Jones Lang Lasalle Limited v Soft Technology Jr Limited

[2021] NZHC 3069

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001654

[2021] NZHC 3069

BETWEEN

JONES LANG LASALLE LIMITED

Plaintiff

AND

SOFT TECHNOLOGY JR LIMITED

Defendant

Hearing:

On the papers

Counsel:

MC Harris and AGH Bradley for Plaintiff

DR Bigio QC, MAH Macfarlane and AC Eager for Defendant

Judgment:

15 November 2021

JUDGMENT OF DOWNS J

(Third judgment)

This judgment was delivered by me on Monday, 15 November 2021 at 12 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Gilbert Walker, Auckland. Hesketh Henry, Auckland. DR Bigio QC, Auckland.

JONES LANG LASALLE LTD v SOFT TECHNOLOGY JR LTD [2021] NZHC 3069 [15 November 2021]

[1]                 This, my third judgment in this case, addresses: (a) costs and (b) redactions in the second judgment. Knowledge of the earlier judgments is assumed. I continue to call the parties Jones Lang and Soft Tech.

Costs

[2]                 Jones Lang seeks indemnity costs under cl 19 of its agency agreement with Soft Tech. This reads:1

Recovery of costs: All costs of and incidental to the recovery of fees and other payments due to Jones Lang LaSalle including, without limitation, legal costs on a solicitor/client basis, shall be payable by the Lessor.

[3]                 The leading judgment on contractual indemnity costs (as against indemnity costs under the High Court Rules 2016) is Black v ASB Bank.2 The important question is whether indemnity costs were reasonably incurred. In this context, “reasonably incurred” does not import a discretion in the usual sense.3 Were it otherwise, “this would erode the contractual protection the indemnity was intended to provide”.4 “Robust judgment” is permissible on the question.5

[4]                 Soft Tech contends Jones Lang’s legal costs are not recoverable under cl 19. On its behalf, Mr Bigio QC contends:

The indemnity relates to the “recovery of fees and other payments due”. Soft Technology submits that the intention of this clause is to allow Jones Lang the ability to enforce payment where payment is not forthcoming – for example, initiating debt recovery proceedings. It is submitted that pursuing a claim where liability for paying the fees, as well as the quantum of those fees, is required to be determined pursuant to a detailed enquiry into facts and circumstances giving rise to the claim goes beyond simple “recovery of fees”.

Given Soft Technology’s genuine contest with respect to whether commission was payable it cannot be said there were fees “due”. This is not a case of having gone to extraordinary lengths to defend a simple debt, or claim for arrears of rent, by raising a technical quibble or a procedural challenge to a liquidated sum. Soft Technology faced a claim for a very substantial sum of money which was dependent upon an intensive investigation of contested facts.

1      Mr Ryoo’s signature on behalf of Soft Tech is immediately beneath the clause.

2      Black v ASB Bank [2012] NZCA 384 at [77]–[80].

3 At [78].

4      At [78], citing Beecher v Mills [1993] MCLR 19 (CA).

5 At [81].

[5]                 Mr Bigio cites no authority to support this submission. Black v ASB Bank and the cases cited therein affirm the contractual recoverability of indemnity costs provided these are reasonable. There is no reason to read down cl 19. To do so would erode the protection it was intended to provide.

[6]                 Mr Bigio contends Jones Lang’s costs are not reasonably incurred because its initial claim was for a much, much higher amount. However, apart from the point this was because Soft Tech resisted quantum discovery, this aspect of the claim was amended when Jones Lang marshalled its evidence for trial. Moreover, there is no reason to believe Soft Tech would have capitulated had Jones Lang’s claim been for less from the outset. Soft Tech’s conduct of the litigation—as to which see my first and second judgments—tells otherwise.

[7]                 Jones Lang seeks  $400,000  costs.6  The  amount  is  reasonable  in  the  Black v ASB Bank sense given, among other things, Jones Lang’s actual costs were higher; time for unsuccessful steps has been deducted; other time has been deducted too; and a reduced hourly rate utilised from 1 January 2021. Moreover, all costs sought lie under cl 19, the indemnity provision of the agency agreement.

[8]                 This leaves an argument not advanced by Soft Tech, which is this: the term “due” typically means owing or required as a legal obligation.7 Jones Lang’s fee was not due in terms of cl 19 because its failure to provide a copy of the signed agency agreement in accordance with s 126 of the Real Estate Agents Act 2008 precluded recovery of its fee absent a Court order under s 126(3) of that Act. And, most of Jones Lang’s associated legal costs predate that order.

[9]                 The answer to this argument is that I gave in relation to the topic of interest in the second judgment:8

This leaves s 126. There is no reason in principle why interest should not be recoverable. The section refers to “commission or expenses that will be recoverable if the order is made”.9 Again, s 126 does not invalidate an agency agreement; it creates a barrier to recovery of commission. Plainly, interest or

6      And associated interest under cl 1.4 of the agency agreement.

7      Oxford University Press (2006) Concise Oxford English Dictionary (11th ed (revised), p 442).

8      Jones Lang LaSalle Ltd v Soft Technology JR Ltd [2021] NZHC 2538 at [70]–[72].

9      Emphasis added.

any other expense must be fair and reasonable in the circumstances, and it must be unjust were the order not made.

There is no suggestion this aspect of the agency agreement is unfair or unreasonable, let alone oppressive. Had Mr Ryoo thought it any of these things, Soft Tech would not have entered the agency agreement. Moreover, Soft Tech has deployed s 126 as sword rather than shield; and with gusto. Soft Tech is, of course, entitled to raise s 126, just as it is entitled to defend Jones Lang’s claim. The point, however, is that it is hollow for Soft Tech to complain about interest when but for Jones Lang’s modest inadvertence, there could be no contest about the reasonableness or fairness of interest. The statutory test is met.

Interest is payable, as claimed.

[10]Jones Lang also seeks $42,491 in disbursements. This aspect is not contested.

Redactions

[11]              At the request of Soft Tech and Auckland Tourism, Events and Economic Development Ltd, or ATEED, I redacted [57]–[59] and [73] of the second judgment to protect commercially sensitive information, including Jones Lang’s commission (as ordered). Jones Lang agreed to these redactions with this caveat: it contends its commission at [73] should not be redacted.

[12]              Mr Harris observes as the successful party, Jones Lang has a legitimate interest in its commission being published. Information of this nature has been included in judgments here and elsewhere.10 Mr Harris says the presumption of open justice in relation to commission is not outweighed by commercial sensitivity because publication of this detail does not permit anyone  to  deduce  rent—the  heart  of  Soft Tech’s and ATEED’s concerns. Mr Harris also notes Auckland Council’s latest financial figures “put into the public domain significant information about the total amount of lease payments” to ATEED, including, albeit without specificity, payments in relation to Kumeū Film Studios.

[13]              The cases Mr Harris cites are distinguishable. All involve commission on sales of land. Nothing in them suggests commercial sensitivity. Publication of commission

10 See, for example, Zest for Realty Ltd v Coumat Ltd [2015] NZHC 3130 at [85]; Coumat Ltd v Zest for Realty Ltd [2016] NZCA 491 at [1] and [4]; Mackys Real Estate Ltd v Webster [2017] NZHC 2546 at [11] and Al Maha Pty Ltd v Liu [2020] NSWCA 108 at [7]–[9].

would enable (those with the requisite interest) to deduce approximate rentals, in turn potentially compromising Soft Tech’s position within the market and ATEED’s negotiations with prospective licensees. Again, Auckland Council’s release of information is not specific to Kumeū Film Studios. Importantly, the judgment— including Jones Lang’s success—remains wholly intelligible despite suppression of [73]. On this discrete aspect, the presumption of open justice is outweighed by commercial sensitivity.

Result

[14]              Soft Tech is liable for costs of $400,000; disbursements of $42,491; and associated interest.11

[15]Paragraphs [57]–[59] and [73] of the second judgment remain redacted.

……………………………..

Downs J

11     As noted, interest is payable under cl 1.4 of the agency agreement.