Wells v Devani

Estate agent – Commission – Entitlement – Appellant estate agent finding purchaser for respondent’s flats – Appellant claiming commission on sale – Judge finding oral contract for payment of commission during telephone conversation between vendor and estate agent – Court of Appeal allowing respondent’s appeal in part – Appellant appealing to Supreme Court – Whether agreement complete and enforceable despite no express identification of event triggering obligation to pay commission – Whether appellant’s claim to be dismissed or discharged because of failure to comply with statutory requirements – Appeal allowed – Cross-appeal dismissed The respondent was put in touch with the appellant estate agent in connection with the sale of unsold flats in a development in Hackney, London. After a telephone conversation between the parties, the appellant contacted a housing association, which agreed to purchase the eight unsold flats subject to contract. Thereafter, the appellant emailed the respondent setting out his terms of business, which specified a fee of 2% of the sale price, plus VAT. In due course, the sale of the flats was completed. The appellant claimed a commission of £42,000 plus VAT, but the respondent disputed his liability to pay. Allowing the claim in the county court, the judge found that the parties had made an oral contract for the payment of a commission, with a legally binding agreement reached in the course of the initial telephone conversation, notwithstanding that the event that was to trigger the entitlement to commission had not been defined at the time. The judge implied a term that payment would be due on the introduction of a person who actually completed the purchase. Since the appellant had not provided the respondent with his written terms of business until after the contract was made, he had failed to comply with his obligations under section 18 of the Estate Agents Act 1979 and his commission should be reduced by one-third. On appeal, the Court of Appeal (by a majority) allowed the respondent’s appeal on the issue of whether there was ever a binding contract and unanimously dismissed his appeal in respect of section 18: [2016] EWCA Civ 1106; [2017] EGLR 7. The appellant appealed to the Supreme Court. The respondent cross appealed. Held: The appeal was allowed. The cross-appeal was dismissed. (1) The question of whether there was a binding contract required a consideration of what was communicated between the parties by their words and their conduct and whether, objectively assessed, that led to the conclusion that they intended to create a legally binding relationship and that they had agreed all the terms that the law required as essential for that purpose. It might be the case that the words and conduct relied upon were so vague and lacking in specificity that the court was unable to identify the terms on which the parties had reached agreement or to attribute to the parties any contractual intention. But the courts were reluctant to find an agreement was too vague or uncertain to be enforced where the parties had the intention of being contractually bound and had acted on their agreement. In the present case, it would naturally be understood that payment would become due on completion and made from the proceeds of sale. The appellant had found a potential buyer which became the purchaser on completion of the transaction. At that point, the appellant became entitled to his commission and it was payable from the proceeds of sale. G Scammel & Nephew Ltd v HC and JG Ouston [1941] AC 251 and RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH [2010] UKSC 14; [2010] 1 WLR 753 followed. (2) It was not necessary to imply a term into the agreement between the appellant and the respondent. However, the court would have had no hesitation in holding that it was an implied term of the agreement that payment would fall due on completion of the purchase of the property by a person whom the appellant had introduced. Importantly for present purposes, a term would only be implied where it was necessary to give the contract business efficacy or it would be so obvious that it went without saying. In this case, the obligation to make payment of the commission on completion was required to give the agreement business efficacy, and would not go beyond what was necessary for that purpose. Each case had to be considered in light of its own particular circumstances. In this case the judge carried out the assessment the law required and found it necessary to imply a term to give the contract business efficacy: Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] EGLR 8 followed. Scancarriers A/S v Aotearoa International Ltd [1985] 2 Lloyd’s Rep 419 explained. Little v Courage Ltd (1995) 70 P & CR 469 considered. (3) Section 18(1) of the 1979 Act provided that before any client entered into a contract with an agent under which the agent would engage in estate agency work on behalf of the client, the agent had to give the client certain information. By section 18(2), the agent was required to give particulars of the circumstances in which the client would become liable to pay remuneration. By section 18(1)(b), the agent was required to give such additional information as might be prescribe by regulations made under section 18(4). There might be cases where the degree of culpability was so great that it justified dismissal of the agent’s application even if the client had suffered no prejudice. This was not one of those cases. The appellant had failed to comply with his section 18 obligation because he did not at the outset, or as soon as reasonably practicable thereafter, expressly inform the respondent of the event which would trigger his entitlement to commission; nor did he provide any of that information in writing. There was no finding that the appellant had acted improperly in any other way. The judge assessed the extent of the appellant’s culpability with care and decided to allow the appellant to pursue his claim but with a significant fee reduction. In all the circumstances, the appellant’s culpability was not so great as to justify dismissal of his application, and the judge made no material error in so deciding. Andrew Warnock QC, David Giles and Laura Giachardi (instructed by Direct Access) appeared for the appellant; Andrew Butler QC and Edward Blakeney (instructed by Wedlake Bell LLP) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of Wells v Devani