Behind the banal puffery of Auckland Council-controlled ATEED promoting its 2017 lease of film studios in west Auckland lay a dispute over fees claimed for negotiating ATEED’s lease. Jones Lang won in the High Court; losing its right to commission in the Court of Appeal because it failed to complete proper written authorities to act as leasing agent. The dollar amount claimed as commission was supressed.
In 2015, Peter Ryoo of Soft Technology JR Ltd was being lobbied by real estate agents keen to get a listing for lease of the company’s 27 hectare property in Kumeu. It was an open secret that the site was a likely prospect for offshore filmmakers seeking to produce films in New Zealand exploiting government rebates on offer. Through the agency of Jones Lang Lasalle Ltd, Warner Brothers took a twelve month lease. Evidence was given that Mr Ryoo drove a hard bargain, forcing down the commission due Jones Lang before agreeing to Warner Brothers lease. Soft Technology paid Jones Lang the agreed commission. At the conclusion of this lease, ATEED (Auckland Tourism, Events and Economic Development Ltd) stepped in, deciding to become a player in the film industry rather than a facilitator. In 2017, ATEED agreed to lease the Kumeu site from Soft Technology on a four year lease. Soft Technology refused to pay Jones Lang’s invoice for commission on this lease.
Both the High Court and the Court of Appeal ruled that Jones Lang had ‘introduced’ ATEED to Soft Technology. In real estate parlance, Jones Lang was entitled to a commission; provided it had complied with rules in the Real Estate Agents Act. The Act requires real estate agents to have a signed agency agreement in place before carrying out the work for which they claim commission. This is a consumer protection rule, the Court of Appeal ruled.
The court was told Mr Ryoo had signed a general agency agreement in 2015 which would have entitled Jones Lang to payment, but for the fact that the agency agreement was not signed at the time by Jones Lang and a signed copy was never provided to Soft Technology; both requirements of real estate legislation. A Jones Lang staffer belatedly signed the agency agreement months later, only after Jones Lang internal procedures required signature to justify commissions claimed on the initial Warner Brothers’ lease. A signed copy was never provided to Soft Technology until the original turned up years later as evidence at an initial High Court hearing. Failure to provide a signed copy of the agency agreement to Soft Technology before doing any work was fatal to Jones Lang’s claim for commission on the follow-up work leasing to ATEED, the Court of Appeal ruled.
Jones Lang’s claimed commission was to be calculated as two months gross rent plus a share of rent from naming rights and parking income. Jones Lang asked for the dollar amount of its claimed commission to be disclosed; ATEED requested suppression of the details ‘to protect commercially sensitive information,’ it said.
Soft Technology JR Ltd v. Jones Lang Lasalle Ltd – High Court (15.11.21) & Court of Appeal (4.08.22)
22.134