Glentree Estates Ltd v Holbeton Ltd

Lord Justice Maurice Kay  : 1.                  Estate agents’ commission often generates litigation, not least in cases of multiple agencies.  This is such a case.  It concerns the sale of Silverwood, a substantial house in The Bishops Avenue N2, which was sold by Holbeton Limited to Mr Jimoh Ibrahim on 22 July 2009.  The consideration comprised £10,000,000 cash together with a nearby property known as The Villa which was valued at £6,000,000.  Although Holbeton had originally appointed Glentree Estates Limited on a sole agency basis, by December 2008 a multiple agency was agreed and another estate agent, Hanover Residential Limited, was also marketing Silverwood.  Following the sale to Mr Ibrahim, Glentree sought commission totalling £368,000 (inclusive of value added tax) but Holbeton refused to pay.  However, it did pay a sum by way of commission to Hanover.  In due course Glentree commenced proceedings against Holbeton but on 25 November 2010 His Honour Judge Richard Seymour QC, sitting as a Judge of the High Court dismissed the action.  His judgment, which contains a detailed consideration of the evidence, is at [2010] EWHC 2901 (QB).  It will not be necessary for me to refer to the evidence in such detail because, although this is essentially an appeal on fact, it falls within a narrow compass.  There is no challenge to the findings of primary fact.  The complaint is about the inferences drawn by the judge from the factual findings in relation to the issue of causation.  The judge concluded that Glentree had not been the, or an, effective cause of the sale to Mr Ibrahim. 2.                  Mr Ibrahim, who is based in Nigeria, was looking for a suitable property on The Bishops Avenue in December 2008.  Two intermediaries became involved – Mr Aderemi and Mr Adenle-Samuels.  They were both known to Mr Ibrahim.  Mr Adenle-Samuels was also an estate agent trading under the name of Ardenleigh Estates.  Mr Aderemi made Mr Adenle-Samuels aware of Mr Ibrahim’s interest in The Bishops Avenue, as a result of which Mr Adenle-Samuels contacted Mr Goldstone of Hanover, from whom he obtained details of Silverwood and other properties in the area including The Villa.  Mr Adenle-Samuels passed the details on to Mr Aderemi who in turn forwarded them to Mr Ibrahim, who also received photographs of Silverwood through Glentree. 3.                  On 3 March 2009, Mr Ibrahim viewed Silverwood.  He was accompanied by Mr Adenle-Samuels and Mr Aderemi.  They were shown round the property by Mr Kramer, a sales negotiator employed by Glentree.  On the same or the next day Mr Ibrahim was shown round The Villa by Hanover.  The asking price for Silverwood was £22,000,000.  On or about 4 March, Mr Ibrahim made an offer of £10,000,000 for it but his offer was rejected.  On 6 March Mr Ibrahim agreed, subject to contract, to purchase The Villa for £5,800,000.  Completion was effected on 12 March.  Although Mr Ibrahim continued to show interest in other properties in the area, including Jersey House, which had an asking price of £40,000,000, he made no further offer or enquiry about Silverwood at that time.  However, at the beginning of June, Mr Aderemi told Mr Ibrahim that he had been approached by solicitors who said that they could get Silverwood for £12,000,000.  This led to Mr Ibrahim viewing Silverwood again in the company of Mr Aderemi and Mr Adenle-Samuels on 3 June.  In fact, the information which had come from the solicitors was false.  It was part of an attempted fraud, possibly involving the dishonest obtaining of a deposit by deception, but its details are obscure, as are the identities of the fraudsters.  Glentree was unaware of these developments. 4.                  In late June, Mr Ibrahim again manifested interest in Silverwood.  Mr Adenle-Samuels approached Hanover and on 1 and 2 July Mr Ibrahim returned to Silverwood, on the second occasion accompanied by his wife.  Mr Ibrahim negotiated directly with Mr Ahmed of Holbeton and an agreement was reached which, following further refinement on 7-8 July, resulted in an exchange of contracts on 15 July and completion on 22 July.  Again, Glentree was not involved in the events of early July. 5.                  The basis of the judge’s rejection of Glentree’s claim to commission was that from the rejection of his £10,000,000 offer to purchase Silverwood and his successful purchase of The Villa in early March until the revival of his interest in June, Mr Ibrahim had effectively lost interest in Silverwood such that the chain of causation in relation to Glentree was broken.  This finding related to the state of mind of Mr Ibrahim which became a matter of pure inference because he did not give evidence, the evidence of Mr Kramer, Mr Aderemi and Mr Adenle-Samuels did not find favour with the judge, and there was scarcely any contemporaneous documentation to illuminate the issue.  In legal terms, the question was whether Glentree was disentitled to commission because, in the words of Lord Shaw of Dunfermline in Bow’s Emporium v A R Brett & Co Ltd (1927) 44 TLR 194, 199, “the continuity between the original relation brought about by the agent and the ultimate transaction has not been merely dislocated or postponed but broken.” 6.                  The case for the appellant is that, notwithstanding the rejection of important parts of its evidence, the judge was wrong to infer as he did and that the only natural inference, having regard to matters such as the short time frame, the proven continuing interest of Mr Ibrahim in other high-value properties in the area and the fact that he did in fact purchase Silverwood in July, was that he never ceased to be interested in purchasing it at the right price. 7.                  At trial it was common ground that, in order to succeed, Glentree had to prove that it was the, or an, effective cause of the eventual sale to Mr Ibrahim.  It failed to prove that it was either.  The crucial findings of the judge were as follows: “78.       I find that, contrary to the evidence of Mr Adenle-Samuels and Mr Aderemi, Mr Ibrahim did not make a further offer of £12,000,000 for Silverwood after the offer of £10,000,000 was rejected.  What he did do, within three days of viewing Silverwood, was decide to purchase The Villa at a price of £5,800,000.  That decision, as it seems to me, demonstrates that, at that time, Mr Ibrahim was not sufficiently interested in purchasing Silverwood to allow any time to pass while considering making a further offer, still less actually to make a further offer.  The decision not further to pursue any prospect of obtaining Silverwood, but to purchase The Villa, was, in my judgment, consistent, and consistent only, with Mr Ibrahim having decided not to seek to acquire Silverwood at that time.  That finding is supported by the fact, as I find, that no further discussion between Mr Ibrahim and Mr Kramer about Silverwood took place at any stage after the rejection of the offer of £10,000,000. 79.         What revived interest on the part of Mr Ibrahim in purchasing Silverwood was the false information conveyed to him in the context of the attempted fraud that he might be able to purchase Silverwood for £12,000,000.  As it seems to me, the price at which Mr Ibrahim thought that he could obtain Silverwood was critical to the revival of interest.  Mr Ibrahim had maintained, I find, his interest in purchasing a further property in the area of The Bishops Avenue after completing his purchase of The Villa but did not, prior to the beginning of June 2009 and the start of the attempted fraud, show any continuing interest in Silverwood.  Once the attempted fraud was revealed, Mr Ibrahim took the initiative, and asked to be put in direct contact with Mr Ahmed.  It seems to me that Mr Ibrahim took that step because he was interested in acquiring Silverwood, but only if it could be had at a price which he was prepared to pay.  Out of the direct discussions between Mr Ibrahim and MrAhmed emerged the possibility, which I find was suggested by Mr Ahmed, that The Villa might be offered in part-exchange for Silverwood.  The introduction of the possibility of part-exchange proved to be the key to the eventual sale … 84.         Quite simply, on the facts as I have found them to be, Glentree was not the, or an, effective cause of the eventual sale of Silverwood to Mr Ibrahim.  The evidence did not show … that Mr Ibrahim maintained a continuous interest in Silverwood after viewing it with Mr Kramer on 3 March 2009.  To the contrary, he almost immediately lost interest when his offer of £10,000,000 was rejected, and bought The Villa.  His interest was subsequently revived by the false intelligence that Holbeton was prepared to sell Silverwood for £12,000,000.  However, the real effective cause of the sale was that in discussion between Mr Ibrahim and Mr Ahmed it emerged that Holbeton was prepared to take The Villa in part-exchange for Silverwood, plus, as it first appeared, £11,000,000 … After showing Mr Ibrahim around Silverwood and acting as the conduit between Mr Ibrahim and Mr Ahmed in relation to the offer of £10,000,000 Glentree did exactly nothing in relation to encouraging Mr Ibrahim to purchase Silverwood and it performed no role in the achievement of the eventual sale.” 8.                  These findings of a break in the chain of causation on or about 6 March were made by way of inference as to the state of mind of Mr Ibrahim.  As I have related he was not called as a witness by either side.  Glentree did call witnesses whose evidence, if accepted on crucial points by the judge, would have led to different findings.  However, Mr Kramer was comprehensively disbelieved and the evidence of Mr Adenle-Samuels and Mr Aderemi “needed to be approached with a degree of caution”.  In particular, the judge rejected their evidence that Mr Ibrahim had made a second offer of £12,000,000 for Silverwood in March and that his interest in that property “continued unabated and indeed increased as he saw other properties and discountenanced them”.  Nor was he persuaded that either Mr Adenle-Samuels or Mr Aderemi was a close personal friend of Mr Ibrahim and that Mr Ibrahim might have shared his innermost thoughts or wishes with either of them. 9.                  The judge gave reasons for his rejection of important parts of the evidence of Glentree’s witnesses.  Although the grounds of appeal as formulated suggested that there was to be an attack on the judge’s assessment of the witnesses and his findings of primary fact, Mr Deacon made it clear at the commencement of his submissions that there would be none.  No doubt mindful of the difficulties he would face in that regard, he confined his submissions and Glentree’s appeal to the inferences drawn by the judge.  He candidly accepted that, in order to succeed, he would have to establish that the inferences drawn by the judge were afflicted by perversity.  He made succinct but robust submissions to that effect.  He also referred to a number of authorities on estate agents’ commission but it seems to me that none of them is determinative of this fact-sensitive case, in relation to which the legal issue has always been common ground.  Many of the cases are no more than fact-sensitive applications and illustrations of the undisputed principle. 10.              As to perversity, I am entirely satisfied that it is not established and that the inferences drawn by the judge were permissible, even if not inevitable.  I am conscious of the fact that these transactions were out of the ordinary.  The mere fact that Mr Ibrahim, within three days of the rejection of his £10,000,000 offer to purchase Silverwood, proceeded to purchase The Villa might not, in itself, have justified the inference of a break in the claim of causation.  After all, Mr Ibrahim continued to be interested in other properties in the area, including Jersey House which had an asking price of £40,000,000.  However, although Mr Ibrahim continued to be in touch with Mr Kramer in relation to other properties, no further discussion took place between them about Silverwood at any stage after the rejection of the £10,000,000 offer.  It was a reasonable inference that Mr Ibrahim had decided against Silverwood because he considered it to be unattainable at a price he was prepared to pay.  It only came back within his contemplation when he was misinformed in early June that an offer of £12,000,000 would be acceptable.  Although Mr Deacon can point to the fact that the time frame from March to June and then July was quite short and that Mr Ibrahim proceeded to buy Silverwood at a price of £16,000,000 or thereabouts, these objective facts do not establish perversity in relation to the judge’s inferences about Mr Ibrahim’s state of mind in March.  In my judgment, the finding that Glentree was not the, or an, effective cause of the eventual sale is unassailable. 11.              I should add that the test of “the”, or “an”, effective cause continues to complicate cases about estate agents’ commission.  The authorities are equivocal as to whether, in the absence of an express term, “an” effective cause may be sufficient: see, most recently, Foxtons Ltd v Pelkey Bicknell [2008] EWCA Civ 419, per Lord Neuberger, at paragraphs 18-20, reviewing the authorities.  However, in the present case the consequence of the judge’s finding was that Glentree failed to establish that it was either “the” or “an” effective cause of the sale.  What courts have understandably been anxious to avoid wherever possible is the liability of a vendor with multiple agents having to pay more than one commission, although there is no legal presumption either way.  Of course, there is no legal inhibition on multiple agents agreeing inter se, before or after the event, to share a single commission. Conclusion 12.              For the reasons I have given, I consider that the findings of the judge are unassailable.  At the conclusion of the hearing we dismissed the appeal and ordered that Glentree pay Holbeton’s summarily assessed costs. Lord Justice Richards: 13.              I agree. Lord Justice Leveson: 14.              I also agree.