Cases involving RTA (Business Consultants) in 2017
Cases involving Anthony Reeves
NOTE OF JUDGMENT
RTA (Business Consultants) Ltd v. Ms Kondje Selim
Case No. C78YM641
Heard in Cambridge County Court on 8 March 2017
The case was heard before District Judge Raggett.
RTA were represented by Counsel (Mr Chapito from LPC Law)
Ms Selim was represented by Anthony Reeves (Consultant Chartered Legal Executive) from Summerfield Browne Solicitors.
Outline of the facts
The Defendant, a co-director of a company, signed an agreement with RTA to sell a business property on behalf of a company but it also provided that she was personally liable. The company closed down and so RTA issued proceedings against Ms Selim. The Contract was signed on 2 April 2014. At the time of signing, a “registration fee” of £1,500 plus VAT became due and was paid.There was a dispute as to whether some handwritten additions to that contract were on the document when it was signed by Ms Selim. At the time of signing the Agreement, Ms Selim was running a busy shop. RTA claimed that this handwritten additional clause stating a minimum commission was on the document when it was signed, whereas the evidence of Ms Selim was that it was added afterwards.In June 2014, the defendant’s co-director instructed another agency. In April 2016, the property was sold for £305,000 by a purchaser introduced by that other agency. The Claimant claimed their fees/commission of £12,000 plus VAT as per the contract when the property was sold, which they regarded as a sole selling rights agreement. RTA had not introduced the purchaser. They limited their claim to £10,000 to keep the case in the small claims track.
Ms Selim’s Defence to the Claim was twofold. First, it was argued that there was a breach of the Estate Agents (Provision of Information) Regulations 1991 in that when she signed the Contract the handwritten addition to the contract was not there when she signed and that it had been added afterwards. Therefore, she had become liable for the registration fee of £1,500 before she was provided with all of the information about the fees of RTA. Secondly, it was argued that there was an implied term into the contract that RTA’s commission was only due if they were the effective cause of the transaction. As RTA did not introduce the purchaser, they were not the effective cause of the sale.
RTA had already indicated a month before the hearing that nobody from the company would be attending the hearing. With their witness not turning up, their lawyer was only able to go through the documents and make submissions. Mr Reeves argued from the start that as their witness had not attended very little weight should be placed on the written statement of Mr Norton. Mr Reeves had a number of question he wanted to put to Mr Norton about his evidence. Ms Selim had attended and was cross examined by RTA’s legal representative.
RTA made submissions that as the contract was a “sole selling rights agreement” there was no need to imply a term into the contract that they had to be the effective cause of the sale. Mr Reeves argued that it was not in fact clear that the Contract was a sole selling rights agreement because although Clause 2 of the contract described it as such, there was no express term which prevented Ms Selim from instructing another agent and some clauses actually referred to other agents. Therefore, with the possibility of other agents being instructed there was the prospect of having two agents fees and so a clause should be implied term into the agreement that they must be the effective cause of the sale for reasons of business efficacy.
Mr Reeves also submitted that it might have been that the Claim should have been or was meant to have been brought as a breach of contract and not a claim for commission due. If it had been brought in this way, he argued that the claim would still fail because there was no breach and/or if there was a breach the damages claimed did not flow from the breach.
The Judge made the following findings of fact:
- She preferred the evidence of Ms Selim to that of the written statement of Mr Norton. The Judge stated that Ms Selim came across as a very credible and believable witness. She felt her answers when questioned rang true and that the written statement of Mr Norton gave little detail as to how the contract came to be signed. So on balance, she preferred the evidence of Ms Selim and therefore decided that the additional hand written term was not on the Contract when Ms Selim signed it.
- Having looked at the contract, she found that it was not a “sole selling rights agreement” and that there was an implied term into the contract that for the commission to be due RTA had to have been the effective cause of the sale.
- The Claim was not brought as a breach of contract and so she did comment further on this.
Having made the above findings of fact, the Judge applied the law to the facts.
Having found that the handwritten term was not on the Contract when Ms Selim signed the document, there had been a breach of Regulation 3 of the Estate Agents (Provision of Information) Regulations 1991. That being the case, the contract was only enforceable if the court ordered it was enforceable. The Judge decided that in all the circumstances the Contract should not be enforceable because there was no evidence of what RTA had actually done. The only evidence of what they had done was producing the sales particulars. She was satisfied by the evidence of Ms Selim that after signing the contract, RTA did not contact her until a week or so before the sale was about to take place to the buyer introduced by the other agent. RTA had stated they would provide Ms Selim with regular updates but there was no evidence of any correspondence with Selim in the period of nearly two years since the signing of the contract. The only documents produced by RTA of what they did was a list of people who they claimed had downloaded particulars but she found this list needed further explanation. In summary, she did not see any evidence of RTA having marketed the property and so it would not be right to Order that the Contract be enforced after there had been a breach of the Regulations.
In addition to refusing to allow the Contract to be enforced because of the breach of the 1991 Regulations, as RTA were not the effective cause of the sale, they were not entitled to their commission and so their claim would also fail on this basis as well. It was not in dispute that RTA did not introduce the buyer who bought the property.
The claim by RTA was dismissed. The Judge awarded Ms Selim £54 in respect of expenses for attending the hearing.
See below from http://www.wilkes.co.uk/businesses-warned-on-contracts
West Midlands businessmen and women have been warned of the need to be vigilant when they buy or sell products or services.
Felix Dodd, a specialist litigation solicitor at the Solihull office of The Wilkes Partnership, has urged directors to be careful, whether they are investing in their businesses or looking to sell out.
Mr Dodd cites the recent county court case, in which he successfully represented Baron Marcus, a 76 year old Birmingham businessman who had signed up with a business sales agent called RTA to help him to sell his business on his retirement.
Mr Marcus, a small shopkeeper who owned a local hardware business called ‘So Many Things’ had been persuaded through a ‘hard sell’ by RTA to sign a document, which turned out to be a contract awarding the latter the sole agency to sell his business.
Having realised that this was not a good deal for him because of the costs involved, Mr Marcus sought to cancel within 24 hours but RTA sued him for over £6,000.00.
Though the court threw out RTA’s claim because there had been what the judge called ‘a fundamental representation’ when the firm’s service was sold to him, the case does carry a health warning for local businesses as Mr Dodd explains.
“Businesses are often prepared to agree to terms that they don’t understand. There are also many cases where businesses buy assets such as machinery, just accepting the standard ‘small print’ documents provided by those who would sell to them.
“If a business buys a major item of factory plant on the basis of statements by the company selling it, representations by the seller should be recorded clearly.
“Also documented should the nature and extent of any guarantees, warranties or technical support to ensure that the factory plant or machinery delivers on the promises made for it.
“Whatever else they do, business owners should understand these contracts and not rely on glib salesmen. They should also insist on written contracts to ensure clarity and the best chance of the terms being complied with or enforced”.