Glentree Estates Ltd v Holbeton Ltd

An estate agent claiming commission must establish that its services were the or an effective cause of the sale, where that term is implied into the agency agreement. The inquiry is fact-sensitive, and the burden lies on the agent. An initial introduction and viewing may be insufficient where the purchaser’s interest later ends and the eventual sale results from separate negotiations or arrangements. The agent need not be the first person to make the purchaser aware that the property is for sale. The critical question is whether the agent materially caused the transaction that was ultimately concluded.

Glentree Estates Ltd claimed commission from Holbeton Ltd on the sale of Silverwood, a property owned by Holbeton. Glentree had acted first as sole agent and later as a multiple agent. It introduced or showed the eventual purchaser, Mr Ibrahim, around Silverwood on 3 March 2009, after which he made a £10 million offer. That offer was rejected.

Mr Ibrahim then purchased another property and ceased pursuing Silverwood for a time. His interest later revived following separate events and direct negotiations with Holbeton’s agent, including an agreement that the other property would be transferred in part exchange. The issue was whether Glentree had been the effective cause of the eventual sale.

1. The claim was dismissed. Glentree failed to prove that it was the effective cause of the sale of Silverwood to Mr Ibrahim.
2. Where an estate agency agreement contains, expressly or by implication, an effective-cause requirement, the agent seeking commission bears the burden of proving that its services caused the transaction. Whether the agent was the effective cause is principally a question of fact: [2008] EWCA Civ 419.
3. The court did not need to resolve whether the correct formulation was “the effective cause” or “an effective cause”. On either formulation, the result was the same.
4. Glentree’s involvement consisted of showing Mr Ibrahim the property and conveying his initial £10 million offer. Mr Ibrahim soon abandoned the prospect of buying Silverwood and purchased The Villa instead. His interest in Silverwood was later revived by information about a possible lower price and by direct contact with Holbeton’s representative.
5. The decisive feature was the subsequent negotiation of a part-exchange involving The Villa. That arrangement enabled the parties to agree the transaction and was the real effective cause of the sale. Glentree did not initiate that arrangement, participate in the relevant negotiations, or contribute to the eventual agreement.
6. An initial introduction, even if it generates some interest or an offer, does not by itself establish entitlement to commission where later events break the causal connection and independently bring about the sale.

First-instance decision. No prior or appellate decision was stated in the judgment.