Aboualsaud v Aboukhater and another

Agency agreement – Claimant introducing possible purchaser of hotel – Claimant contending entitlement to commission on subsequent sale – Whether parties entering into binding oral agency agreement – Whether introduction being effective cause of sale – Claim dismissedThe claimant contended that he was entitled to commission on the sale of an hotel by virtue of an oral agreement made between him and the first defendant and his father (the second defendant). He claimed that the agreement was a binding oral contract under which he was to be paid commission should he introduce a party to the defendants who subsequently purchased the hotel for a price that was acceptable to them. The introduction of a third party in December 2002 led to a letter of intent to purchase the hotel. Although that deal did not go ahead, the claimant contended that the introduction remained the effective cause of the eventual purchase by a joint venture, including the third party, in December 2004. The defendants denied the existence of a binding oral agreement, arguing that it was simply a case of one friend seeking to help another. If that assistance led to a successful sale, a payment in recognition of that help could be expected. Issues arose as to whether there was an agency agreement between the claimant and the first defendant, acting on behalf of himself and the second defendant,; and, if so, whether the introduction of the third party in 2002 was an effective cause of the sale of the hotel to the joint venture in 2004. Held: The claim was dismissed.The claimant had failed to establish an agency agreement or any basis upon which he could establish a binding legal contract. There was no evidence of any concluded agreement between the parties relating to the payment of commission to the claimant or of any intention that there should be a binding legal agreement.In any event, the claimant had failed on the issue of causation. The test was whether his introduction was “an” rather than “the” effective cause of the eventual sale. In some cases, where two agents were acting contemporaneously and competing for commission, “the” might be appropriate test, but that was not the case here. Recent judicial authority indicated that what had to be established was that the introduction was “an” effective cause of the sale which was a question of fact in each individual case: John D Wood & Co v Dantata [1987] 2 EGLR 23; (1987) 283 EG 314 considered. The question was whether the claimant had been instrumental in bringing about the sale, in that his introduction was a real cause of the sale because it caused the third party to purchase the property: Burchell v Gowrie & Blockhouse Collieries Ltd [1910] AC 614; Hookerv WJ Adams Estates Pty [1977] 138 CLR 52; and Price Davies & Co v Smith [1929] 141 LT 490 applied. In the present case, the claimant’s introduction was a matter of essential background, but was not an effective cause of the sale. Richard Spearman QC and Alexander Pelling (instructed by Taylor Wessing) appeared for the claimant; Christopher Butcher QC and James Turner (instructed by Davis & Co, of Amersham) appeared for the defendants.Eileen O’Grady, barrister