Wording in the listing agreement was clear; Bayleys Palmerston North franchise was entitled to its $270,000 commission on finding a tenant for part of Monsoon’s commercial site on Main Street.
Monsoon director David Stiassny’s comment to Bayleys’ staff that Monsoon would not be paying any commission until the entire site was leased was of no moment; Bayleys never agreed to deferred payment.
The High Court was told Monsoon New Zealand Ltd was seeking tenants in June 2022 for 2,340 square metres of commercial space in central Palmerston North.
Auckland-based Monsoon has extensive commercial property holdings valued at some $64 million.
Bayleys introduced Monsoon to cinema operators Otter Group. It was interested in 1,500 square metres. It did not want the whole site.
Heads of agreement were negotiated with Otter Group to lease 1,500 square metres and separately with a gym operator taking the balance. Both deals were conditional: the gym operator had to secure finance; Otter Group wanted Monsoon to contribute $3.5 million towards fit-out costs.
The proposed gym did not go ahead.
Cinema operations did. By July 2023, Otter Group’s Palmerston North operations were open for business.
Monsoon ignored Bayleys invoice for $270,000 commission. When pressed, Monsoon said no commission was payable until there were unconditional lease contracts for the entire floor space.
Bayleys sued, threatening to put Monsoon into liquidation.
Associate judge Gardiner ruled commission was due. Their listing agreement states commission is payable when the property ‘or any part of’ the property is leased.
A lease for part of the space was concluded when Otter Group went into possession, even though their finalised agreement was yet to be recorded in a formal lease.
Monsoon was given five days to pay; failing that, Bayleys could put Monsoon into liquidation for non-payment.
The court was told Monsoon had paid the disputed commission into its lawyers’ trust account prior to the court hearing.
Separately, Monsoon disputes how Bayleys’ commission was calculated. Judge Gardiner was not asked to rule on this calculation.
Mid West Realty Ltd v. Monsoon New Zealand Ltd – High Court (31.05.24)
24.144