Jaques v Lloyd D. George & Partners Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,MR JUSTICE CAIRNS |
| Judgment Date | 20 February 1968 |
| Judgment citation (vLex) | [1968] EWCA Civ J0220-4 |
| Date | 20 February 1968 |
| Court | Court of Appeal (Civil Division) |
[1968] EWCA Civ J0220-4
The Master of the Rolls (Lord Denning)
Lord Justice Edmund Davies and
Mr Justice Cairns
In The Supreme Court of Judicature
Court of Appeal
Civil Division
From His Honour Judge Potter, Bow County Court.
MR G. K. RICE (instructed by Messrs Edwin Roast & Co.) appeared as Counsel for the Appellant.
MR L. BRITTAN (instructed by Messrs Nairnsey Fisher & Co.) appeared as Counsel for the Respondents.
Mr Jaques was the proprietor of a cafe business at 195 Chingford Road, Walthamstow. He had a lease which had seven years to run. But he was advised by his doctor that he ought to give up the business. So be put it into the hands of two estate agents for sale in the middle of 1965 They had not found a purchaser by October 1965. Then a Mr Higgins went along to see Mr Jaques. He was a representative of another firm of estate agents called Lloyd D. George & Partners Ltd. He told Mr Jaques that he had heard that he was wanting to sell the business, and he would like to assist him. Mr Jaques told him that the price he would like to get was 2,950. Mr Higgins went away. He came back again on the 28th November, 1965 and said: "I have found a prospective purchaser; he will pay 2,500". Mr Jaques replied: "I am willing to sell for 2,500 if it is a cash price". Mr Higgins said: "Yea, it will be a cash price". He added: "If we find a suitable purchaser and the sale goes through, you will pay us 250". Then Mr Higgins produced a printed form of particulars of sale. He wrote down the details of the business and he asked Mr Jaques to sign the form. There were conditions on the form. Mr Higgins said: "You realise we are sole agents". Mr Jaques said: "No, it is already in the hands of two agents". Thereupon Mr Higgins struck out one of the clauses in the form. Mr Jaques signed the form with the remaining clauses in it. Mr Higgins did not explain them to Mr Jaques. He went away taking the form with him. He did not leave a copy with Mr Jaques. Unbeknown to Mr Jaques the form contained these important clauses: "I hereby instruct you to use your best endeavours to sell the above in accordance with the terms appearing below" Then this terms "(3) Should you be instrumental in introducing a person willing to sign a document capable of becoming a contract to purchase at a price, which at any stage of the negotiations has been agreed by me, I agree to pay you a commission of 250 or 7½ per cent. of the selling price, whichever is the greater".
A few days later on the 3rd December, 1965, Mr Higgins brought along the prospective purchaser, a Mr Sullivan and his wife. Mr Jaques did not think much of them. They were not suitable people to run a cafe. He told Mr Higgins so. Mr Higgins said: "What do you want to bloody-well worry about? As long as you get your money you can hop it". Mr Higgins produced a printed form of contract of sale. Under it Mr Jaques was to sell the business to Mr Sullivan for 2,500. Mr Sullivan was to pay a deposit of 250 to Mr Higgins' firm as selling agents for the vendors. There was also this: "This agreement is subject to the landlord under the said lease granting his licence to assign and the purchaser hereby agrees to supply satisfactory references for this purpose". Mr Jacques and Mr Sullivan signed the form. Mr Higgins got them both to instruct the same solicitor. He said: "If you take our solicitor, we can get the deal through quickly" So the one firm of solicitors acted for the vendor, the purchaser and the agents.
Mr Sullivan paid his deposit of 250 to the agents and gave the names of four references. The solicitors took up the references but they were far from satisfactory. In consequence the landlord refused to grant a licence to assign, on the simple ground that the purchaser, Mr Sullivan, was not a suitable person to buy the business. So the sale fell through. Mr Jaques told the agents to release the deposit to Mr Sullivan. The agents gave the retort direct: "Not bloody likely". They claimed that they were entitled to commission, 250, equal to the amount of the deposit, although the sale had never gone through.
So the parties went to law. In the first place the purchaser, Mr Sullivan, issued proceedings against the vendor, Mr Jaques, and the agents, claiming back his deposit of 250. On the 21st December, 1966, the County Court Judge gave judgment against Mr Jaques for 250 and costs. He held that the agents had received the deposit as agents for thevendor, and that the vendor had to pay it back to the purchaser, although he had not received a penny of it himself.
Naturally enough, Mr Jaques then turned round on the agents and said: "You received this 250 as my agents. Pay it back to me as money had and received" The agents had no answer, but at the doors of the County Court they put in a counterclaim for commission. They said that on the terms of their printed form they were entitled to 250 commission which wiped out the deposit.
The Judge held that the agents were entitled to stick to the 250, although they bad done nothing to deserve it. He said: "I have the greatest sympathy for the plaintiff, hut I am driven to decide against him". He referred to a dictum of lord Justice Upjohn in Ackroyd & Sons v. Hasan, 1960, 2 Queen's Bench at p. 154, and asked himself: Does the clause cover the event which has happened? As it did. he held that the agents were entitled to their commission. Mr Jaques appeals to this Court.
We have had many cases on commission claimed by estate agents. The common understanding of mankind is that commission is only payable by the vendor when the property is sold. It is payable out of the purchase money. But some agents have sought, by their printed form, to get commission even though the property has not been sold or the purchase money received. At first it was "when a binding contract is signed". Next it was if they introduce a person "ready, able and willing to purchase". Then they missed out "able" and wanted commission if they only got a "prospective" purchaser or a "willing" purchases who was unable to purchase. Now we have got to the widest clause that I have yet seen. "Should you be instrumental in introducing a person willing to sign a document capable of becoming a contract of purchase". Can an estate agent insert such a clause and get away with it? I think not.
I regard this clause as wholly unreasonable andtotally uncertain. Suppose a man signed a piece of paper which had just got on it the address of the premises and the price. That could he said to he "a document capable of becoming a contract", even though there was not an offer contained in it. So also if a man signed a document which was expressly "subject to contract"; or even signed a blank form with all the blanks to be filled in. It might be said to be "a document capable of becoming a contract" Even if the man was quite unable to complete, he might still be a person "willing" to sign. So we are faced with the question in this cases To what extent can estate agents go in putting a form before vendors to sign?
The principles which in ay opinion are applicable are theses When an estate agent is employed to find a purchaser for a business or a house, the ordinary understanding of mankind is that the commission is payable out of the purchase price when the matter is concluded. If the agent seeks to depart from that ordinary and well-under stood term, then be must make it perfectly plain to his client. He must bring it home to him such as to make sure he agrees to it. When his representative produces a printed form and puts it before the client to sign, he should explain its effect to him, making it clear that it goes beyond the usual understanding in these matters. In the absence of such explanation, a client is entitled to assume that the form contains nothing unreasonable or oppressive. If he does not read it and the form is found afterwards to contain a terra which is wholly unreasonable and totally uncertain, as this is, then the estate agent cannot enforce it against the innocent vendor. All the more so when the agents' representative misrepresents the content or effect of the form. In the case of Dennis Reed Ltd. v. Goody, 1950, 2 King's Bench, p. 287, the representative said it was "merely a routine matter" when he asked the seller to sign. In the present case he said: "If we find a suitable purchaser and the deal goes through, you pay250". That is equivalent to a representation that the usual terms apply. It was a misrepresentation of the effect of the document. No parson can hold another to a printed form which has been induced by a misrepresentation, albeit an innocent misrepresentation. I well remember Lord Justice Scrutton in L' Estrange v. 1934, 2 King's Bench, p. 394, saying with emphasis: "In the absence of fraud or, I will add. misrepresentation. the person signing is bound.
Applying these principles, I think that the clause in this case was wholly unreasonable and totally uncertain. It can and should be rejected, leaving the agent to his commission on the usual basis, namely, if the sale goes through, he gets his commission. That follows from the principle laid down by the House of Lords in G. Soammell & Nephew Ltd. v. H.C. & T.G. Ouston, 1941 Appeal Cases, p. 251, together with the corollary stated by this Court in Nicolene Ltd, v. Simmonds, 1953, 1 Queen's Bench, p. 543.
Furthermore, I think that the agent misrepresented the effect of the document, and for this reason it can and should be avoided, leaving the agent to claim for commission on the usual basis. It was said that this misrepresentation was not pleaded. True enough. But the claim for Commission was not inserted until the last moment. and I see no reason why, in answer to it, Mr Jaques should not put...
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