Burney v The London Mews Company Ltd. Rev 1 [2003] EWCA Civ 766

Case No B1/2002/2705

[2003] EWCA Civ 766

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM ILFORD COUNTY COURT

(HIS HONOUR JUDGE RICHARDSON)

Venue Royal Courts of Justice

Date Wednesday, 7th May 2003

Strand

London, WC2

B E F O R E:

LORD JUSTICE WALLER

LORD JUSTICE KAY

MR JUSTICE LINDSAY

Between

STEPHEN BURNEYAppellant

-v-

Between

THE LONDON MEWS COMPANY LIMITEDRespondent

(Computer-Aided Transcript of the Stenograph Notes of

Smith Bernal Wordwave Limited

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400 Fax No: 020 7831 8838

(Official Shorthand Writers to the Court)

MR R BARTLETT (instructed by Meyrick Mills Solicitors) appeared for Defendant

MR J KITSON (instructed by Shah & Burke Solicitors) appeared for Claimant

Wednesday, 7th May 2003

J U D G M E N T

LORD JUSTICE WALLER:

This

[1]is an appeal from a decision of His Honour Judge Richardson, given on 4th December 2002, whereby he dismissed an appeal from a decision of District Judge Sherratte, dated 5th September 2002. By the District Judge's decision, he had refused to set aside a default judgment obtained by the claimants, whom I will call "London Mews", for a commission which they alleged they had earned as estate agents in relation to the sale of the defendant Mr Burney's property at 17 Bryanston Mews West, London W1.

[2]Mr Burney had appointed London Mews as sole agents to sell 17 Bryanston Mews by an agreement, which is dated 12th March 2001. The terms of that agreement are of course of the highest relevance, it being on the basis of those terms that any commission could be claimed. By a term headed "Our Agency", it was provided that, so far as material: "You will be liable to pay remuneration to us in addition to any other costs or charges agreed, if at any time unconditional contracts for the sale of the property are exchanged (and subsequently completed) with a purchaser introduced by us during the period of our sole agency or with whom we had negotiations about the property during that period; or with a purchaser introduced by another agent during that period".

[3]Then there are provisions in relation to the fees, there being a 2 per cent fee, save in circumstances in which another agent had been instructed by Mr Burney, when the fees of London Mews would have been 2.5 per cent plus VAT. There is also a provision which provides for London Mews earning a 1 per cent plus VAT commission if Mr Burney concluded what is termed a "private sale".

[4]The facts are not really in dispute. Indeed, we raised with Mr Bartlett at the commencement of this hearing whether there were any facts which were in dispute. What we had in mind was that this is an appeal from an appeal -- that is to say two rounds had been fought out at considerable cost to the parties -- and on one view of Mr Bartlett's submissions, that could have led to this court simply taking the view that certain of the facts needed to be found at a trial before any decision could finally be taken. But that prospect -- that is to say a trial and further rounds of appeal -- ought to be avoided if at all possible, and Mr Bartlett, on instructions, supported that approach to this case.

[5]He accepted that the facts as stated by the judge could be taken as the facts on the basis of which a decision in this case should be taken. He went so far as to submit that if his submissions were accepted, the effect ought to be that a judgment should be entered in favour of his client, rather than the other way round.

[6]London Mews prepared particulars in relation to the property. Presumably they had inspected the property, taken such measurements as were necessary, arranged such photographs as were necessary and produced particulars. They also advertised the property in newspapers. Indeed, it appears that it was as a result of the advertisement in the newspapers that they were approached by another estate agent, Kaye & Co. In the event, London Mews sent the particulars that they had prepared to Kaye & Co on the basis that they were for circulation to retained clients.

[7]Retained clients strictly are persons who have retained an estate agent to look for property; i.e., they are clients who are going to pay a commission to an estate agent for looking for property, as opposed to clients who retain estate agendas as vendors and pay a commission on the sale.

[8]What appears to have happened is that Kaye & Co utilised the particulars that they had been sent by putting them onto their own headed paper. They circulated those particulars to a large number of people, including a Mr Cullinane. That circulation seems to have gone beyond circulation to retained clients, and indeed Mr Cullinane was not apparently a retained client.

[9]It is accepted that Kaye & Co were not appointed subagents by London Mews. Thus, they had no authority to contact Mr Burney. They had no authority to visit the property in order to produce their own particulars. They had no authority to arrange visits to the property.

[10]It seems that Mr Cullinane thought that Kaye & Co were agents appointed by the vendor, Mr Burney. Mr Cullinane's version of events is set out in a letter exhibited to Mr Burney's statement, and I am quoting from a letter dated 8th August 2001, where Mr Cullinane says: "After receipt of the details, I spoke to Mr Bikhit of Messrs Kaye & Co and expressed interest in viewing the Property. It was explained to myself and my girlfriend, Ms Suzanna Wong, that the vendors were out of the country for the weekend and were thus uncontactable but that Messrs Kaye & Co would seek to arrange an appointment for us to view the property on Monday 26th March 2001. During the course of the morning of 26th March, there were various calls between ourselves and representatives of Kaye & Co and eventually Mr Bikhit admitted to us there seemed to have been some misunderstanding between themselves and the vendor and that they were not retained to sell the property on the vendor's behalf, but "could get us into the property" if we agreed to pay them a commission equivalent to 1 per cent of the purchase price. At this point I expressed my extreme dissatisfaction with the way in which Messrs Kaye & Co conduct their business. I explained that to my mind they had misrepresented themselves as being appointed as agents to sell the property on behalf of the vendor and I did not, at this nor at any prior or subsequent stage, agree to pay the 1 per cent commission they requested on the purchase of the property nor any other property. In reply to this Mr Bikhit said that they thought that Messrs Kaye & Co had been appointed by the vendor and if I was not prepared to pay the 1 per cent commission then I could, of course, seek to gain access to the Property through contacting the estate agents instructed by the vendor to sell the Property or making my own private enquiries".

[11]It seems that Kaye & Co would not in fact tell Mr Cullinane who Mr Burney's agents were and in the result, Mr Cullinane approached Mr Burney at 17 Bryanston Mews West directly. The letter appears at page 77 of the bundle. He apologises for the unusual nature of his approach. He says that he hopes that the property is still for sale. He also says that Kaye & Co were not prepared to tell him who Mr Burney's agents were and he also indicates that he can be contacted at his personal number, or if Mr Burney would prefer it, through Mr Burney's agent, and he says in the final paragraph: "It may not be relevant to you, but I would suspect that if you were to contact us directly there may well be an estate agent commission saving for you".

[12]What happened as a result of that approach by Mr Cullinane was that a sale of 17 Bryanston Mews West took place and it appears that, rather unattractively -- and Mr Bartlett did not seek to defend this -- while that negotiation for a sale was taking place, Mr Burney wrote to London Mews saying that he was taking the property off the market while his wife was having a baby and that he intended to instruct London Mews thereafter.

[13]London Mews, perhaps unsurprisingly, when they learned of the sale, were not pleased about Mr Burney's attitude, and they wrote to him on 20th August, claiming the 2 per cent plus VAT commission which they asserted was due to them.

[14]The judge decided that London Mews were entitled to their commission. He first distinguished a case called McCann v Pow

[1975] 1 All ER 129

. That was a case in which the estate agents, McCann, claimed a commission, earned as they alleged in their particulars of claim through the activities of persons they described as their "subagents", a firm called Douglas & Co. The Court of Appeal held (the main judgment being given by Lord Denning) that the principal agents, McCann, had no authority to appoint subagents, and the Court of Appeal disallowed the claim for commission.

[15]In the instant case, the judge held that Kaye & Co were not subagents and he therefore distinguished that case.

The judge then dealt with the concept of introduction and he did so in these words:

"16. It is said that there are two breaks in the chain of causation between the acts of the claimants and the ultimate transaction. Firstly, it is said that Kaye & Co, without authority from anyone, prepared and sent to Mr Cullinane their own particulars of the property. Secondly, it is said when Mr Cullinane expressed interest in the property they did not put him into contact with the claimants or arrange for him to view it. Either of those events alone, it is said, would be sufficient to prevent the claimants from the being the effective cause of the sale"

. The judge continued: "I have listened with care to that argument, but I reject it. 17. So far as the particulars of the property are concerned, I have already said that it is, in my judgment, clear in this case that there can only be two explanations for the particulars. One is that Kaye & Co copied the particulars prepared by the claimants. The other is that Kaye & Co were invited in by the defendant. Since the latter is not argued by anyone, the former has to be the reality of the case. 18. So the very fact of the particulars supports what the claimants' witness say -- which is that Kaye & Co responded to the advertisement and obtained the details from the claimants. It is true that Kaye & Co did not put Mr Cullinane in contact with the claimants or arrange for him to view it, but by passing on the particulars prepared by the claimants to him they enabled him to do so. The reality in this case therefore is that it was the work done by the claimants, the advertisement, the preparation of particulars, which enabled the whole matter to go ahead. In my judgment, the intervening officious behaviour of Kaye & Co does not break the chain of causation".

[17]Then he held finally that if he were wrong on the view he took about introduction, that there was an introduction by another agent within the last words of the clause, which I have quoted earlier in the judgment under the heading "Our Agency".

[18]In this court, Mr Bartlett accepted that Kaye & Co were not appointed subagents, but he suggested that the Court of Appeal authority McCann still assisted him. He pointed to the fact that what McCann had actually done in that case was very little different from what London Mews had done in this case. McCann had prepared particulars, Douglas had simply copied them, and it was as a fact on the basis of those particulars that a sale took place. So, says Mr Bartlett, if McCann do not win in that case, London Mews should not win in this case.

[19]Mr Bartlett also referred us to another Court of Appeal authority, John D Wood v Dantata

[1987] 2 EGLR 23

, and in particular to what Nourse LJ had to say about the meaning of the word "introduction".

[20]That case concerned a purchaser who behaved in a very odd way and to a vendor who also behaved in a slightly strange way. The purchaser liked inspecting houses and the vendor had appointed ten firms to act for him as estate agents. The case was concerned with a claim to commission by two of the estate agents instructed by the vendor. The circumstances of the case in brief were that each of the estate agents was approached by this purchaser and each of the estate agents took the would be purchaser over the property of the vendor.

[21]So one issue in the case was as to whether both estate agents should be entitled to a commission for introducing the purchaser, or just one. Nourse LJ took the view that it was a case in which it was for the court to decide which of the estate agents should have commission.

[22]It is noteworthy that Nourse LJ in fact commenced the judgment at the second paragraph by suggesting that the eccentricities of the purchaser had produced a set of facts which were unusual and perhaps unique and that he did not think that the decision was likely to be of any general application. However, in the estate agency context, the guidance given by Nourse LJ has been relied on a number of times. Indeed, he relied on it in a further case himself.

[23]The advice that Nourse LJ gives in relation to introduction must in my view be viewed in its context. What Mr Bartlett relies on is the passage which is at page 25 of the report and runs from 25 just below G right the way through to just above M. It is not necessary to quote the whole of that passage, but what Nourse LJ ultimately says is this.

[24]He refers to a passage in Bowstead, a passage which read:

"... the fact that one agent introduces a person who ultimately purchases after a later introduction by another agent will not necessarily entitle the first agent to commission. In such a case the court must determine which of the two agents was the effective cause of the transaction taking place"

. He continues: "The difficulties in clarifying the mind on this question are, I think, caused by the familiar meaning of the word 'introduction' as the bringing together of two people who have not previously met. Thus it is natural, when looking at the word in its present context, to attach significance to the first bringing together of the property and the person who ultimately purchases it. But the full phrase is 'the introduction of a purchaser' and I think that that can only mean the introduction of the person who ultimately purchases, not to the property, but to the purchase or, if you look at it from the vendor's angle, to the sale; in either case to the transaction which ultimately takes place. And if you then apply the primary dictionary meaning of 'introduction', you find that what you are looking for is the leading or bringing in of the purchaser to that transaction. That makes it clear that first acquaintance is not paramount and it explains why the test is expressed by reference to the effective cause of the transaction".

[25]Mr Bartlett wants to extrapolate from that guidance to argue that mere introduction is not sufficient if some other conduct by, as I understood his argument, anyone can be said to be a more effective cause of the transaction going through.

[26]I am not prepared to accept Mr Bartlett's submissions extrapolating from John D Wood v Dantanta. Assume an estate agent provides particulars to A, and that A takes them away and contacts the vendor direct. Assume negotiations then ensue between A and the vendor direct, or between A's solicitor and the vendor's solicitor direct, and it is those negotiations which conclude the purchase. In my view, even if the negotiations between A and the vendor, or A's solicitors and the solicitors for the vendor were an, or even the, effective cause of the bargain actually reached, the original supply of the particulars would amount to an introduction by the estate agent.

[27]It would, as it seems to me, drive a coach and horses through the agreements which all estate agents make with vendors, if the mere fact that a would be purchaser. Who picked up the particulars from an estate agent's desk, but carried out all the necessary bargaining thereafter, had the effect and of depriving the estate agent of their commission.

[28]My Lord, Kay LJ, gave a further example during the argument, which related to estate agents' boards placed in the garden of the vendor. If, on reading the board, a would be purchaser, instead of approaching the estate agent, goes directly and knocks on the door of the vendor and then carries out the negotiations on his own, without any intervention of the estate agent; again it would seem to me that to suggest that the estate agent had not introduced that purchaser has to be misconceived.

[29]If one stands back from the undisputed facts in this case, the position appears to be as follows.

[30]London Mews were appointed sole agents by the vendor to sell Mr Burney's property. They prepared particulars and they advertised the property. If London Mews had handed those particulars, with their name on them, or if an employee of theirs had handed those particulars to any person, and that person then purchased the property, that handing of the particulars by London Mews themselves, or by an employee of theirs, would, as it seems to me, have amounted to an introduction by London Mews of the person to whom those particularshad been handed to the transaction if a sale resulted.

[31]Furthermore, if one takes that example a little further; if the person to whom the particulars had been handed took those particulars to somebody else and that resulted in that somebody else approaching the vendor and purchasing the property, again it would seem to me that London Mews would have introduced that purchaser to the transaction.

[32]Thus, as it seems to me, if London Mews handed the particulars to Kaye & Co for circulation to retained clients, and Kaye & Co had done what they were expected to do -- i.e, circulated those particulars to their retained clients -- there cannot be any doubt that if one of the retained clients had then purchased the property, London Mews would have been entitled to their commission, and indeed Mr Bartlett did not strongly argue that that would not be the result.

[33]So the question in this case is: does the fact that Kaye & Co without authority changed the name at the top of the particulars, or went further than they should have done by circulating these particulars amongst persons who were not retained clients -- make any difference?

[34]It is in this context, as it seems to me, that one must return to the McCann case. In my view, it is too simplistic a view of that case to suggest that the factual similarities are such that, since McCann could not succeed in that case, London Mews should not succeed in this case. It seems to me that the proper ratio of that decision is that what McCann were doing was relying on the activities of an unauthorised agent, and they were in effect relying on their own wrongful conduct. It was not within their authority to appoint subagents. They did appoint subagents and they claimed commission in reliance on the activities of subagents, whom they were not entitled to appoint.

[35]Furthermore, it is right to point out that the merits of that case were very much more strongly in favour of the vendor, as appears from the last paragraph of Lord Denning's judgment, where he talks about what the justice of the case demanded.

[36]The position in this case is that London Mews have done nothing which they were not entitled to do, and indeed expected to do so far as the vendor was concerned. They were perfectly entitled to hand their particulars to Kaye & Co. I do not actually see any reason why they would not have been entitled to hand them to Kaye & Co, for circulation amongst any clients of Kaye & Co, never mind retained clients.

[37]But in any event, what Kaye & Co did was to utilise the particulars. The effect of utilising the particulars was to introduce a purchaser -- the very thing which the vendor hoped would happen by virtue of his employment of London Mews. London Mews did nothing wrong. They are not relying on something that they were not entitled to do, and in my view, the judge was right in the conclusion he came to that on the facts of this case, London Mews introduced Mr Cullinane to the transaction by use of their particulars, and I would uphold the judgment on that ground.

[38]So far as the second ground is concerned, it only arises if I were wrong on the first ground. The question that would arise relates to the proper construction of the word "agent" in the paragraph under Agency.

[39]Mr Bartlett says that the agent referred to in that paragraph of the agreement is in its context an agent instructed by the vendor and not any other agent. He submits the judge was wrong to hold otherwise.

[40]I for my part would prefer not to express a view on that. I am clear that the first ground is the right ground on which London Mews should succeed in this case and I would dismiss this appeal.

LORD JUSTICE KAY: I agree with the conclusion and the reasons given for it by Mr Lord, Waller LJ.

[42]MR JUSTICE LINDSAY: I agree in the result. Mr Kitson, for the respondent, London Mews Company, which I will call "LMC", puts the case, as it was put below, in two different ways.

[43]First of all, he says that LMC introduced the purchaser during the period of LMC's sole agency. Alternatively, he says another agent introduced the purchaser during LMC's sole agency. Either alternative suffices for him to succeed and for Mr Burney, therefore, to have been liable to pay commission.

[44]As for the notion of introduction of a purchaser, whilst, no doubt, the identification of who has introduced the purchaser will, in the vast majority of cases, be a relatively simple task, I do not myself find it an easy concept. Certainly it would be difficult to define what is meant by "introduction of a purchaser" in some way that fitted all the myriad facts in which the question might arise. I do not find it immediately apparent, at least to me, that to ask who was the effective cause of the purchase will necessarily identify who introduced the purchaser -- compare John D Wood v Dantata

[1987] 2 EGLR 23

CA.

[45]Moreover, even if that can be an appropriate question in some cases -- for example, where there are two agents in competition for commission -- it does not follow that it is an appropriate question in all cases, and the case in front of us is not a case of two agents in competition for commission.

[46]There is difficulty, too, in my view, arising out of the case of McCann v Pow

[1975] All ER 129

. There the first agents, McCann, had taken a number of steps: they had prepared particulars, they had taken photographs, they had advertised the premises, they had prepared the particulars, they had sent the particulars to other agents. But they had not given the vendor's name or telephone number to the ultimate purchaser.

[47]As I read McCann, all that was not regarded as having amounted to the introduction of a purchaser. At 132D to E, Lord Denning, with whom Orr and Browne LJJ agreed, said: "The introduction of Mr Rudd was not made by the agents, John McCann & Co, nor was it made by any authorised sub-agent".

[48]As I have understood the case, it was because and only because McCann's own activity did not amount to the introduction of a purchaser that they had to seek to rely on the unauthorised activity of the second agents, Douglas & Co, but that, it was held, they were not entitled to do because Douglas & Co had not be been appointed in any authorised way.

[49]If what had been done by McCann in that case did not suffice to amount to the introduction of a purchaser, I have difficulty in seeing why the extremely comparable acts done by LMC in this case could suffice. So I turn to the alternative limb of Mr Kitson's argument, the introduction of a purchaser by another agent.

[50]In context, I see the phrase "by another agent" as competent to include another estate agent, even if that other estate agent is not instructed as such by the vendor. In point of language, the agreement does not say "by another agent appointed by you", as it so easily could have done, and, indeed, as it does later in the agreement, because under the heading "Our Fees", one finds the expression "if you instruct another agent". I thus find the language wide enough to comprehend an estate agent not appointed as such by the vendor. Further, as it seems to me, commercial good sense points in the same direction, as otherwise it would be all too easy to escape the paying of a commission, even where the first agent instructed had done a good deal of work but which nonetheless fell short of an introduction of a purchaser.

[51]Whilst a prudent draftsman would have put the point beyond doubt by making an express provision on the issue, I regard the case as one in which commission is payable by Mr Burney because a purchaser was introduced "by another agent during that period". Accordingly, I, too, would dismiss the appeal.

Order

costs to be summarily assessed at £3,450.97p; appellant to pay costs within 14 days; payment to be made out of the sum in court with interest.