Estate agent’s commission — Whether plaintiff agents entitled to commission for introduction of party who completed purchase
contract dated April 25 1985 the defendants instructed the plaintiffs as estate
agents to submit the defendants’ hotel property for sale by public auction —
The commission was payable if a sale of the property, whether arranged by the
auctioneers or not, was effected after the acceptance of instructions and
before the auction or within 28 days after the auction — The hotel did not
reach the reserve price at the auction, but in the auction room immediately
afterwards the defendants were introduced by a director of the first plaintiff
to an unsuccessful bidder — This introduction eventually led to the sale of the
hotel by the defendants to that bidder — The sale was not effected until more
than 28 days after the auction — The plaintiffs appealed the decision of Judge
J (sitting in Westminster County Court in the Royal Courts of Justice), who had
rejected their claim for commission based on an oral contract between the
parties alternatively on the basis of a quantum meruit
parties provided for the payment of a commission on a certain event occurring,
namely a sale taking place after the instructions were given, within the 28-day
period from the auction — There was simply no room for implication of a
contract to pay money on a quantum meruit or any other basis in exchange
for the introduction which resulted in a sale outside the 28-day period — It
was quite inconsistent with the bargain made between the parties — Further,
there was no room to imply a request that the plaintiffs will introduce to the
defendants a purchaser which will result in payment on a quantum meruit basis
if the sale results outside the 28-day period — It may be that after the expiry
of that period, had the plaintiffs introduced a purchaser and the introduction
resulted in a sale, a contract or undertaking might have been implied to pay
for that introduction
The following
cases are referred to in this report.
Elliott
(Michael) & Partners Ltd v UK Land plc [1991]
1 EGLR 39; [1991] 08 EG 123
Greenwood v
Bennett [1973] QB 195; [1972] 3 WLR 691; [1972] 3 All ER 586, CA
Houlder
(Howard) & Partners Ltd v Manx Isles
Steamship Co Ltd [1923] 1 KB 110; [1922] All ER Rep 579; 92 LJKB 233; 128
LT 347; 38 TLR 757; 66 Sol Jo 682; 16 Asp MLC 95; 28 Com Cas 15
Way v Latilla [1937] 3 All ER 759
‘Winson’,
The: China-Pacific SA v Food Corporation of India [1980] 3 WLR 891;
[1979] 2 All ER 35; [1979] 1 Lloyd’s Rep 167
This was an
appeal from the decision of Judge J in which he dismissed the plaintiffs’ claim
for commission of some £8,250 plus VAT. The plaintiffs were Fairvale Ltd
(trading as Musa & Abdullah), Abdulsattar Abdullah and Musa Hajee and the
defendants were Dr N N Sabharwal and Dr C K Sabharwal.
Andrew Pinder
(instructed by Simons Levine & Co) appeared for the appellant plaintiffs;
George Leggatt (instructed by Finers) represented the respondents/defendants.
Giving the
first judgment at the invitation of Parker LJ, STUART–SMITH LJ said:
This is an appeal from a judgment of Judge J given on May 4 1990 in which he
dismissed the plaintiffs’ claim for commission of some £8,250 plus VAT. The
case had been remitted to Westminster county court but, for convenience, it was
tried in the Royal Courts of Justice.
The first
plaintiffs are a limited company trading as Musa & Abdullah. Mr Musa Hajele
and Mr A Abdullah are the second and third plaintiffs and there is no
distinction to be drawn between them. The defendants are husband and wife
carrying on a partnership in the running of an hotel.
The defendants
entered into a written contract with the plaintiffs on April 25 1985 whereby
they instructed the plaintiffs as estate agents, jointly with a firm called
Barnard Marcus & Co, to submit the defendants’ property, the Hotel
Solitaire, 63 Princes’ Square, Bayswater, London W2, for sale by public
auction. The material term of that contract is as follows:
I hereby
instruct your firm [Barnard Marcus & Co Ltd] to submit my interest in the
above-mentioned property [the hotel] for sale by way of public auction, subject
to the following:
1. Your
commission will amount to 2 1/2% of the purchase price (minimum commission
£125.00), plus VAT, and will be payable by me if a sale of the property,
whether arranged by the Auctioneers or not, is effected after the acceptance of
instructions and before the Auction, or within 28 days after the Auction.
The auction
took place on June 18 1985 but the bidding failed to reach the reserve of
£360,000. In the auction room immediately after the auction the defendants were
introduced by the second plaintiff, Mr Musa Hajee, to an unsuccessful bidder, a
Mr Barschack. This introduction eventually led to the sale of the hotel by the
defendants to Mr Barschack. However, through no fault of the defendants, the
sale was not effected until more than 28 days after the auction and,
accordingly, no commission was payable to the plaintiffs under the contract
between the parties.
The
plaintiffs’ case at the trial was that nevertheless they were entitled to
commission pursuant to an oral contract which had been made in March 1985
whereby the defendants had instructed the plaintiffs to sell the hotel by
private treaty. Alternatively, it was said that they were entitled to be paid
on the basis of a quantum meruit. The judge rejected the
plaintiffs’ primary case that there was an oral contract in March because he
did not believe the plaintiffs’ witnesses and he found that no such oral
contract had ever been made. There is no appeal from those findings.
The judge also
rejected the claim for a quantum meruit payment. Mr Pinder, for the
appellant plaintiffs, criticises that judgment. He submits, first, that the
plaintiffs were entitled to recover on the basis of quantum meruit.
Second, or in the alternative, he seeks leave to re-reamend the statement of
claim to allege that there was an express oral contract made between the second
plaintiff and the defendants to the effect that, if the sale took place as a
result of an introduction effected by the plaintiffs, but the sale took place
outside the 28-day period, nevertheless commission should be paid. He sought
leave to re-reamend the statement of claim on the hearing of this appeal. He
submitted that he was entitled to rely for that re-reamendment on the facts
found by the learned judge and on the evidence given by Dr N N Sabharwal, the
first defendant, because the plaintiffs’ evidence, of course, had been
rejected. In so far as the re-reamendment seeks to rely upon an express oral
contract, not only, in my judgment, is there no evidence whatsoever to support
it from the evidence of Dr N N Sabharwal but it is far too late to raise that
issue at this stage.
In so far as
the re-reamendment seeks to rely upon an implied contract, in my judgment it
adds nothing to the claim based on a quantum meruit, which was made
before the judge and dealt with by him. What the judge said about that claim
was:
The remaining
claim arises under quantum meruit. It is unnecessary for me to attempt
to formulate close principles for the purposes of this judgment. The matter is
covered by the decision of the House of Lords in Luxor (Eastbourne) Ltd v
Cooper [1941] AC 108. The passage first of all in the speech of Lord
Russell of Killowen at p 125. He said:
‘As to the
claim on a quantum meruit I do not see how this can be justified in the
face of the express provision for remuneration which the contract contains.
This must necessarily exclude such a claim [a claim based on quantum meruit]
unless it can, upon the facts of a particular case, be based upon a contract
subsequent to the original contract and arising from some conduct on the part
of the principal.’
In his
speech, Lord Wright dealt with the matter in much greater detail, but a passage
from his speech [at p 140] reads as follows:
‘It has been
said in some cases that the claim may be based on quantum meruit on the
principles expounded in the notes to Cutter v Powell, according
to which the special contract is treated as rescinded and the agent thereupon
becomes entitled to claim a partial recompense for what he has done. Such a
claim is in the nature of a quasi-contractual claim . . . In the case of the
commission agent, to whom payment is dependent on completion or the like
condition, the principal does not promise that he will complete the contract
for reasons which I have explained. His only promise is that he will pay
commission if the contract is completed. There is no promise to pay a
reasonable remuneration if the principal revokes the authority to the
agent.’ Then he went on in his speech to
deal with the express contract:
In a case
involving estate agents, McCardie J in Bentall, Horsley & Baldry v Vicary
[1931] 1 KB 253 put the principle in this way. Referring to estate agents,
he said, when dealing with the alternative claim based on quantum meruit:
‘Undoubtedly . . . they did work and incurred expense. But this is quite a
usual feature of an estate agent’s vocation when he works under a commission
note which only gives him a right to recover commission when he fulfils the
terms of the note. He runs the risk of losing his labour and expense unless he
can comply with the conditions of the bargain. There is no scope in the present
case for the operation of the doctrine of quantum meruit. The plaintiffs
worked under a special contract and they have failed to do that which entitled
them to commission.’
In the result
the claim based on a quantum meruit failed.
There are
occasions when an estate agent may succeed in a claim based on a quantum
meruit. That much is apparent in the passages that I have read in the
speeches in the House of Lords in the Luxor case. It is also apparent — there
is an example of this happening — in the case of Debenham Tewson &
Chinnocks v Rimington [1989] 2 EGLR 26. In that case a quantum
meruit was allowed: ‘Only to work done quite outside . . .’ the relevant
contract.
In my
judgment the introduction and the discussions between Mr Barschack and the
defendant after the auction had taken place were closely connected with the
auction and the express agreement which governed the arrangements between the
parties.
Finally, on p
13, Judge J said:
In my view,
this transaction does not give rise to a quantum meruit. The work done
of negotiation and introduction was closely connected with the express terms of
the written contract which governed the legal relationship between the parties.
There was no other separate or subsequent contract between them and there was
no conduct by either side which would justify treating the discussions with Mr
Barschack and the introduction to the defendants as something separate from and
additional to that contract and not subject to its terms.
Mr Pinder puts
his case in this manner. He says that there was no obligation on the plaintiffs
to do anything under the contract. They did do something that they were not
obliged to do, namely to introduce Mr Barschack, a sale resulted and therefore
they are entitled to be paid.
It may well be
right that the plaintiffs are not obliged to do anything under the contract,
save perhaps to put the hotel up for auction. This was a contract for the
payment of commission on a certain event occurring, namely a sale taking place
after the instructions were given and within the 28-day period from the
auction. It matters not how that event came about, whether as a result of the
auction, as a result of an introduction by the plaintiffs or for some other
wholly extraneous reason. Everything that was done by the plaintiffs within
that period by way of advertisement, auction or introduction was, in my
judgment, referrable to their attempts to bring about that event. There is
simply no room for an implication of a contract to pay money on a quantum
meruit or any other basis in exchange for such an introduction which
results in a sale outside the 28-day period. It is quite inconsistent with the
bargain made between the parties. Equally, in my judgment, there is no room to
imply a request that the plaintiffs will introduce to the defendants a
purchaser which will result in payment on a quantum meruit basis if the
sale results outside the 28-day period. It may be that after the expiry of that
period, had the plaintiffs introduced a purchaser and the introduction resulted
in a sale, the court might be able to imply a contract or undertaking to pay
for that introduction. But that is not this case.
Mr Pinder also
sought to rely on a number of citations from Goff and Jones on Restitution at
pp 3, 19 and 20 and to a number of authorities on the question of unjust
enrichment: The Winson* [1979] 2 All ER 35 and the judgment of Lloyd J
(as he then was); Greenwood v Bennett [1973] QB 195 at p 202; Way
v Latilla [1937] 3 All ER 759; and Michael Elliott & Partners
Ltd v UK Land plc [1991] 08 EG 123+.
*Editor’s
note: China-Pacific SA v Food Corporation of India.
† Editor’s
note: Also reported at [1991] 1 EGLR 39.
In my
judgment, those cases are of no assistance in this appeal. This is a case where
the parties made a contract for the payment of commission on the happening of a
certain event. That event did not take place. It is similar to a situation
which arose in Howard Houlder & Partners Ltd v Manx Isles
Steamship Co Ltd [1923] 1 KB 110. Mr Pinder’s case really comes to this.
The plaintiffs introduced this purchaser. The purchase resulted in a sale. It
is unjust and unfair that the defendants who obtained the benefit of that
should not pay the plaintiffs as a result. But the court cannot rewrite the
bargain between the parties. The bargain here was clear. In some respects it
was favourable to the plaintiffs because, as I have indicated, it mattered not
how the sale arose during the optimum period. The court cannot rewrite that
bargain and provide that if the sale takes place outside the 28-day period
similar provisions should apply. In my judgment, both the application for leave
to amend the appeal should be dismissed.
BELDAM and PARKER LJJ agreed and did not add anything.
Appeal
dismissed with costs.
