Action by estate agents for commission — Whether in the events which happened the estate agents were the effective cause of the sale — Sole agency granted to agents for a period of two months — Persons introduced by agents made an offer to purchase which was rejected by the vendors as too low — Vendors purported to withdraw property from agents and instructed another firm — New agents put advertisement in a paper which revived the interest of the persons introduced by original agents — These persons made a successful offer direct to the vendors and eventually completed the purchase — The new agents made a claim for a reduced commission which was at first disputed but subsequently settled — The original agents, the plaintiffs, having found out about the sale, then claimed commission — Held that the effective cause of the sale was the original introduction by the plaintiffs — The chain of causation was not broken by the vendors’ rejection of the original offer and the instruction of new agents — Plaintiffs entitled to commission at the originally agreed rate of 3 per cent
This was a
claim for commission by Glentree Estates Ltd against Mr and Mrs Gee in respect
of the sale of a house at 8 Aylwards Rise, Stanmore, which was said by the
plaintiffs to have resulted from their introduction.
Paul H Collins
(instructed by Leonard Ross & Craig) appeared on behalf of the plaintiffs;
Martin Bowley (instructed by Michael Shapiro & Co) represented the
defendants.
Giving
judgment, EWBANK J said: This is an action by an estate agent for commission on
the sale of a house. The estate agent is Glentree Estates Ltd of 698 Finchley
Road, Golders Green, London NW11. Mr Abrahmsohn is the managing director of the
estate agent. The house was put on the market and eventually sold in the autumn
of 1978. Mr Abrahmsohn has told me that his estate agency reckons to sell about
15 per cent of the general run of houses which are on their books and about 30
per cent of the houses if they have a sole agency.
The position
in the autumn of 1978 was fairly booming for the sale of houses and October
1978 was an active month — one of the best months that Mr Abrahmsohn has had.
He reckons that the prospect of selling any house at that time was fairly high.
He told me that the general level of commission in the north west of London at
that time was 2 1/2 per cent to 3 per cent.
At that time,
the autumn of 1978, Mr and Mrs Gee, who lived at 8 Aylwards Rise, Stanmore,
found another house which they wanted to buy. This was 11 Bramalea Close,
Highgate, N6, which is their present home. They bought that house through the
Glentree Estates estate agency at the end of August 1978. As often happens,
they asked Glentree Estates to sell 8 Aylwards Rise for them.
This case
concerns the selling of 8 Aylwards Rise, Stanmore, and, in particular, the
question whether a commission is due to Glentree Estates in relation to that
sale. The initial request to Glentrees came on a telephone message. I have been
told of a diary entry in the appointments diary of Glentree Estates. The date
of the entry is September 5 1978 and the entry reads: ‘4 pm. £85,000’ then the
address and the people. The matter was then dealt with by Mr Glinsman, who at
that time was employed by Glentrees as a negotiator. He had been with them
since 1977. He took the appointment at the house and went there. Glentrees have
a standard form for their negotiators to fill in. Mr Glinsman told me that he
filled in part of the form before he went. The form starts off with the
negotiator’s initials, and then there is the date. He wrote ‘September 6 1978’
on the form. This appears to be a mistake because the appointment was September
5. I do not think that anything turns on that. I regard that as just a mistake
in the date. Then it gives the address of the house, 8 Aylwards Rise, Stanmore,
and then originally it had ‘Mrs Gee’.
That part was
filled in by Mr Glinsman and he went to the house. He looked round it and,
according to him, he was instructed by Mrs Gee to ask for £86,950 for the
house. He told her that he would put the value between £76,000 and £81,000. He
suggested that it should be put on the market at £82,500. But Mrs Gee told him
to put it at £86,950.
Mrs Gee said
that it was Mr Glinsman who suggested £87,000 as being the price to ask and he
suggested that because she asked him for his advice on the matter. The original
price which Mr Glinsman had written on the form is £85,000. That has been
crossed out and £86,950 has been substituted. He says that he wrote the £85,000
on the form before he went because that was the figure that he had seen in the
diary entry. He increased it because Mrs Gee told him to do so.
Mr Glinsman
says that there was a discussion about the commission. He said he always
discussed the commission and he told Mrs Gee, who accepted it, that the
commission would be 3 per cent. He persuaded her that she should give Glentree
Estates a sole agency. Mrs Gee says that there was no discussion about the sole
agency; no discussion about the commission. Mr Glinsman says that he tried to
persuade Mrs Gee to give them a sole agency for six months but that he
persuaded her to give him a sole agency for six weeks.
Mrs Gee says
no such thing was spoken about. In the form which Mr Glinsman says he filled up
at the time, he wrote in ‘3 per cent’ for the commission. He wrote in ‘Yes’ for
sole agency and it had ‘eight weeks’ written against it. He says that he filled
those in because those were the figures that were discussed. He said that his
policy was always to go for the standard rate of 3 per cent and for a sole
agency. He says that he told Mrs Gee — and she agreed — that the commission
would become payable on completion if Glentrees sold the property. Mrs Gee says
that there was no discussion about the commission at all.
On the
following day Mr Glinsman wrote a letter to Mr Gee. dated September 6 1978,
referring to the instructions to Glentree, quoting the price and saying that he
confirmed the oral agreement ‘that upon our directly or indirectly introducing
a person or persons who completes on the purchase you will pay our usual
commission at the rate of 3 per cent plus VAT on the actual sale price’. It
goes on to say ‘I confirm that you have instructed us as sole and exclusive
agents for a period of two months.’
That letter
was received by Mr and Mrs Gee. It is a letter which is in standard form
prepared in a standard way by a typist from the form which Mr Glinsman had
filled in and to which I have already
agreement, does not represent the actual agreement which, in his words, was
that the commission was payable on completion if they sold the property.
Nothing very much turns on this in view of the actual issues which are involved
in the case.
It is common
ground in this case that the commission is payable if Glentrees were the
effective cause of the subsequent sale. So I do not need to consider any
further the exact terms of the agreement. Mr and Mrs Gee received the letter.
They did not answer it. They neither replied to it nor telephoned. They say
that for one reason or another they just glanced at it. I find that very
unlikely. I think that when they saw the letter it represented, as near as may
be, the terms on which they understood the agency was to be granted and that
they did not disagree with the terms. I find that the agreement which Mr
Glinsman told me about in relation to the commission, the sole agency and the
time of the agency, was the agreement which was reached. This letter, to all
intents and purposes, sets out the actual agreement.
The house was
some distance from Glentrees and they employed a sub-agent, Miss Wood, to hold
the keys and to take people round. Miss Wood gave evidence. Nothing I think
turns on her evidence except that she did comment that she thought that the
asking price was a little high. She took a number of visitors to the house. In
all some 15 or 16 people went to the house between September 12 and October 3,
all but two of them after September 25.
Glentrees put
in an advertisement in the Jewish Chronicle advertising the house. That
was dated September 29. On the day of that advertisement, and possibly because
of it, one of the Fishers — that is either Mr Fisher or Mrs Fisher — rang
Glentrees to ask about the house. At Glentrees there was also a negotiator
called Miss Harris. She had only been with them for a couple of months. She was
only 18. Though she was not very experienced, she seemed a very decisive
witness when I saw her in the witness box. She says that it was Mrs Fisher who
phoned. The Fishers both say that it was Mr Fisher who phoned. Nothing turns on
this discrepancy but it is worthwhile noting that in the diary of Glentrees the
appointment made for the Fishers gives the two telephone numbers of the
Fishers, although one of them is written down wrongly, and in relation to the
second entry it refers in terms to Mrs Fisher. On the whole, I think that Miss
Harris is probably right in thinking that it was Mrs Fisher rather than Mr
Fisher. This does not go to any issue but it may indicate that the Fishers’
evidence is not entirely reliable.
The Fishers
went along to the house with their daughter. They looked round it. Then Mr
Fisher suggested that a friend of theirs, Mrs Shoger, who lived fairly near,
might be shown round as well so that they could discuss it. He went off and got
her and they went round again. They obviously liked the house. That weekend Mr
Fisher probably drove past the house to show his father-in-law.
At the
beginning of the following week Mr Fisher telephoned Glentrees. He spoke to a
young lady, who was Miss Harris. He offered £75,000. He says that Miss Harris
implied that the offer was too low, but he said that his offer stood and he
left his phone number. He says that Glentrees did not call him back and, not
hearing anything, he gave no more thought to buying the house. Later, he
phoned, he says, to find out what was going on and was told that the offer was
not acceptable.
Mrs Gee says
that the offer made by Mr Fisher was not transmitted to her. She only learned
about it when she phoned to find out if anything was happening. Both Mr Gee and
Mrs Gee went out to work and if the potential buyers wanted to see the house in
the daytime, Miss Wood used to take them in because she had the key. She used
to do it without reference to Mr and Mrs Gee. Therefore Mrs Gee did not always
know whether anyone had been. She phoned Miss Harris and Miss Harris, according
to her, said ‘I do believe an offer has been made. I am bound to tell you by
law. We have had an offer of £75,000 for the property’ and Miss Harris said
that she had on her own bat said that it was far too low. Miss Harris asked if
Mrs Gee agreed and Mrs Gee said she did. She was not told the name of the people,
who were the Fishers.
The expression
‘I am bound to tell you by law’ sounds a very unlikely expression for anyone to
use. Miss Harris says that Mrs Gee is quite wrong in this description of what
happened. Mr Fisher phoned her on the Monday or Tuesday in the morning and
offered £75,000. She says that she thinks she said that it was a little on the
low side but she would put it forward. She then telephoned Mrs Gee, asked if
she was prepared to consider it and Mrs Gee said that she was thinking much more
in the region of £80,000 and Mrs Gee told her to turn it down. Miss Harris then
phoned Mr Fisher and told him and Mr Fisher said he was not prepared to raise
the offer. She also thought — although she could not be sure — that she told
the Gees the Fishers’ name and told Mr Fisher the Gees’ name. She said that she
could not recall any occasion when she had not given the names.
I thought that
Mr Fisher, in general, was an unreliable witness. I think on this issue Mrs Gee
is wrong. I prefer the evidence of Miss Harris and, in so far as it is
relevant, I think that Miss Harris telephoned Mrs Gee to tell her of the offer,
and Mrs Gee said that it was to be turned down.
At this stage
another firm of estate agents come on the scene. They are called Hampstead
& Highgate Estates. Mrs Gee had been in touch with Hampstead & Highgate
Estates about buying a house. If I have understood it correctly, they had
already agreed to buy the house which they subsequently bought: 11 Bramalea
Close, Highgate. That did not stop them looking round for other houses and
Hampstead & Highgate rang them and said that there was a town house in
Highgate. Mr Bennett of that firm took her to see it. It was not the sort of
house that she wanted, but she said to Mr Bennett during the course of that day
that they were hoping to sell their own and that she was unhappy with the agent
that they had. Mr Bennett asked if she would like him to handle it. She said
no; she would give Glentrees another week.
After another
week, the Gees decided to dispense with the services of Glentrees. They wrote a
letter to Glentrees dated October 7 saying that they were going to withdraw the
house from Glentrees. The reason for their dissatisfaction was that they
thought that no one was visiting the house and that no advertisement had been
put in. They expressed this dissatisfaction in the letter saying ‘We have
decided to withdraw the house from your company as we have had little interest
shown. You had promised an advert in the Jewish Chronicle and the Hampstead
and Highgate Express but during the past two weeks we have had hardly
anyone to see the property.’
These
complaints seem to be totally groundless. First of all it is clear from what I
have already said that there had been an advertisement in the Jewish
Chronicle, and it is clear that there had been in the past two weeks a
considerable number of people to see the house. I have been given a list of the
names of the people and the dates that they came. When the letter arrived at
Glentrees on October 9, someone wrote a note to Mr Glinsman to sort it out. Mr
Glinsman says that he telephoned the Gees and told them that in fact there had
been a lot of interest. He says he took the view that there was no point in
arguing with someone who withdraws instructions and so he did no more. Mrs Gee
says that Mr Glinsman made no such phone call. I think he did.
I think the
withdrawal of instructions from Glentrees by the Gees was a clear breach of
contract with no justification whatsoever. It has been said that Glentrees were
in breach of various duties that they owed to the Gees in relation in
particular to advising as to price and sale, as to communicating regularly to
let the Gees know how things were going on and as to negotiating — in
particular with Mr Fisher with a view to getting him to raise the price. I am
not at all sure that any such duties are owed by estate agents. If they were
owed, in my judgment Glentrees were not in breach of them.
Meanwhile, Mr
Fisher, having failed to get this house at his price, started looking around
again and he found a house in Gordon Avenue and he offered £74,000 for it. That
was accepted. Having terminated Glentrees’ agency, the Gees then instructed
Hampstead & Highgate Estates to sell the house and there is a letter from
Hampstead & Highgate Estates of October 10 1978 dealing with these
instructions. The price now agreed was £79,950. This was on the advice of Mr
Bennett and is a reduction of £7,000.
They say that
the commission is to be 3 per cent, which is the same as the commission which
Glentrees said the Gees agreed with them. Hampstead & Highgate Estates were
not appointed sole
Glentrees, even if they were dissatisfied, if they were having some other agent
being brought in in addition. Hampstead & Highgate Estates put an
advertisement in The Sunday Times on October 22 advertising the house
for sale. Mr Fisher saw that advertisement and saw that it was advertised
£7,000 cheaper than when he made the offer. He phoned Hampstead & Highgate
Estates that Sunday morning and asked what number the house was in Aylwards
Rise. He was told that it was number 8. So then he knew it was the same house.
That day he went, I think with his wife, to Mrs Shoger’s house at Stanmore.
This was entirely coincidental so far as I understand. He said to her that this
house had come down in price. Mrs Shoger then said to him that by chance the
babysitter they had also babysat at 8 Aylwards Rise and so she knew the name of
the owners, which was Gee, although she did not know the people. He thought he
had known someone called Gee 18 or 20 years previously and it might be the same
people. So he went to the house. Mr Fisher says that Mr Gee answered the door,
recognised him and that he, Mr Fisher, told him that he had been to the house
previously and that he was in a position to exchange contracts quickly.
Mrs Gee told
me that when Mr Fisher called she vaguely recognised his face. Mr Gee was out
playing golf. She herself was getting the lunch. He asked if Mr Gee lived
there, he stayed and waited and Mr Gee arrived back about 20 minutes later. Mr
Gee and Mr Fisher then had a talk and, according to Mr Gee, Mr Fisher said he
was still interested in the house. He told him that he had seen the property
previously through Glentrees and had made an offer. Mr Gee said in the witness
box ‘So I said’ — this is in reply — ”that is strange! We know nothing about it — nothing about the
offer.’ I had no knowledge of any offer
having been made.’
I do not know how
he came to say that because it is clear from his wife’s evidence that although
there was a complaint about the way the offer was transmitted to them, they
knew about the offer which had been made. Anyway, that was his evidence. Mr Gee
told Mr Fisher that he would not accept anything under £79,500. They had a long
chat and eventually Mr Fisher made an offer and also said: ‘Why do we need to
bring in any estate agent?’ Mr Gee, very
properly he says, said that he did not want to be involved with anything of
that sort.
The original
offer of Mr Fisher’s, as Mr Gee understood it, was £75,000 for the house with
all its fixtures and fittings. The final offer which was agreed and accepted on
that morning was £75,000 for the house and a further £4,500 for the fixtures
and fittings. Mr Gee told me that he had managed during the course of that
morning to push up Mr Fisher by £4,500.
A figure which
appears in the contract of sale is £75,000: £4,500 does not appear in any
document that I have been shown and was paid in cash, according to Mr Gee, by
Mr Fisher. Mr Gee telephoned Mr Bennett, I suppose the following day, and told
him that they thought that they had a buyer and suggested that as Hampstead
& Highgate had not done any work to speak of they should reduce their
commission. Mr Bennett agreed and Mr Bennett wrote a letter on October 27 1978
setting out the agreement.
The letter
said: ‘We are pleased to confirm our applicant’ — as they describe him — ‘Mr
Fisher has offered to purchase the house for £75,000.’ They confirmed that the commission would be 1
1/2 per cent, which was half the originally agreed commission. On November 29
1978 the contract to sell was exchanged, and on December 6 1978 the completion
of sale took place. Hampstead & Highgate Estates thereupon expected to be
paid the commission at 1 1/2 per cent, but the Gees resisted that in fact. This
aspect is not directly relevant to the case that I am trying, but they resisted
the claim.
A writ was
issued by Hampstead & Highgate Estates and the Gees asserted that there had
been no consideration for the agreement to pay the 1 1/2 per cent. The actual
claim made by Hampstead & Highgate was £1,125. I was told that it was
settled for £950. When Glentrees found out about the sale to Mr Fisher, whom
they regarded as the person that they had introduced, they also asked for
commission. But the Gees resisted that claim, too. So Glentrees issued the writ
in this case, claiming the commission and, by amendment, claiming in the
alternative breach of contract and damages for that.
The defence
has been amended four times and the plaintiffs point to the shifting grounds
and also make the point that significant amendments have been made after the
Hampstead & Highgate settlement. There is underlying this case a suspicion
which has been made manifest in this court that the Gees are cheating
Glentrees. The circumstances concerning the actual sale to Mr Fisher are said
by the plaintiffs to be of a very strange and suspicious nature, as indeed they
are.
However, I do
not think that the evidence goes anything like far enough to say that this is a
deliberate and dishonest effort by the Gees, with or without the Fishers, to
resist a rightful claim.
The first
question that I have to ask is: Were Glentrees the effective cause of the sale
which eventually took place to Mr Fisher?
They introduced him. It was their advertisement that first attracted Mr
Fisher and it was the introduction by them to Mr Fisher to the house which
brought the first offer of £75,000. The defendants say that the chain of
causation was broken after the offer had been rejected. It is said that the
introduction of the new agent, the advertisement in The Sunday Times on
October 22, with the lower price, was the effective cause and that it was the
Gees and the Fishers finding themselves old friends which helped them to reach
the agreement that they did and that agreement was reached without any help
from Glentrees.
It is clear
that The Sunday Times advertisement of October 22 with the lower price
revived the interest that Mr Fisher had. I have been referred to two cases in
particular. The first case is a decision of Lynskey J in Jack Windle Ltd v
Brierley [1952] 1 All ER 398. I find this case a very puzzling case.
It was a case
where an estate agent introduced a buyer but the buyer could not raise the loan
that he needed. The owners of the property then discharged the estate agents
and a few days later the owners got in touch with the buyer and offered to
reduce the price and to allow a certain amount of it to remain unpaid on a
mortgage. Lynskey J said that an agent was only entitled to commission if he
introduced a ready, willing and able purchaser. Because at the time of the
original agreement the purchaser was not able to make the purchase he took the
view that the agent was accordingly not entitled to the commission. I find it
very difficult to think that that is a correct expression of the law. I would
not have thought that it was necessary that the purchaser should be immediately
ready, immediately willing and immediately able. I would have thought that a
purchaser who had to search around for a loan, and who took time to search
around, would still be ready, willing and able, even if some period of time had
elapsed.
Lynskey J,
however, specifically considered whether the introduction had been the
effective cause of the subsequent sale, and with that view of the law I
entirely agree. My doubts as to the first part of his judgment are reinforced
by a study of a Court of Appeal case of Bartlett v Cole [1963]
188 EG 397. I doubt if the first part of Lynskey J’s judgment can stand in the
face of the decision of the Court of Appeal in Bartlett v Cole.
It is clear from Bartlett v Cole that the question I have to ask
is the question which I have already posed: was the plaintiff the effective
cause of the sale?
I do not think
that it would be right to underrate the importance of The Sunday Times advertisement
of October 22 as the immediate cause of Mr Fisher’s visit to the house and the
immediate cause of the actual offer that he made on October 22. However, the
time-scale in this case is of considerable importance and the conclusion that I
have come to is that the chain of causation has not in fact been broken in this
case.
One cause of
Mr Fisher’s offer undoubtedly was the advertisement of October 22. But the main
effective cause of the agreement and subsequent sale was the original
introduction by Glentrees, and I have come to the conclusion that the event
occurred for which commission had agreed to be payable and that therefore the
plaintiffs are entitled to the commission which is claimed. I am not at all
clear what the real sale price of this house was — whether it was £75,000,
which the documents suggest, or £79,500, which Mr Gee says he pushed Mr Fisher
up to and of which he received £4,500 in cash. I think that the plaintiffs,
like the solicitors, would have
probably ought to be based on that figure rather than the higher figure. The
commission of 3 per cent on £75,000 is £2,250. VAT I suppose at the appropriate
rate has to be added at £180.
If I had come
to the opposite conclusion and found that the introduction by Glentrees had not
been the effective cause, I would then have to consider the question of damages
for the breach of contract which I have already found. My view is this. Once
the Gees had agreed to reduce the price of the house, there was a very good
chance of selling it. Not only was there a chance of selling it to Mr Fisher,
as indeed happened, but there was also a good chance of selling it to other
purchasers. It is not easy to assess that chance. But, if I had to, I would
assess it at two-thirds, a 66 per cent chance, and I would accordingly have
given damages for breach of contract at two-thirds of the figure which I have
awarded the plaintiffs by way of commission.
Judgment was
given for the plaintiffs with costs.
By agreement
the amount awarded, £2,430, has been increased by interest at the statutory
rate, amounting to £618.75.
