Ashe v National Westminster Bank Plc

JurisdictionEngland & Wales
Judgethe Master of the Rolls,Lord Justice Mummery,Lord Justice Hughes,Mr Justice David Richards,Lord Justice Longmore,Lord Justice Richards,Master of the Rolls
Judgment Date08 February 2008
Neutral Citation[2008] EWCA Civ 55,[2008] EWCA Civ 26
Docket NumberCase No: A3/2007/0805,Case No: B2/2007/1047
CourtCourt of Appeal (Civil Division)
Date08 February 2008

[2008] EWCA Civ 26

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM LUTON COUNTY COURT

MR RECORDER HOLLANDER QC

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Master of The Rolls

The Right Honourable Lord Justice Longmore and

The Right Honourable Lord Justice Richards

Case No: B2/2007/1047

Between:
The County Homesearch Company (Thames & Chilterns) Limited
Respondent
and
David Cowham
Appellant

Mr Mark Warwick (instructed by Addleshaw Goddard Llp) for the Appellant

Mr Hugh Sims (instructed by Michelmores Llp) for the Respondent

Hearing dates : 16 th January 2008

Lord Justice Longmore

Lord Justice Longmore:

Introduction

1

This is an appeal from the Luton County Court (Mr Recorder Hollander QC) about a buying agent's commission. In 2005 Mr and Mrs Cowham wanted to buy a house within a reasonable distance of Bushey in Hertfordshire where Mrs Cowham's parents lived. They saw an advertisement in Country Life placed by County Homesearch (Thames & Chiltern) Ltd (“County Homesearch”) offering its services as a purchaser's agent to find a property and decided to avail themselves of those services. On 5 th July 2005 Mr Cowham met a director of County Homesearch by the name of Mr Le Neve Foster and, after paying him a registration fee of £500, signed a copy of its standard Terms and Conditions. The contract was to last for six months and a further year unless terminated by one month's notice by either party. By clause 2 County Homesearch undertook “to work with you to find a suitable property for you to purchase”. Clause 3 was headed “FEES” and provided as follows:-

“We will be expending considerable time and effort on your behalf to find a suitable property for you.

Our Registration Fee is GB£500 (inclusive of VAT).

In addition our fees amount to the greater of either 1.5% of the purchase price or 15% of the negotiated saving between the asking price and the price you have agreed to pay for any property you exchange contracts to purchase an interest in or one month's rental in respect of any property you agree to rent, during the continuance or within one year after the date of termination or expiry of this agreement.

For the purposes of our Agreement, we shall be deemed to have introduced a property to you if you have either received the particulars of a property from ourselves directly or indirectly or from any of the firms of estate agents with whom we have regular contact or through agents or individuals whom you have instructed us to negotiate with on your behalf.”

The Recorder described this clause as “very odd”. That is, no doubt, partly because the clause does not make clear what the event is pursuant to which the fee of 1.5% of the purchase price becomes payable. There clearly has to be an exchange of contracts. But there must be some connection between that exchange and County Homesearch. Although the clause does not say so in terms, that connection must presumably be an introduction of some kind since the clause provides a series of possible events on the happening of which “we shall be deemed to have introduced a property to you”.

The Facts

2

On or about 12 th July Mr Le Neve Foster discussed a considerable number of properties with Mr Cowham on the telephone and then delivered a list of those properties divided into two categories; (1) properties already seen by the client (2) properties the client might be interested in. This list included among others a property called “Hunter's Moon” (together with the negative comment “worth considering but seems expensive”) and another house in which Mr and Mrs Cowham expressed an initial interest, Beel House. In August 2005 they decided however, not to proceed with Beel House. Mr Le Neve Foster then on 5 th August reminded the Cowhams about Hunter's Moon but they were not enthusiastic about it. In September 2005 Mr and Mrs Cowham visited another house, called Stivers, about which they had been told by Mr Le Neve Foster. They visited that house four times, on the last occasion in the company of a planning consultant, Mr Robert Clarke. Mr and Mrs Cowham had asked Mr Clarke to come along because they knew that they would wish to build an extension, if they bought Stivers, and that planning permission would be required. At a subsequent meeting at the Cowhams house on 11 th October (Mr Foster Le Neve not being present) Mr Clarke explained to them that Stivers would not work for what they wanted but, now that he appreciated what Mr and Mrs Cowham wanted to do, he said that it might be possible to do that at a property of which he knew called Hunter's Moon because he had once been consulted about the possibility of a similar scheme by the owners of that property, a Mr and Mrs Kaye. Mr Clarke volunteered to find out if Mr and Mrs Kaye were willing to sell. As he understood the position Hunter's Moon had once been on the market but had subsequently been withdrawn. It was in fact the case that, although the property had been on the market in 2003, instructions had later been withdrawn. The judge specifically found that at this stage the references previously made by Mr Le Neve Foster to Hunter's Moon had not made any impression on Mr Cowham's mind.

3

Mr Clarke was as good as his word. He contacted the Kayes, discovered that they would be willing to sell for the right price and put the two couples in touch. After two visits to Hunter's Moon Mr Cowham made an offer which was accepted, subject to contract, by the Kayes on 17 th October. Contracts were exchanged on 29 th November and completion occurred on 3 rd January 2006.

4

It seems that both the Cowhams and Mr Le Neve Foster were aware at an early stage in this history that the position under the contract with County Homesearch was likely to give rise to argument. Mr Cowham persuaded Mr Clarke to keep his interest in Hunter's Moon confidential from Mr Le Neve Foster. Mr Le Neve Foster nevertheless sensed there was something in the wind. He telephoned Mr Clarke asking for information but Mr Clarke was very guarded. He then e-mailed Mr Cowham on 21 st October drawing his attention to another property on the market (Lower Park House) which he did not think was suitable and added that he had been discussing Hunter's Moon with Mr Clarke and that Mr Cowham should have a look at it. (By this time of course, the Kayes had actually accepted the Cowham's offer). He also took the opportunity to refer to the list he had sent to Mr Cowham on 12 th July. He then on 10 th November sent a brochure of Lower Park House, observing that Hunter's Moon had been sold subject to contract and saying he was surprised that the Cowhams had not considered it.

5

This shadow boxing ceased when, after completion Mr Cowham e-mailed Mr Le Neve Foster on 20 th January 2006 saying that he and his wife had purchased Hunter's Moon “privately” and Mr Le Neve Foster replied on 16 th February asking for both an explanation of what had occurred and his fee.

6

The recorder's final finding, made after considerable argument on the matter, was that Mr Le Neve Foster mentioned Hunter's Moon three times to Mr Cowham, once on the telephone on 12 th July 2005, secondly in the list delivered to Mr Cowham on that day and thirdly in conversation on 5 th August.

The Hearing Below

7

Before Mr Recorder Hollander, Mr Cowham relied on Article 57 of Bowstead and Reynolds on Agency (18 th ed, 2006) which states:-

“Subject to any special terms or other indications in the contract of agency, where the remuneration of an agent is a commission on a transaction to be brought about, he is not entitled to such commission unless his services were the effective cause of the transaction being brought about”.

Mr Cowham's contention was that Mr Le Neve Foster was never any (let alone the effective) cause of the purchase. The purchase was only brought about by Mr Clarke's contact with Mr and Mrs Kaye and exchange of contracts only occurred because of that contact.

8

The recorder held that:-

i) the provision of the list of 12 th July 2005 constituted an introduction of Hunter's Moon for the purpose of clause 3 of the contract with County Homesearch;

ii) commission was, on the face of it, payable unless a term could be implied that it was only payable if County Homesearch was the (or an) effective cause of the transaction;

iii) if such a term were to be implied, County Homesearch was not the (or an) effective cause of the transaction; but

iv) no such term could be implied in the present case because

a) it would be inconsistent with the express terms of the fourth sub-paragraph of clause 3; and

b) the rationale of the implied term was to avoid the principal having to pay commission to more than one agent if one such agent introduced a purchaser but another brought about the sale and purchase transaction. No such rationale existed in the present case because there was no risk that the Cowhams would employ another agent.

Submissions

9

Mr Warwick, for Mr and Mrs Cowham, did not challenge the recorder's findings of fact which I have set out above but did say that the recorder was wrong in failing to imply into the contract with County Homesearch the normal term which would, as he put it, be implied into any contract between a homeowner and an agent to sell the property namely that the agent must be at least an effective cause of the transaction. He elaborated this submission by saying:-

i) there was no difference in principle between a contract with an estate agent to procure a sale of a property (a selling agency contract) and a contract with an agent to procure the purchase of a property (a purchasing agency contract);

ii)...

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