Nicholas Prestige Homes v Neal

A vendor who agrees that an estate agent will have sole selling rights breaches that agreement by retaining another agent to market or sell the property during the sole-agency period. The first agent may recover damages even where it was not the effective cause of the sale and cannot recover contractual commission as a debt.

Where the breach deprives the agent of a real and substantial opportunity to earn commission, damages are assessed for the lost chance. The court may award the full commission where the evidence establishes that the chance was effectively certain and provides no proper basis for a contingency discount.

An estate agent appealed from the dismissal of its claim for commission arising from the sale of a property. The Luton County Court found that the vendor had accepted an arrangement under which the agent would have sole selling rights from 1 January 2007 for 16 weeks. It nevertheless dismissed the commission claim because another agent, Plumm Properties, had introduced the eventual purchasers.

Permission to appeal was confined to the agent's alternative claim for damages for breach of contract. The central issue was whether the vendor's continued instruction of Plumm during the sole-agency period caused the agent to lose a recoverable chance of earning its commission.

1. Appeal allowed. Ward LJ, with whom Patten and Black LJJ agreed, entered judgment for the estate agent for £10,883.44, representing the full commission claimed as damages.

2. The vendor's proposed challenge to the finding that a contract had been made had no real prospect of success. The emails showed consecutive arrangements, namely a multi-agency arrangement until 31 December 2006 followed by a 16-week sole-selling-rights period. The vendor's reply accepted those arrangements.

3. The sole-agency term prohibited the vendor from instructing any other agent to market or sell the property during that period. Plumm remained instructed when the eventual purchaser responded to the online marketing. This was a breach of contract.

4. The agent could not recover commission as a debt because it was not the effective cause of the sale, and permission had not been granted to challenge that conclusion. However, its pleaded alternative claim for damages had not been addressed below. The possibility of such a claim was consistent with Foxtons Ltd v Pelkey Bicknell & Another [2008] EWCA Civ 419, where the court contemplated the consequences of a client instructing other agents in breach of a sole-agency agreement.

5. But for the breach, the agent would probably have had the opportunity to sell the property because it promptly tried to return the purchaser's call. That was a real and substantial chance, not a speculative one. On the evidence, the purchasers' interest in the property remained firm, so no discount was justified for contingencies. The lost chance was therefore valued at the whole commission.

• Court of Appeal (Civil Division) In [2010] EWCA Civ 1552, allowed the estate agent's appeal on its permitted alternative claim for damages and entered judgment for £10,883.44.
• Luton County Court (Deputy District Judge Simmons) Dismissed the agent's claim for commission and the vendor's counterclaim for damages for distress. It found that the parties had entered into the agency contract.