Estate agents’ commission — Introduction of purchaser — Expensive house — Entitlement — At one time commission was claimed by no less than three firms of estate agents — Question whether one or two princesses of the royal house of Saudi were involved in the negotiations — At least one witness suffering from ‘forensic amnesia’ — Discussion of principles governing entitlement to commission — Introduction must be the effective cause of the transaction — Statement of the law in John D Wood & Co v Dantata adopted — Plaintiff agents succeed in claim to commission
required some elucidation — There were questions as to whether liability for
commission attached to the individual defendants or to a company in which they
were interested; whether both of two royal sisters, Princess Al-Nauf and
Princess AI-Noud, were interested or only one of them; who exactly were
instructed to find a purchaser; who secured an introduction; and who was the
effective cause of the sale — The property in question, a leasehold house in
London W2, was eventually sold for £1.7m
decided that the instructions were given by the defendants, a sister and
brother, not by the company in which the leasehold interest, held from the
Church Commissioners, was vested — The purchaser was Princess AI-Nauf and her
sister did not figure in the transaction — The plaintiffs introduced Princess
AI-Nauf and were the effective cause of the purchase — The effective
introduction was made by the plaintiffs’ subagents — Another firm, which had
independent instructions, had earlier introduced the princess to the property,
but that introduction had become spent and was not the effective cause of the
sale — There was in fact an agreement between the two firms to share the
proceeds of the present action if the plaintiffs were successful, the other
firm undertaking not in that case to proceed with an action of their own —
Judgment for plaintiffs in the sum of £34,000 plus value added tax of £5,100
The following
cases are referred to in this report.
Brian Cooper & Co v Fairview Estates
(Investments) Ltd [1987] 1 EGLR 18; (1987) 282 EG 1131, CA
John D Wood & Co v Dantata [1987] 2
EGLR 23; (1987) 283 EG 314, CA
In this action
the plaintiffs, Chesterfield & Co Ltd, estate agents, claimed against the
defendants, Safinaz el Zahid and Abdul Hamid Ansari, commission from the sale
of the house known as 8 Clarendon Place, London W2.
P Birts
(instructed by Roche Hardcastles) appeared on behalf of the plaintiffs; P
Kremen (instructed by Lithgow Pepper & Eldridge) represented the defendants.
Giving
judgment, GARLAND J said: This is a claim for estate agents’ commission arising
from the sale in November 1982 of what the sale brochure describes as a
‘magnificent and immaculately restored large freehold house’ at a price of
£1.7m.
The case has a
number of unusual features: no less than three firms of estate agents have
claimed commission; no commission has so far been paid to anybody; there is a
dispute as to whether or not one or two members of the Saudi Royal House were
interested in purchasing the premises, which are at 8 Clarendon Place, London
W2; there are acute conflicts of fact, and at least one witness, in my view,
appeared to be suffering from acute forensic amnesia.
I propose to
set out a chronology of the principal events, indicating where issues and
points of conflict arise, before turning in greater detail to the issues to be
decided and the conflicts to be resolved.
The freehold
of 8 Clarendon Place was vested in the Church Commissioners subject to some
unexpired portion of a long lease. The leasehold interest was acquired by a
company, Alaquin NV, which is registered in the Netherlands Antilles. It
appears that the first defendant had a substantial interest in this company
although the extent of the second defendant’s interest or participation is
vague: the second defendant seemed unable to describe his interest or function
with any particularity.
The company
undertook the restoration of 8 Clarendon Place, engaging contractors directly.
The site supervisor was Mr Mark Chipperfield, who gave evidence; he was a
friend of a Mr Ryan who is employed by Chestertons, chartered surveyors and
estate agents. An interior designer, Michael Costley-White, was also engaged on
the work; he was a friend of Mr Alistair McAlpine, a negotiator with the
plaintiff firm. The defendants are sister and brother. Mr Ansari (who is an
engineer) was in charge of operations and the original intention was that the
house should be occupied by the family, but this plan was abandoned when the
defendants’ mother died.
In the spring
of 1981 Mr Ansari asked Chestertons to consider marketing the property for the
company, Alaquin NV. Chestertons had been retained by the Church Commissioners
to approve the work being carried out by the leaseholder (Alaquin NV) on the basis
that the company would be entitled to acquire the freehold when the work had
been satisfactorily completed. Chestertons acknowledged this invitation on
August 26 1981 and in September they informed Mr Ansari that they had received
an offer from Princess Nauf of Saudi Arabia in the sum of £1m. The matter was
dealt with on behalf of Chestertons by Mr Charles Oliver, who was then the
manager of their house sales department at the 40 Connaught Street branch.
In February
1982 Mr Costley-White told Mr McAlpine that the house might be coming on to the
market and this led to a meeting at the premises between Mr Ansari, Mr
McAlpine, Mr D’Arcy-Clark (the senior partner of the plaintiffs) and Mr
Chipperfield. The plaintiffs were instructed to find a purchaser but, until the
building work was completed, to do so only by personal contact. The main
conflict arising from this meeting is whether or not the plaintiffs were
instructed on behalf of the company or the defendants (or either of them)
personally. There is a related dispute as to whether or not the plaintiffs were
given a sole agency: this is not strictly relevant to any issue in the case but
is a related issue of credibility.
On April 27
the plaintiffs wrote to Mr Ansari acknowledging their earlier instructions and
informing him of the interest which had been or was being displayed in the
premises. As the building work was completed, the plaintiffs decided to launch
the premises on the market by having a ‘launch lunch’ at 8 Clarendon Place to
which leading estate agents would be invited. They also prepared a glossy
brochure. Mr Ansari agreed to pay for the brochure and the lunch. On July 5 the
invitations were sent out; these recited that the plaintiffs were sole agents.
Chestertons received their invitation on the 6th; on the 8th Mr Chipperfield
and Mr Ryan spoke on the telephone, and on the 9th Chestertons confirmed to Mr
Ansari that they, too, had been retained as principal agents. The invitations
of July 5 had in fact offered a subagency at 1% commission (50% of the
plaintiffs’ commission) if any of the guests introduced the purchaser. The
lunch took place on the 15th and on the same day Chestertons showed the
premises to a Mr Marston acting on behalf of Princess Nauf. Mr Marston made an
offer of £1.5m.
On July 20 the
first defendant replied to the plaintiffs’ letter of the 14th confirming the
terms of their agency but pointing out that they were not sole agents. On the
23rd, Chestertons permitted Mr Marston and Prince Abdullah (Princess Nauf’s
husband) to view the house. On the 30th, Mr Oliver showed the princess over the
house again; on this occasion the princess was accompanied by Miss Georgette
Durr, who acts as her companion when the princess is in England. The princess
reaffirmed her previous offer of £1.5m.
One of the
agents invited to the launch lunch was Beauchamp Estates represented by Miss
Penelope Court. Miss Court had frequently done business with Mrs Shirin Dibadj,
the widow of the former Iranian Ambassador to Turkey, who worked for the Bank of
Credit and Commerce International, assisting the bank’s clients to
find properties in London. Mrs Dibadj said that she would have received her
instructions from her immediate superior at the bank, but there is an acute
conflict between Miss Court and Mrs Dibadj as to what followed. Miss Court’s
version is that she showed Mrs Dibadj round the premises on August 10 and that
later in the day Mrs Dibadj returned with a number of Arab ladies who did not
speak English but one of whom was, she understood, a princess and sister of the
King of Saudi Arabia. They spent quite a long time going over the premises. On
August 13 Mrs Dibadj made an offer of £1.4m which Miss Court reported to Mr
D’Arcy-Clark, who in turn reported it to Mr Ansari. Miss Court stated in evidence
that she was satisfied that there was a genuine applicant for whom Mrs Dibadj
was acting. The issue that emerged during the trial, being in no way reflected
in the pleadings (which I directed to be amended), was whether Mrs Dibadj was
acting for a second Saudi princess eventually named as Al-Noud bint Abdul-Aziz
Al Saud and sister of Princess Nauf. The fact that the offer was £1.4m was
debated at some length by counsel in the course of the argument as to whether
or not there were two princesses or only one.
On the 19th
there was a further offer from Mrs Dibadj of £1.5m, which was reported as
before and, like the earlier offer, rejected.
On the 23rd,
Chestertons come back into the story because on that day Mr Oliver met Princess
Nauf and Miss Durr at other premises. The princess took the opportunity to
repeat her earlier offer to Chestertons of £1.5m for 8 Clarendon Place. This
was rejected by Mr Oliver.
On August 26,
Mrs Dibadj (according to Miss Court’s evidence) made an offer of £1.6m which
was reported by Beauchamp Estates to the plaintiffs and by the plaintiffs to Mr
Ansari. There was thereafter no direct involvement of either firm of agents,
although Mr Oliver said in the course of his evidence that Chestertons had made
strenuous efforts to negotiate. He did not, however, give evidence of any
contact with Princess Nauf, Mr Marston, Miss Durr or any other representative
after August 23.
On September
13 (or perhaps a day or two earlier) the princess made a further offer of £1.7m
directly to the vendor without the participation of estate agents. This offer
was accepted and the sale was completed on November 2. Mr Ansari informed both
Chestertons and the plaintiffs, and on September 14 Mr McAlpine wrote a long
letter to Mr Ansari setting out the position as he and Mr D’Arcy-Clark saw it,
justifying a claim for commission.
On the 15th
Beauchamp Estates wrote to the plaintiffs claiming their half-share of the
plaintiffs’ commission. The defendants’ solicitors became involved at an early
stage: Mr D’Arcy-Clark spoke to them on the 15th and on October 4 they wrote to
the plaintiffs saying that other agents were claiming commission and
concluding:
Our clients are prepared to pay a
commission to the agent who can establish that they are solely entitled to the
exclusion of all others. We can only invite you to put forward such proof to
us.
On October 26
the plaintiffs wrote a further letter setting out their position to Landy,
Wiseman & Co (the defendants’ solicitors) and on November 2 submitted a fee
note to Mr Ansari. This was returned by Landy, Wiseman & Co on November 3
‘because you have not addressed it to Alaquin NV but to Mr Ansari’. The
plaintiffs accordingly altered the fee note and readdressed it to the company
via Landy, Wiseman & Co. The plaintiffs and Beauchamp Estates from
September 14 onwards referred to the purchaser as ‘Princess Al-Noud’. This
reference was not correct or challenged by or on behalf of the defendants.
I have not
made any reference to the third firm of estate agents, Central Estates. In fact
their involvement was hardly touched upon in the course of the trial, but for
the sake of completeness it should be said that they had been instructed in
March 1982 and claimed to be entitled to a 1 1/2% commission when the offer of
£1.7m was accepted. They subsequently issued a writ against Mr Ansari but later
discontinued their action.
Chestertons
submitted an account on November 15 1982 and followed it with a writ and an ex
parte application for a Mareva injunction, which was granted. On
December 30 Chestertons obtained judgment in default against Alaquin NV but
have been unable to enforce the judgment in the Netherlands Antilles. There
has, of course, been no adjudication on the merits, and I have been told that
if the plaintiffs succeed in this action, Chestertons will undertake not to
proceed further with their unsuccessful action. The reason for this is that the
plaintiffs and Chestertons have agreed between themselves to share the proceeds
of this action if it is successful, the plaintiffs further undertaking to share
their share with Beauchamp Estates.
The issues in
the case are as follows:
1 Were the plaintiffs engaged by Alaquin NV or
by one or both of the personal defendants?
2 Were the plaintiffs dealing through their
subagents, Beauchamp Estates, and Mrs Dibadj with Princess Nauf, the eventual
purchaser, or with her sister Princess Noud, who faded from the scene?
3 Assuming that question 2 can be answered in
favour of the plaintiffs, can it nevertheless be said that they both
‘introduced’ the purchaser and were the effective cause of the transaction?
There is no
dispute between the parties as to the relevant law, which is accepted as being
correctly set out both in Bowstead on Agency and in Chitty on
Contracts. I was referred to Brian Cooper & Co v Fairview
Estates (Investments) Ltd [1987] 1 EGLR 18 and John D Wood & Co
v Dantata [1987] 2 EGLR 23. The first of these authorities merely
reinforces the basic principle that an estate agent must demonstrate that there
was an introduction of the purchaser and that the introduction was the
effective cause of the transaction. The second assists me in two respects.
First, the consideration of the meaning of ‘introduction’ in the context of
estate agents’ commission. Nourse LJ said at p 25K:
The difficulties in clarifying the mind
on this question are, I think, caused by the familiar meaning of the word
‘introduction’ as the bringing together of two people who have not previously
met. Thus it is natural, when looking at the word in its present context, to
attach significance to the first bringing together of the property and the
person who ultimately purchases it. But the full phrase is ‘the introduction of
a purchaser’ and I think that that can only mean the introduction of the person
who ultimately purchases: not to the property, but to the purchase or, if you
look at it from the vendor’s angle, to the sale; in either case to the
transaction which ultimately takes place. And if you then apply the primary
dictionary meaning of ‘introduction’, you find that what you are looking for is
the leading or bringing in of the purchaser to that transaction. That makes it
clear that first acquaintance is not paramount and it explains why the test is
expressed by reference to the effective cause of the transaction.
Second, the
court also had to consider rival claims between agents. At p 25B of the report,
Nourse LJ adopted a passage from the judgment of the late Forbes J at first
instance as follows:
I do not consider, however, that the
question here turns on whether either agent was instrumental or assisted in the
process which led finally to the sale. The question is whether either of them
has demonstrated that it was his introduction which was the effective cause of
the sale. Although the question of who was first in the field is not
conclusive, I do not consider that an agent who effects a second introduction
to the property (if that is not a contradiction in terms) can succeed in
demonstrating that such an introduction was the effective cause of the sale,
unless he can show that the interest aroused in the purchaser by the first
introduction has evaporated by the time of the second.
This approach
is discussed in the textbooks in terms of causation and break in the chain of
causation. Mr Birts put his case in two ways:
(i) Route A The plaintiffs effectively
introduced Princess Nauf via Chestertons because by going to the launch lunch
Chestertons were adopting the terms of the invitation and their actions were
adopted by the plaintiffs. This approach was not reflected in the pleadings and
I indicated that if it was being advanced as an argument for consideration and
decision it should be reflected in the pleadings, having regard to the further
and better particulars already given under ‘3’ on page 7 of the pleadings bundle.
(ii) Route B The plaintiffs ‘introduced’
the princess by a different route — as a client of the bank starting again with
a lower offer of £1.4m which was raised by stages to £1.6m, this being the last
step in the negotiation before the final offer. Chestertons’ earlier-in-time
‘introduction’ was spent by August 23, perhaps by July 30.
I am indebted
to counsel for the thoroughness of their arguments on the facts and hope that
they will forgive me if I do not recite every point that was made or every aspect
of the evidence that was drawn to my attention. I propose to state my findings
of fact as concisely as possible.
(1) Who engaged the plaintiffs?
In my view, it
was not the company. I prefer the evidence of Mr McAlpine and Mr D’Arcy-Clark,
which is wholly consistent with their subsequent letters addressed to Mr
Ansari, their reference to ‘your magnificent house’, his paying (on his
sister’s account) for the brochure and lunch, and particularly with the first
defendant’s letter of July 20. If strict contractual analysis is required, I
take the
agents; there was a variation after the engagement of Chestertons which is
reflected in the letter of July 20. In reaching this conclusion I have taken
into account the dispute over ‘sole agency’. The plaintiffs plainly believed
that they were sole agents; the defendants disabused them when the engagement
of Chestertons was disclosed. The defendants never at any stage after the
February meeting indicated that the principal was the company, Alaquin. The
letter of July 20 is wholly inconsistent with any such suggestion. The fact
that the account was readdressed to Alaquin is fully explained by Landy,
Wiseman’s instruction to do so.
(2) Were there two princesses?
I have already
commented that this argument was not apparent on the face of the pleadings and
I directed an amendment; that amendment has been made and furnished to the
court. There are in fact two sisters, Al-Nauf and Al-Noud. I have already noted
that the correspondence from September 14 refers to the latter. There was a
great deal of contention between counsel about the admissibility and effect of
parts of Miss Court’s evidence and the consequences of Mrs Dibadj’s failure to
recollect events that Miss Court was very positive had occurred. I earlier
referred to ‘forensic amnesia’. I regret to say that I find that both Mrs
Dibadj and Miss Durr were suffering from it, and where either is in conflict
with Miss Court, I prefer the latter. Mr Kremen has submitted forcefully that
Miss Court cannot identify her client with the ultimate purchaser, Princess
Nauf, who Miss Court refers to in document 20 as ‘HRH Princess Al-Noud’. This
was derived, as the plaintiffs and Chestertons derived it, from Mr Ansari when
he told them that the offer of £1.7m had been accepted. Miss Court was clear,
when cross-examined, that Mrs Dibadj had told her that the bank’s client was
the eventual purchaser. Mr Kremen submitted that Mrs Dibadj’s information was derived
from her superior at the bank, who was not called, and that Mr Birts never put
various matters of conflict with Miss Court to Mrs Dibadj, who was his own,
perhaps somewhat reluctant, witness. At the end of the day I am left in no
doubt whatsoever that only one royal lady was involved: she was originally
introduced by Chestertons, who had dealt with her in 1981. Her interest was
maintained from July 15 to July 30. They attended her at other premises on
August 23. Meanwhile, as a client of the bank, she was persuaded to look again
through Mrs Dibadj. I comment that the plaintiffs referred to Mrs Dibadj when
writing to Mr Ansari on August 20, and that Miss Court’s letter of August 26,
has attached to it a memorandum slip written by Mr Inskip (a former partner in
the plaintiffs) referring to ‘Mr Debarge’ being about to leave the country.
There was no Mr Dibadj. I regard the mention of leaving the country, as I also
regard the offer of £1.4m, as a bargaining tactic. I accept that Mrs Dibadj and
Miss Durr may well have felt themselves to be in some difficulty about
revealing the private affairs of a royal lady who was, in Mrs Dibadj’s case, a
client of her employer bank. Miss Durr was the princess’s companion and no
doubt felt great constraints of loyalty and confidentiality.
I come now to
the mixed questions of fact and law.
(3) Did the plaintiffs introduce the princess and
were they the effective cause of the sale?
I have already
referred to the case of John D Wood & Co v Dantata and would
respectfully adopt the passages I have quoted from Nourse LJ and Forbes J.
Turning first
to Mr Birts’ Route A argument, I am bound to say that it does not commend
itself to me. On the facts, Mr Oliver telephoned the plaintiffs, saying that he
would come to the launch lunch but had already been directly instructed so that
there could be no question of attending on the terms of the invitation. Mr
Birts further suggested that the invitation itself was the effective cause of
the introduction by Chestertons, but it seems to me to be beyond argument that
if Chestertons were acting as independent agents and not as subagents as
envisaged by the terms of the invitation, any introduction of a prospective
purchaser by them must have been their introduction and not the plaintiffs’
introduction.
I turn, then,
to Route B. Mr Birts’ submission is simple and I have already summarised it:
that the Chesterton introduction spent itself, perhaps by July 30 when the last
inspection took place and £1.5m was offered. Alternatively, the final link in
the Chesterton chain was on August 23 when the princess repeated her offer of
£1.5m while viewing other premises with Mr Oliver. The plaintiffs, however,
came on the scene on August 10 through Beauchamp Estates and Mrs Dibadj and
there followed an uninterrupted bargaining process until the offer of £1.6m on
August 26. The final offer of £1.7m must be regarded as a logical progression
in that process, so that it can truly be said that it was the plaintiffs and
not Chestertons who ‘introduced the purchaser to the transaction’.
In my
judgment, this argument is sound. Cases of this nature must vary infinitely on
the facts, and questions of causation can give rise to endless argument. There
were difficulties in this case with two, if not three, agents acting
contemporaneously, some degree of secrecy or mystery attaching to the person of
the proposed purchaser, and language difficulties. However, having considered
the passages in the leading works on the subject and the two authorities to
which I have been referred, I am in no doubt that Mr Birts’ submission is a
sound one.
The fact that
there is still in existence a judgment in favour of Chestertons against the
company, and that Chestertons are supporting this action, has to be considered.
I have already commented that the judgment was a judgment in default of notice
of intention to defend and there has been no decision on the merits. Different
parties are involved, so there is no question of estoppel. Chestertons, through
Mr Birts, offered an undertaking not to take any further steps in their action
if this action succeeded, and I take the view that if they did so the company
would be entitled to apply for leave out of time to set aside the judgment.
Perhaps, no more need be said about this aspect of the matter.
There will,
therefore, be judgment for the plaintiffs in the principal sum of £34,000
together with value added tax of £5,100. The plaintiffs are prima facie
entitled to interest from November 2 1982 and I will hear counsel as to whether
there should be an award from that date and, if so, at what rate.
