Estate agents — Commission — Acquisition of land and resale of flats — Conflict of evidence — Plaintiff estate agents claimed commission under an alleged agreement by defendant property developers to pay commission both on the acquisition of land for development and on the resale prices of the flats to be built by the defendants — Defendants denied the existence of any agreement to that effect
written on behalf of the plaintiffs, after the defendants’ representative had
visited the site, was concluded in terms which, in the judge’s opinion, were
incompatible with a concluded agreement having then been reached about the
payment of fees — The letter mentioned that the plaintiffs were not instructed
by the vendor and that they would therefore look to the defendants for the
payment of commission if the defendants wished to pursue the acquisition to
completion — The commission mentioned was 2% plus VAT on the completed
acquisition price of the site and commission, as sole selling agents on the
future sale of the flats to be built, at 2% plus VAT on the completed selling
price of each unit — The judge’s finding was that no agreement had been reached
about fees, although the plaintiffs’ representative had persuaded himself to
the contrary — The judge did not question the honesty of witnesses on either
side
subsequent telephone conversations between the parties about fees and the judge
was satisfied that in the course of them the defendants said that they would
pay 3% on the acquisition price of the land but would not engage the plaintiffs
to sell the flats, unless persuaded about what the plaintiffs would do by way
of promotional activities — The plaintiffs replied that it would be better for
the defendants to explain what they wanted done — However, by that time the
defendants had decided that negotiations with the plaintiffs had come to
nothing and had made direct contact with the vendors, eventually purchasing the
land for £1.27m — There had been some further conflict of evidence as to what
took place during the telephone conversations, but the judge was satisfied that
the plaintiffs had put forward offers of £1.2m and £1.25m, which were rejected
conceded by the defendants that, whether the matter was put on the basis of
quantum meruit or contract, the plaintiffs were entitled to commission, which
the judge concluded should be at 3%, on the acquisition price — The judge
preferred to put the entitlement on the basis of contract —- The plaintiffs were
not entitled to anything on resales of the flats
No cases are
referred to in this report.
In this action
the plaintiffs, London Commercial & Land Ltd, sued the defendants, Beazer
Lands Ltd, for commission alleged to be due in respect of the purchase by the
defendants of land at Roselly and Hillcrest, Allum Lane, Elstree,
Hertfordshire.
Miss Jane
Mishcon (instructed by Hamlin Slowe) appeared on behalf of the plaintiffs;
Roderick Denyer (instructed by Stuart-Brown Practice, of Calne, Wiltshire)
represented the defendants.
Giving
judgment, SIR MICHAEL OGDEN QC said: The plaintiffs are estate agents.
The defendants are property developers. This action, which has come to trial
with commendable promptness, arises out of the purchase by the defendants of
property in Elstree. The plaintiffs claim commission on the sale price and on
the resale prices of the flats that the defendants built. The defendants deny
that there was any contractual agreement.
The first
issue is what was said on February 29 1988 between Mr Hall, who was and still
is employed by the defendants, and Mr Buktani, who was, but is no longer,
employed by the plaintiffs as a negotiator but who has a continuing interest in
the outcome of this litigation because he was employed on commission terms in addition
to his basic salary.
Mr Buktani
telephoned Mr Hall about the property in question. The former asserts and the
latter denies that during this conversation it was agreed that the defendants
would pay the commission fees proposed by Mr Buktani, being 2% on the
acquisition price and 2% on resales. Let me say at once that I regard both men
as honest witnesses.
I accept Mr
Hall’s evidence that he visited the site on his way to work on March 2. He was
able to do this because Mr Buktani had told him sufficient details of the
property to enable him to find it. It was unwise of Mr Buktani to do this,
unless there had been agreement on fees, because otherwise there was nothing to
prevent the defendants from negotiating a sale directly with the owners.
I accept the
evidence of Mr Hall and Mr Hitchman [the Land Director at Beazer (London)] that
Mr Hall had been instructed not to agree commission fees, so that if he did so
he was acting contrary to his instructions. I accept Mr Buktani’s evidence that
on the same day, February 29, he sent by fax a letter to the defendants. By
‘sent’ I mean that he intended that the letter should go that day and gave
instructions to his secretary to that effect. However, it is now plain that his
secretary did not attempt to dispatch it until the next day and because of a
malfunction it never reached the defendants. However, the letter was also
posted to the defendants, together with plans of the site, and that letter
reached the defendants on March 2 and I am not persuaded that anything was in
fact said — I am satisfied that Mr Hall first saw it after he had visited the
site.
The letter,
which contains the phrase ‘subject to contract’ to which, in the circumstances,
I attach no importance, is headed, ‘Re Land at Roselly and Hillcrest, Allum
Lane, Elstree’. It says:
Further to
our discussion this afternoon I have pleasure in enclosing a set of plans with
respect to the above mentioned site. Please note that we are not directly
instructed in this matter by the vendor and should you therefore wish to pursue
the acquisition to completion we would look to you for our normal introductory
commission based at a rate of 2% plus VAT of the completed acquisition price of
the site. We would also look to be retained as your sole selling agents in the
subsequent new units to be built, once again basing our commission rate at 2%
plus VAT of the completed selling price of each unit. In all cases our
commission will be payable on completion. I understand that the vendors are
seeking offers in the region of £1,350,000 subject to contract.
The rest does
not matter.
Of course, the
terms of that letter are not compatible with there having been a concluded
agreement about fees. In spite of everything urged upon me by Miss Mishcon, on
behalf of the plaintiffs, while I am sure that Mr Buktani genuinely believes
there was agreement about it, I am satisfied that he is wrong and simply
persuaded himself that there was such an agreement. If anything was said about
fees — and I am not persuaded that anything was in fact said — I am satisfied
that no agreement was reached on this topic.
Thereafter,
there were telephone conversations between the two men and it is plain that
there were arguments between them about fees. I am satisfied that Mr Hall said
that the defendants would pay 3% on the acquisition price but made it plain to
Mr Buktani that the defendants would not engage the plaintiffs to sell the
flats, unless Mr Hall’s superior could be persuaded to the contrary by a letter
from the plaintiffs explaining what they would do if employed to sell the
flats,
On March 16 Mr
Buktani wrote that it would be better for the defendants to state what they
wanted done. However, on the same date, the defendants, who considered that
negotiations with the plaintiffs had foundered, contacted the owners, whose
address they were able to discover from the architects who were named on the
plans, and eventually the defendants agreed to buy the property for £1.27m,
which they did.
However,
during the discussions between the two men, the defendants indicated what they
were prepared to pay for the property, but Mr Hall asserts that Mr Buktani
refused to put the offer forward unless his fee proposals were accepted. If Mr
Buktani acted in this way he, and a Mr Allsuch who was with him in his car when
one crucial conversation took place, acted with great folly because it must
have been obvious to them that the defendants could, as they did, contact the
owners and agree a sale without the intervention of the plaintiffs, as a result
of which the plaintiffs would lose the opportunity to gain a commission.
Mr Buktani
kept notes, and those appear in the bundle of documents before the court. They
show that he put forward an offer of £1.2m which was rejected, and there is
also a note that ‘Beazer upped the offer to £1.25m’.
I am quite
satisfied that Mr Buktani did put forward those offers and never said that he
would not do so. This being so, it is conceded by the defendants that, whether
the matter is put on the basis of quantum meruit or, as I consider it
more correct to do, put on the basis of contract, the plaintiffs are entitled
to commission, which I have concluded should be at 3%, on the acquisition
price. If it be necessary to put it in quantum meruit, I regard that as
a reasonable figure, although, as I have said, I prefer to put it on the basis
of contract. However, in view of my earlier findings, the plaintiffs are
entitled to nothing in respect of resales.
