Savills wins in appeal court battle over commission fees

Savills Land & Property Ltd has won Court of Appeal backing in a row over commission charges. The decision strengthens the hand of agents suing for fees when a seller pulls out of a deal. The case centred on negotiations over the sale of Halse Copse Farm, a substantial Oxfordshire property comprising a farmhouse, two cottages, three bungalows, outbuildings and over 500 acres of land. Wilfred Kibble, the owner of the property, engaged Savills, in late 1993, to act for him in the sale. Savills succeeded in obtaining an offer of £845,000 in November 1994, which it accepted on Kibbles behalf, subject to contract. However, in January 1995 negotiations broke down when Kibble withdrew part of the property from the sale and the proposed purchaser asked Savills to look elsewhere. In February 1995 Savills submitted an invoice to Kibble for £8,775 commission, claiming that it was entitled to charge the fees under its standard terms of business. These included a term for payment of half the usual commission “if a ready, able and willing purchaser” was introduced to the property and terms were agreed for the sale in accordance with the client’s instructions. The claim was upheld by Oxford County Court in November 1997 and the Court of Appeal, headed by Lord Woolf MR, has now dismissed Kibble’s appeal. Joel Donovan, counsel for Kibble, argued that the county court judge was wrong to find that Savills had introduced a purchaser who was both “prepared and able” to exchange unconditional contracts within the meaning of Savills’ terms of business. He claimed that there was no evidence that the potential purchaser’s solicitors were in a position, at any stage, to exchange unconditional contracts. However, Simon Williams, counsel for Savills, argued that the transaction would have gone ahead unconditionally if the owner had not changed his mind as to the basis of the sale. Lord Woolf said that the county court judge had been entitled to conclude that the proposed purchasers were in a financial position to enter into the transaction. They had appeared anxious to proceed, having incurred substantial professional fees with a view to purchase on the terms offered by the vendor. The transaction foundered due to the decision by the vendor to withdraw part of the property from the sale, which made the offer, as originally proposed, no longer appropriate. If that had not happened, exchange of contracts would have taken place. He said it was unrealistic, both in this case and generally, to interpret Savills’ terms of business as meaning that it would only be entitled to half of its commission if the vendor had withdrawn his instructions immediately before exchange of contracts. The situation had to be judged at the earlier stage, when Kibble withdrew from the sale when the proposed purchaser was “ready, able and willing” to proceed. Savills Land & Property Ltd v Kibble Court of Appeal (Lord Woolf MR and Morritt LJ) November 24 1998 Joel Donovan (instructed by Bowerman & Partners, of Bicester) appeared for the appellant; Simon Williams (instructed by Tolhurst Fisher, of Southend-on-Sea) appeared for the respondent.