Supreme Court decides Estate Agents Act case

13th February 2019

Judgment has been handed down by the Supreme Court in Wells v Devani [2019] UKSC 4, a case in which Andrew Butler QC and Edward Blakeney appeared for the Respondent, Mr Wells (W).

The case concerned s.18 Estate Agents Act 1979 (“EAA”) and also gave rise to issues over contract formation and interpretation. Devani (D) and W had a telephone conversation in which, as the Judge found, D had agreed to sell some flats for W in return for a commission of 2% plus VAT. There was no discussion of the trigger event by which the commission would be generated, and no compliance with s.18 EAA, which requires an estate agent to provide a client, prior to contract, with written particulars of the circumstances in which the agent will be entitled to commission. Failure to do so means that the contract cannot be enforced without the permission of the Court; and the Court can also, even if it gives permission, reduce the commission payable.

Soon after this conversation, a sale was effected. At first instance (where Andrew and Edward did not appear), the Judge found as a fact that the buyer had been introduced by D.

The Judge resolved the absence of any discussion about a trigger event by implying a term that commission would be payable on the event most onerous to D, namely completion of a sale to a buyer whom the agent had introduced. He allowed D to enforce the contract, but made a deduction of 1/3rd of the commission.

In the Court of Appeal (where Andrew represented W), W’s appeal was allowed, the majority holding that absent discussion of the trigger event, the contract was incomplete, and that the process of implication could not be used to complete an otherwise incomplete contract. On the EAA point the CA, while making some criticisms of the way in which the Judge had carried out his evaluation, did not see fit to interfere with his overall conclusion.

The Supreme Court gave D permission to appeal and allowed the appeal. The ratio of their decision was that the Court of Appeal had fallen into error by finding that the simple contract made in the course of the telephone conversation was incomplete. The mere fact that the trigger event had not been discussed did not prevent a contract from having been made; a reasonable person, they said, would understand that the parties intended commission to be payable on completion and from the proceeds of sale. Alternatively, even had it been necessary to have recourse to the process of implication, it would have been legitimate to do so.

The Supreme Court also upheld the CA’s conclusion on the EAA point, holding that the law “does not require such an inflexible approach” as to interfere every time it perceives that a trial judge has made an error in the course of an evaluative judgment.



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