Estate agents’ claim for commission on sale of house–Commission payable ‘should we be successful in either directly or indirectly introducing a person ready, able and willing to purchase on terms authorised by you’–Two sets of negotiations taking place at same time, one through plaintiffs and the other through competing agents–Vendor’s solicitors exchanged contracts with purchaser introduced by plaintiffs’ competitors before the solicitors acting for plaintiffs’ prospective purchaser had received her signed contract–Plaintiffs’ claim fails–Property sold before person put in touch by the plaintiffs was ‘ready, able and willing’ to purchase–Observations in E P Nelson & Co v Rolfe cited–Implied term that commission is not payable if, before introduction, the principal has entered into a binding contract to sell to another–Appeal from deputy county court judge dismissed
This was an
appeal by A A Dickson & Co, a firm of estate agents, of 392 Lillie Road,
London, SW6, from a decision of Deputy Judge Gerald Owen QC, at West London
County Court. They were plaintiffs in an action for payment of commission
alleged to be due to them from the defendant, M B O’Leary, the respondent to
the present appeal, in respect of the sale of a house at 25 Edgarley Terrace,
London SW6. The deputy judge dismissed the action.
C Beaumont
(instructed by Cree, Godfrey & Wood) appeared on behalf of the appellants;
D P Friedman (instructed by Donald Nelson & Co) represented the respondent.
Mr Friedman was not called on.
Giving
judgment, LORD DENNING MR said: Mr O’Leary was a bricklayer. He bought a house
at 25 Edgarley Terrace in London. He did it up himself. He renovated it and he
decorated it. He then determined to sell the first floor as a flat. He put it
into the hands of house agents–more than one. One was a firm called A A Dickson
& Co. He put it into their hands in June 1976 at £14,000 as an asking
price. The agents confirmed his instructions by a letter of June 22 1976 in
which they said:
Whilst
writing, we would also mention that should we be successful in either directly
or indirectly introducing a person ready, able and willing to purchase on terms
authorised by you, we shall look to you for payment of our commission on the
basis of 2 1/2 per cent of the purchase price
Reading
between the lines, it is pretty clear that some other agents got ahead of A A
Dickson & Co. It appears that, by the end of August, arrangements had got
so far through those other agents that a contract had already been sent to a
proposed purchaser. A A Dickson & Co did not find a person likely to come
in until September 6 1976. Then they said that they had arranged a sale to a
Miss Kyd at the sum of £13,250 subject to contract. Mr O’Leary had not actually
agreed that sum. He would probably have accepted it in due
he instructed his solicitors, and negotiations went on with Miss Kyd’s
solicitors.
So, in effect,
there were two negotiations taking place at the same time. One through the
other agents with other purchasers–which was hanging fire a bit, but the
contract had been sent off to them–and the other through Messrs Dickson with
Miss Kyd and her solicitors.
I need not go
through all the negotiations until I come to the date of October 28. There had
been negotiations ‘subject to contract,’ but on October 27 Miss Kyd’s
solicitors sent her–through the post–a contract to sign. She signed it on the
28th, and returned it to her solicitors, who received it on the 29th. It was
unconditional this time–showing that she was ready, able and willing to
purchase for the sum of £13,250. That was the first time on the evidence that
it was shown unequivocally that she was ready, able and willing to purchase for
the sum of £13,250.
But, as it
turned out, Mr O’Leary’s solicitors had still been carrying on negotiations
with the other purchaser and the other purchaser’s solicitors. So much so that
they had already signed and exchanged contracts on October 28 with the other
solicitors. No doubt commission will be payable on that deal.
On the next
day, October 29, Miss Kyd’s solicitors said to Mr O’Leary’s solicitors, ‘We
have obtained Miss Kyd’s signature, and we are ready to exchange
contracts.’ But the answer was, ‘We are
sorry; you are too late. We have already sold to another purchaser, and
contracts have already been exchanged.’
There it is.
Mr O’Leary said he could not pay Messrs Dickson any commission. Messrs Dickson
were aggrieved. They said they had done all their work. They were entitled to
commission. They immediately sent in a debit note for £357.75 for commission.
Mr O’Leary’s answer to that was, ‘The property had been sold before your client
was herself ready, able and willing to enter into an unconditional contract.’
The deputy
county court judge decided against the agents and in favour of Mr O’Leary. He
had the case argued twice. He wanted to consider particularly the observations
made in the case of E P Nelson & Co v Rolfe [1950] 1 KB 139.
In that case there was a contract in precisely the same terms as this one.
Again ‘a person able, ready and willing to purchase.’ Again there were two prospective purchasers,
but with this difference: there was no binding contract with one of them as
there was in this present case. Geoffrey Howard at p 142 put forward three
implied terms:
Commission is
not payable if, before the introduction, (1) the authority to the agent is
withdrawn, (2) if the property has already been sold
–I gather that
means ‘conveyed’–
or (3) if the
principal has entered into a binding contract to sell to another.
As I read the
judgments of the Court of Appeal, those three terms were accepted by the court
as being correct. Bucknill LJ said at p 145: ‘Another implied term which Mr
Howard admitted must be read into this contract was that commission would not
be payable if the property had been already sold before the person able, ready
and willing to purchase the bungalow had been introduced.’ Cohen LJ at p 146 repeated the very words of
Mr Howard’s argument and threw no doubt upon them. It seems to me that the
third implied term is correct. It is good sense and is applicable to this case:
because, when a house is in the hands of more than one agent, it cannot be
supposed that the vendor is to be made liable for double commission. In the
ordinary way commission is payable to the agent who is the first to find a
purchaser who enters into a binding contract which both parties accept. If a
binding contract is made before another agent has produced ‘a person able,
ready and willing to purchase’–or before any contract is made with that
person–the first agent gets commission, the second does not. It is a race as to
which agent wins. He wins who first gets the binding contract. I am afraid that
in this particular case the other agent won and Messrs Dickson did not.
I think that
the deputy county court judge was right, and the appeal should be dismissed.
BRIDGE LJ
agreed.
Also agreeing,
SIR DAVID CAIRNS said: I am satisfied that the learned deputy circuit judge in
his very careful judgment rightly held, mainly on the authority of the case of Nelson
v Rolfe, that this particular term should be implied. It is right to say
that although it was not a matter of decision in that case, it was clearly the
view of both Bucknill LJ and Cohen LJ that a term to that effect should be
implied; and I feel quite sure that, if either of those two judges had thought
that the concession which was made with regard to it was not rightly made, they
would have said so. Certainly it does not appear that since 1950 there has been
any dissent from the view that such a condition could be implied.
I accept, for
my part, that there may be cases where there are two estate agents both
entitled to commission. In that respect, I accept as accurate what was said by
Orr LJ in his judgment in the case of Christie Owen & Davies Ltd v Rapacioli
[1974] 1 QB 781 at p 790. But it is a situation which reasonable people would
be likely to seek to avoid, and therefore it seems to me that the implication
of such a term as is relied upon here which would contribute to that end is
permissible. I therefore agree that the appeal should be dismissed.
The appeal
was dismissed.
