The recent High Court decision Premier Events Group Limited v Beattie [2013] NZHC 115 has confirmed whether it is the principal or their agent that is entitled to interest on a commission, where payment of the commission to the agent is delayed.

The case involved a dispute over the interest earned on a commission payment that was subject to a High Court preservation order. This dispute was decided against a background of litigation between the plaintiff, Premier Events Group Limited (Premier Events) and its two former employees and various associated entities in respect of accommodation packages provided during the 2011 Rugby World Cup.

Premier Events negotiated and, in May 2008, entered into an agency agreement with Great Eagle Hotels (GEH), trading as The Langham Auckland, to secure 250 hotel rooms for Toyota New Zealand Limited during the Rugby World Cup 2011. The agency agreement provided that all accommodation rates 'charged' were commissionable at ten percent to Premier Events. When two of its employees subsequently left, Premier Events was no longer able to fulfil its obligations under the agency agreement and GEH entered into a new arrangement with Parnell Partners Group Limited (Parnell Partners), a company set up by those two former employees.

In February 2011, Parnell Partners applied for and was granted a preservation order that the commission payment be paid into and held in Simpson Grierson's trust account pending the resolution of a dispute between the parties. In March 2011, Toyota paid $2,668,000.00 to GEH and the parties later signed a consent memorandum recording that a commission of $273,302.50 was held in Simpson Grierson's trust account.

GEH claimed that it was entitled to the interest earned on the commission payment from March to November 2011 because the commission was not due until one month after the accommodation was used, in accordance GEH's normal trading terms regarding due dates for payment. Premier Events argued that the commission became payable at the earliest when GEH had invoiced Toyota for the accommodation in September 2010, but at the latest when Toyota paid for the accommodation in March 2011.

The High Court agreed with Premier Events. The commission became payable when GEH invoiced Toyota. The High Court commented that the law was settled in New Zealand that, under a straightforward agency agreement, for example to sell property, the agent is generally entitled to the commission as soon as he or she procures a person approved by the vendor to enter into the contract.

This decision illustrates the principle that where an agent has done what is required under an agency agreement to obtain a commission, he or she should not be denied that entitlement because the transaction falls through or the principal does not eventually benefit from the agent's action.