Jones Lang Lasalle Limited v Soft Technology Jr Limited
[2019] NZHC 1965
•13 August 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-1654
[2019] NZHC 1965
BETWEEN JONES LANG LASALLE LIMITED
Plaintiff
AND
SOFT TECHNOLOGY JR LIMITED
Defendant
Hearing: 6 August 2019 Counsel:
M C Harris for the Plaintiff
M A H Macfarlane and A A Cho for the Defendant
Judgment:
13 August 2019
JUDGMENT OF ASSOCIATE JUDGE SMITH
This judgment was delivered by me on 13 August 2019 at 12.00 noon, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors / Counsel: Gilbert Walker, Auckland R Stewart QC, Auckland Hesketh Henry, Auckland
JONES LANG LASALLE LTD v SOFT TECHNOLOGY JR LTD [2019] NZHC 1965 [13 August 2019]
[1] The defendant (Soft Tech) seeks leave to apply for summary judgment against the plaintiff (JLL). Leave is necessary, because the proceeding was commenced in July 2017, and the time within which a defendant may apply for summary judgment without first obtaining the leave of the Court expires on the date the defendant serves a statement of defence on the plaintiff.1 In this case, Soft Tech served its statement of defence on or about 31 August 2017, and the application for leave to apply for summary judgment was not filed until 26 April 2019.
[2] Soft Tech's application for leave to apply for summary judgment has been prompted by a substantially amended statement of claim filed by JLL on 27 November 2018. Soft Tech has been particularly concerned with what it perceives to be unjust and onerous discovery requests made by JLL on the basis of pleadings in the amended statement of claim that Soft Tech believes have no prospect of succeeding at trial.
The general nature of the dispute
[3] JLL and Soft Tech entered into a leasing agency agreement (the Agency Agreement), commencing 20 August 2015, under which JLL was to endeavour to procure a lease of Soft Tech's Kumeu premises (the property). The property consisted of Lot 1 (available for warehouse or other light industrial use), and a contiguous lot, Lot 10 (fully forested, and only accessible (by vehicle) through Lot 1).
[4] A short term lease (10 months, with two rights of renewal of one month) was entered into with a subsidiary of Warner Bros Entertainment Inc (Warner Bros), called Manu One Ltd (Manu One). I will refer to this lease as "the Manu One lease". The Manu One lease was a lease of Lot 1 only.
[5] In February 2017, on the expiry of the Manu One lease, Soft Tech entered into a new lease, without reference to JLL, of both Lots 1 and 10. The new lease (I will call it "the February 2017 lease") was for a term of up to 12 years.
1 High Court Rules 2016, r 12.4(3).
[6] JLL received its commission in accordance with the Agency Agreement on the Manu One lease, but it says that it is also entitled to claim commission under the Agency Agreement, running to some millions of dollars, on the February 2017 lease.
[7] The dispute is over the interpretation of certain provisions of the Agency Agreement. First, the Agency Agreement contained a provision stating that it would expire "when property fully leased". Soft Tech contends that that occurred when the Manu One lease was entered into on 15 December 2012. While the Manu One lease was only a lease of Lot 1, Soft Tech says that Lot 10 had no leasable value, and there was an understanding between it and Manu One, not recorded in the Manu One lease, that Manu One would have exclusive use of Lot 10 for no additional rent. Soft Tech says that on the correct interpretation of the Agency Agreement, no additional lease of Lot 10 was contemplated if a lease of Lot 1 alone had been entered into. On that basis, Soft Tech says that JLL's task had been completed when the Manu One lease was signed, and there is no basis for a commission claim in respect of any subsequent leases of the property that Soft Tech might have signed.
[8] JLL contends that there could have been no "full leasing" of the property when Lot 10 had not been leased. It says that the result is that the Agency Agreement did not expire in December 2015, and it had not been cancelled by the time Soft Tech entered into in the February 2017 lease. JLL says that it introduced the lessee under the February 2017 lease to Soft Tech before the expiry of the Agency Agreement, and that introduction was "an effective cause" of the February 2017 lease. On that basis, it says that it is entitled to further commission on the February 2017 lease under the provisions of the Agency Agreement.
[9] As an alternative argument, JLL relies on a provision in the Agency Agreement under which it could claim additional commission if, within 24 calendar months after the commencement date of the Manu One lease Soft Tech entered into a lease of additional space to an "associate" of Manu One. It contends that the lessee under the February 2017 lease was an "associate" of Manu One, and that Lot 10 (which was included in the February 2017 lease) constituted "additional space" within the meaning of the relevant clause in the Agency Agreement.
[10] Soft Tech denies that the lessee under the February 2017 lease is an "associate" of Manu One.
[11] Soft Tech contends that neither of JLL's commission claims has any prospect of succeeding at trial. It seeks to put an end to the litigation now, by obtaining summary judgment against JLL.
Background
[12] There had been some contact going back to 2012 between Mr Ryoo, the manager of Soft Tech, and Auckland Tourism Events & Economic Development (ATEED), an Auckland Council-controlled entity that was concerned with the promotion of Auckland for various purposes, including filmmaking. Mr Harrison of ATEED had been interested to see whether the property could be used as a studio site for a major filmmaker, and developed as a film production "hub". Mr Ryoo was not interested in leasing the property for such use at that stage, and discussions between him and Mr Harrison appear to have petered out by early 2013. However, ATEED again became interested in the property in 2015, and on ATEED's behalf Mr Martin Hudson, a real estate agent with Metro Commercial Ltd, began looking to find a suitable site, and a film studio wanting to produce a film in Auckland. To qualify for certain incentives offered by the government to encourage film production in New Zealand, the film studio would be required to develop production facilities at the site that would be left behind, after the lease, as legacy assets. The initial thinking was that a major film studio might take over the property or part of it on a "pop up" basis, on an initial short term lease of one or two years.
[13] In September 2015 Lot 1 (comprising approximately 19 hectares) contained warehouse buildings, together with a yard, car parking space and some other areas. But about half of it consisted of forest. If was zoned for "light industrial". Lot 10, adjacent to Lot 1, was entirely forested. While it had a zoning of "future urban", only rural activities were permitted until Lot 10 could be developed for urban use.
[14] By early-2015 Soft Tech had a number of tenants occupying parts of Lot 1, all of them with leases due to expire on various dates in 2016. Mr Ryoo was approached by JLL in or about March 2015, about potential leasing opportunities for the property.
[15] Mr Hudson had identified the property as a potential film production site for ATEED, and in the course of 2015 he drew the property to the attention of Mr Harrison of ATEED. Mr Harrison was interested, and Mr Hudson discussed the ATEED interest with Mr David Mayhew, North Shore Manager, Industrial Sales & Leasing, for JLL. Mr Hudson' company and JLL began working on the project thereafter, on the basis that JLL would be the principal agent, and Metro Commercial Ltd would receive a share of any commission earned by JLL on procuring a lease of the property.
[16] Mr Harrison identified Warner Bros as a prospective client who might be prepared to take a lease of the property. Warner Bros was known to be looking for a site to produce the movie MEG, and the property was considered by Mr Harrison to be a good location.
JLL's marketing proposal
[17] On 20 August 2015, JLL forwarded a proposed marketing brochure to Mr Ryoo of Soft Tech, together with a draft agency agreement relating to the leasing of the property. The proposed marketing brochure referred to a "Kumeu Industrial Option", describing the property as "Impressive 13,713 square metre facility set on a 27.1234 ha site". The draft rental would be $80.00 per square metre, and the brochure proposed a total of five separate options for leasing parts of the property. Option A would have involved a lessee taking a lease of 3,555 square metres, with a stud height of 6.7 metres to 8.5 metres. Another option, described as Option C, would have seen the lessee take a total of 7,110 square metres on Lot 1, again with the same stated stud height. The last of the options, Option E, was described as follows:
Option E – Whole Site 13,713 square metres – stud height 6.7 metres to
11.5 metres
The parties sign an agency agreement
[18] JLL and Soft Tech entered into the Agency Agreement in early September 2015. As noted above, the commencement date was agreed as 20 August 2015, and the Expiry Date (stated in the "Reference Schedule" part of the Agency Agreement) was "when property fully leased". The premises were described in the Reference Schedule as "116 Access Road".
[19] In the standard form part of the Reference Schedule dealing with the agreed commission rate, the Agency Agreement stated:
Two months gross rental – for 2 years plus.
One month gross for a lease of less than two years.
Manu One becomes lessee of Lot 1
[20] When Warner Bros became involved in considering the site, they expressed the wish that both Lot 1 and Lot 10 should be included in any lease. On 15 September 2015 Mr Harrison told Mr Hudson that "the whole site is of interest to us". A draft lease was prepared which defined the leased premises as comprising both Lot 1 and Lot 10, but Lot 10 was later removed. Mr Mayhew and Mr Hudson said that was done at Mr Ryoo's behest. According to Mr Mayhew, Mr Ryoo remained wary of film production tenants, and wanted to keep his options open for Lot 10. In the event, Warner Bros ultimately agreed to take a lease of Lot 1 only.
[21] Mr Ryoo said in his evidence that the intention was that, while Lot 10 would not be part of the formal lease, Manu One would have the right to occupy it exclusively, at no cost. He said that that arrangement "essentially recognised the fact that the forested land had no independent value and could not be leased separately in its then state".
[22] Mr Ryoo said there was no discussion about how a commission would be calculated if someone leased Lot 10. Nor were there any discussions about trying to lease Lot 10, because when the Manu One lease was signed everything that could be leased had been leased.
[23] Mr Mayhew rejected Mr Ryoo's evidence that Lot 10 was not available to be separately leased. He said that, while Lot 10 may have been less attractive to industrial tenants seeking only warehousing space, it would have been very much of interest to a film production tenant, who would have considered the bush on Lot 10 as a useful "back lot". Back lot space was said to be highly desirable for film production, because producers generally want to minimise external noise, and maximise privacy,
confidentiality, and security. Back lot space could be put to a variety of uses, including filming.
[24] On Mr Ryoo's evidence that it was intended that Manu One would have the right to occupy Lot 10 for no additional rent, Mr Mayhew said there was only ever an informal understanding to that effect. He said Lot 10 was "very much available for lease, particularly for another film production tenant wanting both Lots (just as Warner Bros had)".
[25] Mr Hudson's evidence on the intended use of Lot 10 was generally the same as that of Mr Mayhew. Mr Hudson denied that there was any "agreement" as such that Manu One had the right to "occupy and have control over Lot 10".
[26] Although the Manu One lease went ahead on the basis of a lease of Lot 1 only, Mr Hudson and Mr Mayhew said that they still believed that a long-term tenant wanting to use the site for film production would want to take a lease of Lot 10 as well as Lot 1, so that they would have full lessee's rights over the whole property. That issue was discussed with ATEED in 2015 in the course of negotiating the Manu One lease, and eventually it was ATEED itself that entered into the February 2017 lease as lessee.
Marketing steps after the commencement of the Manu One lease
[27] Soft Tech contends that JLL's actions after the Manu One lease was signed are consistent with it believing that the property was then "fully leased".
[28] First, JLL communicated with Mr Ryoo in February 2016 in relation to a possible sale of the property. JLL acknowledged that it did not then have an agency for the sale of the property, and it submitted a new contract for agency to sell. Soft Tech was then using Barfoot & Thompson as its sale agent, and it declined to appoint JLL to that role.
[29] Secondly, in May 2016, JLL advised Mr Ryoo that another company was interested in leasing the whole site, starting early in 2017. Mr Mayhew's enquiry on
behalf of the other company was in respect of a possible lease commencing in early 2017, following the expiry of the Manu One lease.
[30] Mr Mayhew denied that any inference could be drawn from JLL's communications after the Manu One lease had been signed that it understood that the property had by then been "fully leased" to Manu One. He said that a subsequent lease for film production could have included Lot 10 (as Warner Bros initially wanted, and as ATEED ultimately achieved). Mr Mayhew said that the fact that JLL had brought other potential opportunities to Mr Ryoo's attention did not support any inference of the kind contended for by Soft Tech. Mr Mayhew also said that Mr Ryoo never suggested that the agency had come to an end, until JLL claimed commission in respect of the February 2017 lease.
The February 2017 lease
[31] Soft Tech admits that ATEED was initially involved in facilitating discussions between Manu One and Soft Tech in relation to the Manu One lease, and Soft Tech further acknowledges that, from about April 2016, it and ATEED held discussions about how the property could be leased after the Manu One lease terminated.
[32] In or about February 2017, ATEED, the New Zealand Film Commission (NZFC), Manu One, Warner Bros, and Gravity Pictures Ltd signed a memorandum of understanding (the MOU). JLL says that the MOU required Manu One to create a legacy component at the property, so that it would qualify for the 5 per cent uplift of the New Zealand screen production grant for international productions. JLL says that the MOU also recorded that ATEED and Soft Tech would enter into a binding lease agreement on terms approved by NZFC.
[33] While Soft Tech was not a party to the MOU, ATEED and Soft Tech had entered into a separate MOU (the Soft Tech MOU) in or about November 2016. JLL alleges that the Soft Tech MOU contained terms for a lease of the property to be entered into by Soft Tech and ATEED following the termination of the Manu One lease.
[34] The February 2017 lease commenced on 21 February 2017. It provided for an initial term of four years, with two rights of renewal, each for four years.
[35] On 2 March 2017, Auckland Council made a public announcement relating to the establishment of a permanent film studio at the property, to be operated initially by ATEED.
[36] In November 2017, ATEED and Soft Tech entered into a further agreement called an "Agreement to Design, Build and Lease", under which Soft Tech was to design and construct certain buildings on the land.
Was ATEED an "associate" of Manu One?
[37] In his affidavit, Mr Ryoo referred to cl 19 of the MOU, which provided that nothing in the MOU was to mean or be read or construed as meaning or implying any legal partnership or agency as between NZFC and ATEED, or between NZFC and ATEED on the one hand, and Manu One and/or Warner Bros and/or Gravity Pictures on the other.
[38] Mr Ryoo said that he had never seen any documentation or correspondence that would suggest ATEED is an associate of Manu One.
[39] In his evidence in response, Mr Mayhew said that JLL's claim is not based on there being a legal relationship of partnership or agency between Manu One and ATEED. The claim is simply that, as a matter of fact, the nature and extent of the relationship between those parties was sufficient to render ATEED an associate of Manu One for the purposes of the Agency Agreement. Further, JLL has not yet had discovery of documents evidencing the association between Manu One and ATEED. That discovery has been sought by way of a particular discovery application against Soft Tech, and a non-party discovery application against ATEED.
Relevant provisions of the Agency Agreement
[40] Clauses 1.2 and 1.3 of the agency agreement are central to the dispute between the parties. Those clauses provided:
1.2If the Premises of any part of the Premises is leased:
a)by [JLL]; or
b)through the instrumentality of [JLL]; or
c)to anyone introduced, either directly or indirectly, by [JLL]; or
d)by the Client or any other real estate agent or person during the term of any Exclusive Agency regardless of whether or not [JLL] introduced the lessee,
then the Client agrees to pay [JLL] without deduction or set off (legal or equitable) or counterclaim:
e)Commission at the Agreed Commission Rate calculated on the GST exclusive rental (plus GST) as a standard fee plus any additional fees and other payments specified in the attached fee scale ("Fee Scale") plus GST; or
f)if a percentage rate is not specified in the Reference Schedule, the fees and any other payments specified in the Fee Scale plus GST;
g)any other moneys owed to [JLL] pursuant to this contract.
1.3The minimum fee referred to in the Fee Scale will apply in any event. [JLL] is entitled to be paid the fees and other amounts it is owed if the Premises or any part of the Premises is leased to anyone introduced to the Client by [JLL] before the expiry or termination of this contract or if an agreement for lease is entered into within 6 months after the expiry or termination of this contract. [JLL] shall be entitled to immediate payment of monies to [JLL] upon any of the following events occurring:
a)signing of an unconditional agreement to lease or agreement to assign a lease; or
b)the date on which a conditional agreement becomes unconditional; or
c)the lessee taking possession of the Premises; or
d)the date when rent payments are payable by the lessee.
[41] Attached to the agency agreement was a scale of fees. In a section headed "Leasing", "rent" was defined to mean the total rental reserved by the lease or agreement to lease for the whole term together with any additional charges such as outgoings, contributions, partitions or shop front rentals, naming or signage rights, car parking fees and any other payment to or on behalf of the lessor for which the lessee is responsible under the lease or agreement to lease.
[42] Clause 8 of the "Leasing" section of the scale of fees provided that fees were to be calculated on the average annual rent reserved under the lease, at particular rates.
[43]Clause 13 of the scale of fees provided:
13.Subsequent Letting Additional Space: A fee shall be payable on any subsequent letting by the lessor of additional space to the same lessee (or an associate or subsidiary of the lessee) and shall be calculated in accordance with the above leasing scale, provided the lessee commences rent payment or takes possession or enters into an agreement to lease no later than 24 calendar months after the commencement date of the lease of the initial space.
Legal principles
Defendant's applications for summary judgment
[44]Rule 12.2(2) of the High Court Rules provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
…
(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[45] The principles applicable to an application for summary judgment by a defendant were discussed by Elias CJ in Westpac Banking Corp v MM Kembla NZ Limited:2
[61] The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is a complete defence to the plaintiff's claim.
...
[62] Application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated procedure and
2 Westpac Banking Corp v M M Kembla NZ Limited [2001] 2 NZLR 298, (2000) 14 PRNZ 631 (CA) at [61]-[63].
affidavit evidence will sufficiently expose the facts and the legal issues. Although a legal point may be as well decided on summary judgment application as at trial if sufficiently clear (Pemberton v Chappell [1987] 1 NZLR 1), novel or developing points of law may require the context provided by trial to provide the Court with sufficient perspective.
[63] Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary procedure the sufficiency of the proof of the plaintiff's claim. That would permit a defendant, perhaps more in possession of the facts than the plaintiff (as is not uncommon where a plaintiff is the victim of deceit), to force on the plaintiff's case prematurely before completion of discovery or other interlocutory steps and before the plaintiff's evidence can reasonably be assembled.
[64] … At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.
Applications for leave to apply for summary judgment out of time
[46] In Stephens v Barron, the Court of Appeal said that the Court should not treat the leave requirement as a mere formality.3 In that case, the defendant contended that a basis for summary judgment only became apparent after the plaintiff had answered interrogatories. The Court of Appeal did not consider that a compelling reason to grant leave. It accepted that the merits of the substantive application can be an important aspect of the leave decision, although all leave criteria must be addressed.
[47] In Corbans Viticulture Ltd v Waihopai Valley Management Ltd, Associate Judge Matthews said:4
[60] Each application must, in my opinion, be considered in light of the objective of the High Court Rules, to secure the just, speedy and inexpensive determination of any proceeding [r 1.2], and the Court must take into account the interests of the party applying, the party against whom the application has been made, and in a case where there are other parties who are not parties to the application, their interests, to the extent that they are relevant. It may also be appropriate, in my view, to make a preliminary assessment of the merits of the proposed application, to the extent that this can fairly be done on the evidence available, but this will only be one fact to take into account in an overall assessment.
3 Stephens v Barron [2014] NZCA 82; (2014) 21 PRNZ 734 at [13].
4 Corbans Viticulture Ltd v Waihopai Valley Management Ltd [2012] NZHC 2799 at [60].
[48] That passage was adopted by Andrews J in Waihopai Valley Vineyard Ltd v Savvy Vineyards 3550 Ltd.5 Her Honour noted that the purpose of summary judgment is to avoid prolonged proceedings when the matters at issue are capable of summary disposition. Leave should not be given to apply for summary judgment if it will not avoid prolonged proceedings. On the facts of the case, Her Honour was not persuaded that an application for summary judgment would achieve that aim.6
[49] In Corbans Viticulture Ltd, the Associate Judge declined to grant leave to the defendants to apply for summary judgment for a number of reasons. First, the case had already been allocated a two week fixture, and the setting-down date was just six weeks away. A timetable was in place for the exchange of evidence, and His Honour did not consider that a parallel process was appropriate, under which the summary judgment application would proceed while the parties were also complying with the timetable for the exchange of briefs of evidence. Secondly, His Honour was satisfied that even if an application for summary judgment were brought, it would inevitably result in argument over disputed issues of fact. There was no evident ground showing that any of the causes of action, let alone all of them as required by r 12.2(2), could not succeed. The Associate Judge said that, in reviewing a leave application, "I would be more persuaded if I had before me a clear pathway on every cause of action to at least a prospect of a summary judgment application having a firm grounding on some basis other than facts which are inevitably in dispute".7
[50] A two week fixture for trial had also been allocated in Waihopai Valley Vineyard Ltd v Savvy Vineyards 3550 Ltd. To the extent that an assessment could be made, Andrews J was not persuaded that the merits of the proposed application for summary judgment were such as to favour the granting of leave. Rather, a preliminary assessment showed that Savvy had an arguable defence. Her Honour rejected the applicant's submission that granting leave to apply for summary judgment would save time and expense and avoid delay, observing that the decision of the Supreme Court in Vector Gas v Bay of Plenty Energy Ltd 8 "must be viewed as widening the range of evidence which can be considered when interpreting a contract. It is therefore
5 Waihopai Valley Vineyard Ltd v Savvy Vineyards 3550 Ltd [2015] NZHC 592, at [34].
6 At [35].
7 Corbans Viticulture Ltd v Waihopai Valley Management Ltd, above n 4, at [64] – [65].
8 Vector Gas v Bay of Plenty Energy Ltd [2010] NZSC 5; [2010] 2 NZLR 444.
unrealistic to suggest in this case that these questions can be resolved without recourse to the evidence."9
[51] The last authority to which I need to refer is the judgment of Master Faire in Tip Top Ice Cream Co Ltd v Polarland Ltd, where the Master considered three factors in deciding whether leave should be granted:10
(i)Has the applicant's delay been satisfactorily explained?
(ii)Are the merits of the applicant's case for the relief sought particularly strong?
(iii)Is there any risk of a miscarriage of justice if leave is not granted?
The parties' arguments
Soft Tech
[52] Ms Macfarlane submitted that the issue of delay should be considered not from the commencement of the proceeding in 2017, but from the date of JLL's substantially amended statement of claim dated 27 November 2018. On that basis, and allowing for the Christmas break, the delay before Soft Tech applied for leave was only a little in excess of three months.
[53] She submitted that the delay is justified by Soft Tech's concern that JLL is pursuing extensive and unnecessary discovery based on a revised commission claim, asserted for the first time in JLL's amended statement of claim, that can have no prospect of succeeding at trial. The further discovery would involve a significant number of highly sensitive commercial documents relating to the rents being paid by ATEED and numerous sublessees of the property. Considerations of cost and expense favour the hearing of Soft Tech's summary judgment application, which if successful will avoid the need for the onerous and unnecessary further discovery, and the intrusion into the private affairs of non-parties that would come with it.
9 Waihopai Valley Vineyard Ltd v Savvy Vineyards 3550 Ltd, above n 5, at [36].
10 Tip Top Ice Cream Co Ltd v Polarland Ltd (2002) 7 NZBLC 103,564 (HC) at [28].
[54] Ms Macfarlane also referred to a letter dated 28 February 2018 from Mr Mayhew to Mr Ryoo, in which Mr Mayhew identified numerous individuals who would be called to give evidence at trial if the case goes to trial. Ms Macfarlane submitted that the letter showed that, if the case is allowed to go to trial, the hearing is likely to be extensive, and to involve evidence from a number of individuals who would have nothing useful to add.
[55] There will be no prejudice to JLL if leave is granted. This is not a case like Corbans Viticulture Ltd, or Waihopai Valley Vineyard Ltd, where the plaintiff's claims had already been set down for trial at the times the defendants' summary judgment applications were heard. This case has not been set down for trial, and discovery has not even been completed.
[56] On the merits, Ms Macfarlane submitted that Soft Tech's case for summary judgment is strong.
JLL
[57]Mr Harris made three principal submissions.
[58] First, Soft Tech was obliged to offer some reasonable explanation for the delay in applying for leave, and it has not done so. Its stated concerns relating to the extent of discovery are not relevant to the leave issue.
[59] Secondly, Soft Tech has not made a sufficient showing on the merits of its case to justify a grant of leave. Mr Harris relied on the judgment of Master Faire in Tip Top Ice Cream Co Ltd, submitting that, particularly in the absence of any proper explanation for the delay, Soft Tech had to make "a strong showing" on the merits. Soft Tech has failed to meet that threshold. Issues relating to such matters as the reasons for Lot 10 being excluded from the Manu One lease, and whether or not ATEED qualified as an "associate" of Manu One, will involve disputed questions of fact, and they are clearly unsuitable for determination on a summary judgment application. Relying on Westpac Banking Corp v MM Kembla NZ Ltd, Mr Harris submitted that it is not enough for a defendant seeking summary judgment to show that the plaintiff's case has weaknesses. A decision on a defendant's summary
judgment application must be clear; it is not to be arrived at "on a fine balance of the available evidence".
[60] Thirdly, JLL would be unfairly prejudiced if it were required to answer a summary judgment application before it has had full access to both Soft Tech's documents and documents sought from ATEED on JLL's non-party discovery application.11
[61] Mr Harris submitted that this is not a case where the leave application has been prompted by the defendant learning some new facts (for example, from the plaintiff's discovery) which have provided the defendant with a basis for summary judgment that it did not have before. The substantial arguments relating to the "fully leased" issue and the cl 13 "associate" issue have been known since the proceeding commenced in 2017.
[62] Mr Harris submitted that a dispute between the parties over the quantum of the commission claimed by JLL in its amended statement of claim cannot affect Soft Tech's summary judgment application. The sole issue for the Court on a defendant's summary judgment application is whether or not it is clear that none of the plaintiff's causes of action can succeed at trial. Quantum is not a consideration.
[63] More generally, Mr Harris referred to the Court's "gatekeeping function" on leave applications such as this. The leave question must be addressed seriously, and proper grounds for leave should be demonstrated.
Discussions and conclusions
[64] I do not consider this is a case where leave should be granted to apply for summary judgment.
11 The non-party discovery application was resolved between JLL and ATEED shortly before the hearing. A joint memorandum was filed, but ATEED's documents have not yet been made available to JLL, and they will not be made available until a formal order for non-party discovery has been made. That order will not be made unless and until one or other of Soft Tech's applications relating to summary judgment has been determined against Soft Tech.
[65] The proceeding was commenced in July 2017, not far short of two years before Soft Tech made its application for summary judgment. While it is true that JLL substantially amended its statement of claim on 28 November 2018, the issue about whether Lot 10 was covered by the Agency Agreement, and whether the property was "fully leased" when the Manu One lease was signed, were live issues when the original statement of claim was filed. And cl 13, relating to the "associate" issue, was expressly pleaded by JLL in its original statement of claim.
[66] It is true that the original statement of claim contained two causes of action which were abandoned by JLL in its amended statement of claim — alleged renewal of the Agency Agreement, and a claim for further commission based on an alleged quantum meruit. It might conceivably have been argued for Soft Tech that there were aspects of those two causes of action that were not suitable for determination on a summary judgment application, and that a summary judgment application therefore could not have succeeded. However, Ms Macfarlane did not appear to place any reliance on that argument, and I doubt very much that the causes of action that were later abandoned by JLL could have survived a summary judgment application by Soft Tech. (I did not note evidence of any renewal of the Agency Agreement, and the quantum meruit cause of action appears to have been equally thin.) The fact that both causes of action were abandoned by JLL also suggests that JLL's new solicitors did not consider that they had any merit.
[67] But even if the filing of the amended statement of claim on 27 November 2018 created a new circumstance, or event, so that fairness would require Soft Tech's delay to be assessed from the point at which a statement of defence to the amended statement of claim was due,12 there is a further delay of approximately four months that has not been satisfactorily explained.
[68] I accept Mr Harris' submission that there has been no new event, or circumstance, occurring since 27 November 2018 that could reasonably have justified Soft Tech looking again at the merits of a summary judgment application. As noted above, the possible summary judgment issues appear to have been known since at least
12 Under r 7.77, an amended statement of defence was due within 10 working days of the service of the amended statement of claim.
2017, and the concerns now raised by Soft Tech relating to substantial additional discovery, including non-party discovery, are not in my view sufficient to justify the four months' additional delay. First, either Soft Tech could demonstrate that neither of JLL's causes of action had any prospect of success at trial or it could not, and nothing occurring since 27 November 2018 appears to me to have affected that issue. As for the non-party discovery, it cannot be regarded as a factor affecting Soft Tech. Soft Tech does not appear to have filed a notice of opposition to the non-party discovery application, and in the end JLL and ATEED were able to work out any difficulties over the commercially sensitive documents on a basis that JLL and ATEED put forward in a joint memorandum. I do not see a basis for any finding that the non-party discovery would be unduly onerous, particularly as JLL will, in the usual way, be meeting ATEED's costs and expenses associated with the non-party discovery.
[69] I accept that Soft Tech has had a concern over what it sees as extensive further discovery directed to the quantum of the commission claim now made by JLL. Soft Tech says that there was never any agreement to pay commission at the rate of 10 per cent of the rent payable by ATEED under the February 2017 lease, and that providing discovery directed to that issue will be extensive, onerous, and completely unjustified having regard to the merits of the issue. But even if Soft Tech is correct on the merits of the 10 per cent commission argument that could not provide any basis for a defendant's summary judgment. The issue goes only to quantum, and to avoid summary judgment JLL would not have to show an arguable case that it is entitled to recover any particular sum. That is because a defendant's summary judgment application in a contract case is concerned with liability, not quantum.13
[70] Nor is it clear to me that the additional discovery going to the "10 per cent issue" will necessarily be onerous or unduly time-consuming. Mr Harris advised at the hearing that JLL is concerned only to obtain verification of the rents actually received or receivable by Soft Tech under the February 2017 lease — it does not seek every document relating to the February 2017 lease and the various subleases apparently entered into by ATEED. Nor does commercial sensitivity relating to the "10 per cent issue" appear to raise any significant new issue. Soft Tech has already
13 In claims based in breach of contract, as this case is, a plaintiff may be entitled to nominal damages even if it cannot prove any loss.
disclosed in excess of 200 documents which it says are commercially sensitive (subject to certain protections as to who may inspect the documents), and given that context it is difficult to see that further discovery of commercially sensitive documents would be likely to create significant additional delay and/or cost.
[71] It may be that Soft Tech has good arguments that JLL cannot succeed on the 10 per cent commission issue (a point I do not need to decide), but even if it does, applying for summary judgment was not in my view the correct response. If it turns out to be clear that there was never any basis for JLL to make the "10 per cent commission" claim, that will be a matter to be considered when costs are addressed, and, depending on the facts, an award of increased or indemnity costs on that issue might be appropriate (regardless of the ultimate outcome of the proceeding).
[72] Ms Macfarlane referred to a letter sent by JLL on 28 February 2018, suggesting that if the case went to trial JLL would call a number of high profile witnesses whose evidence would be of marginal or no relevance. The submission appeared to imply that JLL was then using intimidation tactics, threatening to improperly extend the trial, and add unnecessary costs, by calling witnesses whose evidence would add nothing of relevance. I do not think there is anything in this. Counsel for JLL can be expected to exercise appropriate oversight of the evidence to be called at trial, and any irrelevant evidence could be expected to receive short shrift at trial.
[73] Ms Macfarlane submits that this is not a case like some leave cases, where a fixture had already been allocated for the trial. She submitted that there will be no prejudice to JLL if leave is granted. Mr Harris submitted that there is a risk of prejudice to JLL, in that if leave were granted it would be required to argue the substantive summary judgment application without access to all the documents it would need. JLL's particular discovery application has not yet been dealt with, and in it JLL seeks a number of documents going not merely to the quantum of its claims but also to the substantive issues (including in particular whether or not ATEED can be regarded as an associate of Manu One).
[74] It may be said that a plaintiff's lack of access to any relevant documents of the defendant would be factored into the Court's consideration of any summary judgment
application by the defendant, but to the extent that might be so it would still weigh against the leave application (because it would detract from what would otherwise have been the merits of the defendant's summary judgment application). In this case it is enough to find, as I do, that it is not sufficiently clear that JLL would not be prejudiced by the absence of access to the further documents it seeks from Soft Tech, for that to be a significant factor in Soft Tech's favour on the leave application.
[75] Against the background of those considerations, I consider that Soft Tech needed to show a stronger argument on the merits of the proposed summary judgment application than might otherwise have been the case. Whatever might be the test for the proper weight to be given to the applicant's position on the merits of the substantive case on a leave application, I am satisfied that Soft Tech has not produced sufficient in this case for the leave application to succeed.
[76] I have the advantage of considering all the evidence that would be considered on a summary judgment application if leave were granted, so perhaps more emphasis can be put on the merits in this case than the Courts have been able to put on the merits in leave applications in other cases where that may not have been the case. However, the merits assessment must still only be preliminary, and it is not appropriate in this judgment to make what would, in effect, be a determination on the summary judgment application itself. I think it is enough to say that I consider that Soft Tech's prospects of persuading the Court that JLL has no arguable case on its first cause of action do not appear strong. I note first that the marketing proposal did refer to the whole 27 hectare site, and that the reference to "Option E — Whole Site" in the marketing proposal (which referred to a square metre area of only 13,713) was also accompanied by a statement of the relevant "stud height". The "whole site" description, as with the other descriptions of the four options referred to, appears to have been concerned only with the area of the relevant buildings, and not with the area to be leased.
[77] Further, the Agency Agreement described the premises simply as "116 Access Road", which I understand to be the address for both Lot 1 and Lot 10. Consistent with that, the early negotiations with Warner Bros contemplated a lease of both Lots. The issue seems likely to come down to the terms and effect of an apparent understanding between Mr Ryoo of Soft Tech and Warner Bros or Manu One, as to the
latter's entitlement to use Lot 10. There appears to be no written record of that agreement or understanding, and there was no clear explanation as to why, if the property was regarded by Mr Ryoo as "fully leased" when the Manu One lease was signed, Lot 10 was not included in the Manu One lease. In those circumstances I think it not unlikely that the Court hearing a summary judgment application would come to the view that it would be dangerous to decide the "fully leased" issue without hearing oral evidence from Mr Ryoo and others involved in the negotiations.
[78] That consideration of the merits is sufficient, as a summary judgment application could not succeed if the Court were not satisfied that both of JLL's causes of action must fail at trial. There is no need for me to consider the merits on JLL's second cause of action (relating to the "associate" issue).
[79] Soft Tech having failed to make out a case for leave, the leave application will be refused with costs.
Result
[80] Soft Tech's application for leave to apply for summary judgment is refused. JLL is entitled to costs on the leave application, which I award on a 2B basis, together with disbursements to be approved by the Registrar.
[81] The leave application having been refused, there is no need to consider the substantive application for summary judgment. However, JLL is entitled to any additional costs incurred in respect of the substantive summary judgment application (beyond those incurred on the leave application), also on a 2B basis, and with any additional disbursements as fixed by the Registrar. Leave is reserved to file memoranda if counsel are unable to agree on any such additional costs.
Associate Judge Smith
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