Christie Owen & Davies plc v Ryelance and others

Sale of property — Agency agreement — Construction — Sale to company owned by person to whom claimant agent had earlier provided sales particulars — Purchaser approaching seller directly after end of agency agreement — Whether claimant introducing purchaser — Whether commission payable — Claim allowed The claimant was an estate agent specialising in the sale of business and commercial premises. The defendant family owned a care home, which they instructed the claimant to market for sale. The agency agreement provided that the claimant should have sole selling rights for a certain period, following which, under clause 5(b), it would still be entitled to commission if contracts were exchanged on a sale to a purchaser that had been introduced to the defendants during that period. The sole agency was terminated in late 2001. Subsequently, the claimant was contacted by a potential purchaser, G, to whom it had earlier sent sales particulars for the property. It informed her that the property had been taken off the market. G later approached the defendants via another agent, and, in May 2003, a sale of the property was completed to a company owned by G and incorporated for that purpose. Upon hearing of the sale, the claimant invoiced the defendants, under clause 5(b) of the agency agreement, for a commission of 3.75%, on the basis that the purchaser had been introduced to the defendants during the term of the sole agency. The defendants disputed their liability to pay, and the claimant brought proceedings to recover the commission. Issues arose as to the meaning of “introduction” and “purchaser” in the agency agreement. The defendants argued that the company, and not G, was the purchaser, and that the claimant could not have introduced the company because it had not been incorporated until a year after the end of the sole agency. The claimant submitted that “purchaser” included any vehicle that the purchaser used, whether in the form of a trust or a company or any other form of business association. Otherwise, the commercial purpose of the contract would be frustrated. Held: The claim was allowed. Giving the word its ordinary meaning, G had been “introduced” to the defendants during the term of the sole agency. Although the claimant had done no more than send a copy of the sales particulars, the information contained within those particulars had, from the time of its initial circulation, been important to the purchaser’s continued interest in the property. That interest had never been extinguished, and, thus, it was and remained an effective cause of the sale, and assisted in bringing a purchaser to the transaction: Nahum v Royal Holloway and Bedford New College [1999] EMLR 252, Egan Lawson Ltd v Standard Life Assurance Co [2001] 1 EGLR 27; [2001] 08 EG 168 and John D Wood v Dantata [1987] 2 EGLR 23; (1987) 283 EG 314 applied. The claimant’s interpretation of the word “purchaser” was correct. The most significant factor was the need to ensure that devices were not used by purchasers to avoid the protection that an agent needed in such circumstances, and any reasonable construction should seek to give effect to the commercial purpose. It followed that clause 5(b) was effective and that the claimant was entitled to commission for introducing the purchaser, namely the company, as a purchase vehicle for G, to the defendants. Duncan Macpherson (instructed by Royds Solicitors) appeared for the claimant; Simon Gorton (instructed by Haygarth Jones, of St Helens) appeared for the defendants. Sally Dobson, barrister