Estate Agent Today has been contacted by Stephen Welfare, a partner at law firm Royds Withy King, who has over 25 years been involved in estate agency law. This is his take on the case, in his own words.
The decision of a devout Christian couple to refuse to permit a gay couple to view their house prompting the estate agents, Purple Bricks, to terminate their agency recently hit the headlines (Mail Online, The Times and others 21 January 2022). It follows on from a similar incident of extreme personal choice made by Belfast bakers, who refused to bake a cake in support of gay marriage back in 2018. Is this freedom of choice, or discrimination and is it legal? Moreover, for the purposes of this article, was Purple Bricks justified in terminating the agency, or did it act in breach of contract?
The vendor’s position is that the ‘property is mine and I can sell it to who I choose and equally decide not to sell to who I choose’.
Whilst a property is for sale it is the exclusive property of the vendor, and in this case, his home, so he has the legal right to exclude who he chooses from entering his property; exceptions being the security services acting lawfully in the prevent/detection of a crime (PACE 1994), even if that choice is exercised out of a prejudiced viewpoint howsoever honestly held. In the baker’s case the Supreme Court held that a person cannot be forced to promote a belief they profoundly disagreed with. Democracy at work, regardless of public thinking perhaps.
When an estate agent agrees to market a property for sale in exchange for a fee (should the agent introduce a successful buyer), then a legally binding contract is created. There is no contract between the vendor and the prospective buyers, so contract law does not apply. The agent and the vendor have obligations and duties to each other as the contract parties.
The agent must exercise reasonable care and skill in the performance of his services (Section 49 Consumer Rights Act 2015). But, what of the vendor client, does he owe duties to the agent?
In order for the agent to find a buyer at the price, or near to the vendor’s asking price, the agent must be able to act without undue interference or fetter from the vendor. The vendor client does have a duty to co-operate with his agent and not obstruct [frustrate] the agent in the exercise of his services. Can a vendor insist on seeing the agent’s applicant lists and so forth? The answer is no. That would be an interference with the agent’s business and, unless the agent expressly agreed, a breach of his trade secrets and confidential information.
But surely a vendor can choose to vet who enters the property for a viewing? Yes, as stated above, a homeowner has the right to exclude whoever he chooses from entering on to his property.
Breach of Contract
Was Purple Bricks justified in terminating its agency with the vendors? On grounds of modern morality then almost certainly yes. However, could it do so legally? By terminating the agency did Purple Bricks act in breach of contract?
It is unusual perhaps for an agency agreement to provide for the agent to be able to terminate. The vendor may do so by either by giving written notice, or as a matter of law, where the vendor commits a repudiatory breach. This second example may entitle an agent to terminate, for example where a vendor gives notice, actual or implied, of an intention not to pay the agent’s commission even if the buyer proceeds to exchange of contracts. The agent may treat that intention as a repudiatory breach, terminate the agency and sue for damages.
As in the case with Purple Bricks, the agent will usually include in its terms and conditions a term that the vendor will provide honest and true information, and material, for the purposes of the agent preparing sales particulars, and where using an online platform that the vendor will submit content that is not abusive, defamatory, obscene or otherwise offensive. The agent will reserve to it the right to reject/take down anything it thinks offensive etc. That, however, does not enable the agent to insist that the vendor sells to anyone it introduces, irrespective of the vendor’s personal beliefs and choices.
By terminating the agency, it is arguable that Purple Bricks has breached its contract with the vendor. Beyond a refund of any advertising/marketing expenses, it is not easy to see what damages the vendor shall have suffered since Purple Bricks is not the only agent operating online. The vendor hasn’t lost the opportunity to sell online, only the chance to do so with Purple Bricks. If Purple Bricks should be the lowest commission rate, then the difference payable to another agent might be said to be a recoverable loss.
But what of Purple Bricks, does it have any claim here? Whilst it chose to terminate the agency, it could say with some force that it had little option, and that by excluding a class of potential buyers (here gay people), the vendor was restricting Purple Bricks from fully carrying out duties to market and get the best deal, and thereby reducing its prospects of earning a commission.
In both cases the parties face significant causation problems even if liability could be advanced as I have postulated above.
© 2022 Stephen Welfare, Partner – Dispute Resolution Department, Royds Withy King
*Stephen Welfare is a partner at RWK who has conducted business transfer agent fee recover actions for over 25 years and has specialist knowledge of Estate Agency Law.