Park homes – Sale – Commission – Mobile Homes Act 1983 – Appellant buying mobile home pitch from respondents – Appellant paying commission to site owner – Appellant claiming reimbursement of alleged overpaid commission – First-tier tribunal finding appellant responsible for commission in addition to agreed price – Appellant appealing – Whether commission payable out of agreed sale price or in addition to it – Appeal dismissed
In September 2016, the respondents sold the appellant a pitch at 6 North End on the Lake View Park at Cummings Hall Lane in Romford, which was a protected site under the Mobile Homes Act 1983. The pitch was the subject of an agreement to which the 1983 Act applied and the appellant had the right under the agreement to station a mobile home there. Shortly before completion, the appellant handed over the agreed purchase price plus a 10% commission to a firm of licensed conveyancers, which was representing both parties in the transaction. On completion, the commission was paid by the licensed conveyancers to the site owner (Wildcrest).
After completion, Wildcrest advised the appellant that she should not have paid the commission to the respondents in addition to the agreed purchase price, but should have withheld 10% of the agreed purchase price on completion and paid it to Wildcrest. The appellant believed she had paid 10% more than she ought to have done and applied to the First-tier Tribunal (FTT) for an order for repayment. The FTT found that the agreement had been that the appellant would be responsible for the commission and would pay it in addition to the agreed price.
The appellant appealed. She accepted that she was informed by letter on 6 April 2016 that her offer of £145,000 plus 10% commission had been communicated to the respondents. Issues arose for determination: (i) whether the FTT was correct to find that the parties had reached a legally binding agreement on 6 April; if not (ii) whether the true agreement was as recorded in the buyer’s information form, assignment form and notice of assignment, each of which stated that the commission was to be paid out of the purchase price of £145,000; and (iii) whether the commission which a park owner was entitled to receive was always 10% of the total sum payable or whether a lower commission was permissible, and who was entitled to decide what that commission should be.
Held: The appeal was dismissed.
(1) The FTT had been entitled to find on the evidence the parties had reached a consensus that the commission of 10% would be payable by the appellant to Wildcrest in addition to the purchase price of £145,000. The FTT was also correct to distinguish between a contract for the sale of an interest in land (which by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, might only be made in writing, in a document signed by both parties and containing all the terms agreed) and a contract for the sale of a mobile home. A mobile home was a chattel, and an agreement to station it on a protected site was usually a contractual licence, which created no interest in land. There was, therefore, no reason why an agreement to sell a mobile home and assign a site agreement should not be made orally (although the assignment itself was required by regulation 9(1) of the Mobile Homes (Selling and Gifting) (England) Regulations 2013 to be made in writing).
(2) However, the FTT was wrong to find that the parties had reached a legally binding agreement on 6 April. Where a party made an offer “subject to contract” it indicated that it had no intention to enter into legal relations unless and until a formal contract was drawn up and executed. Thus, the addition of the words “subject to contract” imposed a condition or reservation which prevented either party becoming bound by the terms which had been agreed until the condition was satisfied. They had reached only a non-binding consensus, from which they were each entitled to withdraw until formal contracts were executed. The practice of conducting negotiations “subject to contract” was almost universal in relation to contracts for the sale and purchase of interests in land. But the words had the same effect in the context of other types of contract Yeoman’s Row Management Ltd v Cobbe [2006] 3 EGLR 107 and RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh & Company KG (UK Production) [2010] UKSC 14 considered.
(3) Evidence of the parties’ negotiations and subjective intentions was inadmissible as an aid to understanding the meaning of their agreement. What mattered was the meaning which an informed observer would attribute to the documents in which the parties recorded their agreement. It was clear from the assignment form, and from the way in which the parties and their licensed conveyancers dealt with the funds on 9 September, that it was their intention that the appellant was to pay the respondents £145,000 for the mobile home, it was the appellant as assignee who was to pay the commission to the site owner and the commission itself was to be £14,500. The mistake in the transaction was the statement in the printed form that the commission was to be paid “from the purchase price”. That was not the parties’ intention, determined objectively from the completed document, nor was it what happened in practice. For the form of assignment to make sense it was necessary to disregard those words.
(4) The Mobile Homes (Commissions) Order 1983 provided that the maximum sum that a buyer might be required to pay to a site owner was 10% of the agreed purchase price (15% before 1983). In the case of an agreement which (as here) was not a new agreement, and was therefore subject to implied term 7B(8) in Schedule 1 to the 1983 Act, the commission was to be paid by the buyer to the site owner, but there was nothing in the implied term (nor in 7A(5) applying to new agreements) to prevent the site owner and the occupier from agreeing that the commission would be less than 10%. The implied term 8(2) and the 1983 Order had to be understood as requiring payment of a commission at the rate stipulated as the maximum permissible in the Order unless a lower rate was agreed.
It was for the site owner and seller of the mobile home to agree the rate at which the commission was to be paid, although the statutory scheme provided for the payment to be made by the buyer. In practice, it was likely that parties would think of, and express, the commission as a sum payable in addition to the purchase price.
David Sunderland (of Wildcrest Parks Management Ltd) appeared for the appellant; Ian Beeby (instructed by Mansfield Solicitors) appeared for the respondents
