John D Wood & Co (Residential and Agricultural Ltd) v Craze

On a Part 24 application, where the court has all necessary evidence and adequate argument on a short issue of law or construction, it should decide that issue rather than leave it for trial.

An estate agency agreement must be construed according to its terms. An entitlement triggered by exchange of “unconditional contracts” requires contracts which are binding and enforceable. Fraud which makes the sale contract unenforceable may prevent commission becoming payable. However, a term may be implied where necessary to give the agency agreement business efficacy. In this case, a term preventing fraudulent representations which made any sale unenforceable was implied, giving rise to a possible damages claim.

The claimant estate agent sought commission after the defendant’s prospective sale of a flat failed before completion. The claim relied on four grounds: commission allegedly triggered by exchange of contracts; loss caused by the defendant’s default; damages for breach of implied terms; and quantum meruit.

The defendant conceded, for the application, that the claimant’s standard terms governed the agreement and that he had made fraudulent misrepresentations. A Master dismissed the application for summary judgment or strike-out, although he considered that the quantum meruit claim could not succeed. The defendant appealed. The central issues were whether the legal questions should have been finally determined and whether any of the four grounds disclosed a viable claim.

1. The appeal was allowed on the procedural issue. Where a Part 24 application raises a short point of law or construction, and the court has the necessary evidence and adequate opportunity for argument, it should determine the point. The Master had the material and argument required and should have resolved the legal issues at the hearing.

2. The commission claim based on exchange of “unconditional contracts” failed. Construed in context, that expression required contracts which were free of unfulfilled conditions and enforceable at law. The defendant’s fraudulent pre-contractual misrepresentations rendered the sale contract voidable and unenforceable from the outset. The contractual trigger for commission therefore never occurred.

3. The alleged free-standing claim based on the defendant’s default disclosed no separate cause of action and failed. The quantum meruit claim also failed because the standard terms expressly defined when remuneration was payable and no subsequent contract was pleaded.

4. The court accepted that estate agency agreements generally contain no implied obligation requiring the vendor to complete a sale. Terms should be implied only where necessary to give the agreement business efficacy. The proposed wide obligation to disclose all matters relevant to marketing, including latent defects, was neither necessary nor shown to reflect the parties’ intention.

5. Fraud created a different situation. Since the defendant’s admitted fraudulent representations made any sale contract unenforceable and doomed the agency’s efforts from the outset, it was necessary to imply a term that he would not make such representations. The defendant’s conduct was, prima facie, a breach. The claimant could recover damages only if it proved a real or substantial chance of earning commission. That assessment required evidence concerning remedial work, price, the defendant’s intentions and the prospect of a sale.

6. The proposed amendment adding negligence and a claim under clause 5 was not considered because it was raised too late and had not been properly argued. The claimant remained free to pursue the application separately.

• High Court (Queen's Bench Division): appeal from the Master’s refusal of summary judgment and strike-out. The appeal was allowed on the procedural issue and the legal issues were determined.
• Master Foster: dismissed the defendant’s application with costs and refused permission to appeal. The quantum meruit claim was considered incapable of succeeding, but was nevertheless allowed to proceed.