Estate agents’ entitlement to commission — Appeal by vendor from county court judge’s decision in favour of agents, plaintiffs in the action and respondents to the present appeal — Appellant instructed three firms of agents, one of them being the respondents — Agreement with respondents was that they were to be entitled to commission on introducing a person ready, able and willing to purchase the appellant’s house at the asking price or such other price as might be agreed by the appellant — Respondents introduced a potential purchaser to the appellant, but the price could not be agreed and the negotiations then ceased — Subsequently one of the other firms of agents instructed by the appellant negotiated with the same potential purchaser with the result that a price was agreed and the sale was in due course completed — Respondents claimed that they had effected the introduction which eventually proved successful and sued for their commission — County court judge found in their favour — Appellant submitted that the judge was wrong and that there was not a sufficient causal connection between the original introduction by respondents and the ultimate readiness, willingness and ability of the purchaser required to satisfy the ‘introduction contract’ — Held, reversing decision of county court judge, that the respondents’ introduction had not remained operative; that there had been a break in the causal connection; and that the effective introduction had been made by the other firm of agents — Bartlett v Cole distinguished on the ground that the efforts of the second firm of agents in that case had been nugatory — Caution that decisions in these commission cases depend very much on the individual facts — Vendor’s appeal allowed
This was an
appeal by David J Bromwich, vendor of a house at 22 Cadbury Road, Keynsham,
from a decision of Deputy Circuit Judge Clayton at Bristol County Court in an
action by a firm of estate agents, Hartnell, Taylor, Cook, who sued Mr Bromwich
for commission alleged to be due to them on the sale of his house. The judge
found the defendant liable to the plaintiffs for £1,035 commission with
interest and costs.
Paul M Darlow
(instructed by Middleton & Upsall, of Frome, Somerset) appeared on behalf
of the appellant; Ian Glen (instructed by Fulwell & Partners, of Bristol)
represented the respondents.
Giving the
first judgment at the invitation of Watkins LJ, MAY LJ said: This is a
defendant’s appeal from the judgment of Mr Clayton sitting as a deputy circuit
judge in the Bristol County Court on May 22 1981. He held that the defendant
was liable to the plaintiffs for £1,035 with interest and costs as commission
due to the plaintiffs as estate agents.
The facts of
this case need to be stated in a little detail because, in my judgment, although
we have been referred to a substantial number of authorities relating to the
entitlement of estate agents to commission from potential vendors in various
circumstances, the underlying principles are clear. The decisions in so many of
these cases depend upon the particular facts.
The property
with which this case is concerned was the appellant’s house at 22 Cadbury Road,
Keynsham. The appellant had been a building society manager, but he was minded
to give up that position and buy a business for himself in High Wycombe. In
order to obtain adequate finance for this he proposed to sell his house in
Keynsham, but he needed to do so at such a price that after payment of estate
agents’ commission and VAT he was left with £45,000 clear. To that end, in the
latter part of October 1979, he put his house in the hands of estate agents in
Keynsham by the name of Davies & Way. A few hundred yards away from that
firm the respondents carried on business and he visited them and put the house
in their hands on November 6 1979. At a later date he put the house on the
books of yet another firm of estate agents in the area by the name of Halletts.
On November 6
there was a discussion between the appellant and representatives of the
respondents at their office about which there was dispute on the evidence in
the court below. The learned judge’s finding, which has not been challenged,
was that in that meeting the respondents agreed to reduce their normal rate of
commission from 2 1/2% on the first £25,000 to 2% throughout because of the
fact that the defendant had been a building society manager and that, contrary
to the appellant’s contention, it was not made a condition precedent to the
respondents’ entitlement to any commission that the appellant should realise a
net £45,000 as the result of the sale of his house.
Following that
meeting of November 6, two representatives from the respondents visited 22
Cadbury Road the following day in order to see the premises, measure up as
might be necessary, and obtain such information as they required to prepare
appropriate particulars of sale. I should say that, as the result of the
earlier visit by the appellant to Davies & Way at the end of October, they
had themselves previously prepared particulars of sale and no doubt the respondents
had these to hand in order to assist them. The asking price stated in each
firm’s particulars of sale was £46,500.
On November 7
the respondents wrote a letter to the appellant which it is now accepted
contained the terms of the contract between the parties in this case. The
relevant paragraph read as follows:
We take this
opportunity of confirming that, in the event of our introducing, directly or
indirectly, a person ready, able and willing to purchase the property for the
asking price or for such other price as may be agreed by you, we shall be
pleased to reduce our commission to 2%. In addition, VAT will be chargeable on
the total commission at the standard rate effective at the time.
When the two
representatives of the respondents returned to their office from the
appellant’s house on November 7 they found that a potential purchaser was
already in the office. He was a Mr Bloom. He was also a building society
manager seeking accommodation in the area. He was there and then told about 22
Cadbury Road by the respondents. He visited the appellant at his house on
November 7 and went back again with his wife and family in fact on Sunday
November 22, although there is a reference in the papers to this having
occurred on Monday 12. He made an offer to the appellant of £45,000 for the
property. This was refused because had the appellant accepted it he would have
been left with less than the net figure of £45,000 which he was seeking.
Nevertheless, the two parties, Mr Bloom and the appellant, agreed to continue
to negotiate through the respondents. A senior partner, Mr Cook, then took over
the negotiations. Through him Mr Bloom repeated his offer of £45,000, which was
again formally refused. The appellant then asked Mr Cook to reduce the
commission to which he would be entitled if negotiations succeeded. Mr Cook was
prepared to take £500 by way of commission instead of the full amount. The
appellant was prepared to pay that sum to include VAT if Mr Bloom in his turn
was prepared to offer £45,500. He was not prepared to do so. Indeed it appears
from the evidence which he gave that at that time £45,000 was the top figure to
which he was prepared to go in this transaction. If it had been material to
make any finding on the point, the learned judge also indicated that he would
have found that in the course of these negotiations between Mr Cook, Mr Bloom
and the appellant, Mr Bloom was not prepared at that stage to offer even
£45,250.
Consequently,
as between the appellant and the respondents further negotiations ceased. The
sale of the appellant’s house to Mr Bloom, however, did not, because it was
then that a Mr Ashbee, one of the partners in the first firm of estate agents
to whom the appellant had gone, Davies & Way, appeared on the scene. He had
had on his books another house in which Mr Bloom had been more interested than
in the appellant’s house at 22 Cadbury Road. That was at the time under offer.
There was a doubt about it, however, in this sense, namely whether the offeror
would be able to find the necessary finance. In the event he proved able to do
so and accordingly Mr Bloom was unable to go ahead with the purchase of a house
which indeed he would have preferred. But then Mr Ashbee of Davies & Way
mentioned to Mr Bloom that he also had 22 Cadbury Road on his books, to which
Mr Bloom replied that he had already made an offer for that house through the
respondents which he thought was unlikely to succeed. Undeterred, Mr Ashbee got
in touch with the
negotiate with Mr Bloom. The appellant saw no reason why he should not do so
and as the result of further negotiations between Mr Ashbee, Mr Bloom and the
appellant, Mr Ashbee persuaded Mr Bloom to offer a clear £45,000 to the
appellant and to pay £250 by way of commission to Davies & Way. This was
all agreed. The matter then proceeded, the sale was put in hand and was duly
completed. When they learnt that the transaction had been completed on this
basis, the respondents made a claim for commission against the appellant,
contending that they had introduced Mr Bloom to him, that Mr Bloom had become a
person ready, able and willing to purchase the property not at the asking price
but at another price which was agreed to by him and that, in those circumstances,
the requirements of the contract contained in the letter of November 7 1979 had
been complied with and that accordingly they were entitled to their commission.
That claim was
disputed by the appellant. It was also disputed in so far as it was relevant
for him to dispute it, by Mr Bloom in a letter which he wrote to the
respondents and which we have seen, contending that the effective cause of the
further progress of the transaction between the appellant and Mr Bloom was due
not to any introduction on the part of the respondent, but was due to the
introduction and efforts of Mr Ashbee in the way that I have indicated. County
court proceedings then followed and it was in those proceedings on those facts
that the learned deputy circuit judge found for the respondents estate agents,
and gave judgment for the sum to which I have referred.
It will be
noted that the relevant part of the letter of November 7 1979 provided that
commission should be payable by the putative vendor upon the introduction of a
person ready, able and willing to purchase the property at one price or
another, as I have-already mentioned. This, as counsel for the respondents has
pointed out, and as is borne out by the authorities, is to be distinguished
from the type of estate agents’ contract where commission is payable on the
finding by the estate agents of ‘a purchaser’ — in which, in effect, the court
has said that ‘a purchaser’ means a person who purchases. The contract in the
instant case was not, counsel contends, an agreement to pay commission on a
sale, it was an agreement to pay commission on an introduction.
At the outset
of the appeal, Mr Darlow on behalf of the appellant sought leave to argue that
in fact the contract which had been entered into between his client and the
respondents, either on a proper construction of the letter of November 7, or
upon a proper construction of that letter taken in the context of the meeting
between the representatives of the respondents and his client on November 6, or
on that interview alone, was a contract to pay commission on a sale and not
merely one to pay commission on an introduction. This, as he very properly
accepted, was not a point which he had taken or argued below, nor one upon
which the learned judge had made any determination, and indeed, as we
understand it, at the start of his final speech on behalf of the appellant, he
conceded that the letter of November 7 did constitute the terms of the contract
between the parties and was indeed a contract to pay commission upon an introduction
and not one to pay commission upon a sale. In those circumstances and following
the well-known line of authority which has been recently referred to in the
case of Balchin v Buckle which is only reported, as far as we
know at this stage, in The Times newspaper for June 1 1982, this court refused
Mr Darlow leave to argue that point. The right of appeal from the county court
is a statutory right given by section 108 of the County Courts Act 1959 and
where the point is neither argued nor determined below, it cannot be taken on
appeal.
Mr Darlow’s
second submission was prefaced by his accepting that if one asked the first
question — ‘Was Mr Bloom introduced to the appellant by the plaintiffs?’, the
answer must be yes; and, secondly, if one poses the further question — ‘Was he
a ready, willing and able purchaser at some later stage?’ the answer again must be yes. Contrary,
however, to the submission made to us later by counsel on behalf of the
respondents, Mr Darlow went on to submit that the proof of the pudding in this
particular case was not necessarily in the eating, that the fact that the
answers to those two questions are each in the affirmative is not of itself
sufficient to determine the issue in this case. There was, as he submitted, no
sufficient causal connection between the introduction and the ultimate
acquisition by Mr Bloom of the qualities of readiness, willingness and ability
to purchase the appellant’s house at the figure at which he was prepared to
sell it because, on the facts, negotiations in which the plaintiffs were
involved had come to an end in the way I have indicated, on the rejection of Mr
Cook’s further attempt to keep the negotiations alive. The effective
introduction or cause bringing together Mr Bloom and the appellant, each in the
same state of mind, were the introduction and acts of Mr Ashbee of Davies &
Way and not those of the plaintiffs. It may be that the plaintiffs were the
first to introduce Mr Bloom to the appellant, but the effect of that first
introduction had, by the time that Mr Ashbee came on to the scene, lost any
potency that it had had.
He referred us
in this connection to the case of Bartlett v Cole [1963] EGD 452.
I set out the facts of that case briefly, merely to introduce a quotation from
the judgment of Harman LJ. In that case the defendant put his business into the
hands of the plaintiff estate agents for them to find a person willing to enter
into an agreement to purchase, whether oral or in writing, of the leasehold
property and agreed to pay commission at the rate of 7 1/2% in that event. That
estate agent introduced two brothers who were interested in buying the property
but could not find the necessary finance. The estate agent did what he could to
arrange finance, but failed. The two brothers then went to a second firm of
estate agents by the name of Trinder, who in their turn sought to assist in
finding an appropriate source of finance for the purchase. They, too, failed,
but suggested that the brothers should go to a particular solicitor who they
thought might be able to arrange the necessary finance. The brothers were lucky
on their third attempt, finance was forthcoming and the business was ultimately
sold. The first estate agent who made the first introduction then claimed
commission on the basis that he had introduced a person willing to enter into
the relevant agreement. He succeeded before the learned county court judge and
the matter then went to the Court of Appeal.
In his
judgment Lord Pearce referred to the relevant contract, set out the facts and
then referred to various cases to which it is unnecessary to refer in detail in
the present case and, in the result, came to the conclusion that the learned
county court judge, who saw and heard the witnesses, had been entitled to come
to the conclusion to which he did, and he dismissed the appeal. Harman LJ
agreed in the result, but in the course of his judgment said this:
It is not
till then that Smith [the solicitor] enters the scene and says ‘I will get the
loan,’ which he does, and thereupon the Webbs become willing purchasers. If the
efforts of Trinders had been effective efforts, I would have held that they
were the persons who satisfied the qualifications; but, on a somewhat nice
analysis of the facts, it does not seem to me that Trinders did anything
material. The money came through the help given by Mr Smith and the National
Provincial Bank and had nothing whatever to do with Trinders. They did not send
their client to Smith to find money, but to attend to the conveyancing. The
want of money being the sole obstacle in the way of the Webbs acting on the
introduction they had received from the plaintiff, it was removed, but not through
Trinders’ agency. Therefore, in my judgment, this being a question of fact, the
answer is that the effective introduction was that effected by Bartletts before
Trinders came on the scene, and that entitles Bartlett to his commission.
I quote that
passage from the learned lord justice’s judgment to underline what I think is
the basic problem in these and similar cases, namely an accurate assessment and
examination of the particular facts of a given case. In that case, had the
efforts of the second estate agents been otherwise than entirely nugatory, it
seems quite clear that the learned lord justice would have taken the view that
their efforts had been sufficient to break the necessary causal connection, to
which both he and Lord Pearce had referred, between the efforts of the first
estate agents and the ultimate success of the intended transaction.
Mr Glen, on
behalf of the respondents, submits as I have already mentioned, that the
contract between the estate agents and potential vendor in this case was a contract
to pay commission on an introduction and not a contract to pay commission upon
a sale and that, therefore, the question of effective cause or causal
connection is not relevant in the circumstances of this case. He was, however,
prepared to accept the way in which the deputy circuit judge in the present
case approached the matter which, in my opinion, was clearly one which looked
at the causative connection between the original introduction and the ultimate
success of the transaction. In the course of his judgment the learned deputy
circuit judge posed the question: ‘For commission to be payable on the wording
of this agency contract, does there have to be any connection between the
introduction of the prospective purchaser and the acquisition by him of the
qualities of readiness, ability and willingness to buy at an agreed
price?’ He went on to say that there was
no authority on the question and argued the matter as it had been put before
him on both sides. Then a little later in his judgment comes the passage which
Mr Glen was not only prepared to accept but indicated that it was the way in
which he put his case, namely:
It seems to
me that at the highest one could say that the introduction ought to be shown to
be still operative at the time that the prospective purchaser acquires the
necessary qualities; and by operative I mean that the introduction should still
be a live element in the relationship between the prospective vendor and the
prospective purchaser.
Where the
learned deputy circuit judge referred to the ‘introduction’ still being a live
element in the relationship, I find it difficult to distinguish between that
concept and the concept of a continuing thread of causation: not between the
introduction and ultimate sale but between the introduction and that which the
contract contemplates.
As I read the
penultimate paragraph of the letter of November 7 1979, in order to become
entitled to commission upon this transaction it was necessary for the
plaintiffs to introduce to the appellant vendor (that is to say, to put in
touch with the appellant vendor) a person who was ready, able and willing to
purchase the property for such other price as the vendor was prepared to agree.
Mr Glen submitted that, although he would not differ from the way in which the
learned judge put the necessary question to which I have referred, in this
particular case it was quite clear that in truth the proof of the pudding was
in the eating. Here the agents had introduced Mr Bloom, here Mr Bloom had, in a
very short time, agreed to buy the property at a price which was agreed to by
the appellant vendor. In those circumstances what more, Mr Glen asked
rhetorically, could the estate agents have been expected to do; what more would
the law require them to do before they became entitled to the commission which
they claimed in the present case?
As I have
said, we have been referred to a substantial number of authorities and there
are in the books and reports many cases in which estate agents have sought
commission from vendors in very different sets of circumstances. I think they
all turn in a large measure on their own facts. The basic underlying principles
are those which are conveniently set out in paragraph 1 of Article 61 and
Article 62 of the 14th edition of the well-known textbook, Bowstead on
Agency. In Article 61(1) it is said:
Where an
agent is entitled to his remuneration upon the happening of a future event, his
entitlement does not arise until that event has occurred.
Article 62
states:
Subject to
any special terms in the contract of agency, where the remuneration of an agent
is a commission on a transaction to be brought about, he is not entitled to
such commission unless his services were the effective cause of the transaction
being brought about.
In my judgment
those two articles apply just as much to an introduction contract between
estate agents and vendors as they do to a sale contract between estate agents
and vendors. In an introduction contract the commission is payable on the
occurrence of a future event; the estate agent is required to achieve a result
to complete a transaction; not the result of a completed sale, but the result
of bringing together two people whose minds are at the one time of the same
view, namely that one will sell and the other will buy at the same price.
Viewed in that way, there was not, as I think, the necessary causal connection
between the original introduction by the respondents and the ultimate agreement
between the appellant and the potential purchaser, Mr Bloom, on the sale and purchase
of the relevant property. The proof of the pudding is not necessarily in the
eating. It was not, as I think, in this case. It is a question of fact. The
primary facts were found by the learned deputy circuit judge and upon them he
reached the conclusion that the introduction by the respondents was still
operative when Mr Bloom, as a result of the agreement on price brought about by
Davies & Way, acquired the qualities of willingness, ability and readiness
to buy and that consequently, as he concluded, the plaintiffs were and are
entitled to their commission under the relevant agreement. In other words, he
took the view that the original introduction was still operative, was still a
live element in the relationship between Mr Bloom and the appellant when the
parties came ad idem at a purchase price of £45,000 with £250 to be paid
by Mr Bloom to Davies & Way. Were that a question of primary fact which
depended upon the assessment of witnesses, their veracity, their integrity and
recollection, I would not be entitled to differ from the learned deputy county
court judge, but it is not. The conclusion to which one has to come is a
conclusion by way of inference upon primary facts found by the trial judge.
With all
respect to the learned judge, I cannot reach the same conclusion as he did. I
think that the cesser of the negotiations on which Mr Cook was involved, and
the reopening of negotiations between Mr Bloom on the one hand and the
appellant on the other hand constituted a break in the causal connection between
the original introduction by the respondents of Mr Bloom to the appellant. I do
not think that their original introduction was still operative when, to put it
shortly, he and Mr Bloom ultimately got together. I do not think that the
original introduction was still a live element at that time.
In those
circumstances, on the facts of this particular case, I would come to a
different conclusion than that come to by the learned deputy county court judge
and I would allow this appeal and set aside the judgment.
WATKINS LJ
said: I agree.
The appeal
was allowed with costs.
