In Wells v Devani , estate agent Mr Devani claimed that commission was payable to him by the vendor, Mr Wells, on completion of the sale of his flats to a purchaser whom Mr Devani had introduced.
Seven of the properties within a block of flats completed by Mr Wells in 2007 were still on the market in 2008. A neighbour contacted estate agent, Mr Devani, to tell him about the unsold flats. Mr Devani thanked the neighbour and contacted Mr Wells. Mr Devani claims that he told Mr Wells he was an estate agent and that he would charge 2% plus VAT in commission, although Mr Wells denies this. Mr Devani introduced the seven flats to Newlon Housing Trust which agreed to purchase the properties for £2.1 million. On completion, Mr Devani claimed commission which Mr Wells refused to pay.
In the Central London County Court, the judge held that there was a binding contract between the parties. However, he deducted one third of the fee because Mr Devani submitted his terms only after the introduction had been made, which constituted a failure under the requirements of the Estate Agents Act 1979.
The Court of Appeal allowed Mr Wells’ appeal on the grounds that there may not have been a binding contract, under Section 18 (1) of the Act. This section provides that, before entering into a binding contract, the agent must provide certain information to his client. Mr Devani failed to comply as he did not provide details of the contract to Mr Wells at the outset, or in writing, or inform him of the point at which commission would be due. The Supreme Court, however, allowed Mr Devani’s appeal and dismissed Mr Wells’ cross appeal. The Court found that there had undoubtedly been the intention of a contract between the parties that would lead to payment becoming due on completion to be paid from the proceeds of the sale. Therefore Mr Devani was entitled to commission at the point of completion.
Lord Briggs and Lord Kitchin agreed that there were occasions when the context in which words were used told as much (or more) about the ‘essential terms of the bargain’ than a written contract.
Lord Briggs said that the judgement in no way underrated the importance of the statutory duties of estate agents under Section 18 of the Act; on the contrary, it was because of the enforceable liability of ‘the briefest and most informal exchange’ that the statute protected consumers by imposing such a rigorous requirement of estate agents.
The case was concluded by the court’s interpretation of the intention of the parties overriding the technically imperfect completion of the contract.