Estate Agents Position Clarified by the Supreme Court

On the 13th February the Supreme Court confirmed an Estate Agent's fee entitlement.

After nearly ten years of a bitter battle between a developer and its estate agent, the dispute finally ended.

The facts

An agent was instructed to sell a property in return for a 2% commission, but the developer argued there was no contract because the agreement contained no clause to trigger the payment of the commission.

The judge dismissed this but on appeal the Court of Appeal found there was no contract.

The Supreme Court reversed this and restored the judge a first instance finding. The Supreme Court held the commission was payable upon receipt of the sale proceeds, if the purchaser was introduced by the agent, and that there was no need to have any other trigger in the agreement defining when the commission was to be paid.

The Supreme Court went further to hold that in this case, it was prepared to imply a term into the contract had it not been blindingly obvious that this was so clearly the terms agreed between the parties.

Also of note is that the Court approved an earlier finding on the effect of s.18 (2) of the Estate Agents Act 1979, enabling it to reduce the agent's entitlement to a commission based on the prejudice suffered by the developer.

In this case the commission was reduced by one third to £32,900.00 and this was because the developer was not a consumer. Had the agent contracted with a consumer, then it was likely the reduction would have been greater; indeed the court held that disallowing the whole of the fee was always a possibility where the prejudice suffered by the client justified it.

The case is called Wells v Devani [2019] UKSC 4.

Now imagine what this cost the parties in legal fees and then consider how little and how much quicker it would have been to mediate their differences.

Lesson to all agents; put your terms in writing.