Cases - London Mews Co Ltd v Burney
Record details
- Name
- London Mews Co Ltd v Burney
- Date
- [2003]
- Citation
- EWCA Civ 766
- Legislation
- Keywords
- Estate agency - commission - Estate Agent (Provision of Information) Regulations 1991
- Summary
-
The claimants entered a sole agency agreement with the defendant vendor. The agreement used the standard form of words set out in the Estate Agent (Provision of Information) Regulations 1991, which provides for commission for the introduction of a purchaser during the period of sole agency, whether introduced by the sole agent or another agent.
The claimants prepared particulars of the defendant's property and advertised it in the press. A second agent, Kaye & Co, saw the advertisements and asked for a copy of the particulars for circulation to their clients. The claimants supplied the particulars but did not appoint Kaye as their subagents. Kaye then put the particulars on their own headed paper.
A prospective purchaser, not retained by Kaye, saw the particulars and told Kaye that he wished to view the property. Kaye informed him that they were not retained by the vendor but said they could get him into the property if he agreed to pay a commission of 1%. The purchaser expressed dissatisfaction with this way of doing business and did not agree to pay the commission. He was informed by Kaye that he could gain access to the property through the estate agents employed by the vendor, or by making his own private enquiries. Kaye would not inform him who the agents were, so he wrote to the vendor and proposed saving commission by dealing directly.
During negotiations, the vendor wrote to the claimants stating that he was taking the property off the market. After a sale was agreed, the claimants found out about it and claimed commission. The vendor denied liability on the ground that the chain of causation was broken:
- first because the introduction by the second agent was made without authority; and
- second because the purchaser was not put in touch with the claimants.
So the claimants had not introduced a purchaser as they did not 'lead' the purchaser to the transaction, applying the words of Lord Justice Nourse in John D Wood v Dantata. Two of the judges in the Court of Appeal had little difficulty with either claim. First, in circulating the particulars, the plaintiffs had not done anything they were not entitled to do. So the case of John McCann v Pow in which the second agent was appointed as a subagent without authority, could be distinguished. It was clearly the work of the claimant in preparing the particulars that had introduced the purchaser. Second, the words of Lord Justice Nourse were used in the context of 2 agents, in a rather peculiar case, competing for 1 commission, and were not to be extrapolated from as a basis for claiming that a mere introduction was insufficient to earn commission. If that were the case 'It would ... drive a coach and horses through the agreements which all estate agents make with vendors'. It would mean, using the example of Lord Justice Kay, that an agent would be denied commission where a person, having seen the agent's 'For Sale' sign, knocked on the door of the purchaser and then proceeded to negotiate a sale privately with the vendor.
The third judge, Mr Justice Lindsay, had difficulty distinguishing the John McCann case and decided the issue on a different ground, albeit in favour of the claimants. The facts of John McCann are similar, except that the second agent was employed as a subagent. In that case, Lord Denning stated that the introduction of the purchaser was not made by the plaintiff estate agents. The basis of his judgment was that the introduction was made by the subagent, but without authority. So Mr Justice Lindsay stated:
'If what had been done by McCann in that case did not suffice to amount to the introduction of a purchaser, I have difficulty in seeing why the extremely comparable acts done by [London Mews] in this case could suffice.'
So he turned to the alternative basis of claim that, under the terms of the sole agency agreement, introduction by another agent during the period of agency entitles the agent to commission. So the claimants won whether they were the effective cause or not.