The County Homesearch Company (Thames & Chilterns) Ltd. v Cowham

An agent remunerated by commission on a transaction must ordinarily be an effective cause of that transaction, unless the contract indicates otherwise. Whether that requirement applies to a purchasing agent depends on the express contractual terms. It is not imported automatically from selling-agency contracts.

A contractual definition which deems an introduction to occur without any actual causal contribution may be inconsistent with an implied effective-cause requirement. Such a requirement cannot then be implied. Regulation 7(2) of the Unfair Terms in Consumer Contracts Regulations 1999 applies only where the meaning of a written term is doubtful. A dispute about whether an additional term should be implied does not itself create such doubt.

A purchasing agent agreed to work with the appellant to find a suitable property. The agreement required commission following an exchange of contracts and deemed the agent to have introduced a property in specified circumstances. The agent mentioned the property eventually purchased, but those references made no impression on the appellant. An independent planning consultant later brought the purchaser and owners into contact.

Mr Recorder Hollander QC in Luton County Court held that the contractual definition constituted an introduction. He found that the agent was not an effective cause of the purchase, but declined to imply a term making effective causation a condition of commission. The purchaser appealed. The central questions were whether the effective-cause term should be implied and whether Regulation 7(2) of the Unfair Terms in Consumer Contracts Regulations 1999 required a consumer-favourable construction.

1. The appeal was dismissed unanimously. An agent whose commission depends on a transaction being brought about must ordinarily be an effective cause of that transaction, unless the contract indicates otherwise. The principle is capable of applying to both selling and purchasing agents.

2. The rationale for the usual implication is principally to protect a client from paying commission to multiple agents who each made an introduction, although only one effectively caused the transaction. The purchasing-agency agreement made the engagement of a second agent commercially unlikely. That rationale was therefore absent, although its absence might not by itself have been conclusive.

3. The express terms were inconsistent with an effective-cause requirement. The agreement deemed the agent to have introduced a property even where the purchaser received particulars through another estate agent with whom the purchasing agent had regular contact. The parties had therefore provided for commission in circumstances lacking even the limited causation inherent in a genuine introduction. An effective-cause term would deprive that deeming provision of effect and could not be implied.

4. Selling- and purchasing-agency contracts may be closely analogous. The treatment of both forms of agency by the Estate Agents Act 1979 did not, however, permit the court to disregard the terms of the particular purchasing-agency contract. A term usually implied into a selling-agency contract is not automatically transferred to a purchasing-agency contract.

5. Regulation 7(2) of the Unfair Terms in Consumer Contracts Regulations 1999 did not assist the purchaser. It requires an interpretation favourable to the consumer only where doubt exists about the meaning of a written term. Clause 3, read as a whole, was not doubtful, and clause 2 concerned the agent’s obligation rather than the client’s payment obligation. An arguable question about implying an additional term is not a doubt about the meaning of a written term.

• Court of Appeal (Civil Division): The court dismissed the purchaser’s appeal unanimously: [2008] EWCA Civ 26.
• Luton County Court: Mr Recorder Hollander QC held that the agent had made a deemed contractual introduction and was entitled to commission. Although the agent had not been an effective cause of the purchase, the Recorder declined to imply a term requiring effective causation.