Estate agents’ claim for commission on sale of hotel — No appearance at trial by or on behalf of defendant vendors — Judge proceeded with trial of action, in accordance with Order 35, rule 1(2), in the absence of defendants — Defendants had granted plaintiff estate agents sole selling rights, but later withdrew these instructions — On receiving notice of withdrawal plaintiffs wrote to defendants, saying that under the new circumstances ‘Our commission will only become payable on the introduction of a purchaser through this agency’ — Subsequently the hotel was sold to a purchaser who, the judge found, had been introduced by the plaintiffs — Plaintiffs claimed commission on two alternative bases, (1) pursuant to the original sole selling rights instructions, (2) under the revised basis after the withdrawal of these instructions — Judge held that the plaintiffs failed under the first alternative on the facts, because he was not satisfied that the introduction took place before the withdrawal of the original instructions — He also expressed some doubts (but he did not pursue the point) as to whether, as a matter of law, the mere introduction of the eventual purchaser would have qualified the plaintiffs under the sole selling rights contract to receive their commission although the sale went through many months after the cessation of that contract — The plaintiffs, however, succeeded under their alternative claim as the introduction was the effective cause of the eventual sale to the purchaser — Judgment in favour of the plaintiffs for their commission at 3 1/2% on the actual sale price, with interest and costs
In this action
the plaintiffs, Brodie Marshall & Co, estate agents, of London W1, sued the
defendants, Mr and Mrs Carpenter, who did not appear and were not represented
at the trial, for commission claimed to be due on the sale of the George Hotel,
Brecon, County Powys in South Wales.
P W Birts
(instructed by Fremont & Co) appeared on behalf of the plaintiffs.
Giving
judgment, SIMON BROWN J said: The plaintiffs are a firm of London West End
estate agents. By this action they claim commission in the sum of £3,199.87
arising out of the sale of the defendants property, the George Hotel, Brecon,
County Powys in South Wales.
The defendants
do not appear today, and indeed it is reasonably clear that they are unaware
that the action is listed for hearing today. There is, however, before me an
affidavit from the plaintiffs’ solicitor, Mr Allen, sworn on the 30th of last
month by which he explains the efforts that have been made to keep in touch
with the defendants and to bring to their attention the course of the
proceedings, not least the fixed date for today’s hearing. I am quite
satisfied that they have exhausted all possible and fruitful avenues. The basic
history is this. The defendants’ solicitors sought to be removed from the
record on September 14 1983. Master Waldman initially required that they should
take further specific steps to seek to contact their clients, with whom they
had already by then lost touch. Those steps were taken, but fruitlessly, so
that on December 7 1983, on the adjourned hearing of the application, the order
was duly made that they should be taken off the record. Since then, further
strenuous efforts have been taken by the plaintiffs’ solicitors, who went so
far as to cause inquiry agents to be instructed, but still without avail. In
those circumstances, I have no hesitation in exercising my discretion under
Order 35, rule 1(2) to proceed with the trial of the action in their absence.
The
plaintiffs’ claim is best considered in a chronological context. As a result of
the defendants getting in touch with them there was a meeting at the hotel on
May 10 1979 between Mr Norman, the only witness who gave evidence before me,
who was then the plaintiffs’ hotel manager (in the sense that that was the area
of their work which he managed), and the defendants. The agreement reached at
that meeting was duly recorded in Mr Norman’s letter the next day to the
defendants; this records their instructions to offer the business at £79,500,
and includes this paragraph:
Thank you
also for leaving matters exclusively in our hands for the sole selling rights
to your property, and I confirm our commission of two and a half per cent plus
VAT will only become payable on the completion of a sale.
That letter was
itself duly acknowledged and its terms agreed by the second named defendant on
May 14.
At that early
stage the hotel was advertised for sale discreetly on the defendants’
instructions, it not then being their intention to reveal widely that it was
upon the market. Those instructions, however, at a late stage, very
approximately in early June, changed and the advertisements were less
anonymously effected.
By a letter
dated June 13 the defendants wrote to the plaintiffs thus:
I am sure you
will appreciate that it is with great reluctance that we must ask you to
withdraw our hotel for sale with your company . . .
I need not read
beyond that. That letter was not received immediately. It is in doubt as to
just when it was received, but Mr Norman supposes it was approximately on June
18 or 19, and it was replied to by his letter of June 20, when he confirmed
that under the new circumstances ‘our commission will only become payable on
the introduction of a purchaser through this agency’. He suggested — although
it was not a suggestion that was ever accepted — that his company might
thenceforth act together with the new agents, whom the defendants desired to
instruct, as joint sole selling agents. He thinks it probable that he would
have sent the letter within 24 hours of his receipt of the defendants’ letter
of June 13. I am not, however, persuaded by that evidence that the letter of
June 13 was more probably received on June 19 than on June 18.
Before writing
that letter of June 20, namely on June 18, Mr Norman’s assistant, a Mr Shipley,
had entered up one of the plaintiffs’ record cards to show — as I am satisfied
that it does show — that on that day a Mr Palmer, acting on behalf of a company
called F R Palmer Ltd, had made an inquiry relative to the defendants’ George
Hotel. Mr Norman says — and this also I accept — that in accordance with the
company’s standard practice Mr Shipley would that same day have sent out the
company’s particulars that had already been drawn up relating to the property.
The next that the plaintiffs knew of the matter was apparently one year later
when they learned of the sale of the hotel to Mr Palmer or his company; it
matters not which. Consequent on that, they sent, dated May 13 1980, an invoice
to the defendants seeking their commission on the sale in the sum I have
mentioned.
There was then
correspondence between the defendants on the one hand and the plaintiffs’
solicitors on the other, in which the defendants denied liability to the
plaintiffs. Initially this consisted of a bare denial but eventually when they
came to deal more specifically with the details of the matter, the defendants
stated that the sale had not, in fact, taken place for £79,500 but rather for
£6,500 less than that, namely £73,000. I further note — albeit there is no
evidence from the defendants before me to this effect — that the defendants’
pleadings, namely the further and better particulars of their reply, assert (a)
that the sale took place for the sum of £73,000, and (b) that the circumstances
of the sale were that on June 30 1979 a Mr Barratt came to the hotel explaining
that he had heard locally that it was for sale; he told the defendants that he
had not come through an agent; having looked at the property, he then indicated
to the defendants his interest on behalf of the company F R Palmer Ltd. A day
or two later, so it is pleaded by the defendants, Mr Palmer, the managing
director of that company, inspected, offered and subsequently purchased. That
pleading, closely if not precisely, reflects the substance of the defendants’
correspondence I have earlier referred to.
The plaintiffs
put their claim on two alternative bases. First, they claim the commission
pursuant to the initial sole agency contract. As to that, they need to establish
two matters: first, that as a matter of fact their introduction of Mr Palmer as
a prospectively interested purchaser, namely on June 18 1979, took place before
the cessation of that sole agency agreement, which cessation was brought about
by the receipt of the defendants’ letter of June 13. As I have already
indicated, I am not satisfied on the facts that the second defendants’ letter
of June 13 was received after that introduction. Second, they would have to
show as a matter of law that the mere introduction, however ineffective it
might have been, of Mr Palmer would, assuming he later purchased the property,
once and for all have qualified them under the sole agency contract for their
commission, even albeit the sale went through many months after the cessation
of such contract. As a matter of law, I am not, on the argument thus far
advanced, convinced of that; it is, however, unnecessary to pursue it further
for the reasons I have given, namely that this limb of the case in any event
fails on the facts.
The second way
in which the claim is advanced is under the revised agreement, and the
plaintiffs’ claim under this head is more conventionally canvassed. I take as a
convenient statement of the law a passage from para 2312 of vol 2 of Chitty
on Contracts, 25th ed:
Subject to
any express terms to the contrary, where the agency contract provides that the
agent earns his remuneration upon the bringing about of a certain transaction,
he is not entitled to such remuneration unless he is the effective cause of the
transaction being brought about.
I am satisfied
that the plaintiffs’ introduction of Mr Palmer — coupled with such earlier
advertising as they had already effected in regard to the hotel — was indeed
the effective cause of the eventual sale to Mr Palmer’s company. It follows
that, in my judgment, on that straightforward basis, the plaintiffs are
entitled to commission.
That leaves as
the only outstanding issue the sum upon which the commission is due. As to
this, it is, of course, for the plaintiffs to prove their case as to the sum at
which the transaction went through. Mr Norman assumed that the hotel had been
sold at its asking price simply because he was not told to the contrary, at any
rate before his company invoiced the defendants in May of 1980. However, as I
have already stated, when on June 6 1980 the defendants came to deal more
particularly with the details of the transaction, they asserted that it was
sold for £73,000. Moreover I see no reason why I should wholly ignore in this
regard that solicitors and counsel then instructed by the defendants pleaded
the sale price at £73,000. I would suppose this was done on the basis not only
of oral instruction but no doubt supported by a certain amount of
documentation. I am not prepared to infer, in the face of those assertions both
in the correspondence and in the pleading, that the asking price was achieved
and, accordingly, it follows, in my judgment, that the claim for commission is
only established in regard to the lesser price of £73,000.
Judgment was
given in favour of the plaintiffs for £2,938.25, being commission at 3 1/2% and
including VAT, together with interest amounting to £1,556.85. The plaintiffs
were awarded costs on the High Court scale.
