Foxtons Ltd v Thesleff & Anor

An estate agent’s commission is normally payable on completion, but the parties may agree that it becomes payable on exchange or another specified event. The agreement must be construed as a whole. Where the terms provide for payment on exchange of unconditional contracts with a purchaser introduced by the agent, entitlement arises on exchange and completion is unnecessary. “Purchaser” may be used in an anticipatory sense to describe the contracting buyer. Statutory information regulations do not impose definitions that alter the parties’ contract. A disclosed agent may assume personal liability where the agreement expressly places responsibility for fees on the agent.

Foxtons, estate agents, claimed commission from Markus Thesleff and Claire Thesleff following the sale of the second defendant’s property. The property was marketed under a multiple agency agreement providing for a 3 per cent fee on the achieved sale price and stating that fees became payable on exchange. A purchaser exchanged contracts but failed to complete. The contract was rescinded and the property was later sold to another purchaser through a different agent.

On 10 June 2004, the Central London County Court dismissed Foxtons’ claim, holding that commission was payable only on completion. Foxtons appealed. The respondents relied on additional grounds, including that the agency arrangement had been replaced by a new contract, that the statutory definition of purchaser applied, and that the first defendant was not personally liable as agent for a disclosed principal.

1. Appeal allowed. Judgment was entered for Foxtons for £30,315 inclusive of VAT, with interest to be agreed.
2. The change from sole agency to multiple agency varied the existing agreement. It did not terminate the original contract and create a new contract on the bare terms of the later letter.
3. At common law, commission is ordinarily payable on completion, but the parties may agree otherwise. The question is one of contractual construction: Midgley Estates v Hand [1952] QB 432. The relevant terms were unambiguous. They made the fee payable when unconditional contracts were exchanged with a purchaser introduced by Foxtons, and completion was not required.
4. In context, purchaser meant the person who had contracted unconditionally to purchase. Achieved sale price meant the price stipulated in that contract, rather than a price realised only on completion.
5. The Recorder erred in relying on the statutory meaning of purchaser. The Estate Agents Act 1979 and the Estate Agents (Provision of Information) Regulations 1991 required estate agents to explain the circumstances and method of remuneration. They did not prescribe obligatory definitions for contractual terms or alter the proper construction of the agreement. The Regulations’ use of purchaser was itself anticipatory and referred to a person contracting unconditionally to purchase.
6. The terms were sufficiently drawn to the defendants’ attention. The initial letter expressly referred to the enclosed terms, and the first defendant signed it acknowledging acceptance.
7. Although a disclosed agent is ordinarily not personally liable, the parties may expressly contract for personal liability. The agreement placed responsibility for fees on the party to whom the letter was addressed, namely the first defendant, who had not signed as agent only. The respondents were ordered to repay interim costs, and Foxtons’ costs below and on appeal were to be agreed or assessed. Leave to appeal was refused.

• Court of Appeal (Civil Division): Appeal allowed; judgment entered for Foxtons for £30,315 inclusive of VAT, with consequential interest and costs orders. [2005] EWCA Civ 514
• Central London County Court: On 10 June 2004, Mr Recorder Hamlin dismissed Foxtons’ commission claim, holding that the fee became payable only on completion.