Respected Queen's Service Medal recipient Davinder Rahal and his company have been found liable for nearly $1m in damages after the deceptive sale of this leaky home in Goodwood Heights, Manukau, in 2020.
Respected Queen's Service Medal recipient Davinder Rahal and his company have been found liable for nearly $1m in damages after the deceptive sale of this leaky home in Goodwood Heights, Manukau, in 2020.
A respected Queen’s Service Medal recipient has been ordered to pay nearly $1 million in damages and repairs after the deceptive sale of a rotting house in a case described by a judge as “quite literally a cover-up”.
Justice of the Peace Davinder Singh Rahal and his company First Trust Ltd (FTL) have been found liable for the huge payout in a High Court decision just released by Justice Anne Hinton.
Rahal – who could potentially have his JP warrants removed and be stripped of his Queen Service Medal in the wake of the damages order – says he “strongly disagrees” with the decision and intends to appeal.
It follows a similar finding in 2022 which was relitigated over the last two years after Rahal successfully argued he was unable to take part in the initial proceedings due to ill health.
The latest judgment says Rahal was aware the Goodwood Heights property in Manukau suffered significant weather-tightness issues when he sold it to young couple Ameet Bhargav and his wife Renu in March 2020.
The finding says Rahal authorised cosmetic repairs to mask water damage and deliberately failed to disclose the defects to the buyers.
An agent who sold the property to Rahal in 2019 told the court there were “obvious signs of leak and damage” and the agent made it clear to prospective buyers that “the property had weather-tightness issues”.
The agent told the court: “Mr Rahal said that was not a problem as he would fix it and he had done that many times before.”
An elderly neighbour who viewed the property at the time said it was obvious “it was a leaky house”. “You could see the water on the goddamn framing.”
Giving evidence last year, Rahal accepted parts of the property “smelt damp and mouldy” when he viewed it, but saidhe thought this was just part of the issues that made it a “do up”.
He denied being told by the agent that the house had weather-tightness issues.
“If I ever heard the word ‘leaky’, I will run away from that house ... I would never have proceeded further.”
However, Justice Hinton found it was “inherently implausible” that Rahal was not aware of the weather-tightness problems when he bought the home.
Davinder Singh Rahal (right) with former Governor-General Sir Jerry Mateparae as he received the Queen's Service Medal for services to the Indian community in 2012.
“I am satisfied that Mr Rahal was well aware of, and in fact authorised, the ‘cover up’ works conducted post-purchase,” she wrote.
“His failure to disclose that information constituted misleading and deceptive conduct.”
The Herald can also reveal Papakura Century 21 real estate agent Gurbir “Gary” Bal, who marketed the house to the victims, made a confidential financial settlement last year, resulting in a claim against him being discontinued, with no admission of liability.
A building inspection company that signed off the property as being sound and weathertight, despite having prior knowledge that it leaked, has also settled the case, avoiding joint liability.
The Bhargavs have now endured four years of mental anguish and stress in their fight for justice, racking up at least $400,000 in legal costs while living in a mouldy, leaky home with their young child.
They welcomed the court decision but are now focused on extracting payment from Rahal, whose bathroom company was recently liquidated, owing $1.8m to creditors.
“You can’t explain in words the difficulties we faced,” Ameet Bhargav told the Herald.
“We can’t do anything for our kid. We always feel stressed.
“We are crying every day and we are still not sure if we’ll get our money back or not.”
They feared Rahal might try to hide his assets to avoid payment and said his behaviour was “shameful to the Indian community”.
‘Leaking, damp and mould issues’
Before buying the home for $665,000, the Bhargavs commissioned a pre-purchase inspection report from Metsons (NZ) Limited.
The company’s director, Vinay Mehta, provided a written report saying the property was in “generally good condition” with “no moisture detected any place in the house”.
Metsons (NZ) Ltd director Vinay Mehta carried out a building inspection on the property and found it was dry and sound, with no signs of moisture.
However, the couple became aware of moisture problems after moving in and commissioned a second report from another company, which identified significant weather-tightness problems.
Building work carried out by Rahal’s company was found to be non-compliant with the building code and unconsented.
The estimated repair costs were $750,000, or up to $1.05m to demolish and rebuild.
The couple engaged lawyers and tracked down the previous owner who sold the property to Rahal’s company. They confirmed it had a history of moisture problems and had been advertised “with explicit disclosure of leaking, damp and mould issues”.
It also emerged that, before buying the house, Rahal’s company had engaged Metsons to undertake a previous building inspection – the same firm that later assured the couple the house was dry and sound.
The couple’s lawyer, Sarah Wroe, filed civil proceedings in 2021 claiming breach of contractual warranty against FTL, and misleading and deceptive conduct against Rahal and Mehta.
Justice Hinton’s 2022 judgment found Rahal’s company “concealed” the effects of leaks and presented the house as newly renovated. The victims had been deliberately deceived into purchasing a property riddled with “severe decay and rot”.
“It was quite literally a ‘cover-up’.”
The couple paid $665,000 for this home in Goodwood Heights, Manukau, in March 2020. It turned out to be rotting. Photo / NZME
She awarded the couple damages and costs of nearly $900,000, with FTL and Metsons jointly liable.
In her latest decision, Justice Hinton ruled FTL was liable for repair costs of up to $750,000, though this figure is now subject to submissions.
She also ruled the victims were entitled to damages of nearly $250,000 “given the level of suffering” they had endured after learning their home leaked then being forced to live in it with a child for four years.
Real estate agent makes confidential financial settlement
The property was marketed by Bal, who is the director Local Realty Limited.
Before buying, the couple sought assurances that the 1990s plaster-clad house was weather-tight.
Hinton’s 2022 decision said Bal allegedly made representations to them that the house was not leaky and a “good deal”.
Bal denied making these representations and a claim against him was scheduled to go to trial last year.
Papakura Century 21 real estate agent Gary Bal was due to defend a claim against him before making a confidential financial settlement with no admission of liability.
However, Bal settled with the couple in November and the court action against him was discontinued.
In a statement, Bal’s lawyer said: “The settlement was confidential and was agreed on the basis that no liability was admitted. Mr Bal has always denied making the alleged representations and continues to do so.”
In a statement, Rahal said he was disappointed with the outcome.
“I strongly disagree with the court’s decision, as it was never my intention to mislead or deceive anyone.
“I also disagree with the amount of money that has been awarded against both First Trust Limited and myself personally.
“First Trust Limited and I both accordingly intend to appeal the judgment to the Court of Appeal.”
Lane Nichols is a senior journalist and deputy head of news based in Auckland. Before joining the Herald in 2012, he spent a decade at Wellington’s Dominion Post and the Nelson Mail.
