Bairstow Eves London Central Ltd v Smith and another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Gross |
| Judgment Date | 20 February 2004 |
| Neutral Citation | [2004] EWHC 263 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: CC/2003/APP/0912; CC/2003/APP/0917 |
| Date | 20 February 2004 |
[2004] EWHC 263 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London WC2A 2LL
The Honouralble Mr Justice Gross
Case No: CC/2003/APP/0912; CC/2003/APP/0917
Anthony Haycroft (instructed by Cartwright Cunningham Hazelgrove) for the claimant
Jeremy Child (instructed by Darlingtons) for the Pt 20 defendants
Hearing date: 13 February 2004
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This is an appeal by the claimant, an estate agent ("Bairstow") from a judgment of HHJ Richardson in the Romford County Court, given on 11 December, 2003 ("the judgment"). In the judgment, HHJ Richardson held, inter alia, that a term of a Confirmation of Marketing Agency Agreement dated the 9th March, 2002 ("the agreement") providing for the payment of 3 per cent commission was unfair and therefore not binding on the consumer defendants and Part 20 claimants ("the vendors"), pursuant to the Unfair Terms in Consumer Contracts Regulations 1999 SI 1999/2083 ("the regulations").
The sole ground of appeal is that the judge erred in law in that, by virtue of regulation 6(2), the regulations did not apply to the term in question. I should underline that if, contrary to Bairstow's case, the regulations do apply to the relevant term, there is no challenge to the judge's conclusion that it was unfair.
The facts relevant for present purposes may be very shortly summarised; indeed, on the appeal, the facts were not or not significantly in dispute. At the outset, it is noteworthy, if somewhat disconcerting, that the dispute is in total concerned with a claim for £2,925.75 plus interest and costs.
The background is straightforward. The vendors wished to sell their property, a flat in Leytonstone. To this end, they entered into the agreement. The agreement was in writing and provided, insofar as here relevant, as follows:
"… To be read together with the terms and conditions overleaf…
6. INITIAL MARKETING PRICE £167,500–00
7. TYPE OF AGENCY —Important —see terms and conditions
The Seller(s) agrees to instruct the Agent initially as a … SOLE AGENT
8. COMMISSION FEE —Important —see terms and conditions
The Commission Fee payable by the seller(s) is:
The STANDARD COMMISSION RATE or
The EARLY PAYMENT DISCOUNTED COMMISSION RATE….
STANDARD COMMISSION RATE is 3 per cent of the final sale price of the property plus VAT.
EARLY PAYMENT DISCOUNTED COMMISSION RATE
1.50 per cent plus VAT
9. SOLE AGENCY PERIOD —Important —see terms and conditions
The Sole Agency Period ends a minimum of 8 weeks from the date of this Agreement
12. SIGNATURES OF AGENT AND SELLER(S)
IMPORTANT —Before signing and accepting the terms of this agreement please read carefully the conditions overleaf
12.2 … I/WE HAVE READ AND AGREED TO THE TERMS AND CONDITIONS OVERLEAF"
The signatures of the vendors appear immediately beneath clause 12.2.
It may be noted that the 3 per cent Standard Commission Rate formed part of the standard printed clauses of the agreement; by contrast, the 1.5 per cent figure for the Early Payment Discounted Commission Rate was a handwritten insertion in the agreement. Likewise, the figure for the minimum sole agency period was inserted in handwriting.
Overleaf, there were a number of Terms and Conditions ("the terms"), which provided, inter alia, as follows:
"Entitlement to commission
1. The Agent will charge a fee in relation to its marketing of the property. The fee is called the "Commission Fee". The Agent will earn the Commission Fee if during the period of this Agreement, it introduces a buyer to the property being marketed or enters into negotiations with the person who later contracts to purchase the property.
Commission Fee
5. The Commission Fee payable is specified in the Agreement and it will be either:
(1) The Standard Commission Rate of 3 per cent of the final sale price of the property plus VAT…
(2) The Early Payment Discounted Rate as stated plus VAT…
6. The Early Payment Discounted Rate is only available if the term for early payment set out in Clause 9 below is met.
Payment of Fees
9. The Early Payment Discounted Rate is only available if the full sum payable is received by the Agent within 10 working days of the completion date, time being of the essence of the contract. If the full sum is not received within 10 working days of the completion date, the Standard Commission Rate is due and payable (at the option of the Agent).
Interest for late payment
10. If the Commission Fee is not paid in full within 10 working days of the completion date or any agreed alternative payment date, interest will become payable on any outstanding sum or sums. The interest payable will be 3 per cent above the National Westminster Bank Plc base rate then in force.
Sole Agency Period
14. On the expiry of the Sole Agency Period, the Agreement shall continue on a Multiple Agency basis subject to the Standard Commission Rate and all other terms and conditions of this Agreement …"
Pausing here, the effect of the agreement, so far as it concerns the payment of commission, may be summarised in neutral terms, as follows. Commission was payable at a rate of 1.5 per cent if paid in full within 10 working days of completion or any agreed alternative payment date. If it was not so paid, then the vendors became liable to pay commission at 3 per cent on the entirety of the final sale price of the property. But matters did not stop there; if the full 1.5 per cent commission was not paid within the 10 day period, then interest was to be paid on any outstanding sums at 3 per cent above the base rate as defined. In such circumstances, therefore, Bairstow would be entitled to receive not only the full 1.5 per cent commission but an additional 1.5 per cent commission plus interest on all outstanding sums.
In the events which happened, Bairstow introduced a purchaser and a sale of the property was agreed at a price of £166,000, Completion took place on 25 July 2002. There is no dispute that Bairstow was entitled to commission in this regard. At a rate of 1.5 per cent, the commission due to Bairstow amounted to £2,490 plus VAT of £435.75, a total of £2,925.75.
Inexplicably and as the judge held in the judgment, inexcusably, the Part 20 defendants, a firm of solicitors ("Darlingtons") failed to pay Bairstow the full 1.5 per cent commission due within 10 working days of the completion date. Darlingtons were in funds and the vendors had given them an irrevocable authority to pay Bairstow its commission out of the completion moneys. Although a payment was made of £2,538.75, there was a shortfall of some £387.00 in the amount paid to Bairstow.
After the exercise of some forbearance, in November 2002, Bairstow claimed the entirety of the 3 per cent Standard Commission Rate, amounting to £5,851.50 (inclusive of VAT), less a credit for the £2,538.75 paid, leaving a balance outstanding of £3,3l2,75. At the same time, on 5 November 2002, Bairstow's solicitors made it clear that if the outstanding £387 was paid within 10 days, then Bairstow would not seek to recover commission in accordance with the 3 per cent rate.
No such payment was made and proceedings were commenced by Bairstow against the vendors. For their part, the vendors commenced Part 20 proceedings against Darlingtons. I was told that subsequent to the commencement of proceedings, the £387 shortfall was paid but, nonetheless, the proceedings continued to the fast track trial before HHJ Richardson and, thence, to this appeal.
In outline —I must return later to a more detailed consideration of the relevant section of the judgment —HHJ Richardson held as follows:
i) As already foreshadowed, the learned judge concluded that the provisions of the agreement requiring a 3 per cent commission to be paid fell within the regulations, were unfair and were not binding on the vendors. Accordingly, the £387 having already been paid, Bairstow's claim against the vendors was dismissed. In respect of this conclusion, the judge gave permission to appeal.
ii) The judge went on to consider the position as between the vendors and Darlingtons, in the event that the full 3 per cent had indeed been payable, contrary to his own conclusion. In this regard, the judge found in favour of the vendors and against Darlingtons; if he was wrong in holding that the full 3 per cent commission was not payable, then Darlingtons would in principle be liable to indemnify the vendors. Here, the vendors have been given permission to appeal only for the purpose of claiming an indemnity against Darlingtons in the event that the Bairstow appeal succeeds. Darlingtons were refused permission to appeal any part of the judgment.
iii) There was a further dispute between the vendors and Darlingtons, which the judge resolved in favour of Darlingtons. It is of no relevance to the appeal and I say no more of it.
While in form, therefore, the live topic of the appeal concerns Bairstow's claim against the vendors, in substance the outcome of the appeal will not affect the vendors at all. Either the appeal fails, in which case the vendors have no further liability; or the appeal succeeds, in which case Darlingtons will be bound to indemnify the vendors against their resulting liability to Bairstow. In these circumstances, sensibly, only Bairstow and Darlingtons have been represented on the hearing of the appeal, with Darlingtons standing in the shoes of the vendors.
THE REGULATIONS
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