Burt v Claude Cousins & Company Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER of THE ROLLS,LORD JUSTICE SACHS,LORD JUSTICE MEGAW |
| Judgment Date | 02 March 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0302-1 |
| Date | 02 March 1971 |
| Court | Court of Appeal (Civil Division) |
[1971] EWCA Civ J0302-1
The Master of the Rolls (Lord Denning)
Lord Justice Sachs and
Lord Justice Megaw
In The Supreme Court of Judicature
Court of Appeal
Appeal by 2nd defendant from Order of Mr. Commissioner His Honour William Stabb, Q.C., on 10th July, 1970.
Mr. DAVID KEMP (instructed by Messrs. Dollman & Pritchard) appeared on behalf of the Appellant Second Defendant.
Mr. GRAEME HAMILTON (instructed by Messrs. McNamara Ryan & Co.) appeared on behalf of Ronald Arthur Burt, Respondent Plaintiff.
The first defendants, Claude Cousins & Co. Ltd. did not appear in the Court below and did not appear in the Court of Appeal.
1. THE FACTS
There is in Wiltshire a little village called Castle Combe, which is said to be the prettiest in England. The film "Dr. Doolittle" was made there. So it has attracted many visitors.
In this village there is the Castle Hotel. In 1967 Mr. and Mrs. Shaw were owners of it. They put it into the hands of well-known estate agents at Bournemouth - Fox & Sons - for them to find a purchaser. They were asking £23,500 for it. Whilst it was on their books, a Mr. Travers Cousins went into the hotel for a drink. He was an estate agent carrying on business at Bristol with Claude Cousins & Co. Ltd. He said to Mr. Shaw: "I understand you've got this property on the market. I've quite a lot of clients on my books who would be interested. May I introduce them?" Mr. Shaw said 'Yes'. Mr. Cousins went round the hotel and took the particulars. That was all. Nothing was said about commission or any terms. No doubt it was assumed on both sides that it was on the usual terms.
Claude Cousins & Co. Ltd. advertised the hotel in the "Horning Advertiser". It was seen by Mr. Burt, a builder in Chertsey, Surrey. He telephoned Claude Cousins & Co. Ltd. and asked for particulars. On 13th September, 1967, they sent by post to Mr. Burt the particulars of the hotel. It was described as "a picturesque Free and Fully-Licensed-Freehold Olde Worlde appointed miniature Hotel situate in what is acknowledged as the most beautiful village in England." The price asked was £23,500. Clause Cousins enclosed an Order to View on a printed form headed "Clause Cousins & Co. Ltd. It contained this printed note:-
"Note: This order is issued on the understanding that the deposit be paid to the agents as above and all negotiations made through them: otherwise the purchaser will be liable for commission and expenses the acceptance of this order constituting a contract to that effect."
On 18th September, 1967, Mr. Burt went down to the hotel in Wiltshire and was shown over it by Mrs. Shaw. He liked it. He never saw the agents, because they were in Bristol. But a day or two later he telephoned to Mr. Travers Cousins and offered £20,000. Mr. Cousins said that was not enough, but that £20,730 would be acceptable. Mr. Burt agreed to that figure. Mr. Cousins said; "Will you forward a deposit?" Mr. Burt said he would. On the same day - 20th September, 1967, Mr. Burt sent this letter to Clause Cousins:-
"Re The Castle Hotel, Castle Combe, Wiltshire -
To confirm our telephone conversation of 20th September, 1967, subject to the sale of my own property, I enclose cheque in the sum of £2,075. 0s. 0d., being the 10% deposit for the above hotel, purchase price subject to contract, £20,750."
Mr. Burt enclosed his cheque for £2,075 made out in favour of Claude Cousins & Co. Ltd.
On 23rd September, 1967, Mr. Travers Cousins replied to Mr. Burt:-
"We acknowledge receipt of your cheque for the sum of £2,075, being the customary deposit, subject to contract for the above licensed property."
Mr. Cousins told Mr. and Mrs. Shaw that Mr. Burt was ready to buy for £20,750, subject to contract, but be did not tell them that he had received a deposit. I cannot think why he did not: but he did not. Each side instructed his solicitors to draw up the contract. On 29th September, 1967, Mr. Shaw's solicitors sent to Mr. Burt's solicitors a draft contract which contained this clauses;
"The purchaser having paid a sum of £2,075 to Claude Cousins & Co. Ltd. as stakeholders by way of deposit the balance of the purchase money shall be paid on the date fixed for completion of the purchase."
Mr. Burt's solicitors did not take any exception to that clause, or to any part of the draft. Thereafter the correspondence shows that time after time Mr. Shaw's solicitors pressed Mr. Burt's solicitors to approve the draft and to exchange contracts. Time after time Mr. Burt's solicitors said they were not in a position to do so. They said Mr. Burt wanted to sell some properties of his own, but they never took any objection to the draft. Weeks passed. Still Mr. Shaw's solicitors pressed. Still Mr. Burt's solicitors were not ready. As late as 4th December, 1967, Mr. Burt's solicitors wrote this:-
"We regret that there will be no possibility of completing the matter by 19th December as our client has still a considerable amount of property to sell."
Eventually, early in January 1968 Mr. Burt backed out. He decided not to go on with the purchase. On 17th January, 1968 his solicitors wrote to Mr. Cousins - the estate agent - asking for a substantial amount of the deposit to be returned (the whole, less £200) "as he requires the money for the time being", which was followed a week later by a request for the whole of the deposit to be released to him. But this came too late. An event happened which brought consternation to both sides. The estate agents went into liquidation. They had put the deposit into the bank, and had used it. It had gone beyond recall.
When Mr. Burt found that he could not get the deposit back from the estate agent, he tried to get it from Mr. Shaw. On 26th January, 1968, Mr. Burt's solicitors wrote to Mr. Shaw's solicitors, saying:-
"There is very little likelihood of our client being able to recover the deposit, in which case we regret we may have to look to your client for payment. From the information that we have received, the deposit was held by the agents as agents for your client, there being no mention of it being held as stakeholders. However, as you will no doubt remember from the recent case of Coding v. Frazer, your client can be called upon to make the repayment."
Mr. Shaw's solicitors replied, saying that he could not accept that he was responsible for repayment of the deposit. They said that Claude Cousins & Co. Ltd. held the deposit as stakeholders, and not as Mr. Shaw's agents.
On 7th March, 1968, Mr. Burt issued a writ against Claude Cousins & Co. Ltd. and Mr. Shaw, claiming the £2,075. Claude Cousins & Co. Ltd. did not put in a defence, but Mr. Burt did not sign judgment against them. He proceeded against Mr. Shaw.
The case was tried at the Bristol Assizes before Mr. Commissioner Stabb, Q. C. He held that Claude Cousins received the deposit of £2,075 as agents for the vendor, Mr. Shaw, and that he was liable to repay it to Mr. Burt, although he did not know that Claude Cousins had ever received it.
The case raises once more the question which of two innocent persons is to suffer for the default of a third? This is, always a difficult question. But in this case it depends on the capacity in which the estate agents received the deposit. Did they receive it as "agents for the vendor" or "as stakeholders"? Each of those two expressions has a meaning which is well understood in dealings for the sale and purchase of land.
2. "AS AGENT FOR THE VENDOR
If an estate agent or a solicitor, being duly authorised in that behalf, receives a deposit "as agent for the vendor, it is considered in law to be just as if it was paid at that very install to the vendor himself. The vendor is entitled to have it paidover to him on demand, together with Interest from the moment when the estate agent or solicitor received it, see Harrington v. Hoggart (1830) 1 B. & Ad. at page 586 by Lord Tenterden, Lord Chancellor Edgell v. Day (1865) L. R. I. C. P. 80. If the purchaser should become entitled to the return of his deposit, he must sue the vendor for it. He cannot sue the estate agent or solicitor. even though he still has it in his hands, see Duke of Norfolk v. Worth (1808) 1 Cary 337 at page 339 by Lord Ellen borough, Lord Chancellors Bamfield v. Shuttle worth (1840) 11 Ad. & El. 926; Ellis v. Goulton. 1893, 1 Q. B. 350.
3. AS STAKEHOLDER
If an estate agent or a solicitor, being duly authorised in that behalf, receives a deposit "as stakeholder", he is under a duty to hold it in media pending the outcome of a future event. He does not hold it as agent for the vendor, nor as agent for the purchaser. He holds it as trustee for both to await the event; see Skinner v. Trustee of the Property of Reed. 1967, 1 Ch. at page 1200 by Mr. Justice Cross. Until the event is known, it is his duty to keep it in his own hands: or to put it on deposit at the bank: in which case he is entitled to keep for himself any Interest that accrues to it: see Harrington v. Hoggart (1830) 1 B. & Ad. 577. If the purchaser should become entitled to the return of his deposit, he must sue the estate agent or solicitor for its see Eltham v. Kingsman. 1 B. & Ad. 683; Hampden v. Walsh (1876) 1 Q. B. D. 189. He cannot sue the vendor; because the vendor has never received it, or become entitled to receive it.
4. WHEN NOTHING IS SAID
If an estate agent, before any binding contract is made, asks for and receives a deposit, giving the receipt in his own name without more, the question arises: In what capacity does he receive it? As agent for the vendor? or as stakeholder?
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