Harbour Estates Ltd v Charania

  Lord Justice Leveson: 1.                  This is an appeal from a decision of His Honour Judge Michael Dean QC sitting at the Central London County Court giving judgment on 20th November 2008, for an estate agent, Harbour Estates Ltd (“Harbour Estates”), against Shamas Charania, the vendor of 9 Admiral Court, Chelsea Harbour, London (“the property”) in the sum of £34,915.20 inclusive of VAT and interest being the contractual commission of 2.5% of £975,000 being the sale price of the property to Farzin Yazdani.  The issue between the parties was and remains whether the sale was, in the language of the agreed Terms of Business “with a purchaser introduced by [the agent] during the period of [its] sole agency”. 2.                  I start with the facts.  Harbour Estates Ltd is a company which operates as an estate agent in relation to properties within Chelsea Harbour which was a development of some 310 high value dwellings, a substantial number of which are owned and let by absentee landlords, the remainder being first or second homes.  On 27th October 2002, it entered into a sole agency agreement with Mr Charania (followed by Terms of Business signed on 27th December 2002), to market the property with termination by either side on 14 days written notice.  In accordance with Art 5(1)(b) of the Estate Agents (Provision of Information) Regulations 1991, SI 1991/859, made pursuant to s 8 of the Estate Agents Act 1999, clause 9 provided: “As your sole agent our fees will be based on 2.5% + VAT.  Sole Agency means that you will be liable to pay remuneration to is, if at any time unconditional contracts for the sale of the property are exchanged with a purchaser introduced by us during the period of our sole agency or which whom we had negotiations about your property during that period; or with a purchaser introduced by another agent during that period (either sub-instructed by us or directly instructed by you).”  3.                  Harbour Estates marketed the property at the agreed price of £1.1 million and arranged well over 100 viewings.  One such viewer was Mr Yazdani who was well known to Harbour Estates from 2002 when he acquired through its agency (who received the appropriate commission) another property, 2 Thames Quay, Chelsea Harbour: he was later to sell this property without involving an estate agent.  In 2003, he explained to the Managing Director of Harbour Estates that he was looking to build a property portfolio with monies to which he had recently gained access.  He visited and inspected the property on no fewer than four separate occasions all in 2004 being 11th March, 5th April, 5th May and 6th May.  He also visited some 18 other properties through the same agent. 4.                  In this chronology, it is relevant to add mention of a further property.  In late 2004, 35 Thames Quay was being offered for sale by Harbour Estates and other agents.  Mr Yazdani was provided with details of the premises but this was not one of the properties that he viewed through Harbour Estates or indeed through any of the other agents who had been instructed.  Instead, he contacted the owner direct and acquired it for £990,000 (against an asking price of £1.1 m).  No commission was payable but, as the Managing Director of Harbour Estates observed, having shown him more properties than anybody else, and spent more time on him by a considerable margin, relationships with Mr Yazdani soured and viewings ceased. 5.                  The property remained unsold and, by fax dated 17th August 2005, Mr Charania gave notice of termination of the retainer which, as a consequence, came to an end on 31st August 2005.  In late September or perhaps early October 2005, Mr Charania’s niece (who lived at 7 Admiral Court in the same block as the property, her uncle being mainly resident abroad) was contacted by one of the porters to the block, to the effect that Mr Yazdani, himself resident on the estate, was interested in purchasing an apartment in her block.  The porter’s evidence was that Mr Yazdani approached him and asked if he knew anyone who was looking to sell any property in Admiral Court.  6.                  In any event, Miss Charania allowed the porter to provide Mr Yazdani with her mobile number; he expressed an interest in the property and she arranged to let him see it that evening.  In her statement, which she adopted in court and was not the subject of cross examination, she said that she showed him around the property and pointed out the appliances.  She asked him whether he was familiar with these apartments and he said that he was not.  She took this to mean that he had not previously seen any property in Admiral Court and had certainly not seen number 9.  She went on to make it clear that nothing Mr Yazdani did or said, in any conversation, led her to believe that he had ever seen it; indeed, she was expressly led to believe that he had not.  He asked whether the flat was being marketed through an agent; she said that she believed that it was not but that it had been marketed through Harbour Estates.  He did not say that he had viewed it through that agent.  He said that he was very keen to deal direct and that he did not want to deal with any agents. 7.                  About a week later, Mr Yazdani again attended the property, this time with an architect.  Some days thereafter, he offered £900,000; she contacted her uncle who said that he would accept £1m. He then counter-offered £950,000 saying that given that no agents were instructed an allowance or discount ought at the very least be made off the £1 m. price.  She responded that his offer was insufficient and he should make an effort to come closer to the asking price.  He then said that as he thought she was so very nice to deal with he would offer £975,000.  Mis Charania discussed this with her uncle and, given that it was a private sale with no agents, he was persuaded to accept that offer. 8.                  In order to secure the property, Mr Yazdani then sought and obtained a three month written option to purchase (dated 9th November).  Contracts were exchanged on 27th January 2006 and the sale completed the following month. When Harbour Estates learnt about it, it was reported to them that Mr Yazdani had told Miss Charania that he had not seen the property prior to the negotiations in the autumn of 2005.  In May 2007, when the Managing Director of Harbour Estates spoke to Mr Yazdani, however, he denied that he had ever told Miss Charania that he had not viewed the property either with Harbour Estates or at all; he agreed that he had not said the converse.  Mr Yazdani did not give evidence and the judge accepted the accounts both of Miss Charania and the Managing Director.  Notwithstanding Mr Yazdani’s indignant denials in correspondence, Judge Dean clearly concluded that he had lied, speaking of his “blatant dishonesty” when dealing with Miss Charania. 9.                  I ought to add one further detail.  Subsequent to this purchase, Mr Yazdani acquired two other properties in Chelsea Harbour.  In May 2006, he bought 11 Admiral Court directly from the vendor at a time when Harbour Estates were discussing the possibility of a sale but had not been formally instructed.  Furthermore, in November 2006, he purchased 34 Thames Quay following another direct approach to a neighbour; different agents had been marketing the property. 10.              These primary facts were not in issue.  Before the judge, the argument turned upon the inferences and conclusions to be drawn from these primary facts.  He held:  (a) Mr Yazdani was a sophisticated investor (if not a speculator) who was not looking for a domestic purchase but rather to build a substantial portfolio; he was very familiar with the Chelsea Harbour and would have had detailed knowledge of what was available. (b) Mr Yazdani had an interest in the property which must have been engendered by his earlier viewing and acquaintance with it. (c) Having ascertained that the property was no longer being marketed by Harbour Estates, Mr Yazdani’s approach through the porter was a contrivance. (d) Mr Yazdani’s deliberate deception of Miss Charania that he had not seen the property before demonstrated that he had something to withhold from the vendor. 11.              The learned judge observed that if the ultimate purchaser did express a strong interest in purchase when introduced to the property, the fact that he did in fact purchase would be ‘a strong evidential fact’ in favour of the claim for commission ‘but no more than that’.  He equally acknowledged that there were other major difficulties facing Harbour Estates.  First, Mr Yazdani viewed the property on four occasions but did not enter active negotiations (although he had shown interest in other properties that he was then shown) until about October 2005, some 14-15 months after his last involvement with the agents. Second, when he came to purchase, he did so as a result of contact through the porter and Miss Charania.  Balancing these factors and the inferences that he was prepared to draw, his final conclusion is expressed in paragraph 79 of his judgment in these terms: “I am satisfied on the balance of probability, as a matter of inference from the circumstantial evidence, that Mr Yazdani had formed an interest in that property, which he had kept inactive for a while until he, I have no doubt, learnt that the agent’s instructions were withdrawn and very quickly thereafter proceeded to strike.  He was so keen to buy the property he even entered into an option to purchase.  He made two visits.  I do not think the fact that he brought an architect along is significant one way or the other.” 12.              Turning to the law, it is common ground that the approach to the standard conditions which apply in this case is to be found in the decision of this Court in Foxtons Ltd v. Pelkey Bicknell & Anor [2008] EWCA Civ 419 in the judgment of Lord Neuberger of Abbotsbury (which which Waller and Rix LJJ agreed).  Having identified (at paragraphs 22-3) the two possible readings of the expression “a purchaser” in the phrase “a purchaser introduced by us”, he expresses his conclusion (at paragraph 36) in these terms:  “[I]n order to be entitled to a commission under the Terms for having introduced a purchaser, Foxtons have to show that they introduced the person concerned as the (eventual) purchaser, or to put the point in Nourse LJ’s words [in John D. Wood & Co v. Dantata [1987] 2 EGLR 23 at 25K-L] that they introduced the purchaser to the purchase, and not merely to the property.” 13.              This test was put in slightly different words by Judge Dean (at paragraphs 50 and 54).  First, did the purchaser become a purchaser as a result of the introduction of the estate agent? Alternatively, did Mr Yazdani purchase the property as a result of the introductions and the viewings of the property conducted by Harbour Estates in the spring of 2004? Both parties accept that these formulations accurately reflect the law: it is not sufficient simply to prove that Mr Yazdani was shown the property by Harbour Estates and subsequently bought it; Harbour Estates must demonstrate that there is a causal link between its introduction of the property to Mr Yazdani and that its actions were, to adopt the term used in earlier cases the ‘effective cause’ of the purchase of the property by him.  For my part, I agree that these formulations are slightly different ways of saying what is, essentially, the same thing and have the effect of construing the conditions required as a consequence of the Estates Agents Act 1999 and the relevant statutory instrument as placing the parties in the position that the common law had originally implied into agreements such as these (see Millar, Son & Co v. Radford (1903) 19 TLR 575 and Nightingale & ors v. Parsons [1914] 2 KB 621) albeit that such implied term could be expressly excluded. 14.              Having regard to this common view of the law, it is equally common ground that the only basis upon which this appeal can succeed is by an attack on the inferences that the learned Judge was prepared to draw from the conduct of Mr Yazdani.  Mr Stacey, on behalf of Mr Charania, accepted that this Court would be slow to disturb primary findings of fact made by a judge who had been able to observe the demeanour of the witnesses but cited the observations of Lord Reid in Benmax v. Austin Motor Co Ltd [1955] AC 370 (at page 376) to the effect that: “in cases where the point is the proper inference to be drawn from proved facts, an appeal court is generally in as good a position to evaluate the evidence as the trial judge and ought not to shrink from that task, though it ought, of course, to give weight to his opinion.” 15.              Mr Bromilow for Harbour Estates, on the other hand, pointed to the requirements of CPR r. 52.11(3)(a) to the effect that the judge’s decision can only be overturned if the court considers is conclusions were “wrong”.  He cites a number of authorities that identify, although not claiming to do so, what is meant by the phrase that the court “ought … to give weight to [his] opinion” and, in particular, the nature of the hurdle which any appellant must overcome.  Thus, in Biogen Inc v. Medusa plc [1997] RPC 1, Lord Hoffmann dealt with the issue of whether an invention was obvious as “a kind of jury question”.  Having cited Benmax, he went on (at 45) “The need for appellate caution in reversing the judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance (as Renan said, la vérité est dans une nuance ), of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation. It would in my view be wrong to treat Benmax as authorising or requiring an appellate court to undertake a de novo evaluation of the facts in all cases in which no question of the credibility of witnesses is involved. Where the application of a legal standard such as negligence or obviousness involves no question of principle but is simply a matter of degree, an appellate court should be very cautious in differing from the judge’s evaluation.”   16.              This decision was cited in a more general context in Assicurazioni Generali SpA v. Arab Insurance Group [2002] EWCA Civ 1642 (per Clarke LJ).  Further reasons for caution on the part of any appellate court are to be found in Subesh v. Secretary of State for the Home Department [2004] EWCA Civ 56, in which the judgment of the Court (Judge, Laws and Maurice Kay LJJ) given by Laws LJ included this analysis (at paragraph 44). “44. The answer is, we think, ultimately to be found in the reason why (as we have put it) the appeal process is not merely a re-run second time around of the first instance trial.  It is because of the law’s acknowledgement of an important public interest, namely that of finality in litigation.  The would-be appellant does not approach the appeal court as if there had been no first decision, as if, so to speak, he and his opponent were to meet on virgin territory.  The first instance decision is taken to be correct until the contrary is shown.  As Lord Davey put it in Montgomerie (in the passage we have cited), “[i]n every case the appellant assumes the burden of shewing that the judgment appealed from is wrong” (our emphasis).  The burden so assumed is not the burden of proof normally carried by a claimant in first instance proceedings where there are factual disputes.   An appellant, if he is to succeed, must persuade the appeal court or tribunal not merely that a different view of the facts from that taken below is reasonable and possible, but that there are objective grounds upon which the court ought to conclude that a different view is the right one.  The divide between these positions is not caught by the supposed difference between a perceived error and a disagreement.  In either case the appeal court disagrees with the court below, and, indeed, may express itself in such terms.  The true distinction is between the case where the appeal court might prefer a different view (perhaps on marginal grounds) and one where it concludes that the process of reasoning, and the application of the relevant law, require it to adopt a different view.  The burden which an appellant assumes is to show that the case falls within this latter category.  ” 17.              At the very core of the case is the proper inference to be drawn from the unchallenged facts that Mr Yazdani viewed the property four times in March to April 2004, the last two visits being on consecutive days, and then ceased to show any interest until his approach through the porter of the block (who provided him with Miss Charania’s telephone number) after which he visited almost immediately (lying about whether he had previously seen the property, enquiring about whether an agent was involved), visiting again about a week later (accompanied by an architect) and thereafter and negotiating on the basis that the agents’ fees would be saved and insisting upon an option which was drawn up, signed and dated no more than about six weeks after the porter was approached. 18.              On behalf of Mr Charania, Mr Stacey argued that the learned judge had put insufficient weight on the fact that some 16 months had elapsed between the last viewing of the property through Harbour Estates and his approach to the porter to enquire about available property in 2005.  There was no evidence of him approaching the estate agents or anyone else connected with the property to make an offer or to try to negotiate such that (as Mr Stacey put the case) it is inconceivable that anyone who had formed an interest in purchasing a property (let alone a sophisticated investor) would not have done so, for fear of losing a possible acquisition to another purchaser or because a change of mind in the vendor.  That risk was real and overwhelmed the comparatively small value of the negotiating tactic that a price reduction was appropriate because no payment would be made to an agent. 19.              For my part, I do not consider it to be inconceivable that Mr Yazdani would act in the way suggested.  As a sophisticated investor who clearly disliked transactions in respect of which commission was payable to estate agents and who knew that properties in this development were coming onto the market all the time (witness the fact that he had visited some 18 other properties through Harbour Estates), it is entirely realistic that he would only be prepared to offer to purchase when he believed that he could obtain the best possible price using whatever arguments he could.  Having been sufficiently interested to re-visit the property four times, it is entirely plausible that he was interested in the property (for why else visit so many times?) but decided to bide his time until he considered he could negotiate the best deal.  If the property was sold in the meantime, there were many others. 20.              In the event, it was not sold and, having confirmed within weeks of the end of Harbour Estates’ retainer that they were no longer involved, he moved quickly not only to negotiate a purchase (making use of the argument that no agent was involved) but also to secure it from a better offer by requiring and obtaining an option to purchase, all within six weeks.  Neither was his saving merely £25,000:  he negotiated the price from £1.1m. to £975,000, having started by offering £900,000.  Far less plausible is that this sophisticated purchaser, acquiring a portfolio, would visit four times without having and expressing any interest in purchase but, 16 months later, be so interested (without the slightest evidence of any reason for his change of mind) as to move so rapidly to close the deal after the retainer of the agents was terminated. 21.              The lies support this approach.  If Mr Yazdani had truly not been interested in the property when he first saw it, why not say so and use his initial reluctance as an additional bargaining position to keep the price as low as possible?  His devious behaviour is more consistent with an anxiety to keep his dealings with Harbour Estates away from Mr Charania in order to negotiate a discount, through deception if necessary.  Further, as Mr Bromilow for Harbour Estates argues, the evidence of the Managing Director of Harbour Estates was that when he spoke to him some considerable time later, Mr Yazdani told him that Miss Charania had not asked him if he had seen the property before (which the judge held to be another lie):  if the truth was that Harbour Estates had not inculcated in him a potential long term interest in this property (so that this purchase was the result of the introduction), there was no reason at all for him to lie in that way. 22.              As I have explained above, the learned judge was prepared to draw other inferences from the primary facts which I have recited: these also are the subject of challenge by Mr Stacey.  All, however, are subsidiary to the essential inference in the case which I have sought to analyse and it is unnecessary to consider them further.  In my judgment, the learned judge was perfectly entitled to conclude that Mr Yazdani purchased the property as a result of the introduction of Harbour Estates or, to put it another way, that there was a causal link between that introduction and the ultimate purchase.  Indeed, I would go further:  I consider him correct to have done so. 23.              I would dismiss this appeal. Lord Justice Wilson:  24.              I agree. Lord Justice Ward: 25.              I also agree.