Estate agents’ commission — Claims for commission by two firms of estate agents alleged to be due from the vendor on the sale of the same property to the same purchaser — Vendor accepted liability to pay commission to either firm, but not to both — The terms of the instructions were virtually the same in each case, in the one, commission was to be payable if the firm was ‘successful in introducing a purchaser with whom a sale is completed’, in the other ‘in the event of our producing a successful purchaser on the terms quoted or on such other terms as may prove acceptable to you’ — There was a difference of 1/2% in the commission rate — The judge, in a brief review of the law, observed that it was possible for the later of two introductions to carry with it the entitlement to commission and it was also possible, although unlikely, that a court would hold that a vendor was liable to pay commission to two agents in respect of the same sale — In the present case both firms of agents contributed by their efforts to the final outcome, both were active in showing the ultimate purchaser round the property and both could be said to be instrumental or to have assisted in the process which led to the sale — But the decisive question was which introduction was the effective cause of the sale? — Being first in the field is not conclusive, but the agent who effects the later introduction can only succeed in showing that he was the effective cause of the sale if he can establish that the interest aroused in the purchaser by the earlier introduction had evaporated by the date of the later — In this case, despite a confusing amount of activity over a period of some months, described in detail by the judge, the evidence indicated that the interest aroused by the first introduction had not evaporated and that this introduction was the effective cause of the sale
These were two
actions for commission by firms of estate agents against the vendor of a house
at 19 Avenue Road, St John’s Wood, London NW8. The plaintiffs were respectively
John D Wood & Co and Beauchamp Estates and the defendant was Prince Nasiru
Dantata of Nigeria. The judge ruled that the two actions should be heard
together.
Richard Slowe
(instructed by Jaques & Lewis) appeared on behalf of the plaintiffs John D
Wood & Co; J Ungley (instructed by Dibb & Clegg, Ward, Beynon & Co)
represented the plaintiffs Beauchamp Estates; J Malins (instructed by Shelton
Cobb) represented the defendant Prince Nasiru Dantata.
Giving
judgment, FORBES J said: These two cases involve claims by two firms of estate
agents for commission alleged to be due to each of them on the sale of the same
property by the same vendor to the same purchaser. Initially there was an
argument by counsel appearing for John D Wood & Co that the cases had to be
tried separately. In my view, however, both justice and expediency required
that I should hear them together and I so ruled.
Mr Malins, for
the defendant in each action, points out that in cases such as this it is
frequently contended that there is authority in the form of the decision of the
Divisional Court in Greatorex & Co v Shackle [1895] 2 QB 249
for the proposition that interpleader is always inappropriate where two estate
agents claim commission in respect of the same sale of the same house.
Examination of that case shows, however, that it is not authority for that
proposition at all. The reason why the court found that interpleader was not
appropriate in that case was that the subject-matter of the claims was not the
same. The argument which the court rejected was that in all cases where estate
agents claims commission for the same sale of the same house the subject-matter
of the claims must necessarily be the same. In doing so, the court certainly
did not say that in all such cases the claims must necessarily be different.
The true
position, both in law and in common sense, is that in such cases the two claims
must be examined to see whether their subject-matter is or is not the same and
interpleader may be appropriate where the subject-matter is found to be the same.
In this case,
although I shall have to look at the question in more detail, it is clear that
the terms of the contracts on which the plaintiffs respectively sue are in
reality identical, so that, as I have said, both justice and expediency require
that both cases should be heard together. The result in the end may be that the
defendant has to pay commission to only one of the plaintiffs or to both of
them. He expressly disclaims any suggestion that he is not liable to pay
either.
The property
at the centre of the dispute is a very large and ‘prestigious’ dwelling-house
in St John’s Wood, situated at 19 Avenue Road in that area. The owner of the
property at the material time was a Prince Nasiru Dantata of Nigeria.
On January 15
1982 the plaintiffs, John D Wood & Co, wrote to
oral arrangement whereby John D Wood and Prince Dantata agreed that if the
former were ‘successful in introducing a purchaser with whom a sale is
completed’ they were to be entitled to commission at the rate of 3% of the sale
price.
On May 25
1982, the other plaintiffs, Beauchamp Estates, wrote to Prince Dantata
confirming an earlier oral arrangement under which Beauchamp were to be
entitled to commission at the rate of 2 1/2% of the price realised ‘in the
event of our producing a successful purchaser on the terms quoted or on such
other terms as may prove acceptable to you’. The commission in the case of each
plaintiff was expressed to be subject to VAT.
It is, as I
understand it, accepted by all three counsel that there is no material
difference in the terms of the two estate agents’ contracts and that these
terms are standard terms among estate agents. It is further accepted by all
three counsel that the effect of the contracts is that to succeed the estate
agent has to show that he introduced the ultimate purchaser and that such
introduction was the effective cause of the purchase.
I have been
shown various cases which indicate, for instance, that an introduction which
follows an earlier introduction by some other person does not thereby forfeit
any claim to be an introduction; in other words, that an introduction does not
necessarily carry with it the concept that it must be the first introduction. I
am also prepared to accept that there may be cases where a vendor has to pay
commission to two estate agents. I am, however, mindful of the expression on p
186 of the 14th edition of Bowstead on Agency:
The fact that
one agent introduces a person who ultimately purchases after a later
introduction by another agent will not necessarily entitle the first agent to
commission. In such a case the court must determine which of the two agents was
the effective cause of the transaction taking place.
The note to
that passage reads:
It is
theoretically possible, but very unlikely, that a court might hold that there
had been more than one effective cause.
I have heard,
for John D Wood, Mrs Greenstone, now a partner in the firm but then one of the
chief negotiators, and also another partner, Mr Stephen Buston. For Beauchamp I
have heard Mr Gary Hersham, who is the principal director, and also Mr Greer,
who was the caretaker at 19 Avenue Road, employed by Prince Dantata. All these
witnesses were doing their best to give accurate evidence to the best of their
recollections. The professional witnesses relied, as was only natural, on
contemporaneous documents such as letters, diary notes, entries in engagement
books and so on. From all this evidence I have, I think, a clear picture of
what occurred.
First I should
say that the evidence leaves me in no doubt that Chief Ojura of Nigeria, who
was the ultimate purchaser, was a somewhat flamboyant character who, on his not
infrequent visits to London from his home country, liked going round looking at
‘prestigious’ houses. In a sense this was, I am satisfied, a kind of
window-shopping. He liked looking at houses, going round them and even on
occasion making bids, but it would be fair to say, as Mr Hersham said, that
there was always some doubt whether any particular bid was a serious one.
I find that
the first contact of the Ojura family with 19 Avenue Road was when Mr Hersham
of Beauchamp showed Begi Ojura, the chief’s son, round the property, he having
made known to Mr Hersham that he was looking for a property for his father.
Thereafter virtually the whole Ojura family, including the chief and his wife,
arrived in a cavalcade of motor cars on August 24 and were shown round the
property by Mr Hersham.
At this time a
Dr Coltart had already put in (on August 13) a bid of £750,000 for the
property, through Mr Hersham, but wished completion delayed because he needed
to sell two houses he already owned. Dr Coltart’s bid was being processed
between his solicitors and the vendor’s solicitors.
On September 9
Mrs Greenstone of John D Wood was showing the chief various properties in St
John’s Wood when, such is her evidence, he declared that he had not seen no 19
and wanted to see it. Mrs Greenstone made immediate arrangements and showed the
chief over the property. She told me that she inferred from the chief’s
demeanour that he had not previously seen the property. She also indicated that
in her view the chief would not have stooped to the subterfuge of pretending he
had not seen the property although in fact he had. Be that as it may, I accept
Mr Hersham’s evidence, supported as it is by that of Mr Greer, that the chief
was shown the property on August 24. The chief had in fact made an appointment
with Mr Hersham to see the property again on September 10, but failed to keep
that appointment.
On September
14 Mrs Greenstone telephoned the vendor’s solicitors on the chief’s
instructions offering £650,000 for the property and receipt of this offer was
confirmed by the solicitors by letter of September 15, although they pointed
out that a draft contract had already been sent to another purchaser — this
was, of course, Dr Coltart.
At this time
the chief’s offers through John D Wood were in the name of a company of his,
Hercules Marine (Societe Anonyme). There was then a series of negotiations
between John D Wood and various persons on behalf of the vendor directed to the
question of whether the purchase price could be paid in Nigerian naira and if
so at what rate of exchange. The sterling equivalent of the various offers can
be said to be £700,000 or £750,000.
Staying for
the moment with John D Wood, on November 10 the chief indicated to them that he
was not interested in dealing in naira and that his best offer was £750,000. It
should be stated that Mrs Greenstone was on holiday between November 2 and 23
and negotiations during that period were carried on by Mr Buston. On November
10 Mr Buston made contact with Prince Dantata, who indicated that because he
felt an obligation to another purchaser he wanted £850,000. The chief was
advised by John D Wood to come up to £775,000 – £800,000 to see if Dantata would
accept this, as the chief could buy immediately and the other purchaser had two
houses to sell before he could buy. In the event the chief offered £775,000 and
this offer was put through by John D Wood to Prince Dantata’s solicitors. A
message to this effect was left for the prince’s man of business, one Ken
Davis.
At about
lunchtime on November 11 Mr Davis telephoned John D Wood and told them that
£775,000 was not acceptable and that even a compromise of £800,000 would
probably not be enough. Mr Buston then went off and some other member of the
firm of John D Wood telephoned the chief. Apparently the chief was not advised
to offer £800,000 and did not do so. Effectively that was the last involvement
of John D Wood with the chief and the property.
To return to
Beauchamp Estates, on November 9 the chief asked Mr Hersham to arrange another
view of the property. On November 11 Mr Hersham showed the chief 19 Avenue Road
and three other properties. The chief offered £750,000, which Mr Hersham
telephoned to Prince Dantata, who was in the United States of America. The
prince declined the offer but suggested to Mr Hersham that he would be prepared
to sell at or above £800,000, the price to include the contents.
On November 12
Mr Hersham showed the entire Ojura family, including the chief and his adviser
Mr Piper, over the property. The chief offered £800,000 to include the
contents. This offer was conveyed to the vendor’s solicitors by Beauchamp on
November 12 together with an inventory of the furniture included in the sale.
The offer was accepted, but thereafter there was some difficulty about
completion, which was eventually cleared up by Beauchamp.
Reviewing this
history, I think it could be said that, ignoring the question of introduction,
both estate agents contributed by their work to the final outcome of a sale at
£800,000. John D Wood were clearly instrumental in getting the chief to raise
his bid from £650,000 to £775,000. Their final offer on his behalf was rejected
by the vendor. The final and accepted offer of £800,000 was not only higher
than that put forward by John D Wood but included the contents, and this was
due to Beauchamp. Both estate agents were active in showing the chief and/or
his family around the property at various times.
I do not
consider, however, that the question here turns on whether either agent was
instrumental or assisted in the process which led finally to the sale. The
question is whether either of them has demonstrated that it was his
introduction which was the effective cause of the sale. Although the question
of who was first in the field is not conclusive, I do not consider that an
agent who effects a second introduction to the property (if that is not a
contradiction in terms) can succeed in demonstrating that such an introduction
was the effective cause of the sale unless he can show that the interest
aroused in the purchaser by the first introduction has evaporated by the time
of the second.
Indeed, this
way of looking at it was tacitly accepted by Mr Slowe for John D Wood in his
final submission, because he argued that any interest kindled in the chief by
Beauchamp’s introduction of August 24 must have so far evaporated that the
chief could give Mrs
I am not prepared to hold that the chief had forgotten all about the property
on September 9. I think he retained a lively interest in the property and
recognised its connection with the initial introduction by Beauchamp, because
he had made an appointment through Mr Hersham to look at it again on September
9. Despite the fact that he was negotiating through John D Wood, he yet asked
Beauchamp on November 9 to arrange another view. This is quite inconsistent
with any suggestion that the interest kindled by Beauchamp had waned; it is
consistent only with the view that Beauchamp’s introduction remained in the
chief’s mind an effective introduction. If that introduction were ineffective
in the way Mr Slowe argued, it is inconceivable that the chief would have
recollected the existence of the connection between Beauchamp and the property.
In all the
circumstances I feel satisfied that the introduction by Beauchamp was the
effective cause of the sale. On the facts of this case there is no room, in my
view, for two effective causes. As Beauchamp’s introduction was the effective
cause, it cannot sensibly be argued that John D Wood’s reintroduction was
effective at all.
There will,
therefore, be judgment for the plaintiff in the action Beauchamp Estates v
Dantata and judgment for the defendant in the action John D Wood v
Dantata.
