Glentree Estates Ltd v Holbeton Ltd

Estate agent – Commission – Respondent vendor retaining appellant and another agent on multiple agency basis – Appellant showing property to potential buyer – Offer to purchase rejected – Buyer reviewing property through other agent three months later and negotiating directly with respondent to purchase at higher price – Chain of causation held to be broken such that appellant not entitled to commission on eventual sale – Whether appellant the or an effective cause of sale – Appeal dismissedThe respondent owned a residential property on Bishop’s Avenue, London N2. It retained the appellant and another agent on a multiple agency basis to sell the property with an asking price of £22m. In December 2008, the other agent learnt through an intermediary of a potential buyer, JI, who was looking for a property on the avenue, and provided him with the details of the property. In March 2009, a sales negotiator employed by the appellant showed the property to JI. The same or the next day, JI had another viewing of the property with the other agent. He made an offer of £10m, which was rejected.Shortly thereafter, JI purchased a nearby villa for £5.8m. He continued to show interest in other properties in the area but made no further enquiries concerning the respondent’s property. However, in June 2009, he viewed the property again, independently of either agent, having been informed by intermediaries of a firm of solicitors who claimed that they could secure it for £12m. Although that proved to be untrue, in late June 2009 JI approached the other agent again and, after a further viewing of the property, negotiated directly with the respondent to purchase it for consideration of £10m cash together with the nearby villa that he had previously acquired. The appellant played no part in those events. Contracts were exchanged and the sale was completed in July 2009.Thereafter, the appellant claimed commission of £368,000, inclusive of VAT, on the sale. The respondent refused to pay, although it paid a commission to the other agent. The appellant brought proceedings against the respondent to recover the commission. The claim was dismissed on the ground that the appellant had not been the, or an, effective cause of the sale to JI; the judge inferred that, between the rejection of JI’s first offer of £10m until the revival of his interest in June, JI had lost interest in the property such that the chain of causation in respect of the appellant’s involvement was broken.The appellant appealed. It contended that the inferences drawn by the judge were perverse and that the only natural inference, given the short time-frame, the proven continuing interest of JI in other high-value properties in the area and the fact that he did purchase the respondent’s property in July 2009, was that he had never ceased to be interested in purchasing it at the right price.Held: The appeal was dismissed.The inferences drawn by the judge were not perverse. They were permissible even if not inevitable. The transactions were out of the ordinary. The fact that JI, within three days of the rejection of his £10m offer for the property, proceeded to purchase the other villa might not in itself have justified the inference of a break in the claim of causation, given that JI had continued to be interested in other properties in the area. However, although JI had continued to be in touch with the appellant in respect of other properties, no further discussions had taken place between them about the respondent’s property at any stage after the rejection of the £10m offer in March 2009. It was a reasonable inference that JI had decided against that property because he considered it to be unattainable at a price that he was prepared to pay. It had only come back within his contemplation when he was misinformed in early June that an offer of £12m would be acceptable. Although the time-frame between March 2009 and the events of June/July 2009 was short and JI did proceed to buy the property for a price in the region of £16m, those objective facts did not establish that the judge’s inferences about JI’s state of mind in March were perverse. The finding that the appellant was not the or an effective cause of the eventual sale was unassailable.The test of “the” or “an” effective cause continued to complicate cases about estate agents’ commission. The authorities were equivocal as to whether, in the absence of an express term, “an” effective cause could be sufficient: Foxtons Ltd v Bicknell [2008] EWCA Civ 419; [2008] 2 EGLR 23; [2009] 24 EG 142 considered. The courts had understandably been anxious to avoid, wherever possible, the liability of a vendor with multiple agents having to pay more than one commission, although there was no legal presumption either way. However, in the instant case, the consequence of the judge’s finding was that the appellant had not established that it was either “the” or “an” effective cause of the sale.Robert Deacon (instructed by Ckft Solicitors) appeared for the appellant; Adam Solomon (instructed by Ross & Craig) appeared for the respondent.Sally Dobson, barrister