John D Wood & Co (Residential & Agricultural) Ltd v Knatchbull

Estate agent — Duty of care — Duty to inform — Claimant seeking payment of commission on sale of defendant’s mews property — Defendant counterclaiming — Whether negligent valuation — Whether claimant negligent in failing to inform defendant that property in same mews marketed for higher price — Counterclaim allowedThe defendant instructed the claimant to act as his agent on the sale of a mews property in London W11. In June 2001, on the claimant’s advice, he put the property on the market for £1.5m. The claimant subsequently became aware of another property for sale in the same mews for £1.95m, but did not inform the defendant. In August, the defendant and his purchaser exchanged contracts at the asking price. The following day, an offer of £1.8m (later accepted) was made on the neighbouring property. The claimant sued the defendant for its commission of £44,062.50, representing 2.5% of the purchase price plus VAT. In subsequent court proceedings, the defendant sought to set off his admitted liability against a counterclaim for negligence and breach of contract in: (i) wrongly valuing the property; and (ii) failing to pass on to him the information concerning the marketing of the other property. He argued that he would not have sold his property for £1.5m had the claimant’s breaches not occurred, and that he had thereby been deprived of the chance to obtain a higher price. Held: Judgment was given on the counterclaim in the sum of £120,000. The other mews house was deemed to be a superior property to that of the defendant, and there was no breach of duty in failing to advise a value of £1.8m for the defendant’s property. On the evidence, the value of the defendant’s house as at August 2001 was around £1.7m. However, the claimant had not fallen below the standard of a reasonably competent estate agent in advising, in June 2001, that £1.5m was a realistic asking price. The claimant did not, at the time, possess all the information that was later available, and the material it did have was not so precise as to deprive it of the benefit of a margin of error of approximately 10%. However, an agent was under a continuing duty to exercise skill and care until the principal’s instructions were completed or withdrawn. If, when marketing a property, it became aware of any significant event in the market that might influence its principal’s instructions, it was under a duty to inform him of this and to advise him accordingly. The marketing of a house in the same mews was a matter that any reasonable vendor would at least want to discuss with his agent, and the claimant had breached its duty of care by failing to bring the information to the defendant’s attention. On the evidence, the defendant, had he been so informed, would not have proceeded with the sale for £1.5m. He would have instructed the claimant to negotiate further, or to continue to market the property, or to withdraw the property from sale and wait for an upturn in the market. His lost chance of selling at more than £1.5m was to be valued at £120,000: Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 and Davies v Taylor (No 1) [1974] AC 207 considered. Anthony Radevsky (instructed by Reynold Porter Chamberlain) appeared for the claimant; Richard Furniss (instructed by Moorhead James) appeared for the defendant. Sally Dobson, barrister