Court of Appeal delivers landmark decision under Real Estate Agents Act 2008

On 4 August 2022, the Court of Appeal released its decision in Soft Technology JR Ltd v Jones Lang Lasalle Ltd [2022] NZCA 353.  

The decision primarily concerned the interpretation of s 126 of the Real Estate Agents Act 2008 (Act), which sets out the necessary preconditions that must be met before a real estate agent can claim commission from their client.  This is the first case to substantively consider that section.

Member David Bigio QC appeared for the appellant.  Member Sarah Armstrong and junior barrister, George Morrison, appeared for the Real Estate Authority as intervener.  
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The case concerned an agency agreement between Soft Technology JR Ltd (Soft Tech) and its agent, Jones Lang Lasalle Ltd (JLL).  Soft Tech signed the agreement in September 2015, but JLL did not do so until December 2015 (and did not provide a copy to Soft Tech).  The agreement purported to give JLL authority to seek out leasing opportunities for property owned by Soft Tech.  
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JLL went ahead and undertook agency work for Soft Tech.  Three subsequent leases were entered into by Soft Tech.  Soft Tech refused to pay commission to JLL in respect of the latter two leases, including on the basis that a signed written agency agreement had not been completed in accordance with s 126 of the Act.  JLL brought proceedings to recover that commission.

The High Court held that an agency agreement did not need to be signed before the agent commenced work upon which commission was payable, and found JLL was entitled to commission, despite its failure to sign the agency agreement in a timely manner.  Soft Tech appealed.

The Court of Appeal allowed the appeal, relevantly finding that, unlike under the previous legislative regime, s 126 of the Act requires a real estate agent to have a signed written agency agreement in place before undertaking work upon which commission will be payable.  

More specifically, and with application to the facts, the Court held:
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• Considering its plain words, the consumer protection purpose of the legislation, and the surrounding regime, s 126 of the Act required JLL to have delivered a countersigned copy of the agency agreement to Soft Tech within 48 hours of Soft Tech signing, before performing the work for which JLL would eventually claim a commission;
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• Given the agency agreement was not signed by JLL until late December 2015, and a copy of it was never provided to Soft Tech, JLL was not entitled to commissions for the agency work it undertook in respect of the relevant leases entered into; and
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• In any event, JLL’s failure to provide a copy of the agreement to Soft Tech could not be considered to be inadvertent, such that the omission could be saved by s 126(2) and (3) of the Act.  The Court held that “inadvertence” in the context of s 126 is limited to a minor administrative slip or unforeseen disruption caused by third parties or sources.  Here, there had been reasonable opportunities for JLL to sign the agreement at the same meeting in which it was signed by Soft Tech, or in the period after JLL became aware the agreement had never been signed by it or provided to Soft Tech.  Instead, the signed copy of the agreement was only provided to Soft Tech during discovery in the High Court proceedings.
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A copy of the judgment can be accessed at https://www.courtsofnz.govt.nz/assets/cases/2022/2022-NZCA-353.pdf

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