Estate agents’ claim for commission–Dispute as to amount claimed–No prior agreement as to rate of commission, but understanding that basis of remuneration should be by way of commission–Vendor had experience of the old scales of commission from having sold properties previously–What was reasonable rate of commission in all the circumstances?–Estate agents claimed £286.20 on sale of house at £13,500, but offered to reduce this by £10–Agents claimed that commission on basis of old scale was reasonable–Ban on scales does not prevent estate agent and client from agreeing a rate based on old scales–Here no agreement on rate but judge justified in deciding that the amount charged was reasonable–Judgment for £276.20 upheld
This was an
appeal by the vendor, F Harper, from a decision of Judge Walker at the
Bridlington County Court, giving judgment in favour of Lewis & Graves, a
firm of estate agents, for £276.20 by way of commission on the sale of the
vendor’s house at 45 Harewood Avenue, Bridlington.
John Altman
(instructed by Collyer-Bristow & Co, agents for Harland, Turnbull &
Roberts, of Bridlington) appeared on behalf of the appellant; Rodney Grant
(instructed by West & Son, of Bridlington) represented the respondents. The
respondents’ counsel was not called on.
Giving the
first judgment at the invitation of Megaw LJ, ORMROD LJ said: This is an appeal
by the defendant from an order which was made on September 12 1977 in the
Bridlington County Court by His Honour Judge Walker. Under that order he gave
judgment for the plaintiffs for the sum of £276.20, plus costs on scale 3. The
plaintiffs’ claim was for commission as estate agents.
The
particulars of claim are very short. They say: ‘The plaintiffs claim the sum of
£286.20 for commission payable by the defendant under an agreement made orally
on July 20 1976, whereby the plaintiff was instructed by the defendant to find
a purchaser for his house 45 Harewood Avenue, Bridlington.’ Then in paragraph 2 the plaintiffs allege
(and it is not disputed) that they introduced a purchaser, Mr and Mrs Hiley,
who subsequently purchased the house at a figure of £13,500. In paragraph 3
they calculate their commission by a sliding scale: 5 per cent on the first
£500; 2 1/2 per cent on the next £4,500; 1 1/2 per cent on the balance; plus
VAT; and that came to the figure of £286.20.
The defence
admitted the verbal agreement whereby the plaintiffs were instructed to find a
purchaser for 45 Harewood Avenue. The defendant admitted that the plaintiffs
had sold the property, and he admitted that he had not paid any commission up
to that time. In paragraph 4 of the defence he said: ‘There was no agreement as
to the amount of commission on sale payable to the plaintiffs and the defendant
denies that the commission claimed is fair or reasonable. A fair and reasonable
sum for commission does not exceed £100.’
Paragraph 5: ‘Save as hereinbefore admitted the defendant denies each
and every allegation. . . .’: and so on.
There was a
request for further and better particulars of the particulars of claim as to
how the figure of £286.20 had been arrived at. The answer in the further and
better particulars was: ‘There was no formal or written agreement as to the
commission to be charged. The commission was charged on the price of the house
and on the work done by the agents which is the normal practice in the
Bridlington area.’
That was the
state of the pleadings. The evidence, which is very briefly noted by the
learned judge, follows more or less on those lines–rather less, perhaps, than
more.
The point to
be observed is that it is conceded by the defendant that there was an oral
contract in the terms set out and that, quite clearly, it was an oral contract
that the plaintiffs should be remunerated by commission and not by any other
form of payment–commission, that is, payable in the event that they were
instrumental in selling the property and not otherwise.
In the course
of giving evidence Mr Graves, who was a partner in the plaintiff firm, said
(though it was in issue) that the plaintiff firm had acted for the defendant
before. Mr Graves valued the property at between £13,500 and £13,750; took
particulars; took photographs, put the house on the market, advertised it in
their shop window, and advertised it in the papers. They sold it very quickly.
He agreed that they never in fact discussed the actual commission rates, but he
said that it was the practice of the plaintiff firm to continue to charge the
old scales laid down in the ‘Estates Gazette,’ which are the same as those of
the Royal Institution of Chartered Surveyors. In the cross-examination, the
learned judge noted an answer in this form: ‘Costing it out on quantum
meruit £60 would not be unreasonable.’
We are told by counsel that there was in fact a good deal more detailed
cross-examination of Mr Graves as to how the figure of £60, which no doubt was
put to him, was made up.
The defendant
in his evidence said that he had gone to the senior partner, Mr Lewis, about
buying a house at 4 Vernon Road, Bridlington. He told Mr Lewis that he was
going to advertise his existing house in the Bridlington Free Press
himself, and Mr Lewis had said to him ‘Why not let us sell it?’. The defendant
went on ‘I asked ‘How much would you charge?’ and he said ‘Not a lot; we are
the cheapest in town.’ I said ‘Fair
enough; you sell it’.’
After the
property was sold, the plaintiffs sent in their account, and the defendant
queried it and complained about the bill. In his evidence to the judge he said
‘I said it was a little bit excessive.’
Mr Lewis said it was the ‘going rate.’
‘He offered to reduce it by £10.’
The defendant then argued that solicitors had charged £88 and that the
plaintiffs’ costs should be £20 plus £25 profit. He admitted that he had
previously sold a house in Vernon Road through other agents and had been told
what the commission was: so much, as he said, on the first £500 and so much
thereafter; and that he did not dispute that fee. He also sold a property
called St Kitts Hotel and paid fees on the ordinary commission basis in respect
of that.
The notes of
the judgment which the learned judge made for his own purposes read as follows:
‘The defendant had experience of scale fees from the sale of Vernon Road and
hotel. He knew the sort of bill to expect now the scale has been abolished. No
agreement to pay less or to pay on time and cost basis. The defendant’s real
objection is that it was a quick sale unlike St Kitts Hotel and Vernon Road. I
find that the only form of remuneration contemplated by both parties was by
commission at a rate similar to the old scale.’
So the learned judge gave judgment for the figure of £276.20, which was
the figure claimed less the £10 conceded by Mr Lewis in the course of his
evidence.
Mr Altman
complains, basically, that the learned judge approached the case in the wrong
way altogether. He does not, and cannot, contend on this evidence that the
plaintiffs should only be remunerated on a quantum meruit basis,
whatever that may be. But it is plain–and Mr Altman has not really seriously
suggested the contrary–that there was never any sort of agreement here that the
plaintiffs would be paid for the work that they actually did, whether or not
they were successful in selling the property. It is quite plain, in my
judgment, that the parties in this case made their agreement and made it on the
basis that the remuneration was going to be by way of commission.
The only
question, therefore, that was left for the judge to decide was, what was a
reasonable rate of commission in all the circumstances of the case? The plaintiffs not unnaturally say that the
old scale rates are perfectly reasonable. I call them the old scale rates
because as a result of the enquiries of the Monopolies Commission and their
report in 1969 a statutory instrument was made in 1970 called the Restriction
on Agreements (Estate Agents) Order 1970 (SI 1970 No 1696) which by regulation
3 makes it unlawful for two or more estate agents to agree to charge a minimum
fee or a minimum rate of commission. It does not, of course, in any way
interfere with the arrangements which an estate agent makes with his own
customers. There is nothing unlawful as between estate agent and customer in
charging a rate of commission based upon the old scale fee if that is what the
parties agree. In this case it is common ground that there was no agreement on
the rate of commission. What, then, is a reasonable commission in all the
circumstances?
The
plaintiffs’ case, as I have said, was that £276 was a reasonable sum by way of
commission. There was no evidence at all on the other side as to what would be
a reasonable rate of commission in the circumstances. Some figures were
mentioned. I have already referred to the figure of £60 as the figure said to
have been arrived at costing it out on a quantum meruit basis–whatever
that means. But, since this was a contract to remunerate the plaintiffs by way
of commission, that is quite irrelevant. The only other little bits of evidence
before the learned judge were: first, the alleged statement by the defendant
that he thought that the commission was a little too high. There was also
evidence that after he had received his bill he suggested that the plaintiffs
should accept half the commission; and at the same time he seemed to be
suggesting in the course of his evidence that £45 would be a fair remuneration.
So the judge was left, as far as I can see, with virtually no material at all
upon which to base an assessment of what was reasonable other than the
plaintiffs’ evidence that they had charged on the footing which was in effect
common in the trade–the old scale fee. True it is no longer binding as a
minimum scale; but they said it still represents a reasonable, in the sense of
a normal, sort of charge for this kind of work. There was really no evidence to
the contrary at all.
It is said
that the learned judge was wrong in approaching the case on the basis of
ascertaining what was in the contemplation of the parties. It seems to me, with
respect, that it is perfectly open to a learned judge to approach a case of
this kind in that way. If the evidence before him enables him to arrive at a
conclusion as to what the parties actually had in mind, then it is not
necessary to go and look for implied terms or find ‘reasonable’ figures. If, on
the other hand, it is necessary to find what was a reasonable rate of remuneration,
in my judgment the way the learned judge approached the matter was perfectly
reasonable, given the material that was before him.
Mr Altman has
suggested that the learned judge might have considered the scale of commission
which is fixed for sales under the order of the court. That scale is to be
found on p 495 of the White Book in a note to Order 31 rule 2. It gives a lower
rate than the scale used by the plaintiffs. On the other hand, I observe from
the note that it does not include any advertising cost, which is reimbursed
separately and only if authorised by the court before it has been incurred or
has afterwards been ratified by the court. So one does not know at all how
relevant that scale is to the circumstances prevailing in Bridlington in 1977.
However, the matter cannot be taken any further because the learned judge was
not referred to the scale at all and no argument was addressed to him to
suggest that that would be a more reasonable rate of remuneration than the
figure that the plaintiffs in fact charged.
Mr Altman
referred us to the case of Re Wolfe (deceased): Heller v Wolfe
[1952] 2 All ER 545, which is a judgment of Roxburgh J; but, with respect, I do
not think it carries the matter any further.
In my judgment
there was only one matter here for the learned judge to decide on the evidence
before him and that was, what was a reasonable rate of commission in the
circumstances of this case? It was open
to the judge, in my view, to arrive at the conclusion which he did on the
evidence, because there was virtually no other evidence before him.
The only other
point which should perhaps be mentioned is that the learned judge, it is
submitted, did not reflect in his assessment the remark of Mr Lewis about ‘We
are the cheapest in town.’ That seems to
me very much a matter for him, to decide whether that observation was enough to
justify any substantial reduction in the amount claimed; and anyway Mr Lewis
agreed to reduce the fee claimed by £10.
For those
reasons, in my judgment this appeal must fail and should be dismissed.
BRIDGE LJ
agreed.
Also agreeing,
MEGAW LJ said: Mr Altman has said everything that can possibly be said in the
way of seeking to suggest that the learned judge arrived at a wrong conclusion.
It appears to me that this is not a case which gives rise to any question of
general principle at all. I certainly would not suggest for a moment that the
learned judge in this case intended to establish or accept the proposition
that, in any case in which an agreement is made between an estate agent and the
client of an estate agent under which the estate agent agrees to sell the
client’s house and nothing specific is said as to the remuneration, the estate
agent is, necessarily and as of course, entitled to recover remuneration on
what used to be the scale, or on any other particular basis which he is in the
habit of charging. But on the facts of this case–which are what concern us–the
judge, as I understand it, on the evidence accepted that it was known to and
understood by the defendant, as a result of experience of scale fees on past
sales which had been conducted on his behalf, that the sort of bill which was
to be expected was the sort of bill which was here submitted. The learned
judge, on the evidence, was entitled to arrive at his judgment on that basis;
and I agree that the appeal must be dismissed.
The appeal
was dismissed with costs.
