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Ally Tow
Ally Tow,
SENIOR ASSOCIATE - CHARTERED LEGAL EXECUTIVE
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Boyes Turner wins commission claim dispute for leading regional estate agent
05 March 2010

The facts

The defendants entered into a sole agency agreement with a leading regional estate agent 28 March 2007 to sell their property in Yateley. 
  
In the September of that year the estate agent arranged for a prospective purchaser (Mr X) to view the property, following which he made an offer to purchase it. The offer was rejected. He then made an increased offer which was also rejected, to purchase the property at £630k but with a delayed completion date. 

At the same time, another couple (Mr & Mrs Y), having viewed the property through the same estate agent made an offer to buy the property at £630k but without a delayed completion date. This offer was accepted, however they did ask for a structural survey to be carried out on the property.

In the meantime, Mr X sent an email to the estate agent dated 13 September 2007 confirming his continuing interest in the property.

Mr and Mrs Y pulled out of the sale on 8 November 2007 after the structural survey was received. As a result, the defendants sought to terminate their sole agency agreement with the estate agents and sent formal written notice of termination on 8 November 2007. The estate agents acknowledged receipt and confirmed that although they would not actively seek to continue to advertise the property for sale, the agreement was subject to 21 days notice and would therefore remain in force until 29 November 2007.

In the meantime, the estate agents took steps to try and contact Mr X again to ascertain if he remained interested in the property. Telephone records confirmed that they spoke to him on 13 November 2007. During the call, Mr X said he would get back to them the next day to confirm his position. The agents followed the call with an email to confirm this.

The estate agents claimed that Mr X did call back the following day and reiterated his willingness to make an offer for the property at £630k but without the delayed completion date. This offer was accepted the same day by one of the defendants.

However, the sale did not proceed via the estate agent because they were unable to secure details of the relevant parties' solicitors. They assumed that the sale was not proceeding but discovered in March 2008 that the property had in fact been sold to Mr X by another estate agent.

The claim

Boyes Turner was instructed by the original estate agent to seek the recovery of their commission in accordance with the sole agency agreement. The agreement provided that the agency would be entitled to payment of commission in the event that an unconditional exchange of contracts took place with a purchaser whom they had introduced or had negotiations with over the property during the time when it had sole selling rights.

As a result of the proceedings it was discovered that:

- on 6 November 2007 the second defendant had entered into a sole agency agreement with another agent     and;
 
- Mr X made an offer to buy the property via this other agent for £630k on 21 November 2007.

The defence

It was the defendants' case that the original estate agent was not entitled to their commission for the following reasons:

1. They had failed to act with reasonable skill and care in the marketing of the property and with a view to endeavouring to secure a purchaser; and 

2. They were not the effective cause of introduction. 

The defendants relied on the case of Foxtons Limited v. Pelkey Bicknell & Anr [2008] which found that in order for an agent to be the effective cause of introduction, it had to show that not only had it introduced the purchaser to the property but it had also introduced the purchaser to the sale.

On this basis the defendants claimed that the original agent was not entitled to its commission because it was the second agent which had been the effective cause of sale.

The defendants also said that if any offer had been made by Mr X via the original agent in either September or November 2007 they were not aware of it and that they only learnt of his interest in the property via the second estate agent.

The result

The Judge accepted:

  • That the original agent had shown Mr X the property
  • That Mr X had made offers to buy the property via the original agent in both September and November 2007
  • That the second agent had done nothing to market the property
  • Mr X's evidence that when he has been asked by the second agent what kind of property he was looking for he had specifically stated the address of the defendants' property.

Accordingly, the judge found that the original agent had not only introduced Mr X to the property but also to the purchase.

The defendants were ordered to pay:

  • the commission due on the sale,
  • the contractual interest on the invoice from the date of the invoice, and interest from the end of September 2008 (the last date on which the defendants could have accepted the part 36 offer) at the rate of 10% above base.
  • The estate agents' costs.

For more information about how this issue affects you or to find out more about how the Dispute Resolution can help you please contact Ally Tow on 0118 952 7206 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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