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Supreme Court judgement backs estate agent in ground breaking contract battle

Five senior judges have thrown out an appeal by a developer who believed he didn't have to pay an estate agent a £42,000 fee.

Nigel Lewis

The Supreme Court has backed an estate agent in a long-running battle over whether he should be paid for introducing a buyer who purchased seven flats for £2.1 million within a development in Hackney, London.

The case hinges on whether a sales contract can be enforced when there is no written agreement or essential documents are missing, and will reassure estate agents that clients cannot refuse to pay them because a contract was agreed verbally.

After a protracted court case, appeal and now second appeal, the judgement yesterday also clarified a problematic clause in the Estate Agents Act 1979. It requires that in order to enter into a sales contract, a vendor must be given certain information, but this clause has now been effectively unenforceable.

Buyer introduced

In 2007 London developer Mr Wells asked local estate agent Mr Devani to help him find a buyer for the remaining unsold apartments within his development.

Mr Devani subsequently introduced him to the Newlon Housing Trust, which bought them lock-stock for their asking prices.

When Mr Devani then submitted a £42,000 invoice to Mr Wells for his work, who refused to pay, saying the terms of the contract had not been agreed including the fee level or the trigger point at which payment would become due.

Mr Devani disagreed and has given evidence in court several times, claiming that he told Mr Wells his standard terms were 2% plus VAT during a phone call.

The Court of Appeal allowed the contract to be enforced, but cut Mr Devani’s fee by 33%. Mr Wells then appealed to the Supreme High Court, which yesterday found in Mr Devani’s favour.

Read the judgement in full. 

February 15, 2019

2 comments

  1. Whilst I always think it is correct that an agent is paid for introducing a buyer who completes on a property, unfortunately, if a court action results it still very much is down to what the judge has had for breakfast as to judgement.

    Especially, as many cases are settled at a lower court level, which means there is a patchwork approach to dealing with the matter.

    Over the years I think I received 95% of fees when resorting to the courtroom route, but as all will know, and this is a case in point, years can pass and often clients do not pay if they lose at court.

    Thoughts

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