Ackroyd & Sons v Hasan
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORMEROD,LORD JUSTICE UPJOHN |
| Judgment Date | 12 April 1960 |
| Judgment citation (vLex) | [1960] EWCA Civ J0412-1 |
| Court | Court of Appeal |
| Date | 12 April 1960 |
[1960] EWCA Civ J0412-1
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Sellers (not present)
Lord Justice Ormerod and
Lord Justice Upjohn
MR. HAROLD LIGHTMAN, Q.C. and MR. EDWARD SEELEY, (instructed by Messrs. Pratt and Sydney Smith) appeared for the Appellants, Plaintiffs below.
MR. D. P. CROUM-JOHNSON, Q.C., Mr. P. H, RIPMAN, and Mr. JOHN HAYMAN (instructed by Mr. R. C. de M. Blum) appeared for the Respondent, Defendant below.
I will ask Lord Justice Upjohn to deliver the first judgment.
I would dismiss this appeal as I agree with the decision of the learned Judge in the Court below that the Plaintiffs had not made out their claim for a commission in this case, but I have the misfortune to differ from him to some extent in some of the reasons that he gave in coming to that conclusion.
It appears that in July 1956 Mr. Smalley, a partner in the Plaintiff firm of estate agents approached the Defendant Mrs. Hasan and her husband (who may be treated as one and for brevity described as the Vendors) with a view to introducing a purchaser of leasehold premises then having some 6 years to run known as No. 11Wardour Street belonging to Mrs. Hasan. The premises consisted of a ground floor and basement on which Mrs. Hasan carried on the business of a restaurant, her husband being the manager. On the second floor the husband carried on the business of a club with the help of Mrs. Hasan.
The first floor over which the whole trouble arose was partly let off (nothing turns on that) and, as to the rest, was used as a store and office mainly for the restaurant but partly also for the club under informal arrangements made between husband and wife.
The Vendors gave some oral Instructions to Mr. Smalley on 23rd July and he confirmed them by letter next day in these terms:-
"Dear Sir,
re 11 Wardour Street, W. 1.
Following our meeting of yesterday, we are pleased to confirm with thanks, receipt of your instructions to offer for sale your leasehold interest in the above property together with the business of the Stage Door Grill on the ground floor and basement, in the sum of £12,000 S.A.V., it being agreed that you shall take a tenancy of the second floor at a rent of £500 per annum.
We are immediately placing particulars of this proposition before all likely applicants and assure you of our best and continued end on your behalf.
We would take this opportunity of confirming that in the event of our introduction of a party prepared to enter into a contract to purchase on the above terns or on such other terms to which you may assent you will allow us commission upon the scale of the Estate Agents Institute.
Yours faithfully
ACKROYD & SONS"
The whole trouble arose of course because in giving their instructions to Messrs. Ackroyd & Sons the Vendors never explained that it would be necessary to keep some storage space on the first floor for use by Mr. Hasan in connecting with the Club that he was to continue carrying on the second floor under the terms of the sub-Lease which was to be granted to him as part of the bargain.
Although the proposing purchasers (celled in argument and in this Judgment "the Chinese applicants") were interested in the purchase of No. 11 War-dour Street, from a date early in August, negotiations took a long time to fructify and it was not until nearly the end of October of 1956 that the basic purchase price for the lease of the premises was agreed at the sum of £9,750 of which £6,000 was to remain on mortgage repayable over the term of the remaining 6 years of the Lease and that the rent of the sub-Lease to Mr. Hasan wag agreed at £500 per annum.
Solicitors were then instructed on behalf of the Vendors and the Chinese applicants and each Solicitor received a letter from Ackroyd & Sons dated the 27th October setting out the basic terms of the proposed contract as they were then understood by them. It was made quite clear in that letter that all negotiations were to be subject to contract.
The month of November seems to be taken up with the usual preliminaries, that is the Vendors look up the Chinese applicants references, and the Chinese applicants on their part had a Surveyor's Report, intimately Mr. Blum, the Solicitor instructed by the Vendors, sent a draft contract to Messrs. A. J. Young & Co., the Solicitors Instructed by the Chinese applicants on the 30th November 1956, It was agreed between these Solicitors very properly in the Interests of their clients that drafts of the Mortgage and the sub-Lease of the second floor should be annexed to the contract and drafts of the se documents were sent on by Mr. Blum shortly afterwards. During the month of December the parties and their Solicitors continued negotiating on minor details, e.g. obtaining draft consents by the Head Landlord to the assignment of the Lease, to the transfer of liquor licences, and other details of that sort. On the 28th December Mr. Blum wrote an Important letter to Young & Co. which was much relied upon by Mr. Lightman for the Appellants in this case for it started by saying: "I have now had an opportunity of considering the document in detail with my client" (that must refer to the contract and the various documents annexed thereto) "and the following points arise". And then there is a paragraph which deals with the Under lease to Mr. Hasan and it stated that his client felt that the user of the premises comprised in the Under lease should not be restricted to that of a nonresidential Club but that he should also to entitled to use the premises for office purposes if required. The point made "fey Counsel in his argument was that this showed that the Vendors had seen and considered the draft sub-Lease at that stage. I will assume that is so. This and many other matters of detail were satisfactorily settled and on the 10th January 1957 Young & Co. sent a letter in these terms: "We now enclose our client's part of the Contract signed together with Draft Under lease approved. Ag you see we have retyped your original draft as the many amendments make it difficult to foil-in. Please let us have your client's part of the Contract in exchange as soon as possible". To that Mr. Blum replied that Young & Co. had not yet returned the draft Mortgage which would require to be annexed to the Contract and he asked for it to be sent on and there was also a point on the Inventory. Both these matters were however cleared up, satisfactorily. Further amendments were then made by Mr. Blum on behalf of his clients to the Under lease of the second floor. Mr. Blum stated in his letter of the 14th January 1957 to Young & Co. "I have forwarded the contract to my client for signature on the basis that you agree these amendments and will you please telephone me on receipt of my letter." On the 15th Young & Co. replied agreeing the further amendments to the draft Under lease. A last minute point arose with regard to taking over the stock-in-trade, and that in fact did form the subject matter of a Respondent's notice in this Court but he did not pursue it before us and I say no more about it therefore, the Judge dismissed it rightly as of no importance.
The position therefore on the 17th January 1957 was that so far as the Solicitors were concerned all matters were agreed and on that date Mr. Blum wrote to Young Co., "I refer to your letters of the 15th and 16th. I confirm that I have sent all the documents to my client and am writing her instructions. I shall be telephoning her during the day to ascertain the position". He also acknowledged the receipt of the cheque which represented the balance of the deposit, part of it having been paid some weeks earlier. It appears that Mr. Blum then went to see the Vendors at their Restaurant and he explained the documents to them, when (let It be said in fairness to Mr. Blum, Young & Co. and Ackroyd & Sons and, of course, the Chinese applicants) It emerged for the first time that the Vendors apparently had it in mind that Mr. Hasan must have the use of a store on the first floor for his non-residential Club in continuance of the existing arrangements between husband and wife. Mr. Lightman referred to that as a new point and to this extend he is correct because it was a new point to all concerned except the Vendors. But it was fundamental to them the ugh, as I have stated earlier, they had omitted to rive the proper instructions to Ackroyd & Sons.
The Vendors then put forward other proposals to meet this difficulty but the se proposals were not acceptable to the Chinese applicants and the whole contract went off. Those are briefly the relevant facts.
When an agent claims commission from principal there are certain principles of law applicable which cannot be doubted. First: when an agent claims that he has earned the right to commission the test is whether upon the proper interpretation of the contract between the principal and the agent the event has happened upon which commission is to be paid. Secondly: there are no special principles of construction applicable to commission contracts with estate agents. Thirdly: contracts under which a principal is bound to pay commission for an introduction which does not result in a sale must be expressed in clear language.
Authority for these propositions is to be found in the well known speech of Lord Russell in Luxor Eastbourne Ltd. v. Cooper, 1941 Appeal Cases page 108 at page 124 and put in more summary form by Lord Justice Jenkins (as he then was) in Midgley Estates Ltd. v. Hand. 1952 2 Queen's Bench Division 432. At page 435 he said this:-
"As pointed out over and over again in the reported cases, an agency contract of this sort, just like any other contract, must be construed according to its terms. One has to LOOK at the particular contract and see...
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