Estate agents–Commission–Dispute as to entitlement–Involvement of two different agents–Whether the history was one of a continuous negotiation with an unbroken chain of causation or of separate negotiations–Held that on the evidence there were separate negotiations and that the firm whose negotiations resulted in the making of the successful offer was entitled to the commission–Held that the plaintiffs, although the first agents instructed and the first in touch with the eventual purchaser, were not ‘instrumental’ in negotiating the sale
The following cases are referred to in
this report.
John D Wood & Co v Dantata [1987] 2
EGLR 23; (1987) 283 EG 314
Yates (Peter) & Co v Bullock [1990] 2
EGLR 24; [1990] 37 EG 75, CA
This county court case is of interest as
illustrating the difficulties which can arise, when two firms of agents are
separately instructed, in determining which firm is the effective cause of the
sale of the property in question.
Edward Denehan (instructed by
Philippsohns Newman) appeared on behalf of the plaintiffs, Anscombe &
Ringland Ltd; Lord Meston (instructed by Biddle & Co) represented the
defendants, Peter Shaw Watson, Anthony Francis Mycroft Beeley and John Edwin
Britten, executors of Lady Binder.
The question in this case was as to which
of two firms of estate agents, each of which had been involved at some time in
the negotiations which eventually terminated in the sale of the property, were
entitled to the commission. The decision required a determination as to whether
the negotiations constituted a continuous single process, or whether there
were, in fact, two separate negotiations, and whether there was an unbroken
chain of causation leading from the original introduction to the sale or
whether that original introduction was not, in the events which happened, the
effective cause.
The facts were that the plaintiffs,
Anscombe & Ringland Ltd, received instructions from the solicitors to the
vendor executors to sell a leasehold flat in St John’s Wood, London NW. The
solicitors mentioned, among people who might be interested in a purchase, a Mr
Elias, who, indeed, was the person who eventually completed the purchase of the
property. In correspondence in October 1988 the terms of the agents’
instructions, at first for a sole agency, were agreed. Mr Elias was contacted
by the plaintiffs and looked over the flat on two occasions, accompanied by a
representative of the plaintiffs, after which he made an offer of £300,000.
This offer did not come up to the expectations of the defendants and they
rejected it. By a letter dated January 5 1989 they not only advised the
plaintiffs of the rejection but also terminated the plaintiffs’ instructions,
saying that they would reconsider the whole situation in the spring. Mr Elias
was informed of this decision but obviously did not lose interest in the
property. In fact he made an appointment with the plaintiffs to view the flat
again and did view it. The plaintiffs, notwithstanding the termination of their
instructions, retained a set of keys to the flat, owing apparently to an
oversight on the part of the defendants. The plaintiffs wished to maintain the
interest of Mr Elias in the flat and hoped to persuade him to increase his
offer. The defendants were aware of Mr Elias’ continued interest and the
plaintiffs’ continued contact with him. However, by a letter dated January 17
1989 the defendants confirmed the withdrawal of the instructions to the
plaintiffs and said that they were placing the property with other agents,
Broomhall & Partners. The plaintiffs made a further contact with the
defendants’ solicitor to inform him of a possible offer of £350,000 from
another potential buyer; they were advised to get in touch with Broomhall &
Partners. This possibility failed to materialise, but the figure mentioned
stimulated
the meantime been in contact with Broomhall & Partners and was proceeding
with the purchase of the flat through them for £340,000. The sale was later
completed for this amount. The plaintiffs requested commission on the sale, but
this was refused.
The plaintiffs contended that the
original offer of £300,000 made through them was the opening shot in lengthy
negotiations which ended successfully in a sale for £340,000. The plaintiffs
had shown Mr Elias the flat on a number of occasions, had maintained contact
with him and had tried to persuade him to increase his offer. They submitted
that the matter must be seen as one continuous process and an unbroken chain of
causation which began in October 1988 and remained in existence until the sale
in May 1989. It was argued that the plaintiffs were thus instrumental in
introducing the purchaser.
The defendants on the other hand argued
that the plaintiffs were not instrumental or the effective cause of the sale.
The negotiations, the defendants submitted, fell into two clear and distinct
parts, the first part ending with the rejection of the £300,000 bid and the
withdrawal of the plaintiffs’ instructions by the defendants’ solicitor. The
negotiations which led to the eventual sale to Mr Elias were distinct and
separate and were conducted by Broomhall & Partners. The defendants
rejected the suggestion that the plaintiffs’ activities in 1988 were linked
with the eventual sale.
In the course of the argument reference
was made to John D Wood & Co v Dantata [1987] 2 EGLR 23, Peter
Yates & Co v Bullock [1990] 2 EGLR 24 and to Bowstead on
Agency, 15th ed, arts 58 and 59.
The judge held that the negotiations did
fall into two separate parts, as submitted by the defendants. They did not form
one continuous negotiation with one unbroken chain of causation. The eventual
sale resulted from the separate negotiations conducted by Broomhall &
Partners and the plaintiffs played no part in those negotiations. Judgment was
given for the defendants.
