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Written by rosalind renshaw

A vendor has lost her case in the courts after breaching a sole agency agreement with a firm of estate agents. She sold her property through another agent during the sole agency period, and the Court of Appeal this week ruled that she will now have to pay it the commission the firm would have earned, of £10,883.

In Nicholas Prestige Homes v Sally Neal, the court of appeal has ruled that the breach of contract caused Nicholas Prestige Homes "to lose the very real and substantial chance of earning the whole of its commission, and it was accordingly entitled to the damages based on the commission it would have earned".

The firm of agents, which has offices in Leighton Buzzard and Milton Keynes, was appealing against the dismissal of its claim for damages for breach of contract.

The case began in  2006 when Neal instructed a number of agents to sell her property. In December, she disinstructed all but two agents and informed Nicholas Prestige Homes that as from January 1, 2007, they would be her sole agents. However, she failed to disinstruct the second agent.

Later in January, the eventual buyer of the property rang Nicholas Prestige Homes but the phone was engaged. She therefore rang the other agent that was still representing the seller. Although Nicholas Prestige Homes rang straight back, the purchaser was by then engaged with the other agent, and bought through them in May 207.

Nicholas Prestige Homes issued proceedings against the seller, but when the case went to court, the district judge found that as a matter of fact that it was the second agents, rather than Nicholas Prestige Homes, which had introduced the buyer, and dismissed the claim for commission.

However, the court of appeal said that the claim for damages was not referred to in the judge's decision. Nicholas Prestige Homes argued that its case should have succeeded on this claim, and cited an earlier case involving Foxtons.

The court ruled that the seller had been in breach of the contract after saying that no other agent would be instructed other than Nicholas Prestige Homes. The court said that on the balance of probabilities, the firm could have sold the property to the eventual purchaser. It said that this chance was not speculative, but a real and substantial one.

The seller therefore had to pay the firm damages, based on the commission it would have earned. She has also had to pay the other firm its fee.

Estate agent pundit Trevor Kent said of the case that it proved sole agency meant sole agency, and that sellers who breached it could find themselves having to pay a double fee.

Comments

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    Chris I do hope your not pocketing the deposit .... you may want to speak to your solicitor for legal advice before you end up in the dock!

    • 13 December 2010 10:38 AM
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    Mike,

    I'm sorry to hear you picked a duff one - you are right that some agents are hopeless but as a consumer you have access to a vey wide choice. Even a small town can easily have 10 agents to choose from and all the while the daft part of the population doesn't do their research, shop around, consider Market share, visit the offices, ask around friends and family for recommendations, mystery shop them, etc then those crap agents will continue to attract idiots and on some occasions take their money.

    Of course, clever bloke like you did all that and didn't just go for a low fee did you mate? It's a wonder you found your self picking a rubbish one that normally only happens to the stupid.

    Jonnie

    • 07 December 2010 21:52 PM
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    Good result.

    • 07 December 2010 15:49 PM
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    I signed up with an agent once - sole agency - and, despite the usual tale of a waiting list for this sort of property, the weeks went by with just a couple of viewings.
    Normally I would have thought 'okay, we're on too high' and dropped the price.
    But, during this period, apart from an occasional phone call to arrange a viewing, we heard NOTHING - not a peep - from the agent.
    We'd only signed up for 6 weeks so, after 6 weeks I wrote to them to cancel the instructions and said we were going to try another agent. Further, for the avoidance of doubt, I asked them to produce a list of people they had sent particulars of my property to - so, when the second agent produced a viewing, we could check to see if that buyer had had any dealings with the first agent and, if they had, sort things out before it could get complicated.
    Strangely enough, the agent seemed unable to do something as simple as provide a list of people who had been sent information about our property.
    While the agency world contains half wits like that particular agent, the reputation of the industry will remain rock bottom.

    • 07 December 2010 13:00 PM
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    A great comment, totally agree with you but the NAEA should be enforcing this!!.....any chance of a blank copy of your agreement!?

    • 06 December 2010 14:43 PM
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    chrishall 1978- grow up,-anything to contribute silly person?

    • 06 December 2010 12:14 PM
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    Forget Sole Agency, we only list using Sole Selling Rights now and can't be bothererd with multi-agency these days either! Don't sign up on our terms, simply go somewhere else!

    In this area, buyers are happy to do private deals with vendors after we have sent brochures, arranged the viewings etc. Vendors were calling us to say that they had decided to sell to their brother-in-law, cousin etc. when really they were our introduction! Sod that for a game of soldiers, now it's sole selling every time. If the property changes hands during our selling period or within 6-months of the termination of our contract, to a buyer we can show to have had dealings with, we get paid simple!

    Slightly off topic but other things we do differently is: Make our fees applicable from offer acceptance rather than exchange! That way, when the vendor later decides to stay put, we still get paid for finding them the buyer!

    We also take deposits from buyers and they sign a contract to exchange within 3-months (Cash buyers within 1-month) at the price agreed! Unless the property is down valued or found to be structually defective, they cannot pull out and lose their deposit should they do so! We split the deposit with the vendor if the sale fails and start marketing the property again.

    It's a tough world, so we stack business in a way that protects us. Sure we may lose some potential business, but less of our work is wasted financially and our fall through rate is currently less than 5% this year.

    We all need to get better at protecting our industry with water tight contracts!

    • 06 December 2010 01:06 AM
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    Viala,

    There are many things that work in one country and not in another.

    I'm told the French like to eat copius amounts of garlic, drink most lunch times and keep a mistress but that doesn't work here so we don't.

    Jonnie

    • 05 December 2010 22:44 PM
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    Brought?

    • 04 December 2010 11:48 AM
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    “Brave agent”, if My business was so bad we had to hide behind a sole agency because we can’t answer the phone I would have kept my head down! What damages could the seller have gone for if that buyer brought elsewhere?

    • 03 December 2010 17:51 PM
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    Good

    Jonnie

    • 03 December 2010 17:09 PM
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    Interesting case, as it seems to force courts to look at question of damages. I'm no expert but think previous court cases have decided purely on the basis as to whether the agent was instrumental in effecting the sale.

    • 03 December 2010 17:04 PM
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    The original Judge didn't know or ignored the Law!

    • 03 December 2010 16:41 PM
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    Yes, but who mentioned a joint sole agency. This lady clearly instructed one agent and failed to withdraw from the other agent.

    • 03 December 2010 16:38 PM
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    I appreciate its not necessarily specific to this case however for me coming from a south african background i dont think sole agency should even exist - a multi listing system is the way forward - every house on with every agent and the agent who introduces the buyer and the listing agent share the commission - with this system over valuing is a thing of the past and you really good after your potential buyers!

    • 03 December 2010 16:21 PM
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    At the risk of being boring a joint sole agency is exactly what it says it is (and the case in question does not appear to have been a jsa in any form). I took legal advice and spoke to Trading Standards on this very question a year or so ago. Unscrupulous agents who mask a multiple agency as a joint sole agency to gain an instruction, and word the body of the contract as a multiple, winner takes all, agency are in breach of contract. It's as simple as that. A jsa is 2 agents working together as one to sell a property and sharing the clients' fee. It's exactly what it says on the tin.

    • 03 December 2010 13:56 PM
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    Well done to the agent, it takes determination and deep pockets to go to the Appeal Court. Shame the original judge couldn't see the un-fairness of the situation.

    • 03 December 2010 13:46 PM
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    Whats with this 'joint sole agency' I keep hearing from the corporate white socked negs and managers who interpret this as winner takes all. Back in 'the good old days' when fees were 5% on the first £500, 2 1/2% on the next £4,500 and 1 3/4% on the balance and a joint sole agency was 1 1/2 times the fee shared equally. Sole is sole and not shared with others unless the fee is shared by agreement. The kids in this business are frightened to say no for fear of not getting instructions and they all seem to think it is their right to have all instructions in a 5 mile radius of their office. They just dont get it.

    Good for the apeal court to give due justice. We should print this and hand it out to idiot vendors when they start f**ting around.

    • 03 December 2010 13:42 PM
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    Well Done to the Agent,as we all know some vendors do try to play the game and are not always Squeaky Clean.

    • 03 December 2010 08:53 AM
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