Favermead Ltd v FPD Savills Ltd & others

Sale of property — Joint agency agreement — Applicant claiming property sold through third party — Respondents claiming commission under agency agreement — Applicant failing to pay statutory demand and seeking to restrain winding-up petition — Whether real and substantial dispute on question of liability — Claim allowed The claimant property developer owned premises in west London (the property). It entered into an agreement with the respondent estate agents as joint agents for the sale of the property, under which a fee would become payable if one of the agents introduced a prospective buyer who went on to purchase the property. In 2001, the claimant transferred the property to a subsidiary company. A subsequent article in the national press stated that the property had been sold, but the claimant wrote to the respondents explaining that the property was still for sale and that it wanted the agency agreement to continue. The property was sold in 2004 and commission was paid to T for effecting the purchase. However, the respondents invoiced the claimant for the fee payable under the agency agreement, arguing that they were entitled to commission of £1m plus VAT. It remained unpaid, and the respondents issued a statutory demand. The claimant sought to restrain the presentation of a winding-up petition by the respondents based upon the statutory demand. It contended that the agency agreement contained an implied term to the effect that a fee would be payable only if the agents were the effective cause of the sale. Held: The claim was allowed. In all the circumstances, the claimant’s liability for the commission sought constituted a real and substantial dispute. The court would readily infer an implied term either that an agent was required to be an — or the — effective cause of the subsequent purchase. The agent had been engaged in the ordinary way to find a prospective purchaser, and it would not have fulfilled its engagement unless it had been the effective cause of the sale. It was necessary to consider the legislation against the relevant factual background and to decide whether, in that context, the relevant term was to be implied. In the absence of a sufficiently clear term to the contrary, it would be appropriate to imply into an agency agreement a requirement that the agent should be an effective cause of the sale. However, the court was not in a position to resolve that issue with regard to an application such as the present: Brian Cooper & Co v Fairview Estates (Investments) Ltd [1987] 1 EGLR 18 considered. Mark Warwick (instructed by David Conway & Co) appeared for the claimant; Mary Stokes (instructed by Garner Hutchings) appeared for the defendant. Eileen O’Grady, barrister