SOFT TECHNOLOGY JR LIMITED v JONES LANG LASALLE LIMITED [2022] NZCA 353

SOFT TECHNOLOGY JR LIMITED v JONES LANG LASALLE LIMITED [2022] NZCA 353 [4 August 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA164/2021CA630/2021CA719/2021[2022] NZCA 353BETWEEN SOFT TECHNOLOGY JR LIMITEDAppellantANDANDJONES LANG LASALLE LIMITEDRespondentREAL ESTATE AGENTS AUTHORITYIntervenerHearing: 27 April 2022Court: Clifford, Goddard and Dobson JJCounsel: D R Bigio QC and A C Eager for AppellantM C Harris and A G H Bradley for RespondentS A Armstrong and G S A Morrison for IntervenerJudgment: 4 August 2022 at 3 pmJUDGMENT OF THE COURTA The appeals are allowed.B The costs orders in the High Court are set aside. The respondent mustpay the appellant costs on a 2B basis and usual disbursements in theHigh Court.C The respondent must pay the appellant costs for a standard appeal on aband A basis and usual disbursements in this Court.____________________________________________________________________REASONS OF THE COURT(Given by Dobson J)Table of contentsPara noThe factual background [6]The agency agreement [23]High Court judgment [25]Section 126 [29]Submissions [30]Discussion [32]Legislative history of s 126 [40]Plain meaning of s 126 and surrounding context [45]Practical effect of the s 126 temporal condition [53]Overseas authorities [66]Conclusion [70]The remaining issues [72]Was JLL's omission inadvertent? [74]Did JLL introduce ATEED? [84]The second ATEED lease — did the MOU qualify JLL for commission? [95]Would commission be payable on turnover rent? [108]JLL's entitlement to interest [114]JLL's entitlement to indemnity costs [117]Costs [122]Result [126][1] These appeals arise from proceedings in which the respondent real estate agent,Jones Lang Lasalle Ltd (JLL), made claims for commissions from the appellantcommercial property owner, Soft Technology JR Ltd (Soft Tech), in respect oftwo leases. The leases had been entered into after an initial lease of part ofSoft Tech's property in respect of which Soft Tech accepted that it was liable to anddid pay JLL a commission. In the High Court JLL succeeded on its claims forcommissions for the two subsequent leases (the first High Court judgment). 1The High Court also found in JLL's favour that its commissions could include amountscalculated on turnover rents, and that JLL was entitled to interest from the dates ofdemand for payment (the second High Court judgment),2 as well as indemnity costs(the costs judgment).3 Soft Tech appeals against all aspects of the orders against it.1 Jones Lang Lasalle Ltd v Soft Technology JR Ltd [2021] NZHC 351, (2021) 22 NZCPR 58[First High Court judgment].2 Jones Lang Lasalle Ltd v Soft Technology JR Ltd [2021] NZHC 2538 [Second High Courtjudgment].3 Jones Lang Lasalle Ltd v Soft Technology JR Ltd [2021] NZHC 3069 [Costs judgment].[2] Contractual dealings between property owners and real estate agents arematerially influenced by the provisions of s 126 of the Real Estate Agents Act 2008(the Act). In summary this section provides that a real estate agent is only entitled tocommission for work performed under a written agency agreement, complying withapplicable regulations, that has been signed by the client and agent where a copy hasbeen given by the agent to the client within 48 hours of the client signing it. 4The Court is, however, given a limited power to order that commission is payabledespite failure by the agent to provide the client with a copy of the agency agreementwithin 48 hours.5[3] In the High Court Downs J held that s 126 of the Act did not require completionof a signed agency agreement prior to the agent undertaking work for whichcommission was claimed.6[4] That finding was contrary to the interpretation of the section that has beenapplied consistently by the Real Estate Agents Authority (the Authority),the independent body established pursuant to the Act to regulate real estate agentslicensed under it.7 Since inception, the Authority has administered its responsibilitiesunder the Act on the basis that agency agreements are required to be signed by bothparties before an agent undertakes real estate agency work on behalf of a propertyowner for which the agent would seek commission.[5] The Authority sought leave to intervene in the appeals to present arguments insupport of its contrary interpretation of s 126. Leave was granted for it to do so.8As a result, we had the considerable benefit of the Authority's submissions in hearingthis appeal, an advantage not enjoyed by the High Court.The factual background[6] Soft Tech owns a substantial property at Access Road, Kumeu. It comprisestwo lots, Lot 1 of 19.96 ha and Lot 10 of 7.16 ha, making a total of 27.12 ha. The sole4 Real Estate Agents Act 2008, s 126(1).5 Section 126(2) and (3). The full terms of s 126 are set out at [29] below.6 First High Court judgment, above n 1, at [87]–[93].7 Real Estate Agents Act, ss 10 and 12.8 Soft Technology JR Ltd v Jones Lang Lasalle Ltd [2022] NZCA 115.representative of Soft Tech involved in relevant dealings was Mr Peter Ryoo,who manages the company and is responsible for its business.[7] In early 2015 the then buildings on Lot 1 were occupied mostly bytimber-industry tenants. Lot 10, which was practically only accessible via Lot 1,was covered in bush.[8] In August 2015 a representative of JLL sent a brochure to Mr Ryoo seeking aretainer to pursue potential leasing opportunities for the property. The brochure wasaccompanied by a draft agency agreement. An earlier attempt to obtain instructionsfrom Mr Ryoo in March 2015 had not borne fruit and by August other real estate agentswere contacting Mr Ryoo about leasing opportunities for the property.[9] On 4 September 2015 two JLL representatives, Messrs David Mayhew andConnor McEvoy-Roberts, met with Mr Ryoo. Mr Ryoo signed a general agencyagreement, after making some additions to its printed terms, and gave it toMessrs McEvoy-Roberts and Mayhew. As explained in more detail below,the agreement was not signed for JLL by Mr Mayhew until 21 December 2015.Even then, a copy was never provided to Mr Ryoo. He did not receive a copy of thesigned agreement until it was provided on discovery in the High Court proceedings.[10] By September 2015 there was interest in the property being used forfilm production purposes. A former JLL agent, Mr Martin Hudson, had by mid-2015become a representative of another agency, Metro Commercial Ltd(Metro Commercial). Mr Hudson had a working relationship with aMr Harry Harrison, who was responsible for attracting international film productionventures to Auckland on behalf of an Auckland City Council-controlled organisationcalled Auckland Tourism, Events and Economic Development Ltd (ATEED).In early May 2015 Mr Harrison asked Mr Hudson to help him identify sites that mightbe appropriate for film production facilities. Around the time of Messrs Mayhewand McEvoy-Roberts' meeting with Mr Ryoo in early September 2015, Mr Hudsonlearned from Mr Mayhew that Soft Tech's property was likely to become availableand might be of interest to ATEED. Mr Hudson duly relayed the possible availabilityof the property to Mr Harrison, who had previous familiarity with it.[11] Metro Commercial and JLL then agreed on some terms for acommission-sharing arrangement, which have no relevance to the present appeal.Thereafter Messrs Hudson and Mayhew joined forces in promoting the property toMr Harrison for ATEED.[12] Mr Harrison had two international film studios interested in the property,one of which was Warner Brothers. Towards the end of October 2015 those interestswere sufficient for JLL to provide to Mr Harrison a draft agreement that contemplatedWarner Brothers taking on a short-term lease. Initially the draft contemplated a leaseof both Lots 1 and 10 but Warner Brothers had no requirement for the bush-coveredLot 10, so that was removed. It was Mr Harrison who forwarded the draft agreementto Mr Ryoo, who had initially been unenthusiastic about the property being used forfilm production undertakings because of the uncertainty about consistent ongoing use.[13] Before making any commitment, Mr Ryoo insisted that JLL reduce the extentof the commission that it would charge from that stipulated in the agency agreementhe had signed in early September. After negotiations, JLL agreed to Mr Ryoo'sdemand.[14] Soft Tech then entered into a lease with a subsidiary of Warner Brothers calledManu One Ltd (Manu One) on 15 December 2015 (the Manu One lease). The leasewas for a term of 10 months with two rights of renewal of one month each.JLL invoiced Soft Tech for its commission on the Manu One lease shortly thereafter.That invoice was paid in full by JLL. Mr Harrison and ATEED's involvement wasthat of a facilitator or further broker. It appears that ATEED neither soughtcompensation for its involvement, nor did it contemplate accepting any liability underthe lease that its involvement had facilitated.[15] The direct line of communication between Messrs Harrison and Ryoo thatoperated in October 2015 was either continued or was at least resumed some monthsinto 2016. There is no dispute about the Judge's finding that further discussionsabout the property between Soft Tech and ATEED began no later than 21 March 2016.9The subject of the discussions was the use of the property after completion of the9 First High Court judgment, above n 1, at [24].movie being produced by Manu One, including the future of facilities that were builton the property for the purposes of that project.[16] The New Zealand Film Commission | Te Tumu Whakaata Taonga (NZFC)administers grants to incentivise production of films in New Zealand amounting to20 per cent of production costs for qualifying projects. The NZFC also has capacityto provide an additional five per cent uplift grant for projects that create and leaveavailable for subsequent use so-called "legacy assets". Warner Brothers sought theadditional uplift grant with the help of ATEED, in negotiations with the NZFC.To optimise the opportunities for subsequent use of the property for film production,Soft Tech was drawn into discussions concerning the prospect of it committing capitalto build additional facilities on the property. At some point in these discussionsATEED's role changed from being a facilitator or broker of leasing arrangementsbetween the commercial property owner and film production companies, to a potentiallessee of the property itself, in order to facilitate sequential use of the property byfuture film production projects.[17] By November 2016 these discussions had progressed to the point whereSoft Tech and ATEED completed a Memorandum of Understanding (MOU), whichreflected Soft Tech's preparedness to commit capital to build further facilities and forATEED to lease the property from Soft Tech. The MOU contemplated that ATEEDwould take two leases, each for similar periods, depending (among other things) onthe extent to which proposed new facilities on the property could be constructed bySoft Tech. To this end, the MOU also contemplated Soft Tech and ATEED wouldenter into an agreement to design, build and lease shortly after the first lease wasentered into. The MOU recognised numerous significant conditions that needed tobe satisfied for the lease transactions to proceed, including certain milestones which,if not achieved by specified dates, would bring the arrangements to an end.[18] The first of the leases between Soft Tech and ATEED duly commenced on21 February 2017 (the first ATEED lease). It was for an initial term of four years andcovered both Lots 1 and 10 except for two small areas. After its commencementATEED made a public statement about the arrangements constituting a "fantasticmilestone for Auckland's film industry", and foreshadowing use of the property bysuccessive film production projects.[19] After the Manu One lease was entered into, JLL made attempts to market theproperty to potential new clients and, in December 2015, Mr Mayhew showed theproperty to a prospective tenant. Mr Mayhew took other similar initiatives inFebruary and May 2016. He asked Mr Ryoo in June and August 2016 when theproperty would be available. It appears Mr Ryoo did not respond enthusiastically toany of these contacts from JLL and did not advise JLL of the ongoing dialogue he washaving with Mr Harrison and ATEED.[20] In April 2017 JLL claimed commission from Soft Tech in respect of thefirst ATEED lease. On 17 May Soft Tech wrote to JLL and advised that it consideredtheir agency agreement had expired in December 2015 when the Manu One lease wascompleted because that amounted to the property being fully leased. Soft Tech wenton to advise that, even if the agency agreement was still in force, its letter should betaken as notice of its termination.[21] As contemplated in the MOU, an agreement to design, build and lease betweenATEED and Soft Tech was entered into on 9 November 2017. This agreement wasset to expire on 20 February 2021, being the same date as the expiry of the first ATEEDlease. ATEED and Soft Tech entered into a second lease on 18 May 2018 afterSoft Tech successfully built the new facilities (the second ATEED lease), which hadthe same expiry date.10[22] JLL sued for commissions in relation to the first and second ATEED leases.Soft Tech denied all aspects of JLL's claims on a range of grounds.The agency agreement[23] The agency agreement between Soft Tech and JLL was written using a standardJLL form concerning JLL's agency to lease premises. A reference schedule on thefirst page included details such as the agreed commission rate, and the commencement10 For reasons not material for the present appeal, Soft Tech and ATEED entered into an Agreementto Amend and Restate the Second ATEED lease on 20 November 2019.and expiry dates of the agreement. Clause 1.1 confirmed the appointment by theclient of JLL as the client's agent. Clauses 2.1 to 2.4 specified the extent of theauthority granted to JLL. This included the authority to incur expenses in promotingthe property and to arrange inspections of it.[24] Provision for payment of commission and fees were in the following terms:1.2. If the Premises or any part of the Premises is leased:a) by Jones Lang LaSalle; orb) through the instrumentality of Jones Lang LaSalle; orc) to anyone introduced, either directly or indirectly,by Jones Lang LaSalle; ord) by the Client or any other real estate agent or person duringthe term of any Exclusive Agency regardless of whether ornot Jones Lang LaSalle introduced the lessee,then the Client agrees to pay Jones Lang LaSalle without deduction orset off (legal or equitable) or counterclaim:e) Commission at the Agreed Commission Rate calculated onthe GST exclusive rental (plus GST) as a standard fee plusany additional fees and other payments specified in theattached fee scale ("Fee Scale") plus GST; orf) if a percentage rate is not specified in the Reference Schedule,the fees and any other payments specified in the Fee Scaleplus GST;g) any other moneys owed to Jones Lang LaSalle pursuant to thiscontract.1.3. The minimum fee referred to in the Fee Scale will apply in any event.Jones Lang LaSalle is entitled to be paid the fees and other amounts itis owed if the Premises or any part of the Premises is leased to anyoneintroduced to the Client by Jones Lang LaSalle before the expiry ortermination of this contract or if an agreement for lease is entered intowithin 6 months after the expiry or termination of this contract.Jones Lang LaSalle shall be entitled to immediate payment of moniesowed to Jones Lang LaSalle upon any of the following eventsoccurring:a) signing of an unconditional agreement to lease or agreementto assign a lease; orb) the date on which a conditional agreement becomesunconditional; orc) the lessee taking possession of the Premises; ord) the date when rent payments are payable by the lessee.1.4 Any monies owed by the Client to Jones Lang LaSalle shall atJones Lang LaSalle's election attract interest at the rate of 1.5% permonth from the due date of payment until the actual date of paymentat Jones Lang LaSalles' election.(Original emphasis.)High Court judgments[25] In the first High Court judgment the Judge first found that JLL's participationeffected an introduction of ATEED to Soft Tech and the property, which was sufficientto entitle JLL to commission for the first and second ATEED leases.11 The Judgerejected Soft Tech's argument that the agency agreement had expired on entry into theManu One lease because that lease did not relate to the whole of the property.12At the same time the Judge rejected an argument for JLL that it was entitled tocommission on the first and second ATEED leases by virtue of ATEED being"an associate" of Manu One.13[26] The Judge then dealt with what by then had become Soft Tech's primaryargument: that the agency agreement was unenforceable because it had not beencompleted prior to JLL undertaking the work for which it claimed a commission.The Judge rejected Soft Tech's arguments that s 126 of the Act imposed that temporalcondition and instead found that an enforceable agreement could be concluded afterthe agent had done the relevant work.14 That being so, the Judge went on to considerJLL's application for relief from its non-compliance with s 126(1)(c) that required itto provide Soft Tech with a copy of the agreement within 48 hours. The Judge foundthat JLL's failure to do so was caused by its inadvertence so that relief should begranted under s 126(2).1511 First High Court judgment, above n 1, at [47]–[48] and [65].12 At [69]–[75].13 At [80]–[81]. Clause 13 of the scale of fees appended to the agency agreement provided that afee would be payable on subsequent lettings of additional space to the same lessee "(or an associateor subsidiary of the lessee)".14 At [88]–[93].15 At [100]. See also at [94].[27] The Judge then found that commission was recoverable, in the amount oftwo months' gross rental.16 He also recognised that further issues would need to bedetermined if they could not be resolved between the parties in light of the findingsalready made.17[28] In the second High Court judgment, issued on 28 September 2021, the Judgedetermined further issues.18 He held that the rent on which JLL's commission was tobe calculated included turnover rent that was payable under the first ATEED lease.19The Judge also held that commission was payable on the second ATEED lease,including on an alternative basis, and recovery of the full extent of commissioncharged in accordance with the agency agreement would be fair and reasonable.20Further, the Judge held that JLL could claim interest pursuant to the terms of theagency agreement.21 In the costs judgment, the Judge upheld JLL's contractualentitlement to indemnity costs.22Section 126[29] The impact of s 126 of the Act on the enforceability of the agency agreementis fundamental to Soft Tech's denial of liability for the further commissions claimed.Section 126 provides:126 No entitlement to commission or expenses without agencyagreement(1) An agent is not entitled to any commission or expenses from a clientfor or in connection with any real estate agency work carried out bythe agent for the client unless—(a) the work is performed under a written agency agreementsigned by or on behalf of—(i) the client; and(ii) the agent; and16 At [107].17 At [3]–[4].18 Second High Court judgment, above n 3.19 At [12]–[16].20 At [44], [49] and [56].21 At [66] and [72].22 Costs judgment, above n 3.(b) the agency agreement complies with any applicablerequirements of any regulations made under section 156; and(c) a copy of the agency agreement signed by or on behalf of theagent was given by or on behalf of the agent to the clientwithin 48 hours after the agreement was signed by or onbehalf of the client.(2) A court before which proceedings are taken by an agent for therecovery of any commission or expenses from a client may order thatthe commission or expenses concerned are wholly or partlyrecoverable despite a failure by the agent to give a copy of the relevantagency agreement to the client within 48 hours after it was signed byor on behalf of the client.(3) A court may not make an order described in subsection (2) unlesssatisfied that—(a) the failure to give a copy of the agreement within the requiredtime was occasioned by inadvertence or other cause beyondthe control of the agent; and(b) the commission or expenses that will be recoverable if theorder is made are fair and reasonable in all the circumstances;and(c) failure to make the order would be unjust.(4) This section overrides subpart 5 of Part 2 of the Contract andCommercial Law Act 2017.Submissions[30] On Soft Tech's interpretation of s 126(1), the agency agreement must havebeen completed before the work in respect of which commission was sought wasperformed. That temporal condition was not complied with, and moreover belatedcompletion of the signed agreement is not a form of non-compliance for which theCourt can grant relief under s 126(2).[31] On JLL's case, the only temporal condition was that in s 126(1)(c). It had notcomplied with that but could seek relief from the Court under s 126(2) and (3).JLL claimed it was a deserving case for relief and the Court had correctly granted itthe full extent of the commission payable.Discussion[32] The purpose of the Act is stipulated in s 3 as being: to promote and protect the interests of consumers in respect of transactionsthat relate to real estate and to promote public confidence in the performanceof real estate agency work.[33] Section 3 also states that purpose is to be achieved, inter alia, by regulatingagents, raising industry standards and providing accountability through anindependent disciplinary process.23[34] Section 126 is to be interpreted with that purpose of protecting consumers inmind. It is noted that s 126, which states there can be no entitlement to commissionor expenses without a written agency agreement, appears in pt 5 of the Act, which isheaded "[d]uties relating to real estate agency work". Other provisions in that partinclude requirements to furnish accounts to clients, 24 and to have audited trustaccounts.25High Court's interpretation of s 126[35] The Judge interpreted s 126 as not requiring the completion of an enforceablecontract before the agent undertakes the work in respect of which it claimscommission. This was first because the definition of agency agreement in s 4(1) ofthe Act does not specifically require all agency agreements to be concluded inwriting.26 That definition of agency agreement is: an agreement under which an agent is authorised to undertake real estateagency work for a client in respect of a transaction[36] Because the s 4 definition does not exclude the prospect of oral contracts,the Judge found that rules on formation of an agency agreement are left to ordinarycontractual principles.27[37] The Judge was reinforced in this conclusion by the reasoning inInvestmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd, a decision of the23 Real Estate Agents Act, s 3(2).24 Section 124.25 Section 125.26 First High Court judgment, above n 1, at [87(a)].27 At [87(a)].New South Wales Supreme Court on the equivalent provisions in that jurisdiction.28In that case the Court answered several questions before trial on the effect of thoseprovisions. Having held that their terms precluded the agent from recoveringcommission where there had been non-compliance with the requirements of therelevant provisions, the Court went on to consider whether the agent might have acause of action seeking a quantum meruit. In that context, the Court observed:29These sections do not forbid the making of any contract. Nor do they rendera contract void. There is no prohibition upon the rendering of agencyservices where the statutory conditions are not satisfied. There is nothing tostop a client or principal making voluntary payment for agency servicesrendered in such circumstances [38] The Court went on to find that any quantum meruit or other form ofrestitutionary claim would also be blocked by the statutory provisions.30 Barrett Jobserved:[86] It may be thought that such a result is harsh in a case such as thisinvolving apparently sophisticated property development parties dealing atarm's length in a straightforward, commercial way and in circumstances notinvolving any apparent need for consumer protection in the generally acceptedsense. It certainly seems to me to be harsh. The result is nevertheless onedictated by statutory provisions of long standing and must be accepted by boththe court and the parties.[39] We do not treat those observations as to the possibility of entry intounenforceable agency agreements (here, those that do not comply with s 126), orvoluntary payment of commission, as material to determining whether enforceableagency agreements (those conforming to s 126) are required to be completed beforethe services to which they relate are undertaken. There is a distinction between theformation of agency agreements and their enforceability. Generally, and certainly inthis case, the only type of contract that is relevant is one pursuant to which the agentcan recover commission. It is artificial to consider a counterfactual in which JLLwould be acting as a volunteer in providing services to Soft Tech, in reliance on someunenforceable assurance from Soft Tech that it would pay an agreed commissionirrespective of JLL's lack of capacity to make a legal claim for it. Section 12628 At [87(b)], citing Investmentsource Corp Pty Ltd v Knox Street Apartments Pty Ltd [2002]NSWSC 710, (2002) 56 NSWLR 27.29 At [66].30 At [85].addresses enforceability and does so by constraining what would otherwise be agents'freedom to contract on any terms they could negotiate, and in any form.Legislative history of s 126[40] The previous statute regulating the industry, the Real Estate Agents Act 1976,addressed the requirement for a written agreement in different terms:3162 Real estate agent to have written contract of agencyNo person shall be entitled to sue for or recover any commission,reward, or other valuable consideration in respect of any service orwork performed by him or her as a real estate agent, unless—(a) He or she was the holder of a licence as a real estate agentunder this Act or the holder, or the partner of a holder, of alicence as a real estate agent under the Real Estate Agents Act1963 at the time of the performing of the service or work; and(b) His or her appointment to act as agent or perform that serviceor work is in writing signed either before or after theperformance of that service or work by the person to becharged with the commission, reward, or consideration or bysome person on his or her behalf lawfully authorised to signthe appointment.(Emphasis added.)[41] The Judge considered the extent of change from that provision, whichpermitted the written appointment of the agent to be signed either before or afterperformance of the work, when compared with the current requirement for the workto be undertaken "under" a written agreement.32 He held the changes in wordingwould be too subtle a way of introducing a new requirement that the agency agreementhad to be completed before the work was performed.33 JLL endorsed the Judge'sview on this point and submitted that any requirement for completion of the agencyagreement before performing the work would need to have been explicitly introducedinto the new legislation.31 Section 62 of the Real Estate Agents Act 1976 adopted the terms of the previous provision in s 79of the Real Estate Agents Act 1963.32 First High Court judgment, above n 1, at [88]–[89].33 At [91].[42] The extent of the difference between s 62 of the 1976 Act and the current s 126goes beyond the respective provisions as to timing for completion of agencyagreements. Although the heading of the former s 62 was "[r]eal estate agent to havewritten contract of agency", the essential requirement in s 62(b) was that there bewritten confirmation of an agent's appointment to act as such. There was norequirement for the terms of the retainer to be agreed in writing. By contrast,the current provision does not expressly require written confirmation of the agent'sappointment. 34 Instead, it requires the written agreement to comply with therequirements specified in regulations made under s 156 of the Act.35 Those changesbroaden the scope of what has to be in writing and can be seen as reflecting greaterconcern for consumer protection.[43] Of more direct relevance, s 62 provided that the written appointment of theagent could be signed either before or after performance of the service or work.Permitting written evidence of an agent's appointment after performing the servicescontemplates that an oral retainer was deemed sufficient for the purpose of promotingthe client's property, without addressing any preconditions for an agent to claimcommission. Given the variety of circumstances in which there are likely to beunequal bargaining positions between agents and clients, that liberty is inconsistentwith protecting the interests of consumers of agents' services, the purpose stipulatedin s 3(1) of the Act. When the full terms of the former s 62 and the current s 126 arecompared, the impact of the removal of the liberty for an agent to procure the writtenrecord of appointment after the provision of services is more than a subtle change.[44] For completeness, it is noted there is nothing in Hansard or theSelect Committee report addressing the reasons for changing the requirements for awritten agency agreement. However, the general emphasis in the debates and reportwas on the protection of consumers of agents' services.3634 That requirement is now in the Real Estate Agents Act (Professional Conduct and Client Care)Rules 2012: see r 9.6.35 Real Estate Agents Act, s 126(1)(b).36 See, for example, Real Estate Agents Bill 2007 (185–2) (select committee report) at 1 and 3; and(11 December 2007) 644 NZPD 13815.Plain meaning of s 126 and surrounding context[45] The terms of s 126 preclude an agent enforcing a claim for commission orexpenses unless the agent has performed the work it charges for "under" a writtenagency agreement. If the requisite agreement does not exist in an enforceable form,then in literal terms it is not possible for the agent to perform work "under" its terms.The same proposition holds if the word "under" is replaced with "pursuant to",or "in accordance with". An agent's conduct cannot be pursuant to, or in accordancewith, a contract the terms of which have not been committed to. Because it isunenforceable until completed in compliance with s 126, it is artificial to say that theagent would know how to perform "under" its terms because of earlier oralarrangements consistent with the written agreement. 37 The use of "under" ins 126(1)(a) indicates a temporal sequence requiring the agency agreement to be inplace before the relevant work is undertaken.[46] Consistently with that temporal sequence, s 126(1)(c) requires that a copy ofthe signed agreement "was given" to the client within 48 hours of being signed bythe client. The use of the past tense requires the act of providing a copy of thecompleted agreement to have occurred before the essential activity addressed in thesection, that is, the work to be performed. Tense is not unimportant in interpretingstatutory provisions, and the assumption of deliberate use of past or present tenseshould be reflected in the meaning given to the provision.38[47] Additionally, the definition of "agency agreement" in s 4 must be appliedwhere it is used in s 126, to work out when an agency agreement is enforceable.39In combination, an enforceable agency agreement is one that operates as the source ofthe agent's authority to market a property and which was committed to writing andprocessed in accordance with the s 126 requirements.[48] Further, the terms of the Act's provisions following s 126 confirm therequirement of the temporal condition that the agency agreement must be completed37 We note this is not a contention available on the facts of the present case.38 See Police v Bradley [1974] 1 NZLR 113 (CA) at 116; Gisborne Harbour Board v Spencer [1961]NZLR 204 (CA) at 216; and New Zealand Trotting Conference v Ryan [1990] 1 NZLR 143 (CA)at 149.39 The s 4 definition of "agency agreement" is set out at [35] above.before the work for which a commission will be claimed is undertaken. First, s 127imposes an obligation on agents intending to enter an agency agreement for the saleof a residential property to first provide the person giving instructions to them with acopy of the "approved guide" and obtain a signed acknowledgement that guide hasbeen provided to the person.40 The "approved guide" is one that has been approvedby the Authority for that purpose.41 The educative and consumer protection functionreflected in this section reinforce the intention for all the rules of engagement betweenagents and clients (where they are involved in sales of residential properties) to beconveyed to the client before any commitment to the agent's services is made.[49] Secondly, s 128 requires disclosure by the agent of the source of any rebates,discounts or commissions to which the agent may become entitled in respect ofexpenses incurred on behalf of the client.42 The section also requires the agent tospecify the estimated amount of such rebates, discounts or commissions.These disclosures are required by s 128 to be contained in the agency agreement.43That section similarly reflects a statutory purpose to have all the relevant contractualprovisions conveyed to, and agreed by, the client before an entitlement to claimcommission can be enforced.[50] Thirdly, s 129 provides for regulations to be made under s 156 of the Act tospecify one or more standard forms of agency agreement and the manner and form inwhich the disclosure about other remuneration that may be payable to the agent unders 128 is to be made.44[51] Fourthly, s 130 applies to any agency agreements entered into by a client on asole-agency basis. Where a sole agency is entered into, the client has until 5 pm onthe first working day after the day on which a copy of the completed agreement wasprovided to them to cancel the agreement by written notice to the agent. 45As Mr Harris, for JLL, pointed out, it would not always advantage a client to have thatright of cancellation triggered from the outset of the engagement, given the potential40 Real Estate Agents Act, s 127(1).41 Section 127(2)(b).42 Section 128(1)(a).43 Section 128(1)(b).44 Section 129(a) and (b).45 Section 130(1). The agreement in this case was a general, rather than a sole-agency one.for clients to take advantage of it after an agent had promoted the sale or lease of theirproperty. However, the timing of the right of cancellation generally works fairly inthe interests of both parties if all necessary disclosures and completion of theagreement have occurred prior to the agent undertaking the work, so as to have timerunning under s 130 from that point.[52] The combined effect of ss 127–130 is consistent with optimising consumerprotection. The temporal condition we favour in s 126 is also consistent with thatpurpose.Practical effect of the s 126 temporal condition[53] The Judge also considered that the requirement for agency agreements to becompleted before the agent undertakes the work it wants to be paid for would "oftenbe unworkable".46 However, Ms Armstrong, counsel for the Authority, emphasisedthat the requirement for completed written agreements before commencing work forwhich commission is claimed is a consistent expectation, and is a feature of theAuthority's monitoring of agents for compliance with their regulatory obligations.[54] Ms Belinda Moffat, the Chief Executive of the Authority, completed anaffidavit in support of the Authority's intervention in the appeal. Ms Moffat annexedto her affidavit a copy of the current guidance to real estate licensees that is providedto them, including via the Authority's website. That guidance explains that agentsneed to meet a number of requirements that are set out in the Act and in the Real EstateAgents Act (Professional Conduct and Client Care) Rules 2012 (the Rules).The guidance stipulates that before an agent can receive a commission or expenses forreal estate agency work:— There must be a written agency agreement in place before [the agent does]any work.— The agency agreement must be signed by or on behalf of the vendor andthe agent.— [The agent] must give a copy of the agency agreement to the vendor within48 hours of [it] being signed.46 First High Court judgment, above n 1, at [87(c)].[55] The Authority cited the additional requirements in the Real Estate Agents(Duties of Licensees) Regulations 2009 (the Regulations) and the Rules to support itssubmission that the industry can and does work in compliance with the requirementthat written agency agreements be completed before the work for which a commissionwill be claimed is undertaken. Ms Armstrong submitted that the High Court decisionin this case is the first time a court has questioned the requirement as the Authoritydiscerns it to be.[56] The content of secondary legislation provided for in a statute and relevantlyreflecting provisions in the statute may be a secondary aid to interpretation of thestatute but cannot be used to alter its meaning.47 That approach has been appliedwhere the secondary legislation was introduced contemporaneously with the statute inquestion. That is not the case here as the relevant regulations were promulgatedshortly after the statute was enacted.48 Nonetheless, cautious regard to the relevantcontent of regulations may be warranted.49 There are several indications from theRegulations and the Rules of the requirement for agents to procure written agencyagreements in a timely way with content conforming to the requirements of s 126.For example, the Rules distinguish between "client[s]" and "prospective client[s]"50based on when an agreement is completed.51 The Rules also provide that duties areowed only to "client[s]", 52 and prohibit the marketing of a property without anagreement.53[57] Ms Armstrong submitted that the agency agreement would not be enforceableby the client until executed by the agent. Accordingly, it is important that both parties47 See, for example, Campbell v Accident Compensation Corp CA138/03, 29 March 2004 at [52] perWilliam Young J; Hanlon Law Society [1981] AC 124 (HL) at 193–194, as cited in R I CarterBurrows and Carter Statute Law in New Zealand (6th ed, LexisNexis, Wellington, 2021) at 349–350; and Re Earthquake Commission [2011] 3 NZLR 695 (HC) at [28].48 The Act was enacted on 16 September 2008 whereas the Real Estate Agents Act (ProfessionalConduct and Client Care) Rules were enacted in 2009, following consultation in accordance withs 16 of the Act. The 2008 Rules have subsequently been replaced with the 2012 Rules tomaterially the same effect.49 See, for example, Brown v New Zealand Basing Ltd [2017] NZSC 139, [2018] 1 NZLR 245 at[34], [38], [43]–[47], [67] and [72].50 See, for example, Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012,r 9.7.51 Rule 4.1 definition of "prospective client".52 See, for example, r 6.53 Rule 9.6.were committed to the terms that were considered and which were possibly negotiated,before the work for which JLL is seeking payment was undertaken.[58] Mr Harris submitted that the aim of protecting consumers was not advancedby requiring agency agreements to be concluded before work is undertaken. On thepresent facts, once the terms were agreed and Soft Tech signed, then arguably bothparties knew the terms under which the agency would operate and from that point onSoft Tech had the protection of those contractual provisions. Mr Harris argued thatno greater consumer protection would be afforded if JLL was required to completeexecution of the agreement and provide a signed copy to Soft Tech before undertakingthe agency work.[59] We disagree with the submissions of the respondents. There is an additionalmeasure of protection for consumers if the standard procedure for dealing with agentsrequires both parties to be committed to written terms before the agent undertakeswork in promoting the client's property. If those terms are only negotiated after partor all the agent's services have been performed, then in a variety of circumstancesthere will be an inequality of bargaining positions favouring the agent. Users ofagents' services are routinely unfamiliar with market practices and are dependent onagents for advice, leading to unequal bargaining positions. Generally, whereconsumer protection is a reason for imposing constraints on freedom of contract,having the terms for provision of services specified at the outset is likely to improvethe level of protection for consumers. Of course, in other circumstances there maybe a bargaining position favouring the client.[60] There is a further consequence that advances consumers' interests ifagreements under s 126 are required to be completed before work is performed.A standard requirement for disclosure of their terms of engagement by all agents islikely to encourage competition for better standards of service where agents have topresent the terms on which they would accept instructions at the outset. That enablesmore meaningful comparison by prospective clients of the terms offered to them bycompeting agents. In cases of sales of residential property, the client's understandingof the process and of the agent's role is also enhanced by the obligation under s 127 ofthe Act for prior provision of the guide as approved by the Authority. In this regard,there is little sense in agents providing the terms they offer only after part or all thework has been undertaken.[61] The submissions for the Authority tended to confirm that agents routinelyundertake extensive preparatory work to promote their services to a vendor or lessorin the knowledge that they do not have authority to market the prospective client'sproperty until an agreement is concluded and that they are not entitled to commissionuntil an enforceable agency agreement is concluded. A statutory or regulatoryrequirement that the agency agreement be reduced to writing, signed by both partiesand copied to the client does not, with respect to the Judge's view on this, render theactivities of agents unworkable.54[62] Mr Harris submitted that if the temporal condition on completion of agencyagreements as contended for by the Authority and Soft Tech was upheld, an undulypunitive result would occur. This was because there would be no prospect of a courtgranting relief in favour of an agent that did not procure timely completion of a writtenagency agreement, whereas s 126(2) and (3) do provide for relief where the agent hasfailed to comply with timely delivery of the signed agreement to the client.[63] That possible outcome does not produce a material inconsistency in the schemeof the Act. Completion of written agency agreements before the agent undertakesthe work for which it will seek commission is more fundamental than compliance withthe obligation to provide a copy to the client within 48 hours of the client signing theagreement. If there is a completed and signed agency agreement, the client will knowits terms and will have approved them. Provision of a copy of the signed agreement,while important, is less significant than ensuring the terms have been provided to,and agreed by, both parties. We are not persuaded that this perceived inconsistencyin the prospects for relief requires s 126(1) to be interpreted more permissively.[64] Balancing all the influences on the interpretation of s 126, including theremoval of the previous permission for a contract to be concluded after the services to54 Relatedly, the Judge also considered entitlements to commission being dependent on satisfactionof conditions over which agents have no control as being undesirable/unrealistic: SecondHigh Court judgment, above n 3, at [40]–[41]. However that is an entirely routine feature of thebusiness of real estate agencies.which it related had been performed, and the temporal sequence contemplated by theterms of s 126(1), when analysed in light of the statutory purpose of the Act, we aresatisfied that the Act requires the prior completion of an enforceable agencyagreement.[65] There is little point in testing the outcome this interpretation produces byreference to the merits of the parties to this appeal. There were ample indications inthe evidence that Mr Ryoo was not a client who required consumer protection. He isclearly an experienced and astute businessman, evidenced by his success innegotiating a reduction in the level of the commission he had agreed to pay JLL.JLL gives every appearance of being a substantial and well-organised agency,whose systems might reasonably be expected to conform with all legal requirements.It could not and did not plead unfamiliarity with the statute and the Rules andRegulations as administered by the Authority. There appears not to have beenevidence of how widespread the practice is of undertaking commercial leasingassignments such as this without the agreement signed and returned to the client priorto undertaking work for which commission is claimed. The Act sets one standard forall engagements and is to be interpreted in light of the statutory purpose.Overseas authorities[66] Although not cited in his written submissions, Mr Bigio invited adoption of theinterpretation of the equivalent New South Wales provisions in a 1988 unreporteddecision of the Equity Division of the Supreme Court of New South Wales inMulto Pty Ltd v Craddock.55 In that case an unscrupulous client of a licensed agentprovided a series of excuses for not signing an agency agreement presented to her onnumerous occasions by the agency. When advised of the extent of the commissionthat would be charged for a sale that had been arranged by the agent, the clientdissembled, purported to terminate the arrangement with the agent and concluded acontract privately with the buyer that had been introduced to the property by the agent.The agency commenced proceedings seeking a declaration that it was entitled to haveits agreement with the client specifically performed plus consequential relief requiringpayment by the client of the relevant commission.55 Multo Pty Ltd v Craddock NSWSC4004/87, 11 March 1988.[67] The relevant wording of s 42AA of the Auctioneers and Agents Act 1941(NSW) was in the following terms:(1) A licensee shall not be entitled to—(a) any remuneration by way of commission, fee, gain or rewardfor services performed by him in his capacity as licensee; or(b) any sum or reimbursement for expenses or charges incurredin connection with services performed by him in his capacityas licensee,from the person for whom or on whose behalf those services wereperformed unless—(c) the agreement pursuant to which those services wereperformed is in writing and signed by or on behalf of—(i) the licensee; and(ii) that person;(d) the agreement contains such terms (if any) as may beprescribed; and(e) a copy of the agreement was served by the licensee on thatperson within 48 hours of the agreement being signed by oron behalf of that person.[68] Bryson J found:In [s 42AA] the comprehensive disentitlement can be escaped only by fallingwithin the exceptions in subparagraphs (c), (d) and (e) following the word"unless". Paragraph (c) would not be complied with unless the agreementpursuant to which the services remunerated were performed were in writing.It would not be enough that it should be confirmed in writing, or evidenced inwriting; and an oral or implied agreement would not meet the prescriptions ofsubparagraph (e). There could be no signing and there could be no copyunless there were a written agreement. The terms of subsection (c) make itplain that the performance of the terms must be subsequent in time to theformation of the agreement in writing. If there were any room for anentitlement to arise under an oral agreement which was later to be reduced towriting, the fact that the services had been performed before it was reduced towriting would not make it less true that the services were performed pursuantto the written agreement; but that line of thought is not available in theoperation of paragraph (c); if the services must be pursuant to the agreementin writing they must be later in time than the time when the agreement waseither originally made in writing or was later reduced to writing.[69] There does not appear to have been any reconsideration of this reasoning, andcertainly no authorities in the same jurisdiction that disagree with the temporalcondition the Judge found to be unavoidable. His approach to interpretation issimilar to our own.Conclusion[70] We accordingly uphold the primary ground of the appeal. The terms of s 126required a written agency agreement to be completed prior to JLL undertaking thework for which it claims a commission from Soft Tech. It is common ground thatthat did not occur and accordingly the claims by JLL for commission in respect ofleases for the property arising out of introductions effected by it are unenforceable.[71] The application of s 126 is sufficient to resolve the appeals in Soft Tech'sfavour. Counsel for the parties (but not the Authority) provided comprehensivesubmissions on a series of further issues that had been determined in JLL's favour inthe High Court, and we now turn to those on the alternative basis that the agencyagreement was not rendered unenforceable by JLL's tardy completion of it.The remaining issues[72] Soft Tech advanced a series of further challenges to the High Court judgmentsif the agency agreement was not rendered unenforceable for non-compliance withs 126. These all challenged JLL's entitlement to commission on the first and secondATEED leases:(a) that JLL had insufficient involvement in the formation of those leasesto claim it had effected an introduction that would qualify it forcommission;(b) that even if it qualified JLL to claim commission, JLL should not begranted relief from its non-delivery of the signed copy of the agencyagreement pursuant to s 126(1)(c) of the Act because that omission wasnot occasioned by inadvertence or other cause beyond the control of theagent, as required under s 126(3);(c) that if JLL was entitled to relief, then its commission ought not toinclude amounts calculated on turnover rents;(d) that the absence of an enforceable claim at the time means that interestought not to be chargeable; and(e) that JLL was not entitled to claim costs on an indemnity basis pursuantto the contractual provision that authorised it in defined circumstances.[73] We address the arguments presented and our views on these issues in asomewhat different sequence. This is because we would uphold Soft Tech's appealagainst the Judge's finding that JLL's failure to provide a copy of the signed agreementwithin time was occasioned by inadvertence. That provides an alternative ground onwhich the appeal would succeed.Was JLL's omission inadvertent?[74] The Judge assessed whether JLL's omission was occasioned by "inadvertence"by adopting the common meaning of the word as "not resulting from or achievedthrough deliberate planning". 56 He found that because Messrs Mayhew andMcEvoy-Roberts did not take the opportunity to provide Mr Ryoo with a copy of theagreement when one of them could have signed it at their meeting with him on4 September 2015 and given it to him then, that the failure to do so then and thereafterwas "consistent with inadvertence". 57 Thereafter, in the sequence of events,the Judge found nothing that disentitled JLL from characterising its omission asinadvertence.[75] When Mr Mayhew's attention was drawn to the absence of completion of theagreement at the end of October 2015, he was overseas on holiday. Mr Mayhewimpressed the Judge as an honest witness in circumstances where he had made noattempt to conceal when he signed the agreement, which was on 21 December 201556 First High Court judgment, above n 1, at [99], citing Concise Oxford English Dictionary (11th ed,Oxford University Press, Oxford, 2006).57 At [100(a)].at a time when the Judge considered his conduct had likely been affected by"the phenomenon of a Christmas rush".58[76] JLL provided no evidence as to why the agency agreement was not signed byMessrs Mayhew or McEvoy-Roberts during the meeting at which Mr Ryoo signed iton 4 September 2015. It can be inferred that the meeting afforded them a reasonableopportunity to do so. Of the two JLL representatives at the meeting,Mr McEvoy-Roberts was the listing agent. He had left JLL before the hearing andwas not called as a witness. Mr Mayhew stated that Mr McEvoy-Roberts wasusually good with his paperwork but appeared to have been "sloppy" on this occasion.[77] On 28 October 2015 Mr Hudson of Metro Commercial emailedMessrs Mayhew and McEvoy-Roberts pointing out that the agency agreement had notbeen signed by JLL. Mr Mayhew was overseas on holiday at the time and explainedin evidence that when he returned he found himself involved in a "fee dispute" of sortsthat was an apparent distraction making him assume that the agency agreement hadalready been signed and delivered. That is a less than satisfactory explanation as towhy on his return he or another representative of JLL did not treat it as a priority tominimise the extent of non-compliance with the obligation to provide a copy of thesigned agreement to the client.[78] What appears to have triggered signature of the agreement by Mr Mayhew on21 December 2015 was the preparation of an invoice for commission on theManu One lease. Mr Mayhew's evidence was that internal procedures at JLL meanthe could not submit the invoice in the absence of the signed agreement. Havingsigned it, he still did not provide a copy of it to Mr Ryoo with the invoice when thatwas dispatched. The agreement was provided only on discovery in the proceedings.[79] On 2, 3 and 4 November 2015 Mr Mayhew had represented in exchanges withMr Ryoo that the agency agreement existed, in the context of Mr Ryoo's attempts torenegotiate the extent of commission payable on the Manu One lease. Thosereferences to the agency agreement were made by Mr Mayhew between five andseven days after Mr Hudson's reminder that JLL should sign the agreement.58 At [100(d)].[80] We agree with the Judge that one aspect of the interpretation of "inadvertence"is to contrast such omissions with ones that are deliberate. However, we interprets 126(3)(a) to require an agent seeking relief to make out somewhat more than that theomission was not deliberate. The concept of "inadvertence" is linked in theparagraph to "other cause beyond the control of the agent". That colours the natureof inadvertence intended by Parliament. It contemplates that failure to provide thewritten agreement to the client due to, for example, the unforeseen intervention ofothers, will be excusable. Certainly, if the inadvertence has to be of a type that wasbeyond the control of JLL, then the circumstances here clearly do not qualify.[81] Given the importance attributed in the Act to completion of agency agreementsand provision of their written terms to clients, we do not agree that relief should beavailable under s 126(3)(a) where, in effect, the agent seeks relief on the basis that itsimply did not get around to complying with the requirement for an extended period.The concept of "inadvertence" or other cause beyond the control of the agent in thiscontext is limited to a minor administrative slip, or unforeseen disruption caused byothers. It effectively requires the omission to occur without negligence.[82] That cannot be said of the circumstances of the non-provision of the signedagreement in this case. Mr Mayhew acknowledged awareness of the requirementsof the Act in his evidence. JLL did not provide evidence of external circumstancesor of an internal administrative slip that led to its failure to sign the agreement andreturn it to Mr Ryoo within 48 hours of his having signed it. Almost eight weekslater JLL was put explicitly on notice of its omission by Mr Hudson but did nothing.There were ample opportunities afterwards to provide Mr Ryoo with a copy of thesigned agreement; instead, there was non-compliance with the obligation untildiscovery in the proceedings. That reflects a measure of negligence by JLL thatcannot be excused as inadvertence.[83] Accordingly, even if a written agency agreement was not required to be signedbefore the work for which commission is claimed was undertaken, non-compliancewith the requirement for provision of a copy of the signed agreement did not occur incircumstances in which JLL was entitled to relief under s 126(2).Did JLL introduce ATEED?[84] JLL was entitled to a commission if any part of the property was leased,through its instrumentality, by anyone introduced to Soft Tech either directly orindirectly by JLL.59[85] The Judge referred to a number of earlier High Court judgments on theapplication of clauses providing for the entitlement of agents to commissions. It issufficient to repeat the observations of Tipping J in Harcourts Group Ltd vMcKenzie:60In my judgment questions of causation, for present purposes, must beapproached on the basis that the primary contractual stipulation is thatcommission will be payable if the property is sold to anyone introduced to theproperty through Harcourts' agency. If the agent can show that the ultimatepurchaser was introduced to the property through his agency then prima facieas a matter of construction commission is payable. The prima facieobligation to pay commission ceases only when the agent's introductionceases to have a material bearing on the sale. By that I mean that the agent'sintroduction was no longer instrumental in any material way in bringing aboutthe sale. That, in my judgment, is the only way to harmonise the words ofthe contract with the proposition established by the authorities that there mustbe some causal connection between the introduction and the sale. In anordinary case the connection will be self evident. In a case where the pointis in dispute it will ultimately be a matter of fact and degree whether theintroduction remained instrumental.[86] The Judge dealt with numerous arguments raised for Soft Tech to the effectthat JLL's involvement was outside what is required to entitle it to commission.He rejected those arguments and found that JLL had effected an introduction ofATEED to the property, and that there remained a sufficient causal connection betweentheir introduction and the subsequent first and second ATEED leases.61[87] On appeal, Mr Bigio made extensive reference to the sequence of eventsbetween Manu One committing to the initial lease, and the subsequent directnegotiations between Soft Tech and ATEED leading to the November 2016 MOU,59 The terms of cl 1.2 of the agency agreement are quoted at [24] above.60 First High Court judgment, above n 1, at [45], citing Harcourts Group Ltd v McKenzieHC Christchurch AP129/93, 9 September 1993 at 7.61 At [47]–[48] and [65].the February 2017 second MOU, the first ATEED lease and the second ATEED lease.Mr Bigio distanced JLL's involvement in the subsequent leases on two grounds.(a) First, that JLL's introduction of the property to ATEED occurred whenATEED was not itself a prospective lessee, but rather was a brokerseeking to promote properties to film production entities that wouldenter into leases with Soft Tech. Mr Bigio's argument was that theintroduction could not be an effective one if it was not in thecontemplation of those involved that ATEED would take a lease of theproperty.(b) Secondly, that the extensive negotiations and steps taken after entry intothe Manu One lease were so far removed from the introduction ofATEED to the property that the causal connection between theintroduction and commitment to the later leases was broken.[88] As to the first ground, we do not accept that an introduction has to occur in acontext where the party introduced is interested in leasing (or, in other circumstances,purchasing) the property. The agent's task is to effect an introduction of the partythat subsequently contracts with the agent's client irrespective of the circumstances ofthe initial connection between the agent and the party with which its client contracts.[89] Where an agent is retained to find a lessee for premises, and a prospectivelessee brings an advisor such as an architect or lawyer to view the premises, and theparty originally expressing interest does not pursue it but such an advisor does, thenthe agent has effected the introduction of that party irrespective of the differentcapacity in which the party was initially shown the premises.[90] Equally, where a party is shown premises available for lease by an agent of theowner, and the party subsequently negotiates to purchase rather than lease thepremises, then depending on the terms of the agency agreement, the agent would beentitled to treat that as an introduction giving rise to an entitlement to commission.[91] Mr Bigio's second challenge was that more than enough occurred after JLL'sinitial introduction of ATEED to the property to break the chain of causation so that(to adopt Tipping J's characterisation in Harcourts Group Ltd v McKenzie 62 )the agent's introduction was no longer instrumental in any material way in bringingabout those leases.[92] As Tipping J observed, this analysis is a matter of fact and degree.63 ATEEDhad been aware of the property for some years before JLL's re-introduction of ATEEDto Soft Tech and the property. Mr Harrison had initially inspected the property in2012 but nothing came of ATEED's interest at that time. Once the Manu One leasewas concluded, JLL did nothing more to bring about the leases ATEED subsequentlyentered into. The factors contributing to subsequent entry into the first and secondATEED leases include ATEED's role in helping Warner Brothers procure theadditional NZFC grant, which led to negotiations with Soft Tech to commit substantialcapital to construct additional facilities on the property. There was also the changefrom ATEED's previous disinclination to be a lessee itself, to recognising thecommercial desirability of doing so. In short, the lease agreements eventuallyentered into were in a very different commercial context from what was incontemplation when ATEED expressed interest in the property in the second half of2015.[93] However, we agree with the Judge that the sequence of events betweenMr Harrison establishing a direct dialogue with Mr Ryoo in early 2016 up to thecompletion of the first and second ATEED leases did not move sufficiently away fromthe circumstances of the introduction effected by JLL to break the chain of causation.Rather, JLL brought the property to ATEED's attention as an available site appropriatefor film production activities, and that introduction extended to initial fostering of therelationship between Messrs Ryoo and Harrison.[94] Accordingly, if it were relevant, we would uphold the Judge's finding that JLLhad effected an introduction that qualified it for commission on the first and secondATEED leases.62 Harcourts Group Ltd v McKenzie, above n 60.63 At 7.The second ATEED lease — did the MOU qualify JLL for commission?[95] The first ATEED lease was concluded in February 2017, before Soft Tech gavenotice of termination of the agency agreement with JLL on 17 May 2017.Accordingly, so long as JLL's work was sufficient to effect an introduction, then, had itbeen able to overcome its non-compliance with s 126 of the Act, it would have beenentitled to claim commission in respect of the first ATEED lease.[96] The second ATEED lease was signed and commenced on 18 May 2018,substantially outside the six-month sunset period after the termination of the agencyagreement, which expired in November 2017.[97] Accordingly JLL's claim for commission on the second ATEED lease dependson the MOU which was completed between Soft Tech and ATEED in November 2016constituting a sufficient commitment to lease part of the property to bring it within thescope of JLL's entitlement to claim commission as set out in cls 1.2 and 1.3 of theagency agreement between the parties.64[98] JLL's entitlement to commission on the second ATEED lease was addressed inthe second High Court judgment. The Judge found that the terms of the MOUconstituted a sufficient commitment to lease to entitle JLL to a commission. 65Mr Bigio challenged this finding, submitting that the MOU was only an agreement tonegotiate further agreements and had wrongly been interpreted as containing aspecifically enforceable agreement for leases to be agreed and entered into.[99] The MOU recorded the parties' intention: that three lease documents will be negotiated and entered into followingsatisfaction of the Conditions Precedent:The first ATEED lease was to be of the existing improvements on the land and therelevant underlying part of the land. The second agreement was to be one for thedesign, build and lease of the remaining land. It was to prescribe Soft Tech'sobligations as lessor to develop further improvements, and to record the parties'64 Clauses 1.2 and 1.3 of the agency agreement are set out at [24] above.65 Second High Court judgment, above n 3, at [29]–[30] and [44].obligation to enter into a second lease. Once the improvements described in theagreement to design, build and lease were completed, the parties were to enter into thesecond ATEED lease over the entire land and all of the then improvements.[100] Mr Bigio cited numerous conditions precedent, including timing deadlines,which, if not met by the dates specified in the MOU, would bring all the arrangementsbetween the parties to an end. He also emphasised that the MOU did not record anylease terms, nor did it commit the parties to adopt standard terms from an identifiedform of lease such as the Auckland District Law Society's lease form, or to have anyimpasse on lease terms resolved by a third party: the terms of the leases, includingrent, were at large. Consequently he submitted that the MOU did not commit theparties to leases, and was not a document that could qualify JLL for commission.[101] We agree with the Judge that the terms of cls 1.2 and 1.3 of JLL's standardagency agreement apply to the MOU.66 So long as JLL had effected the introductionof the lessee to the lessor resulting in a conditional commitment by the lessee duringthe term of the agency agreement, and the conditions were thereafter satisfied so thatan unconditional lease ensued, commission would be payable (provided thatregulatory obligations had been complied with).[102] The entitlement to commission is triggered by the entry into a conditionalcommitment between the parties. Where the commitment is subject to conditions,then JLL is entitled to demand payment once the commitment becomes unconditional,pursuant to cl 1.3(b) of the agency agreement.[103] JLL's scale of fees appended to the agency agreement contained a consistentprovision as to when leasing fees became due and payable. Relevantly, eventstriggering the payment obligation included when a conditional agreement to leasebecame unconditional.[104] The MOU did reflect an unusual extent of conditionality, if compared to moreusual terms of conditional agreements to lease. However none of the conditions,including "drop dead" dates for milestones to be achieved, deprived the MOU of its66 Second High Court judgment, above n 3, at [42]–[44].status as a conditional agreement to lease the whole property. The extent of theconditions precedent was more significant than would often be the case, but representonly differences of degree rather than kind. If they were not all satisfied then JLLcould not have demanded payment under cl 1.3(b), just as with any agreement to leasethat was negotiated subject to less significant conditions precedent.[105] Accordingly, had prior issues not been determined against JLL, we would havefound the MOU was sufficient to create an entitlement to claim commission on thesecond ATEED lease, subject to satisfaction of the conditions precedent.[106] Given the view we adopt in relation to the status of the MOU, it is unnecessaryto address an additional ground for JLL's claim to commission on the second ATEEDlease. It was argued in the High Court that an additional provision in the scale offees that applied to the agency agreement gave the agent an entitlement to a fee wherethere was a subsequent letting by the lessor of additional space to the lessee.The Judge accepted JLL's contention that the second ATEED lease reflected theprovision of additional space for ATEED once Soft Tech completed the constructionof additional facilities on parts of the property.67 The MOU had contemplated thatthe second ATEED lease would apply to the whole of the lessor's property, whereasthe first ATEED lease was to apply to a lesser area.[107] We therefore need not express a view on Mr Bigio's arguments challengingthat analysis.Would commission be payable on turnover rent?[108] The scale of fees attached to the agency agreement defined rent, on which feeswould be payable, as follows:"rent" means the total rental reserved by the lease or agreement to lease forthe whole term together with any additional charges such as outgoings,contributions, partitions or shop front rentals, naming or signage rights, carparking fees and any other payment to or on behalf of the lessor for which thelessee is responsible under the lease or agreement to lease.67 Second High Court judgment, above n 3, at [48]–[49].[109] Both the first and second ATEED leases provided for a base rent and then aturnover rent which was to be calculated as a set percentage of the income received byATEED from licensees of the premises, after deduction of the base rent. The baserent was payable in advance and any additional payment due by way of turnover rentwas to be paid within seven days of the first day of each month in arrears followingreceipt of the income from a licensee.[110] The Judge held that the turnover rent should be included in the amount of renton which JLL's commission was to be calculated. 68 Soft Tech challenged thatfinding, submitting that the extent of commission was intended to be calculable beforethe relevant lease started, and that uncertainty and administrative difficulties with theongoing prospect of additional commission that would depend on the level of incomereceived from licensees was neither contemplated by the terms of the agencyagreement nor commercially desirable.[111] In addition, Mr Bigio relied on evidence given by a Mr Seagar, an expertwitness for Soft Tech at the hearing, to the effect that the rent on which commissionswere payable generally complied with the meaning of "gross rental". In Mr Seagar'sopinion, that expression as it was used in the industry did not include turnover rent.[112] Mr Bradley, who presented this aspect of the argument for JLL, submitted thatthe broad definition of rent on which commission was to be calculated clearly includedan additional form of rent such as that calculated on turnover received by the lessee,and that there was no adequate reason why an ongoing liability to account foradditional commission ought not to be enforced.[113] If it was otherwise entitled to commission, we would have accepted JLL'sposition on this issue. The definition of "rent" clearly captures payments receivedby the lessor from the lessee for occupation of the land, however calculated andwhenever paid. The prospect of an ongoing obligation to report to JLL and toaccount to it for additional commission by way of turnover rent is not inconsistentwith either the terms of the agency agreement or the nature of the relationship itcontemplated.68 Second High Court judgment, above n 3, at [16].JLL's entitlement to interest[114] The Judge upheld JLL's claim for interest at the rate stipulated in the agencyagreement, from the dates on which JLL contended that interest would have beenpayable.69 The Judge was satisfied that it would be unjust not to make that order andthat the impediment to JLL claiming interest until the first High Court judgment wasa matter of JLL's "modest inadvertence".70[115] On appeal, Soft Tech challenged that ruling primarily on the ground that, untilrelief was granted under s 126(2) of the Act in the first High Court judgment, Soft Techdid not owe any monies to JLL. The parties invited analogy with various Australianand English decisions addressing entitlement to interest in similar circumstances.[116] If the primary appeal had not succeeded, we would have determined any claimfor interest simply on the basis that the liability did not arise until the issue of ajudgment invoking the discretion to relieve JLL from non-compliance with theobligation under s 126(1)(c). We would accordingly have limited any award ofinterest to that payable under the Judicature Act 1908 from the date of thefirst High Court judgment.JLL's entitlement to indemnity costs[117] JLL claimed indemnity costs in reliance on a provision in the agencyagreement that all costs of and incidental to the recovery of fees and other paymentsdue to it "shall be payable by [Soft Tech]". Such costs included legal costs on asolicitor/client basis. The Judge found that contractual provision was enforceable,and granted JLL costs on an indemnity basis.71[118] Soft Tech challenged the application of the contractual costs provision in theevent its appeal was unsuccessful. Mr Bigio submitted that the costs provision oughtto be read as applying only in circumstances where amounts were inarguably owed toJLL. In contrast, here JLL could not claim any amount was "due" for costs until it69 Second High Court judgment, above n 3, at [66]–[72].70 At [70]–[71].71 Costs judgment, above n 3, at [7].could persuade the Court to exercise its discretion to relieve it of the consequences ofnon-compliance with s 126(1)(c). On Mr Bigio's argument, where liability isgenuinely arguable, the costs provision should not apply and should be determined bythe outcome of a disputed claim in the usual way.[119] JLL supported the Judge's award of indemnity costs essentially on the groundthat if the outcome of its claims was that fees or other payments were owing to it,then the indemnity applies to require Soft Tech to meet its legal costs in making outthe liability.[120] Adopting the same approach to JLL's entitlement to interest on contractualterms, we would have allowed the appeal against the order for indemnity costs.JLL was unable to pursue any claim for commission or other payments until itpersuaded the Court to relieve it of the consequences of non-compliance withs 126(1)(c). Even if we are wrong in the view we have taken concerninginadvertence, JLL's conduct in failing to meet its statutory obligations takes its claimsoutside the circumstances in which it could pass the costs of making out its claimsonto the client, whose position was not protected, as the Act contemplated it would be.[121] Accordingly, if the primary appeal had not succeeded, we would haveoverturned the High Court order entitling JLL to recover costs on an indemnity basis.Costs[122] Soft Tech has succeeded on the essential elements of its appeals. Althoughcertain arguments were pursued on its behalf unsuccessfully, they are not sufficient inan overall assessment to limit the appropriate costs entitlement.[123] The costs orders made in the High Court are set aside. JLL must paySoft Tech costs on a 2B basis and usual disbursements in the High Court.[124] JLL must pay Soft Tech costs for a standard appeal on a band A basis and usualdisbursements in this Court.[125] There is no issue as to costs for or against the Authority.Result[126] The appeals are allowed. Section 126 of the Act required JLL to have asigned agency agreement in place before undertaking the work in respect of which itclaimed commission. Alternatively, the circumstances in which JLL failed toprovide a signed copy of its agency agreement to Soft Tech within the time requiredby s 126(1)(c) did not constitute inadvertence or other cause beyond JLL's control sothat it is not a case in which its non-compliance can be excused under s 126(2) and (3)of the Act.[127] On the other issues in the appeals:(a) JLL had effected a sufficient introduction of ATEED to the property,and the November 2016 MOU would have constituted a conditionalagreement to lease that was sufficient, in the absence of statutorynon-compliance, to qualify it to payment of commission.(b) JLL would otherwise have been entitled to include turnover rent in theamount on which it could calculate recoverable commission.(c) If JLL could avoid the consequences of statutory non-compliance,then it would still not have been entitled to interest or indemnity costspursuant to the provisions on those matters in the agency agreement.[128] The costs orders in the High Court are set aside. JLL must pay Soft Techcosts on a 2B basis and usual disbursements in the High Court.[129] JLL must pay Soft Tech costs for a standard appeal on a band A basis and usualdisbursements in this Court.Solicitors:Hesketh Henry, Auckland for AppellantGilbert Walker, Auckland for RespondentReal Estate Agents Authority, Wellington for Intervener