Estate agents’ commission–An agent cannot claim on the basis of ‘negotiating’ a sale under clause 10 (a) of the scales if all he has done is advise his own principal, and this is so even though he has advised as to price–‘Negotiation’ conveys the idea of ‘reciprocal discussions between the parties concerned on either side, or their respective agents’–F P Rolfe & Co v George (1969) 210 Estates Gazette 455 cited and applied
This was an
appeal by Mr Robert James Hoddell and six other partners, all practising as
Alonzo Dawes & Hoddell, estate agents, of 29 Orchard Street, Bristol, from
a judgment of Judge Russell, sitting at Bristol as a deputy judge of the High
Court, dismissing their claim against Mr Francis Ernest Smith for £2,383.06 as
commission upon the sale of land at East End Farm, Nailsea, Somerset, to
Edgborough Building Co Ltd in 1972.
Mr S B Thomas
QC (instructed by Gregory, Rowcliffe & Co, agents for Veale, Benson &
Co, of Bristol) appeared for the appellants, and Mr R Ellis (instructed by
Tanner, Vowles & Cheshire, of Bristol) represented the respondent.
Giving
judgment, MEGAW LJ said: This is an appeal from a judgment of Judge Russell,
sitting at Bristol as a deputy High Court judge. The action was a claim by the
members of a firm of estate agents, Alonzo Dawes & Hoddell, for commission
of £2,383.06. They claimed that that sum was due to them from the defendant, Mr
Francis Ernest Smith, as a result of the plaintiff firm having acted on the
defendant’s instructions. In accordance with those instructions, the plaintiffs
asserted, they had taken part in negotiations between about January 1971 and
January 1972 which had resulted in the sale of land belonging to the defendant
and his two sisters. The land in question was land known as East End Farm,
Nailsea, in Somerset: it was some 30 acres in extent. Contracts for the sale of
the land, at a price of £154,704, being £5,500 an acre, were exchanged on
January 7 1972. The sale was to Edgborough Building Co Ltd. It was common
ground that Edgborough Building Co Ltd had been introduced to the defendant, Mr
Smith, as a possible purchaser, though the name of that company had not been
disclosed to Mr Smith, before the plaintiff firm received from the defendant
any relevant instructions to act for the defendant in seeking to promote a sale
of the land. The learned judge held that the plaintiffs were not entitled to
commission, and he dismissed the action. The plaintiffs appeal.
There was an
issue in the court below as to the terms of the contract of agency under which
the plaintiffs were employed by the defendant, particularly as to the term
governing the circumstances in which the plaintiffs would be entitled to
remuneration and as to the amount of such remuneration, if any were due. There
were also issues as to the part which the plaintiffs had taken in the
transactions which ended with the contract of sale on January 7 1972. Did the
plaintiffs negotiate? If so, to what
extent? To what extent, if at all, did
their participation or their negotiations bring about the sale? During the hearing of the appeal, it emerged
that the issues with which we are concerned were in some respects fewer and
narrower than had at one time seemed to be the case. In the circumstances, with
no disrespect to counsel or their interesting arguments, I hope to be able to
deal with the matter relatively shortly; relatively, that is to say, in
relation to the facts that the hearing before the learned judge lasted four
days, that the transcript of evidence totals over 150 pages, that the bundle of
correspondence includes 90 documents, some of them lengthy letters or
memoranda, and that the learned judge’s judgment, reciting in detail a good
deal of the correspondence, covers some 40 pages.
In January or
February 1971 the defendant gave instructions to the plaintiffs, through Mr
Hoddell, the senior partner and the first plaintiff in the action, to act as
his, the defendant’s, agents in respect of the prospective sale of East End
Farm. The defendant contends that the original instructions are irrelevant and
that the relevant instructions were given by the defendant to the plaintiffs at
the end of April or the beginning of May 1971. In my judgment, nothing turns on
this difference, and I shall assume against the defendant that the relevant
instructions were given at the earlier date. There is now no dispute between
the parties, though there was dispute in the court below, as to what the
relevant instructions were. In this court counsel are agreed that the
instructions given to the plaintiffs, whenever they were given, can fairly be
expressed in these words: ‘To find a purchaser for the property, and to conduct
negotiations with any prospective purchaser, including Edgborough Building Co
Ltd.’ The reason why that express
reference is made to Edgborough Building Co Ltd is, as I have already
mentioned, that they were already, as it were, in the market as a potential
purchaser of the defendant’s land. An approach had been made to the defendant
on their behalf, though they were not named by the agents, Robinson, Howard
& Co, who were acting on their behalf, as being prospective purchasers.
Edgborough, therefore, were not introduced by the plaintiffs, though the
ultimate sale was to them, Edgborough. Those instructions were accepted, and a
contract of agency came into existence. In substance, the issues before us are,
first, what was the term of the contract as regards the circumstances in which
the plaintiffs would become entitled to remuneration from the defendant, and
what would be the amount of such remuneration, and second, have the plaintiffs
shown that, in the events which happened, they, the plaintiffs, fulfilled that
term?
First, then,
as to the relevant term. This is how it was pleaded on behalf of the plaintiffs
in the amended statement of claim, paragraph 7: ‘It was an implied term of the
said agreement by which the defendant employed the plaintiffs
said sale that the defendant would pay to the plaintiffs as remuneration for
the plaintiffs’ services the scale fees prescribed by the Royal Institution of
Chartered Surveyors. Alternatively the plaintiffs were entitled to a reasonable
sum, and having regard to the work involved, the complexity of the matter and the
price obtained, the scale fees prescribed by the Royal Institution of Chartered
Surveyors constitute a reasonable sum.’
Then particulars were set out under this paragraph of the amount of
£2,383.06 as claimed and that was said, in the particulars, to be commission on
sale in accordance with the Royal Institution of Chartered Surveyors’ scale 10
(a). The first part of that paragraph appears to assert that the term governing
remuneration, at any rate as to the amount to be implied in the contract, is
that which is set out in clause 10 (a) of the brochure described as
‘Professional Charges’ issued by the Royal Institution of Chartered Surveyors.
I shall come back in a moment to the wording of the clause. In the court below,
the defendant did not accept that that was an implied term of the contract as
to remuneration. But in this court, counsel for the defendant does not seek to
challenge it. He says, I think rightly, that the necessary interpretation to be
placed on the learned judge’s judgment, though the judgment does not say so in
express words, is that the judge accepted that that clause was impliedly
incorporated into the contract between the plaintiffs and the defendant as
containing the terms of the contract governing the right to remuneration and
the amount thereof if remuneration were to become payable.
Clause 10 of
the booklet, so far as it is alleged to be relevant, reads as follows: ’10.
Sales of Freehold Property . . . For effecting a sale on terms authorised by
the vendor: (a) By Private Treaty (including the preparation of particulars),
negotiating a sale by private contract or introducing a purchaser.’ Then there follows (b), which relates to a
sale ‘By Auction or Tender,’ and which I need not read. Then the amount of
commission is set out: ‘5 per cent on the first £500; 2.5 per cent on the next
£4,500; and 1.5 per cent on the residue (Minimum fee £10).’ We are told that there is nothing else in the
booklet (and indeed, having had the opportunity of looking at it ourselves, it
seems to me that this is so) which can be said to shed any further light on the
meaning or effect or intention of those words. Certainly no other part of the
booklet appears to have been put in evidence in the court below or to have been
referred to by counsel or by any witness. In view of the concession which has
been made by counsel for the defendant, accepting the judge’s implicit finding,
whether it be regarded as a finding of fact or of law or (as I think is the
case) of mixed fact and law, that the relevant implied term of the contract
between the plaintiffs and the defendant is to be found in clause 10 (a), it is
unnecessary to consider interesting questions which might otherwise have
arisen. Indeed, at one time in the argument of counsel for the plaintiffs
before us, those arguments were in fact being developed, before counsel for the
defendant indicated his concession which I have mentioned. The questions which
we might have had to consider were as to the position in law in relation to
professional scales of fees where nothing is said in the making of the contract
as to the applicability to the contract of such scales, or of the provisions in
them, or of the provisions in the publication authorised by the particular
profession as to the facts and circumstances giving rise to an entitlement to
fees on a particular scale.
We are
fortunate in this appeal that the relevant provision of clause 10 has been
considered in an earlier case decided by this court, and its effect has been
authoritatively stated. That was a case to which the learned judge was referred
and which he applied as his criterion for the decision of this present case.
The authority is F P Rolfe & Co v George, in which judgment
was delivered on March 14 1969 by a court consisting of Lord Denning MR, Salmon
LJ and Winn LJ. It is reported in 210 ESTATES GAZETTE at p 455. Counsel for the
defendant has helpfully looked at the transcript of the judgment in the Bar
Library in order to check whether there is any further reference in the full
text of the judgment to the words which were then used in paragraph 10 (a) of
the brochure as it was at that time. In fact counsel, as a result of that
investigation, was able to tell us that the judgment of the Master of the
Rolls, as it appears in the ESTATES GAZETTE, seems to be a verbatim
representation of what appears in the Bar Library transcript.
The facts of Rolfe
v George were very simple. Mr George, the defendant in that case, owned
a grocer’s business in Hereford. He wished to sell it. He put it into the hands
of the plaintiffs, Rolfe & Co, estate agents. There was in that case an
express contract governing the legal relationship of Mr George as principal and
Rolfes as agents. The contract provided for a scale of 5 per cent on the first
£1,000, and so forth. The contract contained clause 10 (a) of the Royal
Institution of Chartered Surveyors’ booklet as it then was: that is, it
appears, in slightly different words from the present clause with which we are
concerned, but for present purposes the difference is not material. In due
time–perhaps undue time, because it was about two years later–Mr George was
told of a potential purchaser. He was not told by the plaintiffs, the estate
agents, but by a representative of the wholesaler who sold him groceries for
his shop. The potential purchasers were a Mr and Mrs Davies. It would appear
from the report that in substance the whole of the negotiations–the bargaining
between Mr George and the Davieses–was carried out by Mr Rolfe, of the
plaintiff firm, as Mr George’s agent. There was a meeting at the shop, with Mr
George, the Davieses and Mr Rolfe present. As Lord Denning puts it in his
judgment, ‘He’–that is Mr Rolfe–‘went to a meeting which was specially arranged
in the late evening of Thursday, August 17’ (that was 1967) ‘at the shop. Mr
George, Mr and Mrs Davies and Mr Rolfe were there. Mr Rolfe produced the
accounts and took part in the negotiations. All went quite smoothly. Eventually
Mr Davies became the purchaser at a sum arranged at £4,500. An agreement was
drawn up for sale; a valuation was made; and everything went through
smoothly.’ Then Mr George refused to pay
the commission because, he said, the estate agents had not introduced the
purchaser. The estate agents, however, relied upon the part of clause 10 (a)
which was (in that case) in these terms: ’10 (a) Private Treaty. Negotiating a
sale by private contract or introducing a person able, ready and willing to
purchase on terms authorised by the vendor.’
So the estate agents said: ‘We negotiated the sale by private contract.
Clause 10 (a) is a part of that contract. Therefore we are entitled to our
commission.’ The county court judge
rejected that submission, but in this court that submission was upheld and it
was held that the plaintiffs were entitled to their commission. The Master of
the Rolls said: ‘The words of paragraph 10 (a) are, ‘Negotiating a sale by
private contract. . . .’ Those words
mean, as I understand it, that the agent must be, by reason of his negotiation,
the efficient cause of the sale; or, as Winn LJ put it, he must have produced
the sale by his negotiation. There was clear evidence that the agent did this.’
On the facts
of that case, as they were summarised by the Master of the Rolls, it could
hardly be doubted that ‘the efficient cause of the sale’ was the activity of
the agent, or that it was the agent who ‘produced the sale by his
negotiation.’ True, he had not
introduced the person who became the purchaser, but the negotiations effecting
the sale had been carried out wholly by him. So here, in so far as the
plaintiffs are obliged to rely upon clause 10 (a) as the relevant implied term
relating to their entitlement to remuneration, they have to show that they, the
plaintiffs, were by reason of the negotiations the efficient cause of the sale,
or that they produced the sale by their negotiations. If they succeed in doing
so, they are entitled to the full scale fee as set out in clause 10. If they do
not do so, they are not entitled to anything. No question in this case (as I
shall explain further in a moment) arises as to a quantum meruit claim.
So we have to consider, as the learned judge had to consider, whether, on the
material before us, the plaintiffs were by reason of their negotiations the
efficient cause of the sale in this case. Before coming to that question,
however, I propose to consider, and deal with, the alternative way in which
counsel for the plaintiffs in this court has sought to put the plaintiffs’
claim as to the contractual basis on which they are (so he asserts) entitled to
commission. As I understand it, Mr Thomas, for the plaintiffs, puts what I have
called the alternative way as being the way which is his primary method of
seeking to support his case; but he, I think, accepts that, if he is wrong in
that, the only other way in which he can support his case is by seeking to show
that he has duly fulfilled the requirements of clause 10 (a) of the RICS
booklet as construed by this court in Rolfe v George. The
alternative way in which he seeks to put his case — being, as I say, the way in
which he prefers to put it — so far as the pleading is concerned is based upon
the second sentence of paragraph 7 of the amended statement of claim, which I
have already read. I shall read that second sentence again:
Alternatively
the plaintiffs were entitled to a reasonable sum, and having regard to the work
involved, the complexity of the matter and the price obtained, the scale fees
prescribed by the Royal Institution of Chartered Surveyors constitute a
reasonable sum.
This pleading
looks, to my mind, as though it is an alternative claim of remuneration by way
of quantum meruit: asserting entitlement not to a sum fixed by the
contract or to be calculated on a scale fixed by the contract, but to one to be
computed by reference to the services actually rendered by the plaintiffs, the
value of their services standing to be assessed. The wording of the sentence
does, indeed, suggest that the scale fee in the Royal Institution of Chartered
Surveyors’ booklet would quantify the quantum meruit or be relevant towards
that quantification. However, apparently before the judge, and certainly before
this court, the plaintiffs have expressly disclaimed a claim founded on quantum
meruit. We therefore do not have to consider any such issue. But Mr Thomas,
on behalf of the plaintiffs (I should mention that he did not settle the
statement of claim and did not appear for the plaintiffs in the court below),
submits that the second part of paragraph 7 is not intended as a claim based in
quantum meruit. It is, he submits, intended to assert that there was an
implied term of the contract that the plaintiffs should be entitled to
remuneration by way of commission even though it could not be said that their
participation in the transaction, or their negotiation, was ‘the efficient
cause’ or ‘the effective cause’ of the exchange of contracts bringing about the
sale of the land. Even if the plaintiffs were not shown to have ‘produced the
sale by their negotiation’ (to use another phrase in the judgment in Rolfe
v George), nevertheless the plaintiffs were entitled under their
contract–under an implied term in it–to receive commission: not a quantum
meruit payment, but commission, not related to the value of their work; and
the amount of the commission would be determined in accordance with the scale
set out in clause 10 of the RICS brochure. To that extent, and to that extent
alone, on this submission, clause 10 was incorporated in the contract by way of
an implied term.
This
alternative way of putting the claim was summarised by counsel for the
plaintiffs in the course of his argument in these words: ‘If a sale did take
place to persons introduced by the plaintiffs, or to persons with whom the
plaintiffs negotiated, including Edgborough, the plaintiffs were entitled to
commission.’ That is subject to the
rider that the plaintiffs would still have to be acting on behalf of the
defendant up to the time when the contracts were exchanged. In the course of
his submissions in reply this morning, Mr Thomas indicated that though that was
a way in which he had put his alternative argument, he also would like to put
it in a somewhat wider way. That, as I understand it, was to this effect: that
the implied term is that if the agents act in accordance with the instructions
of their principal and a sale comes about, whether or not the activities of the
agents are the effective cause of that sale, the agents are entitled to
commission, and that commission is of the amount set out in clause 10. I
confess that from reading the judgment it does not look as though the learned
judge realised that such an implied term was being asserted. The recollection
of Mr Ellis, who appeared below for the defendant and who has appeared for the
defendant in this court, was that such a submission had not been made, though,
fairly, he was not prepared to pledge his recollection fully in that matter.
Certainly it does not appear very clearly in the grounds set out in the notice
of appeal to this court that complaint is made that such an implied term was
put forward in the court below and wrongly rejected by the learned judge.
However, I do not think that in this appeal we need trouble too far about
whether in those circumstances we could properly give effect to such an implied
term if we thought that, in all the circumstances, it was correct to imply it,
because, in my judgment, with great respect to the argument put forward with,
if I may say so, skill and determination by Mr Thomas, I am quite unable to
accept his proposition that there is, in the circumstances of this case, any
basis whatsoever for holding, on ordinary principles of the law of contract, or
on any special factors relating to this particular case, that such a term is to
be implied. It is neither necessary nor apposite to give business efficacy to
the contract. I propose to leave that alternative implied term there.
So I return to
the implied term as found by the learned judge and as now accepted by the
defendant–what I may call the clause 10 conditions for the earning of
commission. On the facts of this case, were the plaintiffs by reason of their
negotiation the efficient cause of the sale?
The learned judge has held that they were not. He has reviewed at very
considerable length the correspondence and the oral evidence. I do not propose
to do so again. I shall merely briefly state my conclusions on that matter. I
am unable to see that, on the material which was before the learned judge, it
can properly be said that the plaintiffs to any material extent negotiated
in respect of the sale which ultimately was achieved. Mr Thomas seeks to submit
that we ought to treat as part of ‘negotiation,’ for this purpose, such matters
as the plaintiffs, through Mr Hoddell and, when he was ill, Mr J E Hawkings,
attending meetings with Mr Smith, the defendant, and with Mr Smith’s solicitor,
Mr Brown, and offering Mr Smith, and Mr Smith’s solicitor on his behalf, advice
such as an estate agent would offer in relation to the price to be sought and
other such matters. Mr Thomas also relies, as being relevant ‘negotiations,’ on
the fact (as undoubtedly occurred) that the plaintiffs did seek to interest
other potential purchasers apart from Edgborough. They wrote to various
potential purchasers. They had discussions with them. They sought to induce
such potential purchasers to come forward with offers, or to increase the
offers that they had made. One in particular to whom that applied was a company
called Heron Homes Ltd, represented by Mr Kaye; and there is no doubt that the
plaintiffs, through Mr Hoddell and Mr Hawkings, were seeking to see whether a
better offer could be obtained from them than was available from Edgborough. In
the end, however, no better offer was obtained, and the price ultimately agreed
by Edgborough was not, on the evidence here, affected in any way by reason of
these negotiations or discussions between the plaintiffs and other persons.
There was a
good deal of detailed evidence, based on
meetings that took place in May and June 1971 and in December 1971. In May and
June 1971 it looked as though a contract was about to be entered into binding
the defendant and Edgborough for the sale of the defendant’s property. There
came an apparent agreement on the price and terms; but it was all subject to
contract, and contracts were not exchanged. Edgborough seem for a time to have
had second thoughts, and ultimately, in October 1971, Mr Brown, the defendant’s
solicitor, on instructions from the defendant, withdrew the offer which had not
been brought to fruition by exchange of contracts. In the discussions there,
there is no doubt that the plaintiffs played some part. They were present at
certain meetings with, as I say, the defendant and his legal adviser. But there
is really in substance nothing that took place on that occasion, if it is
properly considered, that can be called any substantial ‘negotiation’–meaning
negotiation on behalf of the defendant with the prospective purchaser or the
prospective purchaser’s agent. The reason, no doubt, or part of the reason, why
the plaintiffs were not taking part in such negotiations at that time was that,
for some reason or another, the estate agents who were representing Edgborough
were very unwilling that the plaintiffs should be participating in this matter
at all.
The potential
contract of June 1971 having gone off, then from October 1971 to December 1971
substantially nothing of any relevance happened. In December 1971 the potential
contract with Edgborough came alive again. On December 9 1971 Mr Hoddell was
present at a meeting with the defendant and the defendant’s solicitor, Mr
Brown. There was controversy (which the learned judge did not in his judgment
seek to resolve) as to how it came about that Mr Hoddell was present at that
meeting. I am perfectly prepared to assume what appears to me to be the proper
conclusion on the evidence, that Mr Hoddell was there with the consent and
probably at the request of the defendant himself. But again, though there was
discussion at that meeting between them of what price should be put forward to
Edgborough, in Edgborough’s renewed interest in the sale, those were matters
that had taken place between the defendant and the defendant’s own advisers. It
is true also that Mr Hoddell went along with Mr Brown, the solicitor, to see
the solicitors who were acting for Edgborough in respect of this prospective
purchase; and at that meeting, when Mr Hoddell was present, the solicitor, Mr
Brown, put to Mr Craven, a solicitor and partner in the firm who were acting
for Edgborough, a figure which had been agreed at the earlier meeting of the
defendant, his solicitor, and Mr Hoddell, the figure of £6,000, its being the
figure which they would be prepared to accept. But that, again, was something
which was done by Mr Brown and not by Mr Hoddell. And thereafter, until the
time of the exchange of contracts, there is, as I see it, in the
correspondence, the memoranda and the evidence, nothing which really can be
taken fairly as an indication that the plaintiffs were playing any active part in
‘negotiating.’ I think that the learned
judge was wholly right in his conclusion that the plaintiffs have failed to
show, on the material in this case, that they, by reason of anything on their
part which could be called ‘negotiation,’ were ‘the efficient cause of the
sale.’ I think that the learned judge
was right, if one adopts the other formula, in holding that there was nothing
here which justifies the conclusion that the plaintiffs ‘produced the sale’ by
their ‘negotiation.’
I would simply
add that we are dealing with this appeal on the particular facts of this
particular case, and in relation to a particular contract as it was ascertained
by the learned judge. I would not for a moment suggest that our decision in
this case would have any kind of bearing on different facts, either different
contractual terms or different circumstances: for example, circumstances in
which it was clear that a principal was deliberately seeking to avoid payment
to his agent, after the agent had effectively done all the necessary work, by
withdrawing the agent’s instructions at the last moment or by going behind the
back of the agent to take the last steps in making a contract. But there is no
reason to suppose, on the evidence here–and indeed I do not think it has been
suggested–that that is this case. I would therefore dismiss this appeal.
GEOFFREY LANE
LJ: I agree. As my Lord has said, as the hearing of this appeal has proceeded,
so the area of dispute between the parties has steadily diminished. There is
now no question of any claim in quantum meruit, and it is now conceded
on all sides that the terms of the plaintiffs’ engagement as estate agents were
that they should find a purchaser for the defendant’s farm and conduct
negotiations with any prospective purchaser, including the Edgborough Building
Company. As to the basis of remuneration, Mr Thomas, on behalf of the
plaintiffs, now advances two propositions. His second-favourite proposition,
which is now agreed by the defendant and was accepted by the judge, is that the
basis and extent of the plaintiffs’ remuneration were governed by the terms of
clause 10 of the RICS booklet. Had it not been for this agreement, I myself
should have had grave doubts about holding that that clause formed part of the
terms of the contract when there was no evidence at all that the defendant was
even aware of the booklet’s existence. As I understand Mr Thomas to put it, his
first favourite as a basis for remuneration is this: Clause 10 (a) provides
simply the method of arithmetical calculation of the commission, but no more;
the events upon which commission is to be earned are not governed by the words
of clause 10 (a); commission at the rates set out is payable if the agent acts
in accordance with the instructions of the principal, continues so to act, and
a sale then comes about whether or not the agent is the effective cause of the
sale. Speaking for myself, I do not believe that any seller, and certainly not
Mr Smith, would have accepted those terms as a condition of payment if the
officious bystander had asked him his views at the time the contract was
formed; nor is such a term necessary to make the contract efficacious.
Secondly, it seems to me that if clause 10 is going to be imported at all, it
must in logic be imported in full and not merely for the purpose of
ascertaining the necessary arithmetical basis. The sole problem, then, to be
decided is whether the learned judge was right in holding that the plaintiffs
had not fulfilled the necessary requirements under clause 10 to earn their
commission.
The meaning of
the wording of the clause is, to say the least, obscure. An earlier and
slightly different version of the clause was the subject of interpretation in
the case of F P Rolfe & Co v George (1969) 210 ESTATES
GAZETTE 455, where the Master of the Rolls, interpreting the words ‘Negotiating
a sale by private contract’ which appeared in the booklet, said this: ‘Those
words mean, as I understand it, that the agent must be, by reason of his
negotiation, the efficient cause of the sale; or, as Winn LJ put it, he must
have produced the sale by his negotiation.’
The plaintiffs here did not introduce the Edgborough Building Co to the
defendant: therefore, to earn their commission they must show that their
negotiations were the efficient cause of the eventual sale between Edgborough
and the defendant early in 1972 at £5,500 per acre. Or else, to put it in the
way that Winn LJ put it, they must show that they produced the sale by their
negotiation. This in its turn involves an examination of what is meant by the
word ‘negotiations.’ Mr Thomas, for the
plaintiffs, has urged upon us the view that nearly all of an estate agent’s
proper activities in pursuing a sale can be classed as ‘negotiations.’ He contends, as I understand it, that conferences
with the agent’s own principal, advising him on values and tactics and so on,
all come under the heading of ‘negotiations’ in this context. I am unable to
agree. ‘Negotiation’ must, to my mind, mean conferring with the
and cannot include the simple giving of advice to the agent’s own principal,
the seller.
So, what
negotiations did the plaintiffs do here?
They undoubtedly endeavoured to find other purchasers for the land apart
from Edgborough, and no doubt ‘negotiated,’ in the strict sense of the term,
with some of them. But there is no evidence here that those activities had any
effect upon the sale to Edgborough at all. With Edgborough themselves the
plaintiffs had very little contact. This was not mere chance. At the outset of
the story of this case the plaintiffs, in the shape of Mr Hoddell, no doubt
with the most laudable intentions, had endeavoured to make sure that the
defendant should have no contact with the Edgborough agents, who were Robinson,
Howard & Co, who up to that time had indeed been acting as the defendant’s
agents themselves. Robinson, Howard & Co, as a result, were not best
pleased with the plaintiffs and were clearly determined to have as little contact
with the plaintiffs as possible, preferring (whether it was proper to do so or
not does not matter) to make contact direct with the defendant when they could.
In the upshot, it seems to me, the only actions taken by the plaintiffs which
could conceivably be called ‘negotiations’ were these. First of all, at p 20 of
the correspondence there is a letter of May 4 1971 written by the plaintiffs to
Robinson, Howard & Co, Edgborough’s agents. The material paragraph says
this:
We understand
that you are acting for the company which has recently agreed to purchase
adjoining lands, the property of the Brock family. We believe we are right in
saying that this is Edgebrook Building Co Ltd. Our client advises us that you
have already submitted a verbal offer of £4,100 per acre on behalf of the
company for an outright purchase at this stage, and we shall be pleased to
discuss the matter with you further.
That could
scarcely be dignified by the word ‘negotiation.’ Next, pp 26, 27, 28 and 31 are further
letters written by and to the plaintiffs. The first is on May 14 from the
plaintiffs to Mr Brown, of the defendant’s solicitors, saying, in the material
paragraph:
I told Smith
[the defendant] yet again that he was placing me in a difficult position and
could well be prejudicing his own interests by continuing to negotiate with
Robinson, although he says that he has continually asked Robinson to get in
touch with us. Smith in fact agreed during our telephone conversation that he
would either call in and see Robinson, or preferably write to him confirming
that any future negotiation should be through us.
There is a
letter in reply on May 17 from Mr Brown, simply acknowledging what has been
said and asking if he could help by speaking direct to Mr Smith. Then there is
a letter on May 24 from Robinson, Howard & Co, the purchasers’ agents, to
the plaintiffs, saying:
Further to
recent correspondence in connection with the above, we note that you have been
instructed to offer for sale the above farm [East End Farm] in the open market.
Mr Smith has discussed the matter with us and asked that we put before you an
offer in the sum of £5,000 per acre for East End Farm and the surrounding land,
which, we understand, amounts to approximately 30 acres.
That letter is
simply a notification of what had already taken place direct with the client by
way of negotiation. Finally, on May 28 the plaintiffs write once again to
Robinson, Howard & Co, thanking them for their letter and saying they have
passed on the information in their letter to Mr Hoddell and noting that they
are prepared to make an offer of £5,000 per acre. The next matter which could
be described as ‘negotiation’ was the meeting, referred to by my Lord, on
December 9, which fell into two parts. The first part was a discussion between
the various representatives of the defendant, at which no representative of
Edgborough was present; and the second part was when Mr Hoddell accompanied Mr
Brown across to the offices of Hullah Craven & Co, the Edgborough
solicitors, and there had a discussion. It is perfectly plain from Mr Brown’s
memorandum that this was primarily a discussion between solicitors, in which Mr
Hoddell took very little, if any, part at all. That receives some support from
the fact that Mr Hoddell’s own memorandum on that event is wildly at odds with
the facts. He records this meeting as not having taken place at the offices of
Hullah Craven & Co at all, when quite plainly it did.
If this case
had depended on this point, I would have held that these activities could not
be described as ‘negotiations.’ Even if
I am wrong in that, the next question is, did these activities cause the
sale? Quite plainly they did not. They
indeed had little or no effect upon the course of events. It is clear, if I may
say so respectfully, that Mr Thomas’s proposition which I have described as his
first-favourite proposition, that for an implied term, is designed to overcome
this total lack of causal connection between the plaintiffs’ efforts and the
eventual sale. If any confirmation for that is required, it can be found in two
answers given by Mr Hoddell in cross-examination. He was asked: ”Negotiating a
sale by private contract.’ Are you
telling the court you negotiated a sale by private contract to Edgborough? (A) We did all that we were allowed to
towards the negotiations. (Q) I did not ask you that question. I am asking, are
you saying that you negotiated the sale by private contract to Edgborough? (A) No, we did not. We did not agree the
price of £5,500 per acre.’ Estate agents
may exert themselves to the uttermost in their efforts to find a purchaser; but
if those exertions are not the cause of the eventual sale they do not, on the
wording of clause 10 at any rate, become entitled to commission. If estate
agents wish to be remunerated on the basis put forward by Mr Thomas, then they
should enter into an express agreement on the basis of Mr Thomas’s suggested
implied term. For those reasons, I agree that this appeal should be dismissed.
SIR JOHN
PENNYCUICK: I agree with the judgments which have been delivered by both of my
Lords. It is clear that some provision for remuneration must be implied into
the contract between the defendant and the plaintiff firm. I feel no doubt that
the provision to be implied is the standard provision contained in paragraph 10
of the booklet of the plaintiffs’ professional body, namely, the Royal
Institution of Chartered Surveyors, that booklet being described as
‘Professional Charges.’ I do not see any
justification for the alternative contentions advanced by Mr Thomas. Those
alternatives have already been fully dealt with, and I will not go into them
again. I will only make this observation, that it is most unlikely that the
parties would have intended that an agent who had not introduced the purchaser
should earn his full scale commission without bringing about the sale. I will
return to this point in a moment.
I turn, then,
to construe paragraph 10 in the ‘Professional Charges’ booklet. That paragraph,
so far as now relevant, reads as follows: ‘Sales of Freehold Property. . . .
For effecting a sale on terms authorised by the vendor: (a) By Private Treaty
(including the preparation of particulars), negotiating a sale by private
contract or introducing a purchaser. . . .’
That paragraph is rather elliptically worded, but its effect is clear
enough: that is to say that, upon the sale of land by private treaty the
surveyor acting for the vendor becomes entitled to the specified scale
commission if he effects the sale in either of two ways: namely (1) by introducing
the purchaser, or (2) by negotiating the sale. That is a perfectly sensible
provision. A surveyor employed to sell land has normally to achieve two main
objectives: (1) he must find someone interested in the land, and (2) he must
induce that person to purchase the land at a price acceptable to the vendor. A
surveyor who finds the purchaser has done enough to earn his commission,
provided, of course,
negotiate the terms: but that is not an essential prerequisite to his
entitlement to commission if he has found the purchaser. But where the
purchaser is already on the scene, the agent must ‘negotiate’ the sale; and
that means, to quote from the case of F P Rolfe & Co v George,
decided in the Court of Appeal on March 14 1969, that he must ‘by reason of his
negotiation be the efficient cause of the sale or have produced the sale by his
negotiation.’ It would be altogether
strange if the agent could earn his commission by anything short of this where
the purchaser has already been found.
What, then, is
meant by ‘negotiating’ a sale? The word
‘negotiate’ conveys to my mind the notion of reciprocal discussions between the
parties concerned on either side with a proposed contract or their respective
agents with a view to agreeing upon the terms of that contract. The discussion
may, of course, be oral, or written, or indeed by sign. That meaning of the
word ‘negotiation’ appears, as I see it, plainly to be appropriate in the
present context, where the sale must be effected by the negotiation. I do not
think the word ‘negotiate’ is apt to cover (i) the giving of advice by an agent
to his principal where the principal is conducting personally or through
another agent the negotiations with the other party concerned; (ii) preparing
plans and the like in connection with such negotiations being carried on by the
principal or another agent; (iii) acting as a mere channel of communication
between the principal and his prospective purchaser; or (iv) a mere willingness
to enter into negotiations if so required by the principal.
To turn to the
present case, I find it impossible, upon the evidence, to say that the
plaintiffs at any stage entered into negotiations with Edgborough. The only
direct written communication between the plaintiffs and the agents for
Edgborough were the letters in May 1971 to which reference has already been
made. The only direct personal contact was the meeting with Mr Craven on
December 9 1971, at which nothing was arranged and in which Mr Hoddell took a
very small, if any, part. I do not think any of these activities could fairly
be described as ‘negotiation’ between the plaintiffs and Edgborough. Nothing in
the oral evidence suggests a different conclusion. Upon a first reading, it seemed
to me that the defendant had admitted in paragraph 7A of his amended defence
that the plaintiffs had negotiated up to June 1971. The expression used is,
‘pursuant to negotiations in which the plaintiffs took part.’ But when the defence is read together with
the particulars delivered under it, I do not think that there is really an
admission of negotiations in any relevant sense even up to June 1971. Certainly
there is a denial of negotiation in respect of the period subsequent to June
1971.
If the plaintiffs
had conducted negotiations, it would then be a question of fact whether those
negotiations were the efficient cause of the sale or had produced the sale.
Upon the view which I take, the plaintiffs never reached that point. If indeed
there was anything which could properly be described as ‘negotiations,’ it
seems to me that those negotiations clearly were not the efficient cause of the
sale and did not produce the sale. I would only add that my conclusion would
have been the same had the parties signed a contract in June 1971. But my
conclusion is not based on the fact that the proposed sale then went off for
some months and was taken up again, at a higher price but otherwise on the same
terms as previously.
The appeal
was dismissed with costs.
