The purchaser liked inspecting houses and the vendor had appointed ten firms to act for him as estate agents. 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. An estate agency’s clients resisted payment of his fees. Two agents were saying they were entitled to commission. The result depended upon whether the agent had introduced the purchaser. The parties had accepted that ‘in order to succeed one or other of the two firms had to show that they introduced the ultimate purchaser and that such introduction was the (my emphasis) effective cause of the purchase.’
Held: The familiar meaning of the word introduction was the bringing together of two people who have not previously met, and the phrase ‘introduction of a purchaser’ could 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 vendors angle, to the sale; in either case to the transaction that takes place’. 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.
Nourse LJ: ‘As I have said, the learned judge recorded an acceptance by all three counsel that in order to succeed one or other of the two firms had to show that they introduced the ultimate purchaser and that such introduction was the effective cause of the purchase. That would seem to suggest that there are two questions to be answered, and it would certainly explain the importance which the learned judge attached to the chief’s retention of a lively interest in the property when he went there again on September 9. In truth I think that there is but a single question to be answered: which of the two firms introduced the chief to the sale? Both language and authority establish that that question must be answered by answering this further question: which of the two firms was the effective cause of the sale? Here I would gratefully adopt the following statement of the law in Bowstead on Agency , 15th ed, at p230, to which the learned judge referred:
… 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.
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.
Which of the two firms was the effective cause of the sale to the chief?’
Judges:
Nourse LJ
Citations:
[1987] 2 EGLR 23
Jurisdiction:
England and Wales
Cited by:
Cited – Harwood T/A RSBS Group v Smith and Smith and Bedwell Watts and Company (a Firm) CA 14-Nov-1997
An estate agent with sole selling rights was not entitled to claim commission on a sale where he had contributed no act to the sale, even though his terms were specific enough to deal with the particular circumstances which had arisen here. Such a . .
Cited – Nahum v Royal Holloway and Bedford New College CA 12-Nov-1998
An estate agent was entitled to his commission when he could show that it was he who had brought about the relationship of buyer and seller. Delay and actions of others intended to hide that causation did not defeat the claim. The defendant asked . .
Considered – Chasen Ryder and Co v Hedges CA 1993
The vendor first instructed the plaintiffs to sell his residential home. They introduced several people, but no offers were made. The vendor went to another firm of agents. An extended planning consent was obtained, and one of the original enquirers . .
Cited – Burney v The London Mews Company Ltd CA 7-May-2003
The defendant sought to appeal judgment against him for his estate agent’s commission. They had been appointed sole agents. A second firm obtained the particulars for their own retained clients, but then copied the particulars onto their own . .
Cited – Standard Life Assurance Company (Incorporated Under Laws of Scotland By Act of Parliament) v Egan Lawson Limited CA 21-Nov-2000
The defendant appealed against judgment in favour of his (buyer’s) estate agent for his commission in finding the property for it. A previous offer was rejected by the seller, but a subsequent agent of the buyer obtained the acceptance of a further . .
Cited – Becerra v Close Brothers ComC 25-Jun-1999
ComC Claim for fee for introducing successful bidder at a controlled auction – no express contract – no implied contract based on City practice – claim for quantum meruit failed because no express or implied . .
Cited – Foxtons Ltd v Pelkey Bicknell and Another CA 23-Apr-2008
The defendant appealed against a finding that she was liable to pay her estate agent, appointed as sole agent, on the sale of her property. The eventual purchasers had visited but rejected the property. The agency was later terminated, and the . .
Cited – MSM Consulting Ltd v United Republic of Tanzania QBD 30-Jan-2009
The claimants sought commission or a quantum meruit for the part they had taken in finding a suitable site for the defendant’s High Commission in London.
Held: The works undertaken were consistent with the claimant seeking work from the . .
Cited – Charania v Harbour Estates Ltd CA 27-Oct-2009
The defendant appealed against the award of the estate agent’s fees, acting under a sole agency agreement. The agreement had been terminated. A buyer who had seen the property first under the agency later returned and negotiated a purchase.
Lists of cited by and citing cases may be incomplete.
Agency, Contract
Updated: 16 May 2022; Ref: scu.180396