Foxtons Ltd v Bicknell and another

Estate agent – Commission – Sole agency agreement – Commission payable if contracts exchanged at any time with a “purchaser introduced by” respondent agent during agency period – Sole agency determining – Appellant client selling through another agent to purchaser who had previously viewed through respondent – Whether commission payable to respondent – Appeal allowedIn 2004, the appellant appointed the respondent firm of estate agents to sell her house on a sole agency basis on the respondent’s standard terms. These provided for a commission of 2.25% of the sale price to be payable “if at any time unconditional contracts are exchanged… with a purchaser introduced by us during the period of our sole agency or with whom we have had negotiations about the property during that period; or with a purchaser introduced by… another agent during that period”. The respondent put the house on the market for an asking price of £1.4m, which was later reduced to £1.25m. In June 2005, it was viewed by L, who was enthusiastic about it. However, L viewed the property on behalf of his former wife who subsequently visited it and did not like it. The respondent did not have any further contact with either her or L.The sole agency was determined in July 2005, when the respondent agreed to act for the appellant under a multiple agency agreement. The appellant appointed an additional agent, which sent particulars of the house to L, discussed it with him on the telephone and arranged a further visit by him and his former wife. This resulted in an offer from the latter to purchase the property for £1.15m, which was accepted. Contracts were exchanged, the sale was completed in January 2006, and commission was paid to that agent.The respondent then claimed that it was also entitled to commission under the sole agency agreement on the ground that the purchaser had been “introduced by” it in June 2005, during the currency of that agreement, and that contracts had subsequently been exchanged on a sale.Allowing the respondent’s claim, the judge held that: (i) the terms of the sole agency agreement, in particular the reference to an exchange of contracts “at any time”, expressly negated the introduction of any implied term requiring the respondent to be the effective cause of the sale; and (ii) in any event, the respondent was the effective cause of the sale since L’s interest in the property had continued, albeit with a temporary lull, ever since the respondent showed it to him. The appellant appealed.Held: The appeal was allowed. The reference in the sole agency agreement to an exchange of contracts with “a purchaser introduced by us” should be interpreted as referring to a person who had become a purchaser as a result of the respondent’s introduction. That was the more natural meaning of the words used; the phrase “a purchaser introduced by us” was intended to indicate that the person concerned must have been introduced by the respondent in its capacity as a purchaser. It should not be interpreted as referring to anyone who at some time in the future became a purchaser, even if the purchase owed nothing whatsoever to the respondent. Accordingly, the respondent had to show that it had introduced the purchaser to the purchase, and not merely to the property: John D Wood & Co v Dantata [1987] 2 EGLR 23; (1987) 283 EG 314 considered.The normal principle was that an agent should be the effective cause of the transaction in order to receive commission. Although an agent appointed on a sole agency basis was entitled to somewhat wider rights, there was still no reason why it should be entitled to commission on a purchase for which it had no responsibility and that had effectively originated after the sole agency had ended. Otherwise, a client who marketed his property through the respondent, withdrew it, and subsequently put it back on the market two years later using a different agent would still have to pay a commission to the respondent if the purchaser found by the new agent happened to be someone who the respondent had introduced two years earlier, even if that person had had no interest in purchasing the property at that time. Further, the sole agency agreement was on the respondent’s standard terms, and the court should therefore lean towards a construction that favoured the client, particularly in the field of agency contracts, where the agent would be an expert, often professionally qualified and legally advised, whereas the client would be a layperson who would not normally seek legal advice.Although there was no implied term that the respondent must be the “effective cause” of the transaction, the above interpretation was likely to produce a similar result in most cases.Clive Jones (instructed by Blake Lapthorne Tarlo Lyons) appeared for the appellant; Patrick Blakesley (instructed by the legal department of Foxtons Ltd) appeared for the respondent.Sally Dobson, barrister