Fleurets Ltd v Dashwood

Sale of property – Appellant entering into sole selling rights agreement – Appellant agreeing to pay commission on sale – First agent introducing purchaser – Second agent concluding deal – Whether first agent entitled to commission originally agreed – Appeal dismissed – Cross-appeal allowedThe appellant’s property comprised freehold licensed premises above which was a three-bedroom flat that she wanted to sell. In 2003, she entered into an agreement with the respondent estate agent granting the sole selling rights to it unless determined by at least four weeks’ notice in writing. The contractual document was headed “Estate Agents Act 1979 Sole Selling Rights Agreement” and entitled the respondent to a commission on a sale to a purchaser “introduced to you during that period by us or any other person including yourself”. The respondent prepared the sales particulars and put the property details onto its website. Several people viewed the property but no offer was made. In December 2003, it was agreed that: (i) the signboard would remain on site; (ii) the property would remain on the market until the appellant returned from holiday; and (iii) persons making further enquiries would be informed that the matter was on hold until the new year. By a letter of January 2004, the respondent informed the appellant that it had received enquiries from six people, including A, who wished to inspect the premises. The appellant did not reply until February when she withdrew her instructions and asked the respondent to remove its signboard.In March, the respondent’s contract was terminated and the appellant instructed a new estate agent on the following day. A saw the property on the latter’s website and eventually purchased the property. On learning of the sale, the respondent sent an invoice for commission to the appellant. The appellant did not pay the invoice and the respondent brought proceedings in the county court. The judge rejected the argument that the agreement did not require the estate agent to establish effective cause, but found that the respondent had, in any event, been the effective cause of the sales transaction and that it was entitled to its commission. The appellant appealed and the respondent cross-appealed. Held: The appeal was dismissed and the cross-appeal was allowed.As a general rule, an estate agent was not entitled to a commission unless its services were the effective cause of the transaction being concluded. An agent had to earn its commission and where the agreement required it to find or introduce a successful purchaser, a term would be implied providing that the agent had to be the effective cause of the sale. Where there was no such requirement, the effective cause term would be implied only if it were needed to give business efficacy to the contract. A sole selling rights agreement provided the agent with an exclusive period of marketing and, consequently, the entitlement to a fee, even where a sale was concluded after the exclusive period, provided that the agent introduced the purchaser during that time. If the agent introduced the purchaser during the exclusive selling period, it would be entitled to commission even if another agent had concluded the deal. There was no business reason to imply effective cause into such a contract; it was inconsistent with the clear wording of the terms of the contract, unnecessary and did not pass the officious bystander test.The words “introduced to you during that period by us or any other person including yourself” in the present case differed from an obligation to introduce or find a purchaser. They merely created an obligation to introduce somebody who turned out to be the eventual purchaser even if that person became the purchaser by a route that was unconnected with the original agent. In the circumstances, the effective cause term was not implied in this particular contract: Christie Owen & Davies plc v King [1998] SCLR 786 considered.If that was wrong and effective cause had to be implied, the court had to consider the respective acts carried out by each of the competing agents to determine which of them was the effective cause of the purchase. Each case would depend upon its own circumstances and there might be a number of cases in which two agents’ fees were payable because of the nature of the terms of the agency contracts into which the vendor had entered: Peter Yates & Co v Bullock [1990] 2 EGLR 24; [1990] 37 EG 75, Christie Owen & Davies v Sykes [2002] EWCA Civ 1663 and Christie Owen & Davies plc v Ryelance [2005] 18 EG 148 (CS) considered. Nicholas Baldock (instructed by Lord & Co) appeared for the appellant; William Moffett (instructed by Sprecher Grier Halbarstam LLP) appeared for the respondent.Eileen O’Grady, barrister