that their lawyers had all the facts and were able to use them to try to get the best result. This collaboration worked reasonably well but still quite a lot of what the landlord wanted mentioned did not get included. However, what was presented was much better than it would have been if the landlord had not been involved.
The tenant’s property manager who the landlord exchanged hundreds of emails with and always dealt with, was not a witness. Their lawyer asked two of their witnesses whether they knew that earlier in the year he had gone home to England. The tenant’s local manager said that he thought that he had gone on holiday but he later returned. The landlord got someone to send him an advertising email at the tenant’s email address but there was no auto reply saying that he was out of office or no longer worked for them. It was possible that he might have been employed as a consultant for the tenant or for another tenant company until the case was over. The landlord thought that the tenant’s lawyers twice asked their witnesses to confirm the story about their absent Property Manager in order to pre-empt any questions by the landlord’s lawyers. Several times the landlord asked their lawyers to ask some tenant witnesses if they knew who he was currently employed by and if there was any tenant connection but they did not do this. Deliberately not having their main witness provide any evidence was not acceptable by normal standards but suited all the lawyers involved.
Two others the landlord thought would be tenant witnesses did not give evidence One was the author of a report by Colliers which the landlord received in discovery. The other was the valuer who had prepared a report for them in 2015 and who must have been replaced by a more compliant valuer who was prepared to say what they wanted in order to retain a large client.
The tenant’s lawyers had wanted a BNZ employee, who wrote a two sentence letter, to be a witness at the hearing but, in contrast, the landlord’s lawyers did nothing about the tenant’s major missing witnesses.
The hearing was two weeks instead of the planned three or four weeks. The tenant’s new lawyers told the landlord’s lawyers that they wanted the hearing kept short but the landlord said that they needed to expose all the bad things the tenant’s had done so any deals should not be done with them. However, a deal could have been done because the actual hearing was only 8 days and the landlord’s lawyers failed to ask most of the important questions that the landlord had provided.
The landlord’s lawyers advised the landlord to pay $5000 to have a separate room at the hotel where the hearing was held for four weeks for any discussions. The tenant’s lawyers were not staying in the hotel so used the lounge outside the hearing room as their private space. Richard, who knew more about the case than any of the landlord’s lawyers stayed in the room for most days doing some of the work and arranging the details for the running of the hearing.
On the landlord’s side of the table there were the QC and Mark and the landlord’s representative. On the tenant’s side were two younger lawyers representing the tenant and on the first day a representative from the tenant.
The Auckland based arbitrator was 78 and lived in a retirement village. It was difficult to know how much his memory and cognitive ability had declined with age. He did not provide his decision in the two months after the hearing so he would have forgotten most of what happened at the hearing and would have to rely on his notes. The landlord hoped that he would consult the written evidence but most of this was presented in a traditional way which made it difficult to access all the facts about a particular issue.
Some short video clips and some photos were shown at different times during the hearing by the landlord’s lawyers. The total time taken up would have been about 20 minutes but the landlord had got a three hour video taken when the tenant’s vacated and an hour long video taken about six months earlier than this. What was shown could have been adequate but a far longer video would have given a much better picture of the damaged state of the property.
When the landlord first met the QC in 2018 they found that he did not know that in two clauses in the standard ADLS commercial lease interest could be charged on overdue amounts or on repairs which the landlord was forced to do. This was a major concern and as he was over 75 the landlord wondered whether he would be as sharp as someone younger and would not have short term memory difficulties. The landlord asked their lawyer, Mark, about these issues and he assured them that there would be no problems. The QC was previously a partner in their firm so they gave him a lot of work regardless of any problems.
At the hearing, the QC several times called one witness a similar name. He mixed up the names of some witnesses and forgot others. He was often not persistent with his questions and allowed witnesses to get away with not answering questions.
The arbitrator asked him whether the landlord was relying on three of the clauses the landlord had listed as being important and he said no without knowing what he was doing. The arbitrator said that he would strike them out.
About two months before the hearing, the landlord prepared 17 pages of questions for the tenant’s property manager they had dealt with and the landlord said to Richard that any competent lawyer should be able to wipe the floor with him. However, he was not put forward as a witness. The Senior Property Manager who stood in for him told a lot of lies in his written evidence so the landlord adapted the 17 pages of questions and added a further 8 pages. The landlord’s lawyers gave the QC six pages of questions and he said that he cut them back to a few pages. This fitted in between a medical appointment and a funeral he had to go to. The Senior Property Manager who had told a lot of lies in his evidence got away with most of this. He was required to answer a lot fewer questions than the landlord’s representative had to answer.
The landlord had prepared some suggested cross examination questions for another four of their witnesses but there was little sign that any questions had been used. The QC cross examined their valuer witness, who had no experience leasing properties but claimed that tenants would not have been concerned about the $2 million damage to the property. The elderly QC let him get away with this and he came across as a credible witness. A smooth operator can get away with a lot.
From when the landlord first went to a lawyer to start the case, the landlord tried to save money by preparing basic information which was required. the landlord also asked to see documents before they were sent in to make sure that nothing important was left out. Some of their suggestions were accepted but ultimately the lawyers said what they wanted to say. They may have known that some things were not allowed to be said or they may not have understood the importance and relevance of some of the points the landlord was making.
There did seem to be a cross examination policy on each side of concentrating on one area of a witnesses evidence and ignoring the rest. The landlord had made notes on other possible questions which the landlord might be asked but most of the questions the landlord prepared for were not asked. The landlord’s representative was questioned for one hour on the first day and three hours on the next day.
Lawyers do not like hearings because they disrupt their business and they have to work longer hours and may have to be away from home. They prefer to do all the work leading up to a hearing and get paid for it and then get their clients to settle through mediation or negotiation. This results in the party who created the dispute being rewarded for doing this. Often legal costs and interest which the dispute creator is required to pay get overlooked when a settlement is arranged. There is no compensation for the extra work and all the negative impacts suffered by the innocent party. The parties become responsible for the outcome and the lawyers cannot be criticised and they retain their clients. Lawyers do not want a court hearing because they have to keep to a judge imposed timetable and hearings disrupt their business and create precedents which limit future money making opportunities. In an arbitration lawyers can get away with making as many false and misleading statements as they like over many years in order to retain a large dispute creating client.
As there were no precedent cases, the lawyers mainly relied on an 1891 British case called Joyner v Weeks. Other old overseas cases were also used. The lawyers also relied on quotes from legal books. The only really relevant case was a New Zealand court case which was about a drop in value of a property caused by delays. There were no precedents relating to the many hundreds of thousands of Auckland District Law Society leases which had been used over past decades. This was due to the lease requiring disputes to go to arbitration where the same old arguments could be run for each case. For example, there is no definition of ‘fair wear and tear` so millions of dollars have probably been wasted arguing over what it means.
What the parties read and signed up to was basically ignored in favour of cases about different leases from different countries and eras with different circumstances. This allowed the meaning of some clauses in the lease to be changed in a way that rewarded the tenant.
Lawyers have no concern about whether a case delivers a just result under the circumstances.
The landlord knew from talking to others that lawyer mediation was not about establishing the truth and arriving at a just outcome. It was about splitting the difference regardless of who the innocent party was.
About 20 years ago a clause was removed from the ADLS lease which had indemnified the landlord against costs and losses arising from the acts and omissions of a tenant. This clause needs to be reinstated and a range of improvements made to the lease.
The arbitration clause in the ADLS lease needs to be removed and some case law precedents established. If cases had to go to court, those who deliberately created disputes would be deterred from doing this to avoid unfavourable publicity.
At the hearing, the landlord’s lawyer, Mark, wrote down any significant answers to questions asked by the QC but this would not have been very accurate. Mark cross examined some witnesses and was much better at cross examination than the QC. When the QC was at a funeral he had to ask the questions and at the same time note important answers so this was not satisfactory. He should have got Richard to take notes but he might have been dealing with another case. Richard knew far more about the case than the QC and Mark put together but he was not in the hearing room.
It is unlikely that lawyers are able to take accurate notes during a hearing and can later put forward accurate quotes in context.
The landlord’s written reply evidence had stated that some of their witness evidence was not correct. At the hearing some of their witnesses were then able to explain away what they had said and to tell lies about some things not previously mentioned but the landlord had no opportunity to say anything to refute this or to provide documents to show that they had lied. Some of this false information was included in their closing submissions.
The lawyers on each side decided that it would be a good idea for the two engineers on each side to meet and try to resolve their differences. The landlord’s older and more experienced engineers got their younger engineers to agree with them so that should have been good for the three main items which made up over half the repair costs. However, the landlord’s lawyers sprung on the landlord the idea that the building surveyors should meet for what was called hot tubbing. They were asked to report on whether the costs were reasonable and the time taken was reasonable. This should not have happened because they were not quantity surveyors and only had limited knowledge of costs and what work was done. They took ‘reasonable’ to mean the minimum cost so reported on what they thought the minimum costs might be and what they said the ‘absolute minimum time’ might be. This is the opposite of what they should have done. They should have reported on anything they thought was excessive and unreasonable.
The two building surveyors were questioned together on each of the repair costs. One third of the way through the list of costs, they said that the engineers fees were not reasonable and suggested lower figures. The arbitrator then asked to talk to the lawyers outside the room. He said that the actual costs paid appeared to him to be reasonable so there was no point asking further questions. This indicated that he thought that the building surveyors had taken the wrong approach and their inpromptu guesswork was not worth hearing about. However,
the decisions he later made were the opposite of this so he must have forgotten what he said. He prevented the building surveyors being questioned about the minimum cost estimates they had made about major repair items and he then in his decision quoted the tenant’s building surveyor far more than anyone else who was a witness. The evidence of the engineers and building contractor were largely ignored.
When the landlord’s representative was left in the hearing room with the Building surveyors, they told him that the lack of precedents was a major problem when it came to resolving disputes. They thought that the Building Owners and Managers Association BOMA lease which is not often used by lawyers was a better lease. They also said that almost all disputes were resolved by settlements or mediation after all the lawyers work had been done.
Richard prepared the closing submissions with suggestions from Mark, the QC and the landlord. They were read out by the QC with little expression and stumbling over words. The presentation by the tenant’s lawyer came over much better.
Mark and Richard would have done a much better job on cross examination than the QC. They had a far better knowledge of the facts so had to tell the QC what to say.
During the opening submission he told the arbitrator that three lease clauses could be deleted as they were not relevant. the landlord told Mark that they wanted to rely in a minor way on these clauses but nothing was done about this.
The landlord could only hope that the carefully prepared written evidence would not be overshadowed and undermined by the inherently flawed hearing processes.
The necessity to work towards a hearing and to go through a hearing means that citizens who do not know the special rules of hearings and evidence and do not have experience in the tricks of cross examination, have to employ a lawyer. A better way to deal with disputes would be to eliminate cross examination and put the emphasis on truthful written sworn evidence by the claimant and respondent with penalties for anything proven to be false.
Valuers have little or no involvement with the leasing of properties so their opinions about leasing and vacancy periods were of little value and should not have been put forward.
The tenant’s Closing submissions raised issues that had not previously been dealt with so this was unfair. There were 13 pages designed to avoid paying interest on overdue amounts and 17 pages of false information designed to show that rent should not be paid for the repair period.
The reply from the tenant’s lawyers contained two false statements and also claimed that the condition of the property did not affect it being leased.
The closing submissions should have only dealt with issues covered at the hearing. While the landlord’s closing submissions had a few basic paragraphs about the lease clauses requiring penalty interest to be paid, the landlord could not have anticipated the 13 pages of issues they raised on interest. They probably just copied their interest arguments which had been used on many previous occasions in similar arbitrations. The landlord said to their lawyers that they should request the opportunity to put in an extra submission but the lawyers did not agree. In the landlord’s reply, which was limited to 10 pages, they only had less than a page to deal with some of the tenant’s lawyers interest claims and with cases that were not relevant so this was far from satisfactory. Consequently, the arbitrator decided that default interest did not apply.
The landlord thought that it might be difficult for someone making decisions on the cladding to envisage the full extent of damage so the landlord got photos of the cladding photoshopped to show what 66 patches would look like outside and inside the warehouse. The landlord mentioned these photos in evidence but the lawyers never referred to them so the arbitrator probably never saw them.
The landlord’s lawyers closing submission on the cladding was poor due to some important facts being left out and then not being included as a result of problems with track changes. The landlord suggested that the important facts could be put in as a separate correction submission but this did not happen. Instead, a footnote was put in which stated that the building surveyor had reported that the sheets could have been patched but what he actually said was that the landlord should have gone further than part replacement and should have replaced all the sheets. This bad mistake could have resulted in a negative outcome so the landlord advised Mark and he replied and said that the arbitrator had been advised. This was good and quite unexpected if it happened. Despite the possible highlighting of this important fact, the arbitrator later ignored it and the reason for the landlord not wanting to pay for half the cost of replacing some of the damaged cladding.
The notes in this document about what happened with this case were written prior to the Award being received so were not influenced by it.
The landlord thought that the Award could have been worse if there had not been the following factors.
The landlord put a huge amount of time into making sure that all important facts were included in the evidence under appropriate sections.
The landlord checked the drafts prepared by the lawyers to ensure that there were no errors and omissions and fundamental mistakes. ( but the landlord did not check what they sent in )
The landlord attended each day of the hearing so the arbitrator knew that it was more than just a money making exercise for the lawyers.
The amount charged by the arbitrator to read the written witness evidence indicates that he only skimmed through it. The 78 year old retired associate judge had probably forgotten anything he read by the time he came to write his Award three months later. He had previously said that he owned shares in the tenant company and was a conservative. In his decisions, he relied heavily on notes he made about what the tenant’s witnesses said at the hearing and what the tenant’s lawyers said in their submissions and even copied extracts from their submissions. He quoted their witnesses far more often. He ignored or forgot almost all of the landlord’s witnesses written witness evidence from those directly involved which was the most reliable and accurate account of what happened.
OVER $2,000,000 DAMAGE
If the landlord had had a good tenant who complied with the lease, none of the costs the landlord claimed would have been incurred and the landlord would not have had to put in a huge amount of time over many years getting the repairs done and taking legal action. The landlord would not have had their work disrupted and put on hold and would not have suffered many of the negative impacts of litigation.
The tenant committed numerous breaches of the lease over many years. They ignored the repair notice sent to them a year before the end of the lease and failed to yield up the property in the condition required by the lease. They did this in order to save money but they were not criticised or penalised by the arbitrator. In fact, they were rewarded by the arbitrator for their unacceptable actions that created the dispute.
The landlord’s representative had 134 pages of evidence (plus 53 pages of reply evidence) but this was almost all ignored except for email quotes relating to the issue of whether the repair notice was valid. The landlord was also quoted in relation to the cladding but the most important beginning and end quotes were left out. The 93 pages of evidence (plus 57 pages of reply evidence ) of the building contractor regarding what actually happened with the repair work was largely ignored in favour of what the building surveyors guessed at in relation to reasonable costs and what they said was the absolute minimum time to do the work. The building contractors staff had closely checked each damaged item before deciding what to do and then the landlord had to pay for the actual cost of the work. This was ignored in favour of what the building surveyors saw in photos or might have remembered and what they guessed was a reasonable cost.
Before and during the repair period the landlord made 11 email requests for the tenant to have their representative or an engineer help determine the work to be done. The tenant’s witnesses said that this should have been done but at the time the tenant ignored the many requests and then deliberately created a dispute. Under normal circumstances when you ignore many opportunities to do something, you cannot complain or do anything about it later. The arbitrator never mentioned any of the vital information about the requests the landlord made so he clearly wanted to reward the tenant for creating the money making dispute.
The reports and recommendations of the engineers which the landlord acted on were ignored by the arbitrator and he went along with the guesswork of the tenant’s building surveyor.
The landlord only did two thirds of the yard work recommended by the engineer but over $350,000 was deducted from what the tenant had to pay. In total the landlord had to pay $580,000 for repairs to three main items which were recommended by engineers. The arbitrator even cut back on the engineers fees by accepting what the tenant’s building surveyor guessed at what they should be. The landlord also ended up having to pay for part or all of a lot of other repair items.
The landlord was forced to do the work in order to mitigate losses and they were not involved in assessing the work to be done but this was not taken into account. This independence was proven by some work which a Colliers report for the tenant said should be done but was not done and by some work being charged to the landlord by the building contractor as their responsibility but long after payments were made by them, it was assessed by the building contractor as being the responsibility of the tenant. The landlord did end up paying $280,000 to the building contractor for improvements to the property.
The lease required the tenant to pay for all the damage they did but the arbitrator decided that the landlord had to pay for over 40% of the damage that was repaired.
The tenant should have complied with the lease and completed all repairs prior to the expiry of the lease. This is what tenants normally do and they pay two rents for the repair period.
Other cases and the Colliers International report and the tenant’s lawyers 2016 settlement offer, all accepted that rent had to be paid until repairs were completed in terms of clause 8.1 (a) of the lease.
The arbitrator made the following fundamental error when he copied false statements made by the tenant’s lawyers and agreed with them that the tenant did not have to pay any rent for the repair period because the large property could not have been leased to one tenant at the time.
He failed to take into account that the tenant had breached clause 8.1 (a) of the lease by failing to yield up the premises in the same clean order, repair and condition they were in when the property was first occupied by them. He ignored all their breaches of the lease because he wanted to reward them for creating a money making dispute.
The arbitrator and the tenant’s evidence he quotes ignored the fact that from the outset parts of the property were offered separately for lease or sale. This was stated in 171 emails to agents and a surveyors subdivision plan provided. The size and configuration of the whole property was not an issue. There were 14 different lease or sale options available not just one. The warehouses and main office block could have been leased separately at relatively low rentals so their damage condition was what prevented them being leased or sold.
He ignored the evidence of the two real estate agents and the two valuers which said that the vacancy period for the property should have been 3 months to 12 months but with most stating 6 months. If the property had been maintained in good condition and an average vacancy period of six months is assumed, all or parts of the property would have been leased or sold in the 15 months before the expiry of the lease on 31 August 2016. The estimated vacancy periods failed to take into account that the buildings were available separately and the 15 month major marketing effort before the lease ended.
He quotes at length from the tenant’s closing submissions which he said were accurate but this was not correct. The 17 quoted paragraphs about the leasing of the property were inaccurate and misleading. They said that the size of the whole property meant that it could not be leased to a tenant. In these 17 paragraphs they stated ‘the property’ 25 times and ‘the tenant’ 15 times. They deliberately did not mention that from the start 6 parts of the property had been offered for lease and 6 parts had been offered for sale under a surveyors subdivision plan. The arbitrator was misled into stating that what they said was accurate and that the whole property could not be leased to a tenant. This fundamental error gave him the excuse to agree to not award any rent for the period when the damage was being repaired.
An example of what one of the 17 paragraphs said was: ‘Neither of the real estate agents suggested that the condition of the premises was the reason that a tenant could not be found.’ This is another false statement which the arbitrator said was accurate and it contributed to the decision made.
The landlord’s real estate agent and the valuer actually said in their written evidence that the $2,000,000 of damage made it difficult to secure a tenant for a number of reasons. The arbitrator did not remember and mention this so he went with what the tenant’s lawyers said. They used selective quotes based on questions about the attitude of tenant’s towards properties with minor damage. It was then implied by the tenant’s lawyers that the general comments were actually about the extensive damage at the property.
The repair notice was issued over a year from the expiry of the lease so the repair work should have been completed before the lease ended. The fact that the tenant ignored the repair notice and prevented work being done and failed to allow any time near the end of the lease to do the work, should not have resulted in them being rewarded by not having to pay rent for the repair period in the normal way and not having to pay penalty interest on money owed for many years.
The arbitrator also quotes elsewhere sets of paragraphs from the tenant’s submissions.
There are no ADLS lease precedents so the lease was largely ignored and old overseas cases about different leases in a different property market were used. This radically changed the intent and provisions of the ADLS lease that the parties had read and signed up to. The arbitrator concentrated on what was said in other cases with little relevance to the case and ignored what actually happened and ignored the consequences of his decisions.
The claim for loss of value on sale of the property due to the long delays caused by the tenant, was dismissed after taking into account old overseas cases even though there was a relevant New Zealand case.
The landlord did make a big effort to try to make sure that all the important facts were put before the arbitrator but it does appear that little notice was taken by their lawyers of what the landlord wrote. the landlord set out for them what they considered to be the main issues to be included in the Opening submission and later the Closing Submissions. After receiving the Award, the landlord checked on some issues relating to the above and found that the information had not been included or was understated.
The landlord was expecting the arbitrator to reward the creator of the dispute because that is the way the litigation industry generates new work but he went much further than the landlord had expected. The landlord’s lawyers said that they were dumbfounded by the decisions made.
Arbitration decisions can only be appealed on points of law so there is little opportunity for corrections to be made. The lawyers sought leave to appeal on the interpretation of the decisions made in an 1891 British case which has no real relevance to the ADLS lease. This involved about $1,000,000. They said that the fundamental factual error relating to rent made by the arbitrator could not be appealed, even though there had also been a serious breach of a lease clause.
The landlord was the innocent victim of a bad tenant and the litigation industry. The landlord did nothing wrong so should not have been penalised by an incompetent and biased arbitrator.
The Award was checked for the number of times the name of each witness appeared and this revealed a big bias in favour of the tenant.
The tenant’s Property Manager who dealt with the landlord 95% of the time was not put forward as a witness. The landlord’s lawyers would not make an issue of this but said that the unchallenged evidence of the landlord’s representative would have to be accepted by the arbitrator as being correct. However, he largely forgot or ignored this evidence. the tenant’s staff who had under 5% of the contact with the landlord were together quoted two thirds more than the landlord. Some of their lies which were exposed in reply evidence and at the hearing were not commented on. The landlord’s evidence dealt with a far wider range of issues so the landlord should have been quoted ten times more than them.
The landlord had vastly more experience with the property and everything which happened than the tenant’s building surveyor but the landlord was quoted 56 times and their building surveyor was quoted 107 times.
The Director of the large construction company inspected all the damage, got quotes and checked them as he was a quantity surveyor and he supervised the work. He was quoted 44 times. In contrast the tenant’s building surveyor had only gone to the property when about 5% of the work was being done but he was quoted 107 times.
The tenant’s building surveyor was quoted 107 times compared to 46 times for the landlord’s building surveyor. As they were dealing with the same issues the number of quotes should have been about the same.
The Quantity Surveyor was mentioned by the arbitrator as being one of the witnesses and he said that she was not cross examined. He also mentioned her in a sentence about the Closing Submissions. This made a total of 3 times compared to the 107 times the tenant’s building surveyor is quoted. The reason she was not cross examined could have been because the tenant’s lawyer knew that the arbitrator would only deal with the submissions and what he made notes on at the hearing and that he would forget the witness evidence he had read. This seems to be why so much important written witness evidence was ignored.
On checking for the word ‘brief’ it comes up 62 times which is an average of 4 times for each witness and is rather appalling.
The landlord’s senior engineers visited the property several times from the outset and wrote reports and made recommendations which were accepted. The tenant’s junior engineers only looked at documents and photos two years later but they were quoted almost as much.
The landlord’s real estate agent had a hundred times more involvement with the property than the tenant’s real estate agent but the tenant’s agent was quoted 50% more.
The landlord witnesses had far more knowledge about the property and repairs than the tenant’s witnesses. Despite this, their witnesses were quoted in relative terms many times more often than The landlord’s witnesses. This displays a fundamental bias in favour of a large, public company and a large law firm that could give a compliant arbitrator future work.
The arbitrator did not give any weight to the fact that the Director of the large construction company actually inspected each damaged item and got quotes and that he was a quantity surveyor.
For some items the arbitrator did not take into account his evidence. He did not take into account the reports obtained by the tenant regarding what the Colliers report cost was for each item and what the Hi tech quote stated for each item. He ignored the landlord’s quantity surveyor when she said that the costs of the major items were reasonable so the same should apply to the other items.
He did not mention that the 11 requests made by the landlord to the tenant for experts to meet and determine the work and costs were ignored. Under normal circumstances that would be the end of the matter but this does not suit those who operate in the litigation industry. He ignores that the landlord simply did what the engineers recommended in their reports. It was also proven that the landlord did not play any part in deciding what work should be done but this was also ignored.
His preference was to constantly quote and adopt the opinions and cost estimates of the tenant’s building surveyor.
A senior Auckland lawyer, who knew about the case, said that the arbitrator must not have had much work on if he was appointed by the Law Society. He thought that the arbitrator would be keen to show the tenant’s lawyers what he could deliver so that they would give him future work. He said that the word soon got around about how each arbitrator operated.
The landlord’s lawyers said that they were very surprised by some of the decisions made by the arbitrator and they advised that some could be appealed on a point of law. They said that factual errors could not be appealed. This is because deliberate errors are a good way to help reward the creator of a dispute and to encourage more disputes.
If factual appeals were allowed this could show up the declining memory of a retired lawyer or judge so this would not look good. This is another reason why the Arbitration act banned these appeals.
The Act gives lawyers the opportunity to reward the creator of a dispute by making as many false statements as a lawyer wants to make. The reason for dangling the prospect of a lucrative high fee arbitration in front of elderly retired lawyers and judges could be to discourage them from having a pang of conscience and speaking out publicly about what was wrong with the litigation industry.
Preparing for a Leave to Appeal court case to allow an Appeal case to go ahead was expensive. It was basically the same as preparing for an Appeal but the lawyers got to make a lot more money. A better system would be to discourage unwarranted appeals being taken by fining any lawyer and their client who did this but the amount of money to be made by lawyers would be reduced so there is no interest in doing what is in the best interests of justice for the community.
The Leave to Appeal was not really about the case. It was about the arbitrator’s interpretation of the 1891 British case called Joyner V Weeks. This was from a different era, facts etc
The QC decided that a separate application should be made to set aside the decision by the arbitrator to not consider repudiation of the terms and obligations under the lease. This arose from a misunderstanding when the arbitrator asked whether repudiation was to be excluded. The QC told him that it would only be excluded in a cancellation of the lease sense.
The landlord later pointed out that there was no good reason to exclude repudiation when it was an important part of the case and required the payment of damages. It made no sense to claim repudiation in the Opening Submissions and then suddenly exclude it and in the Closing submissions claim it again. Even if a mistake was made by lawyers, the client should not be disadvantaged. None of this basic common sense was included in the Setting Aside Submission.
The judge had little to say about the leave to appeal but got into a discussion with the QC on the repudiation clause in the lease. The QC was persistent and did clarify that there were different types of repudiation in the lease.
At the beginning of the hearing the QC called the landlord a Corporation but this was not correct.
The performance of the QC was not good. He did not speak clearly at times and there were a lot of gaps in what he said and Richard had to try to help him out. There was some mumbling, bumbling and stumbling. In contrast, the opposing lawyer was clear and eloquent and easy to understand.
After the hearing the landlord wrote to Richard and said:
“The opposing lawyer misled the court by saying that the landlord and the tenant had not been able to agree on the repairs to be done. This implied that they had been involved in deciding the repairs and a dispute had arisen over the work. This was not corrected by stating that they had ignored many requests to be involved and the landlord had been forced to do the work without their participation.
“Now that you have seen the QC in action, how did you rate his performance? Did he do far better than you or Mark could have done? How did he compare with the opposing lawyer? ”
Richard replied and denied that the opposing lawyer had misled the court and he failed to answer the questions about the QC.
The landlord wrote back to him on 9 September and said:
“The opposing lawyer outlined a sequence of events including that the landlord and tenant had not been able to agree on the repairs to be done at the time when they vacated. This implied that they had been involved in deciding the repairs and a dispute had arisen over the work. This was not correct because they had ignored many requests to be involved and the landlord had been forced to do the work without their participation.
It is noted that you have not answered the questions regarding the QC.”
Richard replied and again denied that the opposing lawyer had misled the court and also said that he had not misled the arbitrator. This was despite the arbitrator copying 17 paragraphs and stating that they were accurate, when there were a huge number of documents to show that he had been misled.
The landlord replied and said that what the opposing lawyer said was just another example of him putting forward misleading information. Some judges have said that the adversarial system distorts the truth and is ‘not designed to ascertain the truth and arrive at a just result’ so the landlord thought what happened was not unexpected.
Six months after the hearing, no decision had been received so the landlord got a reminder sent and a decision turned up a couple of weeks later. The judge would not have been able to remember what happened at the hearing but might have been able to scribble a few notes. He dismissed both applications.
The decisions mainly centred around what a judge decided in the 1891 British case called Joyner v Weeks. It was about damage that was not repaired because the premises were going to be demolished. The tenant was made to comply with the lease and pay for the damage and the landlord made a big profit. This is the opposite of what happened in the present case. Apart from the very different circumstances of the case, the British judge might have been incompetent and only got his job because he was a member of the aristocracy. It is bizarre that what was decided then is still being used over 130 years later.
The landlord’s lawyers sent the following email regarding further appeal prospects:
As discussed earlier this week, we set out some further thoughts as to potential appeal points for your consideration.
Again, these are preliminary thoughts to assist your thinking. If you did wish to appeal then we would recommend.
We look at these points in closer detail and in conjunction with the QC who has already indicated that he wishes to do that and that it would be sensible to undertake the exercise.
Our earlier email explained the basis of the two court applications; namely the application for leave to appeal (legal issues) and setting aside (repudiation).
This application dealt with the arbitrator's assessment on the legal effects of the larger value claims (ie front and rear warehouse floors and yard areas), but also the other comparatively smaller repairs that are affected and the contractual interpretation points. It was submitted that they substantially affected The landlord’s rights in the court should exercise its discretion in favour of the landlord.
Within this section we refer to the rule in Joyner v Weeks as “the rule”, and we have paraphrased the questions in respect of which leave to appeal was sought. The first five questions relate to the rule.
Overall, we remain of the view that it is highly arguable the rule is narrower in scope than what the arbitrator (and the judge) have found it to be. Any application for leave to appeal based on a challenge to the scope of the rule would need to rely on one or more of the five questions outlined below, but there is considerable overlap between them.
Question one – did the arbitrator err in holding that the rule in Joyner v Weeks both prescribes and proscribes losses claimable?
The judge said that this was a way of asking whether the arbitrator was wrong in finding the rule was an absolute bar to a claim for the reduction in value of the property. The judge noted that this claim failed on the facts (i.e. the arbitrator was not satisfied there was any reduction in value) and said the proposed question was therefore moot. This, in our view, misunderstands the question and doesn't comprehensively answer it. The question has broader application than The landlord's claim for the loss in value of the property, regardless of what the judge said. An appeal court (that deals with public policy) may take a different view.
Question two – did the arbitrator err in relation to the purpose of the rule?
The judge said that the arbitrator's discussion of the purpose of the rule was in the context of the consequential loss claim only. It did not form part of his reasoning. For those reasons, the judge said the purpose of the rule was not an appropriate subject matter for appeal.
This question was put forward in conjunction with other questions relating to the arbitrator's interpretation of the rule. If The landlord obtains leave on another question (or questions) relating to the rule then the purpose of the rule will inevitably form part of the argument on those questions.
Question three – did the arbitrator err in holding that the normal rules applying to contractual damages, including mitigation, are not applicable under the rule.
This point is intertwined with the above (and in particular question one). The judge held that the arbitrator's approach to mitigation (that it has no relevance) was correct, but also referred to a lack of case precedent and the Court of Appeal binding the judge's decision.
Essentially what was being stated is that costs incurred by the landlord in reasonable mitigation are not necessarily claimable. Costs which are retrospectively held to be unreasonable are not claimable even if the landlord acted reasonably in incurring them. The judge approached this on the basis that there needed to be an exception to the rule to allow such costs to be claimable, and said there was no such exception that has been recognised currently in New Zealand law. For the same reasons as stated under question one, an appeal court may take a different view. In particular, that the rule does not go as far as what the judge and the arbitrator found, and that it is not necessary to find an exception in order to claim costs incurred in mitigation. Rather, those costs are claimable under standard contractual damages principles.
Question four – did the arbitrator err in holding the rule is a minimum cost rule and does not involve enquiry into the landlord's actual costs?
This question is similar to the above questions in relation to the correct approach to apply to the rule and the focus of the landlord's actions in the New Zealand context. We do not repeat our above comments.
Question five – did the arbitrator err in holding that the rule means the landlord has to prove that repairs actually undertaken were reasonable?
This question is similar to the above questions in relation to the correct approach to apply to the rule and the focus of the landlord's actions in the New Zealand context. We do not repeat our above comments.
Questions six and seven – did the arbitrator err in holding that costs incurred in remedying breaches are not monies payable under the lease in terms of clause 5.1 and 13.1 and the schedules?
The arbitrator and the judge accepted the tenants submissions on both questions based on the cases they referred to, in the absence of New Zealand case authority (including again reference back to the rule). We refer back to our earlier comments about the rule. The absence of authority means that obtaining leave, at this further appeal stage, is likely to be more difficult on this point than on the others.
Question eight – did the arbitrator err in holding that interest payable under clause 14.1 required The landlord to have undertaken the repairs during the term of the lease?
The landlord argued that there was no "temporal" limit to clause 14.1, and the landlord was entitled to interest on repair costs which were the subject of a repair notice, even if those repairs were undertaken after the lease expired. The arbitrator and judge disagreed.
The arbitrator factually found that most of the repairs claimed by The landlord were not completed during the term of the lease pursuant to its lease entitlements to enter the property and undertaken during that time, and the judge relied on this finding. He essentially said that this was not an appropriate case to grant leave for the contractual interpretation point to be analysed in more detail. It remains in our view arguable as to the interpretation of clause 14.1 in relation to interest in reliance on this clause in respect of the items which were subject to the repair notice. An appeal court may take a different view.
Questions nine and ten – did the arbitrator err regarding the onus of proof as to the rear warehouse floor?
The judge accepted it was arguable that the arbitrator’s finding as to onus of proof was in error, but said it was not decisive in terms of the application for leave. He considered there was a basis in the evidence for the arbitrator finding as he did, and he noted that the question involved a one-off point of little precedent value. Leave to appeal was declined on those bases. This is highly disappointing given what appears to be clear reference to error by the arbitrator. He even appears to accept what the tenant submitted as to the value, and took a different view as to the amount claimed (even though he referred to it as being $41,000). If an appeal was to be pursued on the above, then this rationale could be attacked.
The landlord submitted at the High Court hearing that it and the arbitrator were at cross purposes on the repudiation point given the award, the arbitrator was obliged to have raised the point given the structure of the submissions and there was a breach of natural justice (and even a marginal breach of natural justice favoured setting aside of the arbitrator’s decision on the point) as he did raise it. There could not have been any material prejudice to the tenant in terms of the evidence led in arbitration or otherwise given breach and repudiation of the lease in this particular case were synonymous, and the point should be reopened.
The High Court judge declined to set aside the award on this point. He found factually and contrary to The landlord's evidence, that the repudiation pleading was unequivocally withdrawn and the arbitrator did not need to revert to The landlord's counsel. This however is inconsistent with his earlier statement as to his finding that the pleading was to be ignored on the basis that it would not affect The landlord’s claim. He found that he had a discretion and would not exercise it in this case. His judgment favours the tenant’s submission about the ability to adduce evidence or cross-examine The landlord’s witnesses and his decision was that would not be appropriate.
In referring to discretion, and as we have discussed, the judge was critical of The landlord at paragraph 66 of his judgment. While it is contained in the last part of the judgment, it may be that has coloured his view. We do not consider that comment justified, nor do you. Parties are able to change lawyers and amend claims and the comments that he refers to the arbitrator's award are very summarised. Whether the inclusion of that adds good ground to appeal will need to be considered further.
The difficulty with pursuing an appeal on this point solely as the factual nature of the judge's finding. If an appeal were to be pursued on the other application, then the potential gain in relation to this would likely outweigh the risk of costs in pursuit of it.
As an initial view, we consider the decisions in relation to the legal point are open for further appeal, particularly some or all of the questions relating to the rule in Joyner v Weeks. That would need to be firstly pursued by way of an application to the High Court for leave, and then leave from the Court of Appeal if the first application were not successful as we indicated in our email to you earlier this week. You have always indicated a wish to clarify law, particularly in the court setting,
The landlord has a right of appeal in respect of the judge's decision to decline to set aside part of the award. If that appeal were to be taken, it would involve remission back to the arbitrator for further directions. If the tenants were not at that stage minded to try and resolve the point, it could potentially lead to further witness evidence given their submissions.
These are provisional views for discussion purposes with yourself and with the QC.
We note your queries about him following the hearing. If you wished for another senior counsel to advise on leave to appeal prospects, rather than him (but bearing in mind his knowledge of the case), we could also discuss that with you
Richard.
The case had gone on for five years at this point. The first lawyer advised us to get a QC after his Statement of Claim was rejected by the tenant’s lawyers. The lawyer used by the QC went to live 500 km away and the landlord was later asked to find another lawyer so the landlord did this. The arbitrator mentioned in his Award that the landlord had changed lawyers but gave no details as to why. He also said that the tenant had moved to new lawyers a few weeks before the hearing but he did not mention changes in their staff handling the case over 5 years. In justifying his decision, the judge referred to the chequered history of representation due to the landlord’s conduct. That derogatory bias would have affected his decision. It seems certain that the judge had discussed the case with one of the lawyers involved and this exposes how lawyers and the litigation industry operate.
The landlord decided that if they stop using the QC the landlord could be up against increased judge bias and also Arbitrator bias when it came to the claim for legal costs.
At a meeting the landlord discussed the appeal and said that it did not seem right that the landlord had had to pay out a lot of money to try to correct a mistake which had not been made by them. Following the meeting the lawyers decided that the Law Society rules required them to pay for the landlord to get independent advice. They said that they would pay up to $2000 plus GST. They later said that their time considering the appeal came to $14,000 but they would charge $10,000.
The independent lawyer said that the landlord could have a case against their lawyers regarding what had happened at the hearing. They had not discussed with the landlord withdrawing the repudiation breach of lease and had not sought to clarify to the arbitrator that repudiation had not been withdrawn. However, the landlord said to the independent lawyer and their lawyers that they had no intention of bringing a case against them. The landlord needed their goodwill for the rest of the case and did not want to risk future decision-maker bias.
The independent lawyer did not have all the facts but her view was that the setting aside decision would be difficult to overturn. The other appeal could be less difficult but the decision on what to do could depend on the amount involved. the landlord said that they had a public policy interest in the outcome so that was another consideration.
After receiving the independent advice, the landlord decided that the QC could give some basic advice and then appeal documents could be filed.
The landlord was advised that the repudiation decision was a finding of fact so the landlord should not appeal it. This meant losing $200,000 or more in damages. The litigation industry had it arranged so that when an arbitrator did not take into account clauses in a contract or agreement, this was to be regarded as a factual error that could not be appealed and was not a point of law. Clearly, a great way to reward the creator of a dispute.
The landlord could appeal three decisions relating to Joyner v Weeks and were told that two could be withdrawn after the QC had given more thought to the matter but the landlord said that this could indicate incompetence and make it easier for the other decision to be thrown out.
The landlord was told that the High Court appeal would probably not be successful but the landlord could then go to the Court of Appeal who had an Interest in promoting public policy. AN APPEAL COULD BE HEARD BY A JUDG who might be CONCERNED ABOUT ARRIVING AT A JUST result AND CREATING A PRECEDENT WHICH WOULD IMPROVE PUBLIC POLICY. However, it is known that judges rely on recent law graduates to do research and to write up their decisions so the outcome is unpredictable.
JOYNER V WEEKS
In Joyner v Weeks it is certain that the landlord did not do any of the following:
The ADLS lease has been used over many decades for up to 1,000,000 commercial properties and has been revised 6 times, but it has not been changed to deal with the arbitrator’s interpretation of Joyner v Weeks so this indicates that his interpretations are not correct. However, the lease is designed by lawyers to help lawyers make as much money as they can from disputes they create.
There are no ADLS lease precedents so what the lease said was largely ignored and old overseas cases about different leases in a different property market were used. This radically changed the intent and provisions of the ADLS lease that the landlord read and signed. The arbitrator concentrated on what was said in cases with little relevance to the actual case and ignored what happened and the consequences of his decisions.
Every year hundreds of thousands of incidents involving one person damaging property belonging to another person are resolved based on normal ethical and moral standards. It is wrong that in legal cases those standards are abandoned in favour of using different standards and facts from a different era in different cases.
An arbitrator does not have to be a lawyer so decisions should have been made based on the available facts and documents and not on a lawyer arbitrator’s interpretation of what happened in old overseas cases?
There was no defence of betterment by the tenant so the only motivation for the landlord doing the repairs was to accept expert advice and mitigate losses. The arbitrator had no right to use Joyner v Weeks to force the landlord to pay for 40% of the cost of repairs.
It is bizarre that courts pay fanatical attention to interpretation of minor details in completely different old cases when the court knows that there are many factual errors and omissions together with false and misleading statements in the case being considered. This includes the evidence, discovery, submissions, cross examination and then judgements.
There is no good reason why repudiation would have been put forward in the Statement of Claim and in submissions and then withdrawn on the spur of the moment at the hearing.
Should statements by Officers of the Court about this be doubted and ignored?
When a mistake was made by lawyers, it should have been corrected so that the landlord was not adversely affected.
The tenant’s submission on repudiation said that there had to be intention not just breaches. The Repair Notice for extensive repairs was sent a year before the end of the lease and was ignored so there was a demonstrated intention in this and other ways to ignore the lease.
(A witness was told by another landlord that they were having the same experience with The same tenant.)
The judge did not accept the evidence of the QC and the partner lawyer that repudiation was not being claimed in a cancellation sense even though this was partly supported by the notes of one tenant lawyer. In an affidavit the landlord said that the landlord had noted three other clauses that the QC agreed to delete and the landlord would have been very concerned if clause 31.1 repudiation had also been deleted. The arbitrator and one tenant lawyer thought that repudiation had been deleted and half a Tenant lawyer was uncertain.
This was 3.5 to 2.5 in the landlord’s favour but the judge ignored the imbalance and effectively found that the landlord witnesses were lying. This was another example of rewarding the creator of a dispute.
The application was considered by the same judge after a delay of many months. He was not going to say that his original decision was wrong so he issued a short decision rejecting the application. This was just another unnecessary money making step in the process. The previously used taking of depositions at a long hearing was also designed to make money but the Government abolished it.
On 7 October 2021 the Court of Appeal refused to hear an appeal over the costs awarded in a District court and High Court case about a damaged Remuera letterbox. This illustrates how the court system is used by those who have a lot of money to get what they want at the expense of an innocent party and the taxpayer. There was no criticism of the lawyers involved because it is well accepted that lawyers exploit the justice system to make money. The lawyers should have advised their client to take the case to the Disputes Tribunal.
The landlord was told that the application would probably be rejected by the High court Judge but the landlord could then apply to the Court of Appeal. What the landlord did not realise was that the most the Court of Appeal could do, would be to ask the High Court to consider the case again This could involve a delay of a year and could involve the same biased judge.
In August 2022 the Court of Appeal ruled that part of the case could be heard again by the High Court. The landlord had decided to change from the QC to a Wellington barrister
Clarification came from the Court of Appeal in late August and they said:
[1]
The appellant applied to the High Court for leave to appeal an arbitral award. Leave was refused (the first leave judgment).1 The High Court also refused
leave to appeal to this Court (the second leave judgment).
2 The appellant applied to this Court under cl 5(6) of the second schedule to the Arbitration
Act 1996 for special leave to appeal the first leave judgment.
[2]
This Court granted the application for special leave but only in respect of some of questions on which leave had been sought in the High Court.
3 In doing so it suggested that the questions of law that the appellant had identified as warranting leave being granted to appeal the arbitral award could be simplified.
[3]
At [17] of the decision the Court referred to special leave being granted “to appeal the award”. The parties have, understandably, sought clarification.
The application was for special leave to appeal the first leave judgment, not the arbitral Award
table with 2 columns and 3 rows
1
The appeal was rejected in July 2023
The draft legal costs submission prepared by the landlord’s lawyers was adapted from one written earlier by another lawyer in the same firm. It started out by quoting cases which were not relevant and gave the impression that they were the most important consideration. The landlord said that the submission should start with the lease clause on legal costs and then lack of precedents and who the landlord were up against and the deliberately created dispute and about five other important considerations.
The landlord made many requests to try to get the tenant and their lawyers to co-operate in determining the work and costs. A lot of effort was also made to try and reach a settlement at different times but these efforts were rebuffed and so a dispute became inevitable.
The landlord was up against one of the largest companies in New Zealand and one of the largest law firms. It was necessary to accept legal advice about representation and other matters and to get witness evidence to counter whatever litigation strategy the tenant’s lawyers might come up with.
The landlord wanted to avoid delays for personal reasons and to be able to get on to dealing with other commitments.
If the landlord had used a major law firm, there might only have been one or two changes of lawyers but the costs would have been much higher. The landlord knew that they could claim the legal costs of enforcement or attempted enforcement of the lease but sought to get the work done economically and tried to do as much of the basic work as possible in order to save costs.
The landlord did not want to change any lawyer working on the case so any delays which resulted were not their fault. The landlord always answered correspondence within 24 hours and promptly responded to any requests.
Generally, delays are equally the responsibility of the lawyers on each side. Such delays are not unusual and lawyers know that there are various reasons for them. These could include holidays, illness and other work commitments.
It appears that the tenant’s lawyers created the dispute in the hope that it would be so long, drawn out, expensive and stressful that the landlord would give in and accept a low settlement. This strategy is called ‘burning off ‘ by lawyers and it usually works but it did not work in this case.
Lawyers have to deal with a number of cases at the same time and meet deadlines. They have to get a good grasp of the facts and have to work quickly at times. They have to try to not make mistakes so this can be stressful. Clients are asked to check the work done so it becomes the client’s fault if anything is wrong. This does not happen in other professions because they only do work that their client cannot do.
The landlord got the impression that, even though they made it clear that they wanted a good job done, the lawyers did as little or as much work as they could to fit the time available. If they took on extra work which prevented the work being done, then that did not really matter because they may have thought that the outcome was already determined. The main objective seemed to be for all the lawyers involved to be looked after. The lawyers exchanged emails and phone calls that the landlord knew nothing about at the time.
In early 2019 it was arranged by the lawyers that all stages would be completed by the end of April and there would be a hearing after that. The arbitrator was later asked for a hearing date and said that he was not available until mid-October. The work then expanded to fill the 3 month gap, with lawyers arguing over minor points.
The landlord’s lawyers did not do or say a lot of things that the landlord suggested could help the case so this could have assisted those who created the dispute.
The lawyers did not respond to some of the unsatisfactory things that the tenant’s lawyers said and did and they helped them in a variety of ways. It appeared that the lawyers had done some secret deals which the landlord was not aware of. The actions of the landlord’s lawyers might have been a way to pay back the lawyers who created the money-making dispute opportunity.
When the tenant’s lawyers wanted to remove a significant document from their discovered documents, the landlord’s lawyer wanted to do a secret deal with them but the landlord said that a request would have to be made to the arbitrator by the tenant’s lawyers in the normal way. They did not do this and the landlord later found that the paragraph in the landlord’s evidence about this important document had been deleted by the lawyer and it was not mentioned at the hearing.
The landlord was never sure whether all the work the landlord put into ensuring that everything relevant was covered, was worthwhile. There was such a huge amount of information combined with uncertainty, lack of precedents, misrepresentation and dishonesty, that it would be easy for an arbitrator to do what he wanted and look after the fellow lawyers involved. The basic facts outlined at the beginning of this document and the ideal of arriving at a just outcome were completely ignored.
It must be difficult to maintain a steady flow of work for a litigation team in a law firm so a client might get charged for unnecessary work at one time and at another time not get critical work done properly. A lawyer is supposed to represent a client but has a much lower chance than the client of remembering all the details, grasping technical matters and understanding the background and underlying issues.
The submissions made by the tenant’s lawyers often misrepresented the true position by leaving out critical information or twisting what was said. They asked witnesses only a general question about something but then said in submissions that the answer by the witness was about the property. They chose what suited them out of old English cases and did not mention any facts in the case which did not help them.
The landlord thought that submissions made by lawyers should have to fairly state the situation, whether or not this suits their client and the case they are trying to make.
The landlord was not aware of the tenant’s lawyers doing the landlord any favours but the landlord had 38 pages outlining the favours their lawyers did for the tenant’s lawyers and for The tenant. The landlord’s lawyers did some good work and did resist some of the tenant’s lawyers requests and claims but there was always a question about whose interests they were really representing. Unwritten litigation rules could have required them to help reward the party which created the dispute.
The tenant escaped the costs of having to finance and organise the repairs.
The landlord had to give their lawyers encouragement from time to time to try to get them to do their best but the landlord had reservations about doing this. As Sir John Hansen pointed out, there has always been a conflict between what is in the best interests of lawyers and the best interest of the client.
A few years before the dispute was created, the landlord employed a large firm of architects to design a retail building. They followed the written instructions and consulted the landlord before making any changes. The landlord could not have done the work they did and the landlord was able to rely on them to not make any mistakes. They charged $85 per hour for skilled work which was error free. Occasionally, one of the two partners in the firm was consulted at $150 per hour.
In view of this experience, it was difficult for the landlord to not compare what happened then with the way that their lawyers operated. And charged excessively high hourly rates.
The landlord had to sign standard lawyer Terms of Engagement prepared by the NZ Law Society for each firm. These allowed the lawyers to charge whatever they wanted to charge regardless of quoted hourly rate fees. These Terms of Engagement would not be acceptable for any other trade or profession.
Monthly invoices for up to $200,000 had only a brief explanation of the work done and no times and rates were included.
After the Award was received, the landlord was told that work had been charged at increased rates for Richard of $385 per hour and for Mark at $415 per hour. They were each copied into correspondence and at meetings with both, Richard said very little. A lot of the work done requires no legal knowledge and could have been done by the client or by a clerk with some instructions to follow. This could have included basic discovery and the Marketing Schedule and other schedules listing repairs, property expenses, interest, legal costs etc. When the landlord received an invoice each month, the landlord was not told who did the work, how many hours were involved and at what rates.
Mark had a good knowledge of the case but this was due to him being copied into most emails and paying for him and Richard to work on the case. When he discussed aspects of the case with the QC this cost a total of $1065 per hour and if Richard was involved the cost was $1450 per hour.
The QC was consulted about various legal issues and a month before the landlord had to send in their evidence he started checking it.
The hearing was booked in for four weeks but it was hoped that it would be over in three weeks. The QC required the landlord to pay $110,000 plus GST to the lawyers to cover his future fees.
The hearing only took two weeks and the QC sent an invoice which simply stated My fee $95,400. Added to this were some incidental costs and GST.
The landlord had no way of knowing what work had or had not been done so could not challenge any of the legal invoices the landlord received over the years.
The NZ Law Society deals with complaints about excessive and unjustified fees as a way of keeping a lid on public discontent. This is really only possible for standard straightforward tasks. It would be interesting to know what proportion of complaints about fees are upheld by lawyers and if any action is taken against lawyers involved in defrauding clients.
The landlord paid over $1,400,000. ( including GST ) These costs included the cost of witnesses and half the costs of the arbitrator and the hearing. This demonstrates how a simple open and shut case is exploited by all the lawyers involved.
The hourly rate for legal fees, which the Legal Services Agency will pay for legal aid work, are about half those normally charged to clients by lawyers. The Agency is reluctant to pay for litigation but when it does, this is for a fixed fee. Clearly, the Government recognises that lawyer’s fees are too high and that lawyers create and extend disputes in order to make money. The Government has plenty of money and could pay but they ignore the plight of those who cannot afford to go to a lawyer or who are exploited by lawyers.
Pro bono work is a way for lawyers to reduce public pressure for change. It is similar to those involved in gambling giving money to charities or alcohol companies giving money for sport.
It is well recognised by judges and lawyers that the law is a business and not a profession. The Law Practitioners Act and other laws which have been written by lawyers to provide special privileges and money-making opportunities for lawyers should be reviewed and action taken to ensure that the interests of citizens become the first priority instead of the interests of lawyers.
In May 2020 government officials discussed with the new Zealand Law Society how arbitration could be carried out over the complex issue of determining a fair rental rebate for businesses impacted by the Covid-19 lockdown. The Government decided that it would pay up to $6000 or 75%of the estimated cost of completing an arbitration. That cost would be up to $4000 for each party. The landlord paid hundreds of times this amount to deal with a more straightforward failure to comply with a lease issue so this shows that something is very wrong with the arbitration litigation industry.
When Covid-19 arrived people had to stay at home for 5 weeks. The landlord’s lawyers said in a newsletter they were all very busy working from home giving advice on employment matters, leases etc. They must have had increased revenue but some work could have been delayed. The Government gave a wage subsidy to businesses that had a drop in revenue of 30%for 12 weeks and 40% for another 8 weeks. The landlord’s lawyers claimed over $500,000 for 20 weeks of wage subsidies and failed to repay them. After the case was over the landlord asked them to repay and when they refused a detailed research document about what happened was sent to the N Z Law Society. After a long delay they said that someone else should deal with the issue. Clearly, the N Z Law Society has no problem with lawyers making big money by whatever method they choose.
The landlord did not complain about anything that happened in their case because this was regarded as being a waste of time.
The landlord was a charitable Trust and was defrauded of over $2,780,000 by those working in the litigation industry.
The following losses would not have been suffered by The landlord if the tenant had acted like a normal tenant and had not deliberately ignored the lease and then deliberately created a dispute in the knowledge that they would be well rewarded for doing so.
The repair costs claimed were based on engineering advice from 2 firms of consulting engineers. This was after 11 failed attempts to get the tenant to help determine repairs and costs.
$1,730,898.06 plus
$292,092.00
Total repair costs $2,022,990.00
Less reduction given
less Amount awarded based on impromptu
guesswork of building surveyors. $95,981 + $1,057,496.19
= $1,153,477.19
Total Loss on repairs carried out $869,512
The landlord’s lawyer verbally recommended in the middle of the hearing that the building surveyors be used to reach agreement on some payments. No written instructions were given to the building surveyors so they quickly used guesswork to arrive at estimates for every work item. The arbitrator adopted their figures and ignored the actual amounts paid and largely ignored the evidence of the engineers and others who were involved in determining and carrying out the work. The landlord’s lawyers recommendation resulted in major losses.
The tenant took out an insurance policy on the property that had a $10,000,000 excess so they failed to repair damage that should have been covered by insurance.
Rent and property expenses for the repair period were payable under the lease and the tenant and their consultants accepted this. Nothing was awarded due to false information put forward by the tenant’s lawyers in a block of 17 paragraphs. These paragraphs were copied by the elderly arbitrator and said by him to be accurate despite 171 documents showing that they were false.
Loss of rent during the repair period $815,859
The landlord’s lawyers said that this was a finding of fact so could not be appealed. They said that the breach of clause 8.1 (a) that required the tenant’s to yield up the premises in the same clean order, repair and condition they were in when first occupied was not a point of law that could be appealed but it should have been.
No interest awarded on legal costs built up over 3 years and then outstanding for 5 years. At minimal interest of 5% this amounts to about $330,000.
The second arbitrator said that the landlord’s lawyers could have sought an interim costs award in March 2020. Presumably, if it was not paid, then interest would have been payable from that date. He said that , as costs had only now been decided, the claim for interest was meritless.
Two clauses in the lease provided for a defaulting tenant to pay penalty interest but this was denied by the first arbitrator due to weird cases saying that it did not have to be paid after the end of the lease. The second arbitrator did not understand that this was the reason for not awarding penalty interest.
The loss of interest to The landlord was $ 190,000
Total loss of interest denied to The landlord $520,000
Under clause 6.1 legal costs were payable by the tenant for enforcement or attempted enforcement of the lease and the clause did not say that these costs had to be reasonable.
The landlord’s lawyers said in their closing submissions at the end of the 2019 hearing that costs had to be reasonable but the lease does not say that and The landlord has never accepted this. The result was that the second arbitrator was able to deny and reduce the indemnified legal and related costs in the following ways:
First arbitrator and hearing costs half share $83,752.92
(Despite The landlord not creating the dispute )
Second cause of action provoked by the tenant’s Total $83,088
Appeal legal costs $328,468
The second arbitrator got some things wrong about decisions already made and he quoted unrelated cases and said that ‘It would be entirely contrary to public policy and to any commercially reasonable interpretation of clause 6.1 of the Lease for The landlord to be entitled to its costs incurred on the failed appeals.
The landlord read ‘ attempted enforcement’ in the lease so took this to mean that this was about a failed attempt to enforce the lease. The landlord’s lawyers did not advise that the clause would not apply to appeals.
The second arbitrator also said that it was open to the landlord’s lawyers to have their legal costs indemnified under clause 6.1 by each Court but they did not do this.
Legal costs paid to tenant $36,925.89
Second arbitration costs $62,834.46 less $25,133.78
means loss of $37,700.68
(Despite The landlord not creating the dispute)
Half share of Second arbitrators costs $11,500
(Despite The landlord not creating the dispute)
Total legal costs denied $581,435
TOTAL LOSSES SUFFERED BY THE LANDLORD BUT COMPENSATION UNDER THE LEASE DENIED BY ARBITRATORS $2,786,806.40
The landlord was advised and did not claim 5% interest on repair costs interest that was outstanding for almost 5 years amounting to over $25,000.
Independent advice was received that action could be taken against the landlord’s lawyers for withdrawing the claim of repudiation of the lease at the beginning of the first hearing. This action prevented them from claiming damages of $200,000 or a lot more. Also, the landlord had to pay for the cost of them unsuccessfully trying to get the High Court to reverse what had happened.
The Court of Appeal decision was received in June 2023. The arbitrator was unable to continue on so a second arbitrator had to be appointed and make a decision on the legal costs. Despite many reminders it took 22 months to have a hearing. At least a year was wasted by the landlord’s lawyers and this cost about $50,000 in lost interest plus extra legal fees.
No claim can be made for the work done by the landlord in arranging repairs and dealing with the case and for the disruption, financial sacrifices, and all the negative impacts of litigation. (This compares to the Tenancy Tribunal dealing with residential properties where exemplary damages can be awarded for these items). An estimated amount in this case would be $250,000.
The second cause of action arose two years down the track when the tenant insisted that the landlord show that the landlord had not made a profit on the sale of the property a year after it was tenanted. The valuers evidence was that the landlord wanted to sell the property in 2015 but was forced to wait until 2019 when its value had declined by $2.9 million due to a change in the market rate of return. The claim was denied.
A high proportion of people are denied justice because they cannot afford to get a significant problem dealt with. It appears that this is mainly due to law graduates not being work ready so lawyers only provide work training for about half of graduates each year. These are those required to service clients who are able to pay high fees. Consequently, hourly rates can be two or three times higher than those charged for architects, engineers and others with similar qualifications and experience.
Those graduates who do get jobs in law firms are paid low salaries and often have to work long hours. Lawyers get graduates to do the donkey work but charge clients up to ten times what they pay these young lawyers. Normally, service businesses only charge about two or three times what they pay their staff. As many lawyers are women who take time off to have children, they are paid basic salaries and usually do not become partners receiving extremely high incomes.
In early 2018, hundreds of lawyers employed by large law firms complained through social media about sexual harassment, sexual assaults, bullying and exploitation by senior lawyers. The Law Society was well aware of these problems but did nothing about them until they were exposed on social media by hundreds of young lawyers . In May 2018 it published a survey which revealed the widespread incidence of unacceptable behaviour and that only a small number of lawyers were prepared to complain for fear of having their employment terminated.
In June 2020 the Law Society called for public submissions on its belated proposals for change. Most people would expect that lawyers would treat the people they work with each day much better than their clients and far better than the clients of other lawyers. Therefore, the public probably think that lawyers have low standards of behaviour when working for them.
A former litigation lawyer said publicly that lawyers do whatever they know that they can get away with; ‘ The profession appears to attract personalities who believe they can act without repercussions.” ‘Lawyers and law firms are meant to be the gatekeepers of ethics – that’s why they have gotten away with it for so long they are beyond reproach. They are literally above the law and no-one is watching them. ‘
If a barrister represents someone who has clearly committed a crime, the barrister goes to great lengths to try to show in court that their client is innocent in order to get publicity and future business from criminals. If they represent someone who is clearly innocent and has been dragged into a civil dispute, they do nothing to indicate that their client could be the innocent party and they try to soften them up to accepting a low settlement. This ensures that those who create disputes are rewarded and lawyers get plenty of profitable dispute work.
A retired litigation lawyer said privately that the clients he liked best were those who said what had happened to them was morally wrong because this meant that they were prepared to spend everything they had before being advised by him to give up and settle.
In April 2018 a Company Director, Peter Glasson, went on a 10 day hunger strike outside the offices of Southern Response in Christchurch. He wanted to get action on major earthquake repairs to his home but his main complaint was that Southern Response was controlled by their lawyers who he said indulged in dirty tricks, game playing, delays and dispute creation. He and several others who have gone public over major earthquake damage problems have all referred to a book called Delay, Deny and Defend. This book outlines the tactics used by litigation lawyers acting for insurance companies and other large organisations to force a weaker party into accepting a low settlement.
Insurance company lawyers told Canterbury University that they would delay payment for earthquake repairs for ten years so the University was forced to accept $600m for repairs costing over $800m. A similar situation arose for the Christchurch City Council.
The standard litigation lawyer strategy is to create financial difficulties for the weaker party so that they cannot afford a long drawn out and expensive legal battle. Another strategy is to create delays and put stress on the weaker party in order to force acceptance of a low settlement offer.
Large organisations are told by lawyers that they can escape paying part of their legal obligations by creating a dispute. The litigation industry business model rewards them for creating a money-making dispute for all the lawyers involved but this is at the expense of those dragged into a dispute.
Litigation lawyers do what they refer to as burning off the weaker party. They have no scruples or concern about the damage they could be doing.
The litigation industry is dependent on dishonesty and encourages it. There is no concern about establishing the truth and arriving at a just outcome.
The landlord was involved in a Resource Consent hearing. The applicant had a lawyer but the Regional Council, DOC, a society and two others did not have lawyers. From notification to decision took ten weeks. The procedures were simple and straightforward and those involved were perfectly capable of presenting their case. There was no cross examination but the Commissioner did ask some questions. This contrasts with what happens in court cases. If a lot of outdated traditions and jargon were eliminated from court proceedings and litigants representing themselves were given a set of simple rules to follow, the majority of people would be able to present their own case.
A former Council planning officer who had dealt with many hundreds of Resource Consents and then worked for consultants said that if a lawyer gets involved there is a vast increase in work compared to an identical Resource Consent where no lawyers are involved.
Under normal circumstances, if someone damaged an item which they had borrowed, they would be told by a lawyer that they had both a moral and legal duty to pay for the full cost of repairs. However, if the lawyer was then told that the repairs would cost hundreds of thousands of dollars or millions of dollars , the lawyer would see an opportunity for a number of lawyers to make money and would give completely different advice. Normally, anyone who fails to comply with their legal obligations is penalised but lawyers have arranged it so that anyone who does this and then creates an arbitration dispute is rewarded.
Those who pay big money for legal advice are unlikely to ignore it so lawyers are able to make as much money as possible from an unresolved problem. When they are ready to move on they advise their client to settle.
The standard commercial lease that was prepared by the Auckland District Law Society, is designed to provide an investor with a known rate of return without any unforeseen costs or losses arising. The lease makes investment in commercial property more acceptable because the rate of return is similar to investment in shares or investment in fixed interest securities. The lease has gone through many editions so should fully protect the landlord and tenant. However, the ADLS inserted in the lease the requirement that disputes must go to lawyer controlled arbitration and removed a clause indemnifying a landlord against costs and losses caused by a bad tenant. This gave lawyers the opportunity to make a lot of money. A tenant who ignores their obligations under the lease and creates a dispute is rewarded by the litigation industry at the expense of the landlord.
The main purpose of a legal arbitration appears to be to reward the party which creates the dispute so that their lawyers can justify their fees and they and other lawyers will be motivated to create more money-making disputes. Arbitration is where the innocent party is encouraged by their lawyers to settle so that the lawyers on each side cannot be criticised for the outcome.
In court cases most Judges, who previously benefited from creating disputes, regard looking after lawyers and the litigation industry as their main purpose. They have no concern about the vast majority of people not being able to afford access to the Courts and about not delivering a just decision under the circumstances. However, judges know that their decisions are made public and can be appealed to a higher court. As Court cases result in precedents which have to be followed, the same dodgy arguments cannot be put forward numerous times, as happens with arbitration when there are no precedents. Those organisations which have deliberately created arbitration disputes would not want to risk adverse publicity resulting from court action.
District Court judges only deal with an average of four civil cases each year. This has to be because simple cases are turned into complex cases by the industry which benefits from doing this and the costs become too great. If the Disputes Tribunal could deal with all cases regardless of the amount involved and on a user pays basis, this would result in a huge improvement in access to affordable justice.
The High Court only deals with about 3000 cases each year but less than 10% of lawyer created disputes end up in court. Lawyers try to avoid their businesses being disrupted by long hearings and they do not want to create any precedent cases because these would have to be followed in future and so would reduce the number of disputes which could be created. In court cases Judges narrow down the issues and it takes on average about 12 months to get a decision. The landlord now knows that there is a huge dispute industry in which lawyers and their experts extract the maximum possible money from clients. In each case a wide range of issues are created and it can take many years to get a decision. Cases follow the same rituals as in court cases but the parties have to pay for a lawyer arbitrator and do not get the opportunity to appeal a decision which has been influenced by false and inaccurate information. Lawyers have written into widely used standard legal documents that any disputes have to be settled by arbitration. This allows them to create disputes and exploit clients to the maximum. Arbitration is a process with no accountability. As cases are not reported, lawyers and their clients can indulge in dishonest and unacceptable behaviour in the secure knowledge that it will never be reported in the news media and they will not suffer any penalty and will be rewarded for creating a money-making dispute.
Those who are self-employed or own businesses and farms have to have accurate financial statements in order to operate successfully, avoid insolvency and pay the correct taxation without incurring penalties and fines. There is no requirement to use a Chartered Accountant and they can use any accounting service or software they like regardless of the figures involved. No artificial obstacles have been developed over time to prevent competition. This contrasts with the monopolistic and unacceptable practices of lawyers.
In professions requiring a high level of skill, the work done on a particular task by one member will be very similar to that done by another member and the outcome can be predicted. In the litigation industry the work done on a particular task can vary widely between lawyers and no lawyer is prepared to predict the result for an innocent party. They often say that no-one wins in litigation but this is really just an admission that it is a scam which they make a lot of money from.
Disputes can usually be outlined in a paragraph but can be expanded by lawyers into hundreds or thousands of pages of evidence. As lawyers have little knowledge of the subject, they often make errors and omissions. The amount of time lawyers put into preparing a case will depend on the amount of money their client has available and the lawyers other commitments at the time. How well expressed and accurate and complete a case is will vary widely so using a particular lawyer is a gamble people are forced to take.
The parties to a dispute have a far better knowledge and understanding of the facts than their lawyers and if they were given a set of instructions to follow, they could quickly present a better and far cheaper case at a Disputes Tribunal than a lawyer can do in a different setting.
Some lawyers have said that it is better for the majority of those with a significant dispute to be unable to afford to get it resolved than for them to take the risk of a mistake being made if they were to take a dispute involving any amount to a Disputes Tribunal. This idea is just an excuse for maintaining a monopoly and is ethically and morally wrong.
If the Disputes Tribunal can deal with a dispute involving a small amount of money, there is no reason why it should not be allowed to deal with the same sort of dispute involving a large amount of money. It could operate on a user pays basis for larger sums. If it obtained independent advice from experts and lawyers, this would eliminate a lot of costly adversarial arguments. If percentage penalties could be imposed on those who deliberately create disputes or delay proceedings or make false statements, this would encourage greater honesty and make a big difference. Appeals could be made to the courts by anyone prepared to pay the costs for both parties. All decisions should have to be prepared immediately after a hearing and not months later when most of what was written and said has been forgotten.
If modern decision-making methods were introduced in the courts, this would simplify everything and result in better decisions. Monopolistic rituals would be eliminated and self-representation by educated citizens would be much easier.
Partners in the big three law firms are reputed to earn over $1,000,000 each year by charging high fees and exploiting young lawyers who work long hours for low pay.
A client can invest a lot of money in their lawyer getting to know all the facts of their case but if that lawyer moves on for whatever reason, the client is expected to pay for another lawyer to go over the same ground. Each lawyer starts out without any knowledge of the events, issues and technical details and may never gain an understanding of the fundamental problems which exist. It is doubtful whether in the modern age a lawyer can better represent the interests of an educated person. Traditional court rules and rituals have been retained in order to help maintain a lawyer monopoly and to deter self-representation.
Those involved in the litigation industry do not have any regard for the negative impacts of long drawn out litigation on innocent or largely innocent parties who do attempt to get justice. They can have their lives put on hold while a case is hanging over them and find the whole process very difficult to deal with. They will probably end up being forced to give up and accept a low settlement.
The radical reforms which introduced ACC eliminated a huge amount of litigation. However, when lawyers got involved in the appeal process the average time for a case to be completed was 5 to 7 years. In 2018 the ACC decided to not use lawyers and a 2021 report by Dunedin barrister and ACC researcher, Warren Forster, said that cases were now being completed in about two weeks. This demonstrates that lawyers need to be barred from the business of dispute creation.
CONCLUSIONS
The adversarial system is not designed to establish the truth and arrive at a just outcome. What happened in this case serves as an example of all the unacceptable things that go on in the litigation industry.
The landlord put vastly more time than other claimants would do into trying to ensure that all relevant facts were included in the case. the landlord also checked draft evidence and submissions and attended each day of the hearing. This should have resulted in a much better outcome than would have otherwise been the case but the landlord’s written evidence was largely ignored or forgotten by the arbitrator.
The landlord tried hard to get a better than average result because the landlord did not want the tenant to get away with ignoring the lease and using arbitration to try to force a low settlement.
The landlord was not able to claim compensation for the huge amount of work the landlord put into getting the repairs done and enforcing the lease or for all the negative impacts of litigation over many years. This is not acceptable and needs to change.
Lawyers do not want to discourage the deliberate creation of disputes. Arbitration causes considerable financial and personal damage and involves a lot of work and disruption for an innocent party but no compensation is available. This can be contrasted with lawyers making money when innocent parties seek compensation for defamation, nuisance, negligence etc. The Tenancy Tribunal can compensate landlords of residential properties for the time they put into repairing damage done by tenants and can award exemplary damages if a property is not maintained in a reasonable state of repair.
The discovery process is a relatively new way of lawyers making money. It is unreliable and wide open to dishonesty. Each party can decide what documents they want to reveal and they can refuse to provide requested documents. Checking is very time consuming and expensive relative to the chance of something worthwhile being revealed. As some judges and lawyers have suggested, it should be discontinued. If it does continue, clear rules are required for determining privileged, irrelevant and discoverable documents. The basic work could be carried out using the rules by the client or by a clerical assistant at an appropriate rate or by AI. Any doubtful documents could be checked by a lawyer.
Lawyers should provide witnesses with written details of what issues they would like to have covered in their evidence and the rules to be followed. Lawyers could check evidence and advise witnesses in writing of any changes required but they should not write out any evidence. If any sworn evidence is found to be untrue, a penalty should be imposed.
Lawyers are officers of the court so in court cases they are not allowed to mislead the court. In the uncontrolled arbitration industry they should not be allowed to continue making false statements misrepresenting situations and leaving out important facts which do not suit the case they are trying to make. They should not be permitted to get witnesses who have major conflicts of interest to say things which are clearly untrue. Under normal circumstances, anyone with a conflict of interest is expected to declare it but lawyers choose to ignore this because these witnesses help create money-making disputes for all the lawyers involved. Lawyers should be penalised for creating disputes and making false and misleading statements. They should have to bear the cost of any delays they create.
Lawyers should only carry out and charge for work which requires legal expertise. Work done by office staff and young graduates should be charged at a normal mark up rate. Invoices should state the work done and the hours and rates charged. The standard Terms of Engagement which all clients are forced to sign, need to be radically changed to prevent clients being exploited.
Lawyers representing an innocent party which has been dragged into a dispute should not be permitted to assist in any way the creator of the dispute and should not be permitted to arrange secret deals or collude with the opposing lawyers.
Compulsory arbitration needs to be banned from legal documents so that lawyers are prevented from operating a money-making scam. This would allow a body of case law to be developed and would overcome a major problem identified by some judges, lawyers and others involved in the litigation industry. The parties should have to agree on whether to go to court or the Disputes Tribunal or some other form of dispute resolution. If one party wants a more expensive process to be used, they should pay the additional capped costs for both parties.
As Sir John Hansen and many others have pointed out, our adversarial court system is badly flawed and is not about ascertaining the truth and arriving at a just result. Civil litigation turns something simple into a long drawn out and complicated muddle with no lawyer prepared to predict the outcome. The only reason for retaining ancient out of date rituals and processes is that they create an extremely profitable virtual monopoly for lawyers.
Lawyers make a lot of money from dishonesty involved in civil litigation so they are happy to indulge in it and encourage it. They know that there will be no criticism or penalties from judges or arbitrators who used to do the same thing so anything goes. Research has shown that judges are critical of welfare beneficiaries who are dishonest and they penalise them very heavily when compared to the penalties they impose on white collar criminals. Judges know that they have had a career of doing similar things to white collar criminals but fortunately for them, lawyers have legalised these activities.
The landlord’s experiences with litigation and the experiences of many others, indicate that the litigation industry is in desperate need of reform. The lawyers who represent those wanting to escape their legal obligations have little or no regard for ethics, morals, honesty and integrity. They have no concerns about accuracy, truth, justice and the victims they create. They do not care about the majority of citizens who cannot afford to get a significant problem resolved due to lawyers extremely high fees and their dispute creation and expansion activities.
The legal establishment is never going to agree to significant changes to the highly profitable fee driven litigation industry so they need to be bypassed and affordable and better justice made available to all citizens.
An inquisitorial form of litigation would be much better than the current adversarial legal process. It would aim to establish the truth and arrive at a just outcome. Written evidence by each party would have to be sworn and there would be no need for opening and closing submissions and cross examination. Anything shown to be untrue or misleading could attract a penalty to discourage dishonesty. If independent legal or expert advice was required, this could be obtained and the parties could be charged. If one party wanted to appeal a decision, they could do this if they paid the costs of the other party. Experience in Europe has shown that inquisitorial processes are quicker cheaper and better.
The Disputes Tribunal provides an accessible, affordable and relatively quick means of resolving disputes. While it is not perfect, it is vastly better than nothing and what is currently provided through the court system and arbitration. It should be allowed to deal with all cases regardless of the amount involved and for larger sums this could be on a user pays basis.
