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Result: The Court of Appeal Scheme - 0 Supreme Court - 1

Updated: Jul 18, 2022

What on earth were they doing?

For the thousands of mediators waiting for the next job it must gall them, to read Wells-v-Devani in the Supreme Court on 13th February, which was not a Friday. It's a case that should have been mediated, but instead went all the way to the Supreme Court. What went wrong?

I know it's not part of the job to be judgmental, but no matter how composed we are some things get to us.

OK, this case, it is only about a developer and an estate agent, but the serious point, is how it got to trial, to an appeal and then to the Supreme Court, without a sniff of a mediator being involved.

This case involved 2% of £2.1 million in sale proceeds. It should have been capable of settlement way before court proceedings.

The facts

A developer asked an estate agent to market some flats he was developing, and he would pay the agent a commission of 2% of the sale proceeds plus VAT as the fee. Both parties knew each other and were businessmen. The flats were sold following the introduction of a purchaser by the agent, but the developer refused to pay the commission when the sale proceeds arrived. It's a pretty common occurrence but usually it gets calved.

The agent started proceedings and presumably, the pre-action protocol process was followed but it's not mentioned.

The Court at first instance found for the agent but the Court of Appeal overturned its judgment. The Court of Appeal agreed to the developers submission that the absence of a trigger date by which the commission should be paid, meant that there was no binding contract between the parties, so no commission was due.

I thought everyone knew that an agent’s commission is paid out of the proceeds of sale, so surely that is the trigger date. But the developer ran the point, and the Court of Appeal went with it.

Do you need a contract to get paid?

We all know, you don't need a contract to get paid but the claimant didn't hedge his bet and claim, in the alternative for a quantum meruit, that well-known (except for Microsoft Word) restitutional remedy. You can be forgiven for thinking that soon or later the developer was going to come unstuck.

But the developer was winning. The red mist was descending for the agent and the fight deepened as soon as the Court of Appeal held the failure to agree when the commission should be paid, which was in fact fatal to the existence of a contract.

The agent and his advisers consumed by win / lose fog went off in a rage to the Supreme Court; money was then no object. I wonder if now having won they feel they got good value and it was worth it?

...and count to 10

I mean really. Take a breath folks. Walk around the block. Speak to someone you respect and get some objectivity; find some perspective. I thought that is exactly where the Court of Appeal mediation scheme would kick in? But where was it?

Instead, the fight went to its conclusion and the wise men of the Supreme Court restored the original judgment mostly, and held that the absence of a trigger date was not necessary because of the facts that it was blindingly obvious that the commission payment was triggered as soon as the completion moneys were received.

To help future agents and developers in the same predicament, the Supreme Court also held it would have implied such a term had it been necessary.

I guess it just goes to show for the developer that if you miss out the mediation stage and expose yourself to a court case, you are asking for trouble. But the whole court thing can't have been a happy experience for either party.

I just don't get why people would risk it? Being exposed as a loser in public can't be good. Maybe there were advisers playing clients games; hopefully not. Was this legal expenses insurers having a day or two in court? Or could it be a lack of knowledge of mediation and the various mediation schemes? It's not something I have experienced, but something is going wrong for it to escape the net which I hope we can fix soon.

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1 Comment

Apr 05, 2021

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