Cases - Michael Harwood t/a RSBS Group v Smith
Record details
- Name
- Michael Harwood t/a RSBS Group v Smith
- Date
- [1998]
- Citation
- 1 EGLR 5
- Legislation
- Keywords
- Estate agency - Estate Agents (Provision of Information) Regulations 1991
- Summary
-
The plaintiff estate agent was instructed by the defendant vendors to find a purchaser for a residential home. The agreement gave the plaintiff sole selling rights for 6 months. The sole selling rights explanation in the Estate Agents (Provision of Information) Regulations 1991 was incorporated into the contract. The agreement also expressly precluded the defendants from offering the property privately. The defendants, responding to a newspaper ad, found a purchaser themselves, and exchanged contracts with the purchaser 2 days after the sole selling rights agreement expired. The plaintiff claimed commission on the basis that the purchaser had been, in the words of the explanation, 'introduced to you' during the period of the sole selling agreement. However, the Court of Appeal held that the words 'by us' were implied after the words 'introduced to you'. Therefore no commission was due.
The Court of Appeal noted that the first paragraph of the statutory explanation, dealing with exchange of contracts during the period of sole selling rights, provides for commission 'even if the purchaser was not found by us but by another agent or by another person including yourself'. The wording is comprehensive. But in the second paragraph, concerned with exchange after the agreement has expired, the words 'introduced to you' are not so qualified and are followed by the words 'or with whom we had negotiations about the property during that period'. The court took the view that the second paragraph would be 'reasonably understood by a client' as providing for commission where either:
- the agent introduces the purchaser; or
- the agent does not introduce the purchaser but negotiates with them.
If this were not the case and commission becomes due if the purchaser is introduced by another agent, there would be no point in including part (b); the commission would be payable anyway. The court observed that, given the purpose of the regulations to bring home clearly to the client when he would be liable for commission, the explanation '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'. Furthermore, the argument that the statutory wording should be construed in the context of the explanation of sole agency is of little relevance to a contract in which the other explanation does not appear.
However, Lord Justice Pill observed in passing that the point at issue in the case could be academic because the damage, which flowed from the breach, 'was in the commission which Mr Harwood would have earned had [the defendants] referred the prospective purchaser to him as the agent with sole selling rights'. Unfortunately, the court was not called upon to make a finding on this point.