1. RTA (Business Consultants) Ltd v. Mrs Ann Cizek - Grimsby County Court, 16 March 2018, before Deputy District Judge Nix.
Anthony Reeves appeared at Grimsby County Court for the Defendant in this small claim. DDJ Nix accepted my argument that the contract of RTA was not a "Sole Selling Rights" agreement and that there should be an implied term into the contract that for the commision to become due, RTA needed to have been the effective cause of the eventual sale. RTA were not the cause of the sale and so their claim for commision was dismissed. Below is the relevant extract from the written Judgment of DDJ Nix:
selling agreement - The claimant’s witness, Mr O’Reilly, says at paragraph 15 of his witness
“the defendant bizarrely suggests that the contract is not. one that provides sole selling rights. Clause 2 specifically
states that the defendant is providing to us sole selling rights and under a sole selling rights contract the agent
does not have to be the effective cause of the sale.” He refers to the authority of Fleurets v Dashwood.
10. In oral evidence the defendant herself indicated that in
terms of the contract being a sole selling agreement, she
“understood it to be such”, but of course the issue for me is not what she thought but how I interpret the contract.
11. There is certainly a heading between paragraphs 2
and paragraph 3 of “sole selling rights” and paragraph 2 states
that the vendor “give you sole selling rights for an irrevocable (6 month) period. I agree that these sole selling rights shall remain in force after that date until terminated by me”. Paragraph 6 states: “ I further acknowledge that if I instruct… another agent to sell my business and property on a sole agency, joint sole agency or a sole selling rights basis I may have a liability to pay fees to more than one agent”.
12. Notwithstanding the references to “sole selling rights”
and inclusion of wording at paragraph 3a and b which was
mandated in the Estate Agents (Provision etc) Regulations 1991, my determination is that this is not a sole selling rights agreement. The agreement read as a whole does not support it being a sole selling rights agreement, irrespective
of the uses of that phrase - see below. As the contract is ambiguous, contra proferentem will apply and the court will
not find there to be a sole selling rights agreement. (1) There is no express clause stating that no other agent can be instructed. (2) There is recognition in paragraph 6 of the possibility of a vendor instructing another agent and the possibility that the vendor may have a liability to pay fees to more than one agent, (which does not sit well with a sole selling rights agreement). The defendant’s solicitor made a similar point about 3a. (2) Paragraph 7 refers to termination having the effect of the claimant having no entitlement to commission even if it had introduced a purchaser but the purchase occurs through another agent more than 6 months from termination, which conflicts with the wording of 3b - which (3b) is presumably included because of the author of the contract terms’ awareness of the need to include this wording if sole selling rights is to be referred to due to the 1991 Regulations. (3) In the event of cancellation (per paragraph 11) paragraph 6 says if 3b is engaged there is a liability to still pay commission 2 years after “cancellation”.
13. As I have found that this is not a sole selling rights contract, I do find that there should be implied into the contract a term that for the commission to be payable, the claimant must show that it was the or an effective cause of the sale e.g. by introducing the purchaser. Foxtons v Bicknell considered and also Fleurets v Dashwood. I consider such an implication to be needed to give business efficacy to the contract. There is no evidence here that the claimant was the or an effective cause of the sale – in July 2017 the defendant (with no assistance from and no introduction by the claimant) sold the property, to the Plums, purchasers who had showed interest in around April 2017. They had not been referred to the defendant by the claimant. The claimant had had no role in bringing about the sale. Accordingly the claimant’s claim for commission in circumstances where this was not a sole selling rights agreement and the claimant was not the or an effective cause of the eventual sale must fail"
2. RTA (Business Consultants) Ltd v. Ms Kondje Selim
Case No. C78YM641
Outline of the facts
The Defendant, a co-director of a company, signed an agreement with RTA to sell a business property on behalf of a company but it also provided that she was personally liable. The company closed down and so RTA issued proceedings against Ms Selim. The Contract was signed on 2 April 2014. At the time of signing, a “registration fee” of £1,500 plus VAT became due and was paid.There was a dispute as to whether some handwritten additions to that contract were on the document when it was signed by Ms Selim. At the time of signing the Agreement, Ms Selim was running a busy shop. RTA claimed that this handwritten additional clause stating a minimum commission was on the document when it was signed, whereas the evidence of Ms Selim was that it was added afterwards.In June 2014, the defendant’s co-director instructed another agency. In April 2016, the property was sold for £305,000 by a purchaser introduced by that other agency. The Claimant claimed their fees/commission of £12,000 plus VAT as per the contract when the property was sold, which they regarded as a sole selling rights agreement. RTA had not introduced the purchaser. They limited their claim to £10,000 to keep the case in the small claims track.
Ms Selim’s Defence to the Claim was twofold. First, it was argued that there was a breach of the Estate Agents (Provision of Information) Regulations 1991 in that when she signed the Contract the handwritten addition to the contract was not there when she signed and that it had been added afterwards. Therefore, she had become liable for the registration fee of £1,500 before she was provided with all of the information about the fees of RTA. Secondly, it was argued that there was an implied term into the contract that RTA’s commission was only due if they were the effective cause of the transaction. As RTA did not introduce the purchaser, they were not the effective cause of the sale.
RTA had already indicated a month before the hearing that nobody from the company would be attending the hearing. With their witness not turning up, their lawyer was only able togo through the documents and make submissions. Mr Reeves argued from the start that as their witness had not attended very little weight should be placed on the written statement of Mr Norton. Mr Reeves had a number of question he wanted to put to Mr Norton about his evidence. Ms Selim had attended and was cross examined by RTA’s legal representative.
RTA made submissions that as the contract was a “sole selling rights agreement” there was no need to imply a term into the contract that they had to be the effective cause of the sale.Mr Reeves argued that it was not in fact clear that the Contract was a sole selling rights agreement because although Clause 2 of the contract described it as such, there was no express term which prevented Ms Selim from instructing another agent and some clauses actually referred to other agents. Therefore, with the possibilityof other agents being instructed there was the prospect of having two agents fees and so a clause should be implied term into the agreement that they must be the effective cause of the sale for reasons of business efficacy. Mr Reeves also submitted that it might have been that the Claim should have been or was meant to have been brought as a breach of contract and not a claim for commission due. If it had been brought in this way, he argued that the claim would still fail because there was no breach and/or if there was a breach the damages claimed did not flow from the breach.
The Judge made the following findings of fact:
1. She preferred the evidence of Ms Selim to that of the written statement of Mr Norton. The Judge stated that Ms Selim came across as a very credible and believable witness. She felt her answers when questioned rang true and that the written statement of Mr Norton gave little detail as to how the contract came to be signed. So on balance, she preferred the evidence of Ms Selim and therefore decided that the additional hand written term was not on the Contract when Ms Selim signed it.
2. Having looked at the contract, she found that it was not a “sole selling rights agreement” and that there was an implied term into the contract that for the commission to be due RTA had to have been the effective cause of the sale.
3. The Claim was not brought as a breach of contract and so she did comment further on this.
Having made the above findings of fact, the Judge applied the law to the facts.
Having found that the handwritten term was not on the Contract when Ms Selim signed the document, there had been a breach of Regulation 3 of the Estate Agents (Provision of Information) Regulations 1991. That being the case, the contract was only enforceable if the court ordered it was enforceable. The Judge decided that in all the circumstances the Contract should not be enforceable because there was no evidence of what RTA had actually done. The only evidence of what they had done was producing the sales particulars. She was satisfied by the evidence of Ms Selim that after signing the contract, RTA did not contact her until a week or so before the sale was about to take place to the buyer introduced by the other agent. RTA had stated they would provide Ms Selim with regular updates but there was no evidence of any correspondence with Selim in the period of nearly two years since the signing of the contract. The only documents produced by RTA of what they did was a list of people who they claimed had downloaded particulars but she found this list needed further explanation. In summary, she did not see any evidence of RTA having marketed the property and so it would not be right to Order that the Contract be enforced after there had been a breach of the Regulations.
In addition to refusing to allow the Contract to be enforced because of the breach of the 1991 Regulations, as RTA were not the effective clause of the sale, they were not entitled to their commission and so their claim would also fail on this basis as well. It was not in dispute that RTA did not introduce the buyer who bought the property.
The claim by RTA was dismissed. The Judge awarded Ms Selim £54 in respect of expenses for attending the hearing.