Premier Events Group Limited v Beattie

[2013] NZHC 1115

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-003178 [2013] NZHC 1115

BETWEEN  PREMIER EVENTS GROUP LIMITED Plaintiff

ANDMALCOLM JAMES BEATTIE First Defendant

ANDANTHONY JOSEPH REGAN Second Defendant

ANDCT NZ GROUP LIMITED (PREVIOUSLY KNOWN AS CARTAN GLOBAL LIMITED)

Third Defendant

ANDPARNELL PARTNERS GROUP LIMITED Fourth Defendant

ANDCARTAN GLOBAL LLP Fifth Defendant

ANDCARTAN TOURS INC Sixth Defendant

Hearing:         On the Papers

Counsel:         Z Kennedy and M Pascariu for Plaintiff

J Eichelbaum for First to Fifth Defendants
I M Gault for Sixth Defendant

G B Towers and M S C Harrison for Great Eagle Hotels (Auckland) Ltd - a non party

Judgment:      16 May 2013

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on

16 May 2013 at 9.30 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

PREMIER EVENTS GROUP LIMITED V BEATTIE HC AK CIV-2010-404-003178 [16 May 2013]

Solicitors:

Minter Ellison Rudd Watts, PO Box 3798, Auckland (Z Kennedy)

Bell Gully, PO Box 4199, Shortland Street, Auckland 1140 (I M Gault)

Simpson Grierson, Private Bag 92518, Wellesley Street, Auckland 1141 (G B Towers) Copy to:

J R Eichelbaum, PO Box 37-928, Parnell, Auckland 1151

Introduction

[1]      Great Eagle Hotels (Auckland) Ltd — trading as The Langham Auckland, seeks a direction that $3,514.49 be returned to it.  This sum represents interest which was earned while moneys were on deposit in the trust account of Great Eagle’s solicitors, Simpson Grierson, between 28 February 2011 and 23 November 2011.

Background

[2]      Premier Events Group Ltd (“PEG”) is involved in litigation with Messrs

Beattie and Regan, and various interests associated with them.

[3]      In 2008 PEG was a specialist provider of travel and hospitality services for major sporting events worldwide.  Relevantly it was involved in promoting and selling packages to the Rugby World Cup event to be held in New Zealand in 2011. Great Eagle Hotels and PEG entered into negotiations in relation to the provision of accommodation during the event.  Pursuant to a letter dated 28 March 2008, Great Eagle Hotels confirmed that all accommodation rates charged by it would be “commissionable” at ten percent to PEG.

[4]      On or about 16 May 2008 PEG secured, on behalf of Toyota New Zealand Ltd, an agreement with Great Eagle Hotels, whereby Great Eagle Hotels was to provide 250 hotel rooms for the use of Toyota over the duration of the 2011 Rugby World Cup.

[5]      Messrs Beattie and Regan, who were previously employed by PEG left its employment.   Following their departure, PEG was no longer able to fulfil its obligations under the agency agreement.  Great Eagle Hotels and Toyota entered into new arrangements with Parnell Partners Group Ltd, one of the defendants in this proceedings.  Parnell Partners Group Ltd is a company which was set up by Messrs Beattie and Regan.

[6]      On   8 September   2010   Great   Eagle   Hotels   issued   invoices   totalling

$3,429,300 to Toyota for the accommodation that it was to provide.  The price of the

accommodation was subsequently varied by agreement, and at some  date on or before 10 March 2011, Toyota paid the sum of $2,668,000 to Great Eagle Hotels for the accommodation.

[7]      The accommodation was not used by Toyota until October 2011.  The rooms were vacated on 24 October 2011.  Great Eagle Hotels normal trading terms required payment 30 days after the event, which was 23 November 2011.

The preservation order

[8]      In  the  interim,  on  25 February  2011  the  fourth  defendant  applied  for  a property preservation order under r 7.55 of the High Court Rules.   It specifically sought  that  the  commission  payment  should  be  paid  into  the  trust  account  of Simpson Grierson, or alternatively, that it should be paid into Court, pending the resolution of the dispute between the parties to these proceedings.

[9]      On 28 February 2011, Priestley J made a preservation order on a Pickwick basis, directing that the commission payment should remain in Simpson Grierson’s trust account.

[10]     It seems that the commission was only paid to Simpson Grierson’s trust account on or about 31 March 2011.  It was, however, held by that firm thereafter in accordance with the order made by Priestley J.

[11]     There was an application to set aside the asset preservation order.  I declined that application in a reserved decision issued on 16 August 2011.

[12]     Subsequently, PEG, Messrs Beattie and Regan, and their associated interests, reached agreement.   They signed a consent memorandum.   It recorded that as at

6 June 2012, Simpson Grierson had advised that the sum of $273,302.05 was held by it in its trust account.  That sum represented the ten percent commission, together with accrued interest.  The parties requested an order that the sum should be paid to an account with the Bank of New Zealand, held in the name of CPG York Ltd.  They

further requested that any surplus remaining after the payment, should be retained by

Simpson Grierson as stake holder, pending determination of the proceedings.

[13]     A minute making directions in accordance with the consent memorandum was issued by Toogood J on 8 January 2013.

The arguments

[14]     Great  Eagle  Hotels  says  that  it  is  entitled  to  interest  earned  on  the commission  payment  between  28 February  2011,  and  23 November  2011.    The interest it claims amounts to $3,514.49.  It says that it only became liable to pay the commission to whoever was entitled to it once it had received a non-refundable deposit.  It refers to the letter sent by it to PEG dated 28 March 2008.  It also refers to a subsequent agreement entered into between it and PEG on behalf of Toyota New Zealand Ltd, dated 16 May 2008, and to an addendum to that agreement, dated

22 December 2009.  It notes that neither of the later agreements refer to the payment of commission, and that none of the documents contain any term expressly stating when the commission became payable.  It does, however, note that the agreement dated  16 May  2008,  and  the  addendum,  refer  to  the  deposit  becoming  non- refundable.  They acknowledge that once Toyota paid the deposit, Toyota would not receive it back if it cancelled the agreement.  However, they point out that there was a force majeure clause, which provided that Great Eagle Hotels could be required to refund the deposit, if it cancelled the agreement due to any act of God, such as an earthquake, fire, flood or civil disturbance.  It says that given the force majeure clause, Great Eagle Hotels was not in a position to know if the deposit had to be refunded until after the rooms had been used.  It says that the rooms were used by Toyota up until 24 October 2013, that its normal trading terms required payment 30 days  thereafter,  and  that  the  commission  therefore  only  became  payable  on

23 November 2013.

[15]     Messrs Beattie and Regan, and their various interests, have advised that they have no interest in this dispute.  So has Mr Gault, on behalf of the sixth defendant.

[16]     PEG disputes Great Eagle Hotels’ claim.   It says that Great Eagles Hotels’ contention that the commission was not payable by it until the accommodation was used is inconsistent with the letter dated 28 March 2008, and with general legal principle.  It refers to the decision of the Court of Appeal in Latter v Parsons.1    It argues that the commission was payable as early as September 2010, because by that date, PEG had delivered what it contracted to provide to Great Eagles Hotels under

the agency agreement, and Great Eagles Hotels had charged the accommodation to Toyota.  It says that on any view of the matter, the commission became payable at the latest on or about 10 March 2011, when Toyota paid for the accommodation.  It says that at that date Great Eagle Hotels received the full benefit of the tripartite agreement between it, PEG, and Toyota, dated 16 May 2008.

Analysis

[17]     I agree with PEG’s submissions.

[18]     The letter of 28 March 2008 provided that all accommodation rates “charged” would be commissionable at ten percent.  The word “charge” means to require or demand a price for services rendered, or goods supplied.  In other words, once Great Eagle Hotels invoiced Toyota, the commission rate became payable.  The invoices issued on 8 September 2010.   They were subsequently varied by agreement, and payment was made by Toyota on or before 10 March 2011.

[19]     Further  it  is  settled  law  in  New  Zealand  that,  under  a  simple  agency agreement  to  sell  a  property,  the  agent  is  prima  facie  entitled  to  his  or  her commission as soon as he or she has procured a person approved by the vendor, to enter into a binding contract of purchase upon terms warranted by his authority.2

This principle has been endorsed on a number of occasions, including by the Court

of Appeal.3

1      Latter v Parsons (1906) 26 NZLR 645 (CA).

2      Above n 1.

3      See for example Nigro v Wilson [1924] NZLR 834 (SC); Pemberton v Action Realty Ltd [1986]

1 NZLR 287 (CA) at 289.

[20]     Further,  an  agent  who  has  done  all  that  is  required  to  earn  his  or  her commission in terms of the agency agreement is not to be deprived of that right, because the transaction ultimately falls through, or because the principal ultimately receives no benefit from the agent’s action.4

[21]     This compels the conclusion that Great Eagle Hotels is not entitled to interest earned on the commission as claimed by it.

[22]     There are additional difficulties for Great Eagle Hotels.

(a)	It asserts in a memoranda filed that there is a standard hotel industry practice  of  paying  commission  only  upon  the  rooms  being  used.
There is no evidence of this industry practice in the papers before me.
(b)	Payment has been made to the Bank of New Zealand, for the credit of an  account  in  the  name  of  CPG York  Ltd.   There  is  no  obvious
mechanism to obtain repayment from that entity.
[23]	In th	e circumstances, the application by Great Eagle Hotels (Auckland) Ltd is

declined.    The preservation order made by Priestley J  and confirmed by me on

16 August 2011, is to remain in place.

Wylie J

4      Laws of New Zealand Agency (online ed) at [92] and cases there cited.