Foxtons Ltd v Thesleff and another

Contract — Implied term — Respondents engaging appellant as agent for sale of property — Agreement providing for payment of commission upon exchange of contracts — Purchaser exchanging contracts but failing to complete — Whether purchaser defined as person completing sale and purchase — Whether commission payable only upon completion — Appeal allowed The appellant estate agent claimed commission for services provided in respect of the sale of a residential property, which it had marketed on behalf of the respondents. The first respondent had instructed the appellant on behalf of his mother (the second respondent), who owned the property. The instruction was originally on a sole agency basis, at an asking price of £950,000. The commission rate was to be 2.25% of the achieved sale price plus VAT. The letter of confirmation referred to the appellant’s terms of business; the first defendant was required to read these and to confirm his acceptance of them. The sole agency was subsequently varied to a multiple agency, at a commission rate of 3% plus VAT. The appellant introduced a purchaser whose offer on the property was accepted. Contracts were exchanged and a 10% deposit of £86,000 was paid to the respondents. However, the purchaser failed to complete in time and forfeited his deposit. Although the purchase had not been completed, the appellant claimed its 3% commission. The respondents refused to pay, submitting that: (i) the first respondent was not liable because he was merely acting as agent for his mother; and (ii) they both believed that the commission was payable only upon completion. The county court confirmed that view and held that the commission was payable only when the sale and purchase had been completed. The appellant appealed, contending, inter alia, that the judge had erred: (i) in concluding that the word “purchaser” meant the person who completed the sale and purchase by reference to the Estate Agents (Provision of Information) Regulations 1991, which covered sole agency clauses; and (ii) in construing the “achieved sale price” as being the price achieved upon completion. Held: The appeal was allowed. The terms and conditions of the agency agreement were clear and provided that the appellant was entitled to its commission following the exchange of contracts. There was no evidence to suggest that the first respondent had signed the contract merely as agent for his mother. The contract specified that it was made with the person to whom it was addressed. No principle of law dictated that parties might not contract on the explicit basis that responsibility for payment of fees remained with the first respondent. The judge had misled himself in considering the common law position. Although it was usual for the commission to be paid upon completion, there was nothing to stop parties from relying upon a different event to trigger the payment of the estate agent’s fees: Midgley Estates Ltd v Hand [1952] 2 QB 432 considered. There was no ambiguity. The “achieved sale price” meant the price that was stipulated in the contract. Furthermore, the word “purchaser” in the regulations was not limited to the person to whom the fee simple absolute was transferred, but also included the person who contracted unconditionally to purchase. The regulations were not meant to provide obligatory definitions, but, rather, to assist in explaining estate agents’ terms to clients. Andrew Davis (instructed by the legal department of Foxtons Ltd) appeared for the appellant; Neil Mendoza (instructed by Roodyn Manski) appeared for the respondents. Eileen O’Grady, barrister