Estate agents — Sale commission — Construction of agreement — Estate Agents (Provision of Information) Regulations 1991 — Exchange of contracts after expiration of sole selling right period — Whether purchaser must be introduced by estate agent — Whether estate agents entitled to commission
In July 1994
the plaintiff estate agent was instructed by the defendant vendors to sell
their property upon terms giving the plaintiff sole selling rights during a
specified period. The agreement provided that commission was payable if
unconditional contracts were exchanged after the specified period ‘to a
purchaser who was introduced to [the vendors] during that period or with whom
we had negotiations … during that period’. The estate agent accepted the termination
of the agreement on January 14 1995. On January 16 1995 the defendants
exchanged contracts with Mr & Mrs G, after the defendants had answered
their newspaper advertisement. At no stage was the estate agent involved. The
plaintiff claimed commission under the agreement or alternatively damages for
breach of contract. The plaintiff appealed the decision of the court below
where it was held that on the true construction of the agreement he was not
entitled to pursue his claim for commission.
as would be reasonably understood by a client, the right to the commission
covers two alternatives, either the purchaser has been introduced by the agent
or the purchaser has been introduced to the vendor by somebody else, but the
estate agent has negotiated with him. The agreement did not mean that
commission was payable where a purchaser was introduced by anyone.
defendants in offering the property privately was the commission the estate
agent would have earned had they referred Mr & Mrs G to the agent with sole
selling rights.
The following
cases are referred to in this report.
Peter
Yates & Co v Bullock [1990] 2 EGLR 24;
[1990] 37 EG 75, CA
Wood
(John D) & Co v Dantata [1987] 2 EGLR
23; (1987) 283 EG 314, CA
This was an
appeal by the plaintiff, Michael Harwood t/a RSBS Group, against the decision
of Judge Hamilton, in Hitchin County Court, dismissing his claim for summary
judgment and for a determination under Ord 14A in proceedings for commission or
alternatively damages against the defendants, Peter James Smith and Anne
Kirkland Smith.
Brian Riley
(instructed by Howe Roche & Waller, of Stevenage) appeared for the plaintiff;
Antonia Morris (instructed by Chivers Walsh Smith Irvine & Co, of Bradford)
represented the defendants.
Giving
judgment, HOBHOUSE LJ said: Mr Michael Harwood, the plaintiff in this
action, is an estate agent who in 1994 was carrying on business in Leeds under
the name ‘The RSBS Group’. He was engaged by the defendants, Mr and Mrs Smith,
who owned the Norwood House Residential Home in Scarborough, to act as their
agents with sole selling rights to sell Norwood House. The agency was to last
for a minimum of six months. So although on November 10 1994 the Smiths gave Mr
Harwood written notice to terminate his agency, it is accepted that it
continued until January 14 1995. On January 16 1995 the Smiths exchanged
contracts for the sale of Norwood House to Mr and Mrs Gallacher with completion
later the same day.
Mr Harwood has
commenced proceedings claiming from the Smiths either a commission of three and
a half percent on the price at which Norwood House was sold by the Smiths to
the Gallachers or alternatively (in a form which he has not yet properly
pleaded) liquidated or other damages for alleged breach of contract on the part
of the Smiths.
He applied
under Ord 14 for summary judgment. The district judge declined to accede to
this application but made an order for an interim payment, it would seem on the
basis of the allegation of breach of contract. The matter was appealed to Judge
Hamilton, sitting at Hitchin County Court. It was agreed between the parties,
with the concurrence of the judge, that the claim for commission depended upon
a point of law which should be decided under r 14A. The question of the
alternative breach of contract claim and the interim order were stood over; if
Mr Harwood succeeded in his commission claim, the damages claim would be
academic. The judge decided the Ord 14A question against Mr Harwood. Mr Harwood
has appealed that decision to this court. We have had the assistance of
argument from Mr Brian Riley, for the plaintiff, and Miss Antonia Morris, for
the defendants.
The point of
law for determination under Ord 14A is:
Whether on a
true construction of the clause of the Plaintiff’s terms of business and in
particular (b) of the sole selling rights section, remuneration (of 3.5% of the
sale price) is payable to him in the circumstances which have arisen in this
case, namely, during the currency of his agency agreement with the Defendants
they without any involvement from him answer a newspaper advertisement which
has the eventual consequence that they sell their business to the placers of
that advert after the expiry of the period of the agency commission.
The contract
is evidenced by the letter dated July 15 1994, which Mr Harwood sent to the
Smiths. It is headed ‘Terms of Business’. And read:
Re: Norwood
House Residential Home — Scarborough
I refer to my
visit to your property and your business and would like to take this
opportunity of thanking you for the time and courtesy extended and for the
information kindly provided. We are pleased to write and confirm our
instructions to proceed and to enclose a copy of the business description to be
used. Our Terms of Engagement are printed overleaf. We confirm that we are to
proceed on your behalf on the following basis:
1. The asking
price is to be £290,000, plus sav.
2. We are to
act in the capacity of Agents with Sole Selling Rights as per Scale A referred
to in our Terms of Engagement and our fee will be 3½% of the agreed price
excluding stock, plus VAT, as agreed, with a minimum charge of £2,500 plus VAT.
3. The
initial Sole Selling Rights period of six months must be terminated by the
Vendor giving four weeks notice in writing to expire at the end of the period,
or it will continue indefinitely until such four weeks notice is given and
expires. If Sole Selling Rights no longer apply, terms are then changed and the
fee will be increased to 4% plus VAT with a minimum charge of £3,000 plus VAT.
The document
below was a printed document under the heading ‘The RSBS Group Legal
Definitions, Fees and Terms of Engagement’. The material parts read:
1. Definitions
In common
with all Estate Agents we are now obliged under Section 18 of the Estate Agency
Act 1979 to provide certain information in advance to potential clients with
regard to certain definitions which apply between Agents and Vendors. To comply
with the legislation all Agents must use exactly the same terms. In particular
the regulations cover two main definitions, these being ‘sole selling rights’
and ‘ready willing and able purchaser’.
|
Ready willing and able |
|
A |
|
You will be liable to |
|
Sole selling rights |
|
You |
|
(a) If |
|
(b) If unconditional |
2. Fees
Scale A (sole selling rights
freehold/leasehold)
A fixed fee
or a percentage of the total price of Leasehold/Freehold property, including
Goodwill, Fixtures, Fittings and Equipment plus VAT. The commission rate is
discounted from our standard rate in consideration of ‘Sole Selling Rights’
being granted for a minimum period as agreed and defined overleaf, during which
you are precluded from offering the property/business privately, withdrawing
instructions to the RSBS Group or instructing any other agent, other than by
payment of the minimum charge as stated. The initial Sole Selling Rights period
must be terminated by the Vendor(s) giving four weeks notice in writing to
expire at the end of the period, or it will continue indefinitely until such 4
weeks notice is given and expires. If sole selling rights no longer apply, the
fee or percentage commission will be agreed in our Terms of Business overleaf …
3. Terms of engagement
Our terms of
engagement are as follows:–
(i) The RSBS
Group agree to act as the Vendor’s Agent and to use all best endeavours to sell
the Vendor’s business and property. The Vendor(s) agrees that this property
will not be advertised for sale by any other agent on his/her/their behalf at a
lower price than that agreed by us, unless The RSBS Group are also instructed
at such a lower price.
(ii) The
agency fee is calculated in accordance with our scales A, B, or C and will be
payable in the event of The RSBS Group introducing a purchaser who is ready
willing and able to purchase the property or in circumstances described above …
(v) In the event
of The RSBS Group introducing a prospective purchaser who instructs Solicitors
to proceed with the transaction and the Vendor(s) withdraws for whatever
reason, the Vendor will pay to The RSBS Group one half of the fee that would
otherwise have become due on completion. The Vendor(s) and The RSBS Group
acknowledge that such a sum will represent a fair and reasonable payment to The
RSBS Group for the work which they will have carried out by that time …
(vii) The
RSBS Group undertake to pass all offers received as quickly as is practicable
to the Vendor(s), and these will be confirmed in writing together with any
disclosures as to the ability of the purchaser to proceed and/or their
financial situation, eg mortgage requirement and the arranging of the same.
The two
definitions appearing in boxes in this document are taken from and conform to
the 1991 Estate Agents (Provision of Information) Regulations made under
section 18 of the Estate Agents Act 1979. The purpose of section 18 and of the
regulations is to attempt to ensure that the person instructing the estate
agent shall know precisely what his liabilities to the estate agent are. Part
of the mischief to which the Act and regulations were directed was the use by
estate agents of expressions such as ‘Sole Agency’ or ‘Sole Selling Rights’,
which had no clearly defined meaning and the implications of which would not be
fully understood by the client.
The relevant
facts of the present case can be shortly summarised. Mr and Mrs Smith
instructed Mr Harwood in July 1994. Although he placed some advertisements for
the property, he did not succeed in getting any offers for it, nor, so far as
the Smiths were concerned, did his efforts at marketing seem to be effective.
In mid-October the Smiths saw an advertisement in the classified section of the
Scarborough Evening News. Under the heading ‘Property Wanted’ it said
that a residential nursing home was wanted and called for responses to a box
number. Mr Smith responded to the advertisement saying that he was the owner of
a nursing home in Scarborough and that if the advertiser was interested he
should telephone Mr Smith at a number which he gave him. The persons who had
placed the advertisement were the Gallachers. They telephoned the Smiths and
went to see Norwood House. The Gallachers were interested in buying it and
negotiations between the Gallachers and the Smiths ensued. Mr Harwood was at no
stage involved. He apparently did not see the advertisement or if he did, did
not respond to it. On November 10, having taken legal advice, Mr Smith wrote to
Mr Harwood saying:
My wife and I
are very disappointed in the lack of results from placing the above in your
hands. It is now about four months since you began marketing and to date we
have had only one viewing resultant and there was confusion even in relation to
that. We are basically unhappy to continue with you on the same basis and
request alteration to non-sole agency basis if possible. Alternatively, we give
notice of our intention to discontinue your involvement as from 14th January
1995 and would appreciate your written confirmation to that effect.
The response
of Mr Harwood dated November 15 was: ‘I confirm that our contract will end on
14th January 1995’. He also stated that he had been taking active steps to market
the property and would continue to do so until the expiry of the agency.
Under these
circumstances the first question one would ask was whether this was truly a
case where there had been any introduction by anyone of the Gallachers to the
Smiths. No third party was involved. They simply found each other without the
need for anybody to introduce them. However, Judge Hamilton said:
I find no
difficulty in ruling that the purchaser was introduced to the defendant vendors
during the specified period in the sense that the introduction was effected by
the purchaser himself.
Miss Antonia
Morris, for the Smiths, has expressly accepted this finding. It was, she said,
in accordance with what Nourse LJ had stated in John D Wood & Co v Dantata
[1987] 2 EGLR 23, at p25, where he confirmed:
The familiar
meaning of the word introduction as the bringing together of two people who
have not previously met.
see also Peter
Yates & Co v Bullock [1990] 2 EGLR 24 at p25. I accordingly
proceed on the basis that there was an introduction of the Gallachers to the
Smiths effected by the Gallachers.
The question
argued on this appeal is the entitlement to commission. We are not concerned
with the claim for damages which Mr Harwood is making against the Smiths for
responding themselves to the advertisement of the Gallachers and thereafter
negotiating with them independently of Mr Harwood. The judgment of Judge
Hamilton appealed from does not touch upon that question. The effect of his
judgment was that Mr Harwood was not entitled to take the short cut of claiming
a commission and must be left to whatever remedies he had for any breach of
contract he could establish.
The point with
which we have to deal is one of the construction of the contract between the
Smiths and Mr Harwood. It must be decided having regard to the contract as a
whole. The structure of the contract is clear. The obligation of Mr Harwood is
to act as the vendors’ agent and use his best endeavours to sell the property.
He also undertakes to pass all offers received as quickly as practicable to the
Smiths. His primary right to be paid a commission is upon his introducing a
purchaser who is ready, willing and able to purchase the property. If the
prospective purchaser instructs a solicitor but then declines to proceed, a
half commission is payable and, if it is the Smiths who decline to proceed,
they remain liable for the full commission. Thus the primary right to
commission depends upon the agent having introduced to the vendor the ready,
willing and able purchaser. It is the agent’s introduction that earns him the
commission.
The relevance
of giving the agent sole selling rights is that it reduces the scale upon which
the commission is calculated and provides for a specified period during which
the sole selling rights are to subsist. In return for the reduced scale of
commission the rights of the agent to be paid commission are made more
extensive and certain obligations of the client are introduced into the
contract. These obligations are set out in the clause headed ‘Scale A (Sole
Selling Rights Freehold/Leasehold)’. The relevant words are (emphasis
supplied):
The
commission rate is discounted from our standard rate in consideration of ‘Sole
Selling Rights’ being granted for a minimum period as agreed and defined
overleaf, during which you are precluded from offering the property/business
privately, withdrawing instructions to The RSBS Group or instructing any other
agent, other than by paying of the minimum charge as stated.
This clause
imposes obligations upon the client not to offer the property privately or
instruct any other agent other than upon payment to the agent of the minimum
charge stated, that is to say £2,500 plus VAT. But the clause also clearly
contemplates that there may be circumstances under which the agent may have to
be content with a claim in damages and not be able to recover the commission.
With this
background one comes to the definition of sole selling rights itself. It
contains two paragraphs. The first paragraph, (a). deals with the exchange of contracts
during the period of sole selling rights and gives an unqualified right to the
full commission regardless of how that exchange came about. The wording is
comprehensive: ‘even if the purchaser was not found by us but by another agent
or by another person including yourself’. The second paragraph, (b), covers the
exchange of contracts after the expiry of the period in which case the
commission is payable if the purchaser was a person ‘who was introduced to you
during the period or with whom we had negotiations about the property during
that period’. There are two phrases linked by the word ‘or’. The second phrase
deals with the situation where the agent has negotiated with the relevant
person during the period. Thus the person has not been introduced by the agent
but the agent has been involved in an attempt (later successful) to sell the
property to that purchaser. I consider that the first phrase should be
construed similarly: it too contemplates that the agent has done something —
that, in contrast with the situation covered by the second phrase, he has
introduced the relevant person to the client.
Thus, para (b)
appears to cover two alternatives: either the individual has been introduced to
the client by the agent or the individual has been introduced to the client by
somebody else, but the agent has negotiated with him on behalf of the client.
This is the meaning of the paragraph which is arrived at on a consideration of
how the language used would be reasonably understood by a client. As I will stress,
I consider this to be the critical consideration.
I can
visualise two arguments which, although they were not the arguments of counsel
for Mr Harwood, might be at first sight be thought to support a different
conclusion. First, it could be suggested that the explanation of the reference
to negotiations during the period could be to do no more than cover the
situation where the eventual purchaser was already known to the vendor before
the sole selling rights period started, but with whom the agent had negotiated
during the period. This is a possible explanation which would reduce the force
of the inference to be drawn with regard to the first phrase, but it is no more
than an argument and if that was the intention of including the second phrase
it could have been so stated.
The second
possible argument is that if the sole selling rights clause is to be read in
the way which I prefer, there will then be only a very narrow distinction
between the entitlement to commission under para (b) and the entitlement to
commission for the introduction of a ready, willing and able purchaser. If para
(b) is to be read as referring only to an introduction by the agent, it must be
supposed that it was the introduction of a person who is not at that time
ready, willing and able to purchase the property. However, again, I do not
consider this to be a persuasive consideration. It is well within the
contemplation of the parties to this contract that the agent may introduce to
the client a person who has expressed an interest in the property without at
that time proceeding any further, but who later (outside the period) chooses to
do so. This, in my judgment, is the situation which is dealt with in the first
part of para (b). If it is not what is there dealt with, it certainly is not
clearly stated.
In my
judgment, bearing in mind that the purpose of the definition is to bring home
clearly to the client the circumstances under which he will become liable to
pay commission, the definition does not make it clear that he is still to pay
commission in respect of an exchange of contracts outside the period when the
introduction was not effected by the agent.
Another
argument is derived from the regulations themselves. The Schedule to the
regulations includes a definition of the term ‘Sole Agency’. This definition
gives an entitlement to commission on a sale to ‘a purchaser introduced by us
during the period of our sole agency or with whom we had negotiations during
that period; or with a purchaser introduced by another agent during that
period’. Looking at the Schedule alone it can be argued that the specific
language of this definition suggests that when a similar phrase is used in para
(b) of the definition of ‘Sole Selling Rights’, the phrase ‘introduced to you’
was deliberately left unqualified so that it would mean introduced by anyone.
But what has to be construed is not the statute as such but the use of those
words in a contract which probably does not include the other definition and
did not do so in the present case. The purpose of these definitions is that the
contract should be clear and not need to be construed by reference to another
instrument to which the client will not realistically be expected to have
access or to concern himself with.
Accordingly, I
do not accept the argument of Mr Harwood that the relevant words in para (b)
mean introduced by anyone. In my judgment, they mean what in context they would
reasonably be understood to mean by a client reading this document, that is to
say, introduced by the agent. In my judgment, the decision of Judge Hamilton
was correct and the appeal should be dismissed.
Agreeing, PILL
LJ said: Regulation 5(1) of the Estate Agents (Provision of Information)
Regulations 1991 (SI 1191 No 859) provides, in so far as is material:
If any of the
terms ‘sole selling rights’ ‘sole agency’ and ‘ready, willing and able
purchaser’ are used by an estate agent in the course of carrying out estate
agency work he shall explain the intention and effect of those terms to his
client in the manner described respectively below, that is to say —
(a) ‘sole
selling rights’, by means of a written explanation having the form and content
of the statement set out in paragraph (a) of the Schedule to these Regulations;
(b) ‘sole
agency’, by means of a written explanation having the form and content set out
in paragraph (b) of the Schedule to these Regulations;
(c) …
Provided that
if, by reason of the provisions of the contract in which those terms appear,
the respective explanations are in any way misleading, the content of the
explanation shall be altered so as accurately to describe the liability of the
client to pay remuneration in accordance with those provisions.
Para (a) of
the Schedule provides:
Sole selling rights
You will be
liable to pay remuneration to us, in addition to any other costs or charges
agreed, in each of the following circumstances —
if
unconditional contracts for the sale of the property are exchanged in the
period during which we have sole selling rights, even if the purchaser was not
found by us but by another agent or by any other person, including yourself;
if
unconditional contracts for the sale of the property are exchanged after the
expiry of the period during which we have sole selling rights but to a
purchaser who was introduced to you during that period or with whom we had
negotiations about the property during that period.
I will refer
later in this judgment to these paras as (a)(i) and (a)(ii). Para (b) provides:
Sole agency
You will be
liable to pay remuneration to us, in addition to any other costs or charges
agreed, if at any time unconditional contracts for the sale of the property are
exchanged — with a purchaser introduced by us during the period of our sole
agency or with whom we had negotiations about the property during that period;
or with a purchaser introduced by another agent during that period.
In his ‘Terms
of Business’, Mr Harwood twice used the expression ‘sole selling rights’ in the
context set out by Hobhouse LJ. Mr Harwood complied with regulation 5 and set
out verbatim para (a) of the Schedule to the regulations. The point of law
requires the court to determine the meaning of para (a) of the Schedule to the
regulations which has been incorporated into the contract.
A contract is
normally to be construed as a whole so that other provisions, for example, the
provision defining what Mr and Mrs Smith were precluded from doing in
consideration of ‘sole selling rights’ being granted (under the heading Fees:
Scale A (Sole Selling Rights Freehold/Leasehold)) might be relevant in
considering the meaning of the expression ‘sole selling rights’. However, in
this case, the court is invited by counsel to construe the expression,
incorporated from the regulations, without reference to other provisions of the
contract. That is, first, because of the procedural position under which Mr
Harwood has a separate claim for damages for breach of the ‘Scale A’ clause in
the contract, which I have just mentioned, by the Smiths. Upon that claim, the
district judge has found that there is a triable issue on the claim based on
debt, but that the Smiths are in breach of contract. He ordered them to pay the
sum of £3,000 as an interim payment of damages for the breach. Second, it is
because counsel for Mr Harwood does not want to run the risk of having other
clauses in the contract struck down for inconsistency with clauses incorporated
from the regulations. It is a curious result that, upon the point of law which
the parties seek to have determined, the court is asked not to consider the
overall contractual position between the parties, and I express my reservation
about the value of the exercise.
Upon the
facts, which have been stated by Hobhouse LJ, it is common ground that there
has been an ‘introduction’ for the purposes of para (a)(ii) of the Schedule.
The question is whether the expression ‘introduced to you’ in para (a)(ii)
under ‘sole selling rights’ is limited to an introduction by the agent, Mr
Harwood. I have not found this an easy question. In the regulations, from which
the clause is taken, ‘sole selling rights’ are distinguished from ‘sole agency’
and might be expected to give the agent greater protection when an introduction
occurs. Sole agency would not protect the agent when no agent is involved,
whereas sole selling rights might be expected to protect him. However, the
provisions relating to ‘sole agency’ are not a part of the contract. Counsel
for Mr Harwood relies on the absence of the words ‘by the agent’ or ‘by us’
after the words ‘introduced to you’ in para (a)(ii). The relevant introduction
did occur during the period when Mr Harwood had sole selling rights.
The reason
why, in agreement with Hobhouse LJ, I have come to the conclusion that the
appeal should be dismissed is the presence in para (a)(ii) of the second
alternative: ‘or with whom we had negotiations about the property during that
period’. The alternatives in para (a)(ii) each contemplate action ‘during that
period’, that is, the period of sole selling rights. There could be
‘negotiations’ involving the agent during that period following an introduction
before the period began, but counsel for Mr Harwood did not contend that such a
situation would be common upon the grant of sole selling rights or that it was
likely to have been in the contemplation of the draftsman. The second
alternative therefore contemplates ‘negotiations’ following an introduction
during the period other than by the agent. It protects the agent who has
negotiated without having introduced. If the first alternative covers all
introductions, however occurring, the second alternative is largely redundant.
The presence
of the second alternative in para (a)(ii) is a good ground for holding that the
first alternative was confined to introductions by the agent. Further, if there
is uncertainty in the wording of the clause, as, in my view, there is by reason
of the absence of a definition or explanation of ‘introduction’, the clause
should be construed more strongly against the party whose document it is. That
principle is not, in my view, defeated by the fact that the wording is
incorporated by virtue of a statutory instrument. Indeed, a stated purpose of
regulation 5 is to explain the intention and effect of the expression ‘sole
selling rights’ to the client. I prefer the construction that the
‘introduction’ contemplated in para (a)(ii) was introduction by the agent.
Upon the case
as presented to this court, the point at issue could eventually be academic
because it may be argued that the damage, which flowed from the breach of
contract by Mr and Mrs Smith in offering the property privately, was in the
commission which Mr Harwood would have earned had they referred the prospective
purchaser to him as the agent with sole selling rights. I raise the possibility
without, of course, making a finding.
I agree that
the appeal should be dismissed.
Also agreeing,
MUMMERY LJ said: I agree that this appeal should be dismissed. My
conclusions on the construction of ‘sole selling rights’ are as follows:
(1) Regulation
5 of the 1991 Regulations requires an estate agent to explain to his client the
intention and effect of the term ‘sole selling rights’ by means of a statement
having the form and content prescribed in para (a) of the Schedule to the 1991
Regulations. That statement, describing the circumstances in which the client is
liable to pay remuneration to the estate agent, should be construed in the
sense that a reasonable client, for whose benefit the explanation is provided,
would probably understand it.
(2) There is
no dispute that the statutory statement draws a clear line between, on the one
hand, the case of unconditional contracts for sale being exchanged in the
period of sole selling rights and, on the other hand, the case of
unconditional contracts for sale being exchanged after the expiry of that
period. On the facts here, the former case does not apply. In the latter
case, liability to pay remuneration depends on what was done ‘during that
period’. It is agreed that if the estate agent had negotiations with the
purchaser about the property during that period, he is entitled to
remuneration, even though: (i) the contracts for sale were not exchanged until
after the expiry of the period, and (ii) the purchaser was not
introduced to the client by the estate agent. That is not this case. The estate
agent did not have any negotiations with the purchaser during that period, or
at all.
(3) The
critical question on this particular remuneration claim, brought as an
application for summary judgment, has been identified by Hobhouse and Pill LJJ:
it is whether the purchaser under the contracts exchanged after the expiry of
the period ‘was introduced to’ the client during the period of sole selling
rights. The dispute has
purchaser was introduced.
(4) A
reasonable client of an estate agent would understand this part of the
statutory statement as applying only to an introduction of a purchaser to him by
the estate agent who is claiming remuneration from him. In the absence of
an express identification in the statement of the person who has effected the
introduction, four possibilities fall to be considered: there is the purchaser
who has introduced himself to the client: there is the client who has
introduced himself to the purchaser: there is the purchaser who was introduced
to the client by the estate agent; and there is the purchaser who was
introduced to the client by a third party (eg another estate agent). The
language of the statement, read in context, indicates to the reasonable client
that, for the estate agent to be entitled to remuneration for a sale which is
subject to exchange of contracts after the expiry of the period, he must have
done something for the client during the period. Thus, it is expressly provided
that, if he has conducted negotiations with the purchaser about the property
during the period, he is entitled to remuneration, no matter how the purchaser
was introduced to the client. But if, as here, the estate agent has not
conducted any negotiations with the purchaser about the property and can only
make a claim to remuneration by reason of an introduction of the purchaser
having taken place during the period, a reasonable client of the estate agent
would sensibly understand the obligation to pay remuneration as only applying to
the case where the purchaser was introduced to him by that estate agent.
(5) If the
provision were read in the wider sense contended for by the appellant, so as to
embrace all possible ways in which the purchaser might be introduced to the
client, the latter part of the provision relating to remuneration for the
conduct of negotiations with the purchaser about the property would be
redundant. There would be no point in expressly providing that the estate agent
would be entitled to remuneration if he had conducted any negotiations with the
purchaser about the property: negotiations by the estate agent with the
purchaser could not begin to take place, unless a purchaser had been introduced
in one way or another; and, if that had happened, then, on the appellant’s
construction, the estate agent would, in any event, be entitled to remuneration
without conducting any negotiations. On a sensible reading of the whole
statement, the liability to pay remuneration in a case such as this must,
therefore, be limited to the purchaser who was introduced to the client by that
estate agent during the period. If the purchaser is introduced to the client in
any other way, the estate agent can only claim remuneration if he has conducted
negotiations with the purchaser about the property during that period.
Appeal
dismissed.
