Neutral Citation Number: [2011] EWHC 2946 (QB)

Case No: HQ11X00012

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 21/11/2011

Before :

HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.

(sitting as a Judge of the High Court)

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Between :

FOXTONS LIMITED Claimant

- and -

(1) DESMOND O’REARDON

(2) DIANA O’REARDON

Defendants

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Andrew Davis (instructed by Foxtons Ltd. Legal Department) for the claimant

Sarah Lippold (instructed by Healys LLP) for the defendants

Hearing dates: 24, 25, 26 October 2011

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Approved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this

Judgment and that copies of this version as handed down may be treated as authentic.

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Approved Judgment

Foxtons Ltd. v. O'Reardon

His Honour Judge Richard Seymour Q.C. :

Introduction

1. The claimant in this action, Foxtons Ltd. (“Foxtons”) carries on business as an estate

agent.

2. Until completion of the sale of the property to Ealing Land Ltd. (“Ealing”) on 13

June 2011 Mr. and Mrs. Desmond O’Reardon were the freehold owners of the

property known as and situate at 63, Christchurch Avenue, London NW6 (“the

Property”).

3. In 2007 Mr. and Mrs. O’Reardon retained Foxtons to seek prospective purchasers for

the Property.

4. The case for Foxtons in this action was that the retainer was agreed in writing in a

document (“the Standard Form”) in a standard form used by Foxtons which

comprised two A5 pages. The front sheet bore the name “Foxtons” and the legend

“Terms & Conditions”. It included space for the completion of the name of a

“Client”, space for the completion of the “Property Address” in relation to which

Foxtons was being instructed, and spaces for various other pieces of information to be

inserted. The copy of the Standard Form adduced in evidence was completed to show

the names of Mr. and Mrs. O’Reardon, the address of the Property as that in respect of

which Foxtons were to seek purchasers, an indication that Foxtons was being

instructed on a sole agency basis at a commission of 2.5% plus Value Added Tax, and

a note that the asking price in respect of the Property was to be £2,500,000. On the

face of the Standard Form it was signed by Mrs. O’Reardon “for and on behalf of

seller” and by Mr. Tim Jackson “for and on behalf of Foxtons”. Each signature was

dated 19 June 2007. It was not in dispute in this action that the Standard Form had,

indeed, been signed by Mrs. O’Reardon and by Mr. Jackson. Ultimately, I think, there

was no dispute that the date upon which at least Mrs. O’Reardon signed the Standard

Form was 19 June 2007, but, during the course of the evidence, certainly of Mr.

O’Reardon, there seemed to be a degree of equivocation upon the date. Mr. Jackson,

at the time employed by Foxtons as sales manager of the branch (“the Hampstead

Branch”) at 47, Heath Street, London NW3, but no longer employed by Foxtons at

the date of the trial, was called to give evidence on behalf of Foxtons. He was firm

that he had signed the Standard Form on 19 June 2007. The position of Mr. and Mrs.

O’Reardon was that Mr. Jackson did not sign in the presence of either of them, so

they took no stance on the date of his signature.

5. The second page of the Standard Form bore the name of Foxtons at the top, followed

by the words, “Terms and Conditions of Business, Fees and Expenses” (“the

Terms”). The Terms included the following provisions which were material to the

issues in this action:-

“Sole Agency

Where Foxtons acts on your behalf as your sole agents, you

will be liable to pay remuneration to us, in addition to any

other costs or charges agreed, if at any time unconditional

contracts for the sale of the property are exchanged:-

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Foxtons Ltd. v. O'Reardon

with a purchaser introduced by us during the period of our sole

agency or with whom we had negotiations about the property

during that period; or with a purchaser introduced by or

offering via another agent during that period. …

Fees payable

Foxtons fees are calculated as a percentage (%) of the sale

price achieved plus VAT at the prevailing rate. For all sole

agency instructions this percentage is at a rate of 2.5%. …

Time and Payment of Fees

All Foxtons fees become due and payable upon exchange of

contracts. However, and at the discretion of Foxtons, fees may

be paid out of completion monies. On your signing the enclosed

copy letter you are hereby authorising your lawyers to pay our

fees out of the sale proceeds.

Interest

We reserve the right to charge interest on any amounts still

outstanding twenty-eight (28) days after Foxtons fees are first

demanded. The prescribed rate of interest shall be 2% above

the HSBC base rate as at the date they are first demanded and

payable from that date. …

ENTIRE AGREEMENT AND VARIATIONS

Each party confirms that these conditions constitute the entire

agreement between the parties. Each party confirms that it has

not relied upon any representation not recorded in this

agreement inducing it to enter into this agreement. No

variation of this agreement will be valid unless confirmed in

writing by the Chief Operating Officer of Foxtons.”

6. On about 20 July 2007 Mr. Maurice Leonard, a gentleman introduced to the Property

through Foxtons, offered to pay the sum of £3,300,000 to purchase it. Mr. and Mrs.

O’Reardon accepted that offer, subject to contract.

7. By a contract (“the Contract”) in writing dated 1 August 2007 Mr. Leonard, Mr.

Andrew Kershaw and Mr. John Haughey agreed with Mr. and Mrs. O’Reardon to

purchase the Property unconditionally for the sum of £3,300,000. By clause 20 of the

Contract it was provided that:-

“Completion shall take place upon the Seller giving the Buyer

28 days notice of a Completion Date, such notice not to [be]

given before six months have elapsed from the date of this

contract. If no such notice is given by the Seller then the

Contract will complete in 12 months from the date hereof.”

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Foxtons Ltd. v. O'Reardon

8. Following the exchange of the parts of the Contract, under cover of a letter dated 2

August 2007 Foxtons despatched to Healys LLP (“Healys”), the solicitors acting on

behalf of Mr. and Mrs. O’Reardon in respect of the sale of the Property, an invoice

dated 1 August 2007 in the sum of £82,500 (that is, 2.5% of £3,300,000), plus Value

Added Tax at 17.5% of £14,437.50, making a total of £96,937.50. That sum was not

paid by or on behalf of Mr. and Mrs. O’Reardon, and was the sum claimed by

Foxtons in this action, together with interest. A formal demand for payment was

made by a letter dated 21 October 2008 written to Mr. and Mrs. O’Reardon by the

Legal Department of Foxtons. By that letter payment was demanded within seven

days.

9. The sale of the Property to Mr. Leonard, Mr. Kershaw and Mr. Haughey did not

proceed smoothly, and was ultimately aborted. Contracts for the sale of the Property

at a price of £1,800,000 were exchanged between Mr. and Mrs. O’Reardon and Ealing

on 10 March 2011.

10. This action was commenced by a claim form issued on 26 May 2009. A Defence was

served on 24 July 2009. That Defence made no reference to the matter which, by the

date of the trial, appeared to be the principal relevant disputed allegation of fact raised

in this action on behalf of Mr. and Mrs. O’Reardon. That matter was first raised in an

Amended Defence and Counterclaim dated 16 March 2010, served following an

unsuccessful attempt on the part of Foxtons to obtain summary judgment on the

claim. The critical allegation, added to paragraph 3 of the existing Defence, was:-

“It was a further express term of the contract, agreed orally,

that the purchaser to be introduced by the Claimant must be a

“cash buyer”, being a purchaser with sufficient funds readily

available to purchase the Property.”

11. That allegation was denied on behalf of Foxtons in a Reply and Defence to Amended

Defence and Counterclaim at paragraph 5. It has to be said that the contention that it

had been expressly agreed between Mr. and Mrs. O’Reardon and someone at Foxtons

that Foxtons would only introduce a “cash buyer” seemed, without more, improbable.

Given the asking price of £2,500,000, what one was being invited to postulate as

having been agreed was that only someone with that amount of ready cash was to be

introduced as a possible purchaser. It appeared unlikely that someone with assets

sufficient to fund a purchase at the level of the asking price would simply have that

amount lying in a bank account. Moreover, the suggested stipulation did not look as if

it was one which a mere estate agent could perform. An estate agent was not in a

position to insist upon full and frank disclosure of assets on the part of a prospective

purchaser. All the estate agent could do, at best, would be to enquire of the

prospective purchaser as to his or her asset position, and pass on what the estate agent

was told. How useful that would be, when the acid test of ability to purchase would

appear to be whether the prospective purchaser was prepared to enter into an

unconditional contract to buy, may be doubted.

12. Given the apparent significance of the allegation of an express term concerning a

“cash buyer”, it is convenient to consider the evidence adduced on that point next.

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Foxtons Ltd. v. O'Reardon

The evidence about a “cash buyer”

13. As I have noted, the position of Foxtons was that it had not been agreed that it would

only introduce as prospective purchasers of the Property a “cash buyer”.

14. The evidence of discussion about a “cash buyer” took the form of what Mrs.

O’Reardon asserted in two witness statements, and the evidence of Mr. O’Reardon.

There was no reference to a “cash buyer” in the Standard Form or in any document

contemporaneous with the signing of the Standard Form.

15. Given the importance of the point to her case, it was surprising that in her first witness

statement, dated 16 March 2010 and made in answer to the application for summary

judgment, Mrs. O’Reardon was not more specific in the account which she gave,

certainly as compared to what she said in her second witness statement, dated 15 July

2011 and prepared for the purposes of the trial. In her first witness statement Mrs.

O’Reardon really gave no detail at all. What she said was:-

“8. Accordingly, in June 2007 we decided to engage Foxtons

and instructed them to find us a cash buyer for the Property as

we wanted a straightforward sale without any complications.

This was extremely important to us and it was agreed that this

was an express term of the contract we entered into with

Foxtons. We did not simply instruct Foxtons to find us a buyer

(which we could have done ourselves) but rather a cash buyer,

which is one of the reasons that we agreed to pay such high

commission of 2.5%.

9. We informed Foxtons that we wanted to exchange contracts

quickly so that we had the comfort of knowing that I would be

left in a financially secure position to enable me to move out of

the Property if my husband did not survive his operation.

However, as a result of my husband‟s forthcoming transplant

and the unknown length of his hospital stay (if the operation

was successful), we needed some flexibility regarding the

completion date and a period of up to a year between the

exchange of contracts and completion. We would simply have

been incapable of undertaking a house move for a considerable

period of time after my husband‟s operation. This was made

absolutely clear to Foxtons and there is no doubt that they were

fully aware of our situation and needs.

10. As set out in paragraph 5 of Mr. Kataora‟s witness

statement, on 19 June 2007, I signed an agreement with

Foxtons for them to act as our estate agent in relation to the

marketing of the Property for sale and all associated services

(“the Agreement”). This was presented to us by Foxtons as a

standard contract with the only point of emphasis being that

commission was to be charged at a rate of 2.5% of the sale

price achieved plus VAT on a sole agency basis (details of

which were on the first page). Foxtons did not give us the time

or opportunity to read and digest the detail of the Agreement as

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Foxtons Ltd. v. O'Reardon

their representative was anxious to leave our house. In addition

the size of print was small which would have made it

impossible for either of us to read quickly. …”

16. The point about the print size was a little difficult to follow. The copy of the Terms

put in evidence as part of the Standard Form seemed to me to be perfectly legible.

17. In the second witness statement of Mrs. O’Reardon a considerably fuller account of

her dealings with Foxtons was set out. It included:-

“6. On or around 14 June 2007, Gary Reichman and another

representative from Foxtons attended 63 Christchurch Avenue,

London NW6 7BX (“the Property”) for a long meeting with us.

Mr. Reichman took the lead for Foxtons in our discussions.

7. … Mr. Reichman initially suggested a value of £1,800,000

for the Property but we told him and his colleague that we

expected them to sell the Property for more than this and asked

them to offer the Property for sale at £2,500,000.

8. We spent a considerable amount of time explaining to Mr.

Reichman and his colleague that we were selling the Property

because of my husband‟s illness, pending transplant and the

need for a healthier environment. The full seriousness of my

husband‟s medical condition was brought home to us after a

meeting at the Hammersmith Hospital and we were very

concerned about his possible convalescence in a house that had

increasingly become a burden for us. My husband was also

concerned that, if anything happened to him, I would be left on

my own to deal with the sale of the Property and all the

attendant ramifications. The fact that my husband was

critically ill is recorded in Foxtons‟ notes at C2.

9. We told Mr. Reichman and his colleague that we were

already under a lot of stress which was about to intensify as a

result of my husband‟s forthcoming transplant. We said that we

had decided to retain an estate agent to act on our behalf in

our best interest in managing a safe sale of our Property in

such a manner so as to minimise our stress. We told them that

we needed the sale to go through smoothly and to be as

straight-forward as possible. We also made it very clear that

we would only be interested in a buyer who was financially

viable. My husband stated categorically that we would not be

interested in a buyer who required planning permission as a

condition of the purchase. We spent some time explaining this

to ensure that Mr. Reichman and his colleague realised why we

needed Foxtons‟ help and were, in turn, willing to pay what we

considered to be a higher rate of commission (2.5% of the sale

price) for this service (compared with that being charged by

other agents at the time). Indeed, we were not prepared to pay

a commission fee of as much as £60,000 on a £2,500,000 sale

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Foxtons Ltd. v. O'Reardon

for an estate agent to simply arrange some viewings and make

some telephone calls. We, therefore, relied on Foxtons to look

after our interests in finding us a buyer who was in a financial

position to complete the sale and expected Foxtons to take all

reasonable steps to ensure that any prospective buyers with

whom we contracted met this condition.

10. As set out at paragraph 9 of my First Statement, I wanted a

period of up to a year between the exchange of contracts and

completion. The reason for this was that I could not see how I

would be able to manage finding a new property, packing and

moving by myself whilst holding down a full-time job, visiting

my husband in hospital (over several weeks) and looking after

him after his transplant. My husband, on the other hand,

suggested a quick sale with the option of renting the Property

from the new owners whilst we looked for somewhere to buy.

Foxtons (I believe it was Mr. Reichman) said that this was

highly unlikely and so we decided on the long-term completion

option. I now question whether this advice from Foxtons was

correct since Ealing Land Limited to whom we eventually sold

the Property were amenable to our renting the Property from

them for a while. Why Foxtons did not consider the rental

option to be viable is unclear but, in reliance on such advice,

we decided to purchase a new property. If Foxtons had advised

us that my husband‟s suggestion was viable, we may well have

decided to rent from our buyers for a while whilst looking for a

new property, in which case the losses we have suffered would

have been significantly reduced.

11. On or around 19 June 2007, Mr. Reichman came back to

the Property on his own with Foxtons‟ contract for us to sign.

Due to my husband‟s precarious condition, Mr. Reichman and

I agreed that I should sign the contract, which I did. As set out

at paragraph 10 of my First Statement, this was presented to us

by Mr. Reichman as being a standard contract and he did not

give us the time or opportunity to read and digest the terms and

conditions as he was anxious to leave for another appointment.

12. My husband refers at paragraph 5 of his witness statement

to his conversation with Mr. Reichman regarding the contract

with Foxtons and, in particular, the fact that we would not be

liable to pay any commission if the sale to a buyer introduced

by them fell through. I was at the front door at this point in time

(assuming that Mr. Reichman would follow me out) and so was

not present during this conversation which took place in the

kitchen area. However, once legal action was commenced

against us, we could not understand why Foxtons were

expecting to be paid commission since Mr. Reichman had led

my husband led [sic] to believe that the contract had a “no sale

no fee” clause in it.

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Foxtons Ltd. v. O'Reardon

13. I can confirm that we were not provided with a copy

(carbon copy imprint or otherwise) of the contract upon me

signing this as is asserted at paragraph 13 of Foxtons‟ Reply

dated 5 May 2011. Mr. Reichman said to us that he was not

authorised to sign the contract on behalf of Foxtons and so he

had to take it back to his office to arrange for it to be counter-

signed. I see now that the contract was signed and dated 19

June 2007 by Tim Jackson of Foxtons but, despite the fact that

Mr. Reichman said during his visit that a copy would be sent to

us, it never arrived. I do not understand why Foxtons refer to

us having been given a copy “to take away” as I signed the

contract at the Property.”

18. Mr. O’Reardon signed both of his wife’s witness statements to indicate that he agreed

with the contents of them. However, he also made a witness statement of his own

which he signed on 15 July 2011. For present purposes the interesting evidence in that

witness statement was paragraph 5:-

“As set out at paragraph 10 of Diana‟s First Statement and

paragraph 11 of Diana‟s Second Statement, on or around 19

June 2007, my wife signed the contract with Foxtons at the

Property. Just after she did so, I had a discussion with Gary

Reichman of Foxtons in the kitchen area. I specifically asked

Mr. Reichman whether we would still be liable to pay Foxtons

commission if a sale of the Property did not go through. Mr.

Reichman took the signed contract out of his jacket pocket and

told me (in a jovial manner) that we were covered in that

eventuality by a particular paragraph in the terms and

conditions to which he pointed. I could not read it because the

print was too small which I told Mr. Reichman at the time. Mr.

Reichman said that it did not matter as I would be able to study

the paragraph when they returned the signed copy to us, which

they never did. Mr. Reichman did, however, confirm that we

would not have to pay commission to Foxtons if the deal fell

through. He then hurried out of the house taking the contract

with him and saying that it needed to be signed by someone at

the office. My wife was not present during this discussion as

she had already gone to the front door.”

19. The alleged conversation between Mr. Reichman and Mr. O’Reardon did not feature

as an alleged misrepresentation in this action, or anything like that. The significance

of paragraph 5 of Mr. O’Reardon’s witness statement was simply that, on its face, it

specifically confirmed that Mr. Reichman had attended at the Property on 19 June

2007, that he had obtained the signature of Mrs. O’Reardon to the Standard Form, and

that he had taken the Standard Form as so signed away to obtain a signature from

someone else on behalf of Foxtons.

20. It appeared that, in June 2007, Mr. Gary Reichman had, indeed, been employed by

Foxtons as a sales negotiator at the Hampstead Branch, from which the affairs of the

Property were dealt with. Mr. Reichman was not called to give evidence on behalf of

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Foxtons Ltd. v. O'Reardon

Foxtons. The suggestion was that he was currently based in the United States of

America.

21. However, that did not mean that evidence was not called on behalf of Foxtons which

directly contradicted the evidence of Mrs. O’Reardon and Mr. O’Reardon concerning

Mr. Reichman, an alleged visit by him and a “colleague” on about 14 June 2007, and

the circumstances in which the Standard Form was signed, not only by Mrs.

O’Reardon, but also on behalf of Foxtons.

22. Miss Nisha Ghei, who was formerly employed by Foxtons, gave evidence on its

behalf which, I think, was not seriously in dispute. She had worked for Foxtons as

what was called a Move Consultant. One of the functions which she performed in that

role was answering the telephone to someone who rang up with a view to considering

engaging the services of Foxtons. Foxtons operated a number of electronic systems,

and by reference to the information contained in one of those she was able to say that

at 16:37 hours on 13 June 2007 Mr. O’Reardon telephoned and, as a result of her

conversation with him, Miss Ghei did two things. She made, using the access which

she had to his electronic diary, an appointment for Mr. Jackson to call at the Property

at 17:00 hours on 19 June 2007. She also sent Mr. Jackson an e-mail at 20:01 on 13

June 2007. In the e-mail she wrote:-

“Hi Tim, Canvassing response 13/07/2007 re: demand for

property. This has been sought after for it‟s [sic] development

potential. Didn‟t give me much indication as to why he is

thinking of moving or why [sic]. Property is on 0.3 acres of

land. 8 bed. Detached house. 2 bath. 4 receptions. Kitchen.

Over 3 floors. Garden. Plenty of parking available. When:

don‟t know. Why: again don‟t‟ know. Access: vendor will be

there to let you in. Price: has been offered well over £1.2 mil.

Decision maker: YES. Sales valuation booked with Tim Jackson

for 19/06/2007 at 17:00. Thanks, Nisha.”

23. Miss Sarah Lippold, who appeared on behalf of Mr. and Mrs. O’Reardon, did not

suggest to Miss Ghei that her account of her involvement in making the arrangements

of which she spoke was in any way inaccurate. Miss Lippold simply put to her, and

she accepted, that the arrangements which she had made could have been altered

subsequently. Another record of which a copy was put in evidence indicated that in

fact the appointment had not been changed. That record was called “Valuation

Appointment History” and noted only the appointment originally made by Miss Ghei.

24. Mr. Jackson prepared a witness statement for the purposes of this action, having had

the opportunity, he told me, of refreshing his memory from the records maintained by

Foxtons. In his witness statement Mr. Jackson said, so far as is presently material:-

“2. I first met Mrs. Diana O‟Reardon in June 2007. She had

asked Foxtons to appraise her property at 63 Christchurch

Avenue, NW6 7BL, owned jointly with her husband Desmond,

for sale. I had not taken the first call directly but someone [in

fact Miss Ghei] at Head Office had received a response to a

canvassing letter and I was given that lead along with basic

details. As I recall, these were that here was a large property in

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Foxtons Ltd. v. O'Reardon

NW6 that, owing to its plot size and location, could be right for

a developer. I set up an appointment [Mr. Jackson accepted in

cross-examination that in fact it was Miss Ghei who had set it

up] and met with Mrs. O‟Reardon a few days later. This

meeting took place at the property. I understand it is alleged

that she did not get enough time to consider the contract in

detail but she did not say that she wanted to do that before

signing it. However, I always made a point of talking my clients

through the key points of the terms and conditions including the

term length, sole and multiple agency rate and Mrs. O‟Reardon

showed no reticence in signing them and I felt clear that all

her questions had been addressed before I left the appointment.

Neither did Mrs. O‟Reardon call me after the appointment to

discuss any aspect of the agreement in particular.

3. She told me that Mr. O‟Reardon was seriously ill and I

understood this to be one of the reasons for the sale. As far as I

can recall, I did not meet Mr. O‟Reardon either then or

subsequently. She wanted a purchaser who could move quickly

but equally she was not in a rush and I think I recall that she

actually did want a period of time before completion took place

to find a smaller property. I remember that she said the sale of

the property would help with her pension fund (or words to that

effect). She volunteered that she had already received a private

offer for the property from a developer at £1.8M. At the time

the market was still rising so obviously she wanted as much for

the property as she could get but I got the impression she had

no real idea what it was worth. I advised we could market it for

£2.5M. I am absolutely clear that Mrs. O‟Reardon did not say

that what she wanted was a „cash‟ buyer. I am quite certain of

that because I advised her that in view of its potential, the

property was likely to prove particularly attractive to a

developer and that the sort of price we were now talking about

would only come from a developer, not from an owner

occupier. In my experience developers rarely paid entirely in

cash for this sort of purchase. If she had asked me to find a

cash buyer I would have told her the best price would be from a

developer and they would be unlikely to pay cash.

4. It was the nature of my role that I did not keep this

instruction to myself. As a manager, negotiators the property

details [sic]. Each of them began to look for suitable buyers. I

remember taking my senior negotiators on a view-check of the

property with Mrs. O‟Reardon‟s permission so that they

understood what they were selling. I felt clear that Mrs.

O‟Reardon had accepted that in order to get the highest price a

developer would buy the property and so it was that developers

were sought out and began to come forward. As I recall, we

ended up with a few asking price offers.”

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Foxtons Ltd. v. O'Reardon

25. In cross-examination Mr. Jackson told me that he had not changed the appointment

which Miss Ghei had made for him to visit the Property. It was put to him that Mrs.

O’Reardon signed the Standard Form in the presence of Mr. Reichman and that Mr.

Reichman brought it back to the office for Mr. Jackson to sign. Mr. Jackson denied

that. He also denied the suggestion that he had not met Mrs. O’Reardon before she

signed the Standard Form. Mr. Jackson said in cross-examination that there were no

visits to the Property by anyone from Foxtons, and in particular not by Mr. Reichman,

prior to the signature of the Standard Form. He explained that the normal procedure at

Foxtons, followed in this case, was for a visit to be made by a sales manager,

following a contact made by a potential client, so that a valuation of the property

could be carried out and a document in the form of the Standard Form could be

completed, if Foxtons was to be instructed. The next step was for the sales manager,

in all probability (at least in his case) the next morning, to inform the sales negotiators

about the new instruction. Until that happened, Mr. Jackson said, Mr. Reichman

would not have known anything about the Property or Mr. or Mrs. O’Reardon.

26. Mr. Nikit Pankhania was employed by Foxtons as a sales negotiator in 2007 and

remained so employed at the date of the trial. He was called to give evidence on

behalf of Foxtons. The principal contribution which Mr. Pankhania made to the

evidence was to confirm what Mr. Jackson said about the sales negotiators at Foxtons

only being told about the instructions concerning the Property after Mr. Jackson had

visited and obtained the signature of Mrs. O’Reardon to the Standard Form. In his

witness statement Mr. Pankhania said:-

“2. Shortly after he had met with the vendor of 63 Christchurch

Avenue („the property‟), the then sales manager, Tim Jackson

told a number of negotiators at our office about this property.

Alongside myself, Gary Reichmann [sic], RJ Peach, Justin

Chilton were told about this property and what could be done

with it, namely that it had development potential. Tim did not

say at any point that the vendor required a cash purchase only

and certainly the terms and conditions the vendors had signed

had not been endorsed so as to make this an express

requirement. If this had been a stipulation then it would have

been recorded on BOS against the property details either on

the viewing card, or in the viewing arrangements section on the

instruction card.

3. Shortly after that we as a group viewed the property (we call

this a „viewcheck‟) when we met with the vendor Mrs.

O‟Reardon. I remember being told that Mr. O‟Reardon was

very ill; we were given medical hand-wash which we applied

before we went in to the property. We did actually meet Mr.

O‟Reardon at the property in one of the rooms upstairs. We

exchanged pleasantries and did not really talk much as he was

notably unwell and short of energy. We shook hands and

looked around. She showed us around the house and the

garden. The whole appointment must have lasted no more than

about 15-20 minutes with quite some of that time being spent in

the garden (this was not an appointment where we sat down

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Foxtons Ltd. v. O'Reardon

with cups of tea or anything like that). There was not much

dialogue between us but I asked my standard questions which

were where they were moving to; what sort of delay in

completion she had in mind, and why they were moving. She

thought about a year would be a sufficient delay. She didn‟t

know at that point where they were moving to (although the

delay was because of her husband‟s illness and I gather it was

to allow sufficient time for him to become well enough to

manage the move or for a related reason) but the last answer

was that the sale was needed to pay for Mr. Reardon‟s [sic]

ongoing healthcare. We touched on possible figures: she asked

me whether we could really get that much for the property – I

cannot recall precisely what figure we mentioned but I do

remember we were optimistic about achieving that level which,

to the best of my recollection was £2.5M. At the end of the

appointment we thanked her for her time and it was left that we

would call her with possible buyers. In fact, I then sat in my car

and made some calls whilst outside the property. These were to

developers to whom the property was suited and would be the

best buyers of this type of property; a simple owner occupier

sale was unlikely to produce as high an offer price.

4. I am absolutely certain that Mrs. O‟Reardon did not mention

anything whatsoever about requiring a cash buyer only.”

27. It was obvious, from the evidence which I have rehearsed, that the contrast between

the accounts of Mrs. O’Reardon and Mr. O’Reardon, on the one hand, and those of

Mr. Jackson and Mr. Pankhania, on the other, was stark. The two different accounts

could not be reconciled. If Mr. Jackson and Mr. Pankhania were correct in what they

said there was just no possibility of Mr. Reichman having visited the Property before

the visit of Mr. Jackson. It appeared to be being contended that it was one of the

things which Mr. Reichman said on the occasion of his alleged visit on or about 14

June 2007 that amounted to the agreement of the express term relied upon.

28. I was impressed by Mr. Jackson as a witness. He seemed to me to give his evidence

carefully, and what he said was supported by such few relevant contemporaneous

documents as there were, as well as by the evidence of Miss Ghei and that of Mr.

Pankhania. As I have noted, the evidence of Miss Ghei was not really challenged. Mr.

Pankhania was cross-examined at some length, but he, too, impressed me as a careful

and accurate witness.

29. It was plain from their evidence that both Mr. and Mrs. O’Reardon have encountered

many misfortunes in the last four or five years. The ill-health of both Mr. O’Reardon

and Mrs. O’Reardon has been a major feature. The difficulties over the disposal of the

Property have been another. There have been many things for them each to ponder

upon and to mull over, perhaps in order to obtain a better understanding of all the

adverse occurrences which have befallen them. In the witness box Mr. O’Reardon

was obviously emotional, and gave his evidence at considerable volume. In particular,

he seemed to feel that he and his wife had been let down by Foxtons, whom he had

expected to deal with all aspects of the sale of the Property, including, it appeared,

instructing solicitors to act in the sale on behalf of Mr. and Mrs. O’Reardon. It was a

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Foxtons Ltd. v. O'Reardon

feature of the evidence of both Mrs. O’Reardon and Mr. O’Reardon that the alleged

first meeting they had with anyone from Foxtons, which was said to be the occasion

of the visit of Mr. Reichman and an unnamed colleague, was pushed during cross-

examination even further back in time than 14 June 2007 – so far as Mrs. O’Reardon

was concerned to as early as perhaps 5 June 2007, whilst Mr. O’Reardon plumped for

7 June 2007. This mobility of dates seemed to have been prompted by trying to

reconstruct a time-frame in which two to three weeks of activity could be fitted in

before 22 June 2007, the date upon which they each contended that the offer of

£3,300,000 for the Property had been made. Unhappily I have reached the firm

conclusion that the evidence of both Mrs. O’Reardon and Mr. O’Reardon of their

dealings with Foxtons is just not reliable. However it comes about, the plain fact is

that how they each say they remember their dealings with Foxtons just cannot be

correct. A few examples will suffice to illustrate the point. In her cross-examination

Mrs. O’Reardon told me that she thought that her first meeting with Mr. Reichman

might have been as early as 5 June 2007, but the evidence of Miss Ghei, unchallenged

on this point, was that it was only on 13 June 2007 that Mr. O’Reardon telephoned to

make the initial contact with Foxtons. Surprisingly, given that the evidence of Miss

Ghei was not challenged on the point, in her cross-examination Mrs. O’Reardon

suggested that it was not her husband who had telephoned Foxtons, but Foxtons

which had telephoned him, presumably as some sort of cold call. How Foxtons might

have obtained the telephone number of Mr. and Mrs. O’Reardon, or known that they

were interested in seeking purchasers for the Property, was not explained. Again, as

Mrs. O’Reardon said she remembered things, the involvement of Foxtons in the

matter of the Property lasted no more than two and a half or three weeks. Moreover

she considered that it came to an end, effectively, with a bidding process on 22 June

2007 in which Mr. Leonard was successful. What logically was involved, if this were

correct, was a considerable amount of work being undertaken by Foxtons in advance

of the signature by Mrs. O’Reardon of the Standard Form on 19 June 2007, a date the

accuracy of which she did not dispute, or the bidding process being instigated and

brought to fruition within three working days, an analysis for which she did not

contend. Fatal to either version, however, was the fact that the Foxtons’ computerised

log of viewings of the Property, in which the date and time at which a viewing

appointment was made was entered automatically at the time the appointment was

made, showed that the first appointment, to view at 12:30 hours on 20 June 2007, was

made at 19:20 hours on 19 June 2007, and the last, by Mr. Leonard to view at 9:00

hours on 25 July 2007, was made at 16:46 hours on 24 July 2007. The offer from Mr.

Leonard seems to have been made on 20 July 2007, for in an e-mail to Mrs.

O’Reardon sent at 16:38 hours on that day Mr. Jackson wrote:-

“Dear Diana,

It was good talking to you earlier.

Further to our conversation, my recommendation [concerning

which solicitors to instruct] would be to use Raj Bhandari or

Emma Grubner.

Great news on the offer of 3.3 million and we look forward to

getting this through for you.”

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Foxtons Ltd. v. O'Reardon

30. In the result I prefer the evidence adduced on behalf of Foxtons to that of Mrs.

O’Reardon and Mr. O’Reardon. It follows that I am not satisfied that the alleged

express term pleaded at paragraph 3 of the Amended Defence and Counterclaim was

actually agreed between Foxtons and Mr. and Mrs. O’Reardon. It is thus immaterial

whether, had it been agreed, it had been breached in the circumstances of the present

case.

The entire agreement clause

31. An issue raised at paragraph 8 of the Amended Defence and Counterclaim was

whether the entire agreement clause included within the Terms was unfair within

meaning of Unfair Terms in Consumer Contracts Regulations 1999 Reg. 5(1). That

point was only relevant in the event that I found that the express term pleaded at

paragraph 3 of the Amended Defence and Counterclaim had in fact been agreed. In

the circumstances it is not necessary to consider it.

Alleged misrepresentation

32. An aspect of the complaints of Mr. and Mrs. O’Reardon against Foxtons in relation to

Mr. Leonard was what was added by amendment to paragraph 5.2 of the Defence in

the Amended Defence and Counterclaim, namely:-

“The First Defendant requested information about Mr.

Leonard‟s position and was informed by the Claimant that Mr.

Leonard “had money to invest” alternatively “had capital to

invest”, which in the context of the Agreement the First

Defendant took to mean that Mr. Leonard was a “cash buyer”.

The Defendants accepted the recommendation of the Claimant

that Mr. Leonard‟s bid should be accepted and entered into the

contract to sell the Property to the Buyers on that basis.”

33. In the Counterclaim part of the statement of case, at paragraphs 23 to 25 inclusive,

were set out what were alleged to follow from the alleged misrepresentation:-

“23. Further or alternatively, if which is denied there is no

express term of the contract requiring the Claimant to

introduce a “cash buyer”, the representation made by the

Claimant to the First Defendant that Mr. Leonard “had money

to invest” alternatively “had capital to invest”, which

amounted to an implied representation that Mr. Leonard was a

“cash buyer” was an untrue misrepresentation.

24. The Defendants entered into the contract to sell the

Property to the Buyers on the basis of the misrepresentation

made by the Claimant.

25. If the Claimant is entitled to remuneration on the basis of

the Defendants entering into the contract to sell the Property to

the Buyers, the Defendants are entitled to an indemnity by

reason of the misrepresentation made.”

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Foxtons Ltd. v. O'Reardon

34. In her written skeleton argument Miss Lippold contended that the indemnity to which

Mr. and Mrs. O’Reardon was entitled was “in respect of any sums due under the

Agreement”, meaning the agreement between Foxtons and Mr. and Mrs. O’Reardon.

35. The case in misrepresentation, as it seemed to me, was fraught with difficulty.

36. Logically the first obstacle to be overcome was proving that the statement complained

of had been made. If it had been, the next question was whether it should be

understood in the sense in which it was contended on behalf of Mr. and Mrs.

O’Reardon that they understood it. The next issue would be whether the evidence

indicated that Mr. and Mrs. O’Reardon had relied upon the statement or statements

complained of in entering into the Contract. If so, the question would arise whether

Mr. and Mrs. O’Reardon were able to complain as against Foxtons that they had

entered into a contract with third parties. The last question was whether, assuming

everything else in their favour, Mr. and Mrs. O’Reardon were entitled to an indemnity

from Foxtons in respect of their liability to Foxtons. Each of these points appeared to

me to present insuperable obstacles to a claim by Mr. and Mrs. O’Reardon.

37. Mrs. O’Reardon had at least said, at paragraph 14 of her first witness statement,

“Foxtons told us that Mr. Leonard was a man living in Maida Vale who had the

money/capital to invest in property”. She went on:-

“Since his offer was £100,000 higher than the other offers,

Foxtons recommended that we proceed to sell the Property to

him. We relied on Foxtons‟ representation that Mr. Leonard

met our criteria, i.e. that he was a cash buyer, in deciding to

accept his offer.”

38. At paragraph 14 of her second witness statement Mrs. O’Reardon said that she had

not been present on the occasion upon which anything had been said about Mr.

Leonard living in Maida Vale and having money to invest in property. She did not say

much in her second witness statement about reliance on the alleged statement or

statements. Her evidence seemed to go no further than this, in paragraph 16:-

“As set out in paragraph 12 of my First Statement, we agreed

to a sealed bidding process at Foxtons‟ suggestion. I received a

telephone call from Foxtons (I believe this was Mr. Reichman)

on the evening of Friday 22 June 2007 informing me that there

had been 3 (or 4) bids of £3,200,000 and one bid of

£3,300,000. We were not told who the 3 (or 4) other bidders

were or provided with any details of their financial

circumstances.”

39. In re-examination Mrs. O’Reardon told me that she did not recall being told that Mr.

Leonard was the highest bidder and she could not remember how she had obtained

that information. It appears that by the date of the Contract she was aware that Mr.

Leonard, Mr. Kershaw and Mr. Haughey were to purchase, but how and when she

obtained that information was obscure.

40. Mr. O’Reardon dealt with the information allegedly provided concerning Mr. Leonard

at paragraph 4 of his witness statement:-

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Foxtons Ltd. v. O'Reardon

“After our first meeting with Mr. Reichman and his colleague

on or around 14 June 2007 (see paragraphs 6 – 10 of Diana‟s

Second Statement) and before the contract was signed on or

around 19 June 2007, various representatives from Foxtons

brought several potential buyers round to view the Property. I

was due to go into hospital for my transplant and my wife and I

were under a great deal of emotional stress. My wife was at

work during these visits and, although I was at home, Foxtons

did not actually introduce these people to me. Maurice Leonard

was one of the first people to view the Property and attended on

his own – when Mr. Reichman was on the premises. Mr.

Leonard then visited a second time with Andrew Kershaw. I did

not know, at the time, who these people were. Mr Reichman

told me by telephone that Foxtons had received offers of

£2,500,000 and above although I was not told who these were

from. I felt that Mr. Reichman was recommending Mr. Leonard

(the only name that he ever mentioned) over and above other

interested buyers since he said that Mr. Leonard was a man

living in Maida Vale who had the money to invest in property

and dismissed the others as being “just property developers”.

At this time we were not aware that Mr. Leonard required

planning permission to finance the purchase of the Property.”

41. Given the difficulties which I have mentioned which I have in accepting the evidence

of Mr. and Mrs. O’Reardon on their dealings with Foxtons, I am not satisfied that

anyone on behalf of Foxtons actually said to Mr. O’Reardon that Mr. Leonard had

money or capital to invest.

42. If that had been said, in my judgment it was not capable of meaning that Mr. Leonard

was a cash buyer. It meant no more than that Mr. Leonard was interested in

purchasing property as an investment.

43. On the evidence it did not appear that Mr. or Mrs. O’Reardon relied upon whatever

they contended had been said about Mr. Leonard in deciding to enter into the

Contract, because, according to Mrs. O’Reardon, they did not know, at the time they

decided to accept the highest bid, who the highest bidder was.

44. In any event, as it seemed to me, no cause of action in misrepresentation arises against

a third party who makes a representation which is false and thereby induces the

representee to enter into a contract with a third party. A cause of action under

Misrepresentation Act 1967 can, I think, only arise as against the other party to the

contract into which the representee was induced to enter. A stranger to a contract can

be liable for making a misrepresentation inducing the contract, but only if he has

acted fraudulently, or, in a case in which a duty of care of the type recognised in

Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465 is held to exist, for

negligence. There was a counterclaim against Foxtons based on alleged negligence,

and to that I shall come.

45. Moreover, it appeared to me that the remedy sought in respect of the alleged

misrepresentation or misrepresentations, an indemnity against the liability of Mr. and

Mrs. O’Reardon to Foxtons, was not one which the law could contemplate. The

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Foxtons Ltd. v. O'Reardon

necessity for the remedy only arose on the hypothesis that Mr. and Mrs. O’Reardon

were in fact liable to Foxtons. If they were in fact liable, there was no justification for

the granting of an indemnity. If Mr. and Mrs. O’Reardon had a proper reason for not

paying the sum claimed by Foxtons in this action, the necessity for an indemnity did

not arise.

Implied term of care and skill and duty of care in tort

46. It is convenient next to consider the counterclaims of Mr. and Mrs. O’Reardon based

on the allegations that it was an implied term of the Standard Form, by virtue of the

provisions of Supply of Goods and Services Act 1982 s.13, that Foxtons would supply

its service with reasonable skill and care, and that it owed Mr. and Mrs. O’Reardon a

duty of care to like effect, each of which obligation it was said had been breached. In

fact it appeared from the Amended Defence and Counterclaim that these allegations

were also related to the complaint that Mr. Leonard was not a “cash buyer”. The

relevant allegations were set out in paragraphs 18 and 19:-

“18. It was an implied term of the Agreement that the

Claimants would exercise reasonable skill and care when

finding a purchaser for the Property. Alternatively the

Claimant owed the Defendants a concurrent duty of care.

19. The Claimant has breached the said implied term and/or

was negligent. Further or alternatively the Claimant has

breached the express term to provide a “cash purchaser”.

PARTICULARS

19.1 In failing to enquire and/or to ensure that Mr. Leonard

had the necessary finance in place to complete the purchase.

19.2 In failing to enquire and/or ascertain that the purchase

was conditional upon Mr. Leonard obtaining planning

permission.

19.3 In recommending Mr. Leonard to the Defendants as a

purchaser when he was unable to complete the purchase.

19.4 In failing to inform other potential purchasers that the

Defendants required a period of twelve months between

exchange and completion and thus depriving the Defendants of

the possibility of increased offers from these other than Mr.

Leonard.”

47. The latter allegation of breach was not the subject of any evidence or cross-

examination at trial and need not be further considered. The other allegations of

breach were essentially but a reprise of the complaint that Mr. Leonard was not a

“cash buyer”. Paragraph 19.1, in complaining that Foxtons had failed “… to …

ensure that Mr. Leonard had the necessary finance in place to complete the

purchase”, appeared to suggest that Foxtons should have warranted or guaranteed to

Mr. and Mrs. O’Reardon that Mr. Leonard had the necessary funds, but Miss Lippold

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Foxtons Ltd. v. O'Reardon

eschewed any such contention in her closing submissions. Paragraph 19.2 literally

complained of something which it was common ground had not happened – the

purchase by Mr. Leonard and his business partners had not been conditional upon Mr.

Leonard obtaining planning permission. The allegation in paragraph 19.3 was simply

a restatement, with the benefit of hindsight, of the fact that Mr. Leonard was not a

“cash buyer”, associated with an implicit suggestion that Foxtons should have

known, or discovered, that that was going to prove to be the case.

48. The simple answer to the counterclaims based on the alleged breaches of the implied

term contended for and the duty of care was that there was a complete mismatch

between the duty in fact owed by Foxtons and the alleged breaches.

49. By Supply of Goods and Services Act 1982 s.13 it is provided that:-

“In a contract for the supply of a service where the supplier is

acting in the course of a business, there is an implied term that

the supplier will carry out the service with reasonable care and

skill.”

50. That form of words tells one nothing about what the service is that has to be carried

out with reasonable care and skill. I do not think that it was in dispute that the effect

of Supply of Goods and Services Act 1982 s.13 was that the statutory term was

implied into the Standard Form, although Mr. Andrew Davis, who appeared on behalf

of Foxtons, did emphasise that, in fact, Foxtons did not actually commit itself to doing

anything by the Standard Form – it was merely entitled to a payment upon achieving

the specified result, an exchange of unconditional contracts. The live issue was

whether the proper performance of the service which Foxtons undertook by the

Standard Form to provide extended to making enquiries as to whether Mr. Leonard

was able, financially, to complete a purchase of the Property and whether he needed a

loan for that purpose which he could only obtain conditional upon receiving a grant of

planning permission. Absent express agreement to make such enquiries, in my

judgment the making of such investigations is outwith the scope of the services

provided by an estate agent. The basic service of an estate agent is simply to advertise

property for sale and to introduce prospective purchasers to the intending vendor. As I

have not been persuaded that the express term contended for at paragraph 3 of the

Amended Defence and Counterclaim was a term of the agreement between Foxtons

and Mr. and Mrs. O’Reardon, it follows that they cannot succeed on the basis of the

much more general term implied by Supply of Goods and Services Act 1982 s.13.

51. I can see no justification for imposing upon Foxtons a duty of care in tort to make the

enquiries which they had not contracted to undertake.

Alleged unfair contract terms

52. The other points raised in the Amended Defence and Counterclaim did not depend

directly upon any version of the “cash buyer” issue. I have already noted that it is

unnecessary for me to consider the question whether the entire agreement clause in

the Standard Form was unfair within the meaning of Unfair Terms in Consumer

Contracts Regulations 1999 Reg. 5(1). However, it was contended on behalf of Mr.

and Mrs. O’Reardon that the provision in the Standard Form that commission became

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Foxtons Ltd. v. O'Reardon

payable to Foxtons on exchange of unconditional contracts was also unfair for the

purposes of that provision.

53. Unfair Terms in Consumer Contracts Regulations 1999 Reg. 5(1) is in these terms:-

“(1) A contractual term which has not been individually

negotiated shall be regarded as unfair if, contrary to the

requirement of good faith, it causes a significant imbalance in

the parties‟ rights and obligations arising under the contract,

to the detriment of the consumer.”

54. The effect of a contract term being found to be unfair is stated in Unfair Terms in

Consumer Contracts Regulations 1999 Reg. 8(1):-

“An unfair term in a contract concluded with a consumer by a

seller or supplier shall not be binding on the consumer.”

55. The allegations relevant to the contention that the provision for payment of

commission upon exchange of unconditional contracts were set out at paragraphs 9

and 10 of the Amended Defence and Counterclaim. Omitting paragraph 10.6, which

was said only to relate to the entire agreement clause, what was pleaded was:-

“9. Further or alternatively, the term of the Agreement that

purports to give rise to a requirement to pay remuneration

before the sale has been completed is unfair within the meaning

of regulation 5(1) of the Unfair Terms in Consumer Contracts

Regulations 1999 and so is not binding upon the Defendants.

10. The following factors (which are not exhaustive) are

relevant to the question of fairness:

10.1 The terms and conditions of the Agreement were not

explained to the Defendants and the Defendants were not given

a full opportunity to read the Agreement (due to time and due

to the size of the type of the Agreement) before the Defendants

were required to sign the same;

10.2 The Defendants were not provided with a copy of the

Agreement after signing the same;

10.3 The Claimant was aware of the vulnerability of the

Defendants and the position they were in due to the ill health of

the First Defendant;

10.4 The term that purports to give rise to a requirement to pay

remuneration before the sale is not an industry standard;

10.5 The Claimant was aware that the Defendants may require

up to a year between exchange of contracts and completion

which would mean that they would be without funds to pay

remuneration to the Claimant upon exchange of contracts;”

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Foxtons Ltd. v. O'Reardon

56. In answer to the contention that the provision for payment of the commission of

Foxtons on exchange of unconditional contracts was unfair Mr. Davis submitted, first,

that reliance upon the alleged unfairness of the term was excluded by the provisions

of Unfair Terms in Consumer Contracts Regulations 1999 Reg. 6(2). That provision

states:-

“In so far as it is in plain intelligible language, the assessment

of fairness of a term shall not relate –

(a) to the definition of the main subject matter of the contract,

or

(b) to the adequacy of the price or remuneration, as against the

goods or services supplied in exchange.”

57. Miss Lippold countered that that provision was concerned only, so far as was

presently relevant, with the adequacy of the remuneration payable to Foxtons, not

with the time at which it was payable. I think that the submission that Reg. 6(2)(b)

was concerned only with the adequacy of the remuneration, not with the time for

payment, was sound. However, Mr. Davis’s submission based on Reg. 6(1) was

different. He relied upon paragraph (a). He contended that the main subject matter of

the contract in the Standard Form was that which Foxtons, not contractually bound to

do anything at all, had to see happen in order to be entitled to any remuneration,

namely a purchaser introduced who exchanged unconditional contracts to purchase

the Property. I accept that submission. Consequently it was not really necessary to

consider further the question of the fairness of the provision that Foxtons’

remuneration should be payable on exchange of unconditional contracts.

58. Since Mr. Davis made additional submissions concerning the question of alleged

unfairness, it is, nonetheless, appropriate to consider those contentions.

59. Mr. Davis’s second point focused on the assertion pleaded at paragraph 10.4 of the

Amended Defence and Counterclaim. In fact no evidence was led before me to

support the assertion that a requirement to pay estate agent’s commission before

completion of a sale, for I think that was in fact the contention, despite the actual

terms of paragraph 10.4, was “not an industry standard”. Per contra, submitted Mr.

Davis. The definition of the expression “sole agency” in Estate Agents (Provision of

Information) Regulations 1991 Schedule 1 demonstrated that it was an entirely usual

type of provision. The relevant definition is:-

“You will be liable to pay remuneration to us, in addition to

any other costs or charges agreed, if at any time unconditional

contracts for the sale of the property are exchanged –

with a purchaser introduced by us during the period of our sole

agency or with whom we had negotiations about the property

during that period; or

with a purchaser introduced by another agent during that

period. ”

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Foxtons Ltd. v. O'Reardon

60. It seems to me that there is no serious scope for argument that the provision in the

Standard Form for payment of the remuneration of Foxtons on exchange of

unconditional contracts for the purchase of the Property was unfair. By the time of

exchange there was nothing further for Foxtons to do by way of providing services to

Mr. and Mrs. O’Reardon. It had contracted to seek a purchaser for the Property on

terms that it would not be entitled to any remuneration unless and until there was an

exchange of unconditional contracts. Thus by the time entitlement to remuneration

arose Foxtons had performed all it had agreed to undertake. Why was it unfair, in

those circumstances, for Foxtons to expect to be paid? Once an exchange of

unconditional contracts had taken place, one’s ordinary expectation would be that, in

due course, completion would take place. However, if, for any reason, that did not

take place, that was not a matter over which Foxtons had any control, but Mr. and

Mrs. O’Reardon would be in a position, if they so chose, to seek to enforce the

contract, or to rescind it and seek damages.

61. The issue raised at paragraph 10.1 of the Amended Defence and Counterclaim, if true,

appeared to me to be largely irrelevant to the issue of the fairness, or not, of the

provision for payment of the remuneration of Foxtons on exchange of unconditional

contracts. Mr. and Mrs. O’Reardon plainly appreciated that Foxtons would have to be

paid for its services, in the event that it rendered services of value. They did not

suppose that Foxtons would not charge. The only possible scope for debate was when

Foxtons’ commission would be due. The common sense answer to that issue was

when Foxtons had done all that it had agreed to do, in other words on exchange of

unconditional contracts. The only other suggested time was on completion of the sale.

The Terms did provide that Foxtons had a discretion to delay seeking payment until

completion. A point was taken on that discretion, to which I shall come next.

However, in terms of fairness the issue was whether it was unfair for Foxtons not to

afford to Mr. and Mrs. O’Reardon the benefit of Foxtons agreeing in advance and in a

binding fashion, in effect to exercise that discretion in their favour by delaying the

date of payment until completion. To make such provision would have been wholly to

the advantage of Mr. and Mrs. O’Reardon. There was nothing in it for Foxtons if

payment was delayed until completion. Rather, it could be said, such delay was unfair

to Foxtons. It had completed what it contracted to do, but was being kept out of its

money. Not only that, but Foxtons would be compelled to bear the risks, whatever

they were, that, notwithstanding that it had done what it agreed to do, completion

might not take place and it would be left with no remuneration at all.

62. A further wrinkle in the contentions advanced on behalf of Mr. and Mrs. O’Reardon

was what was to follow in the event that I concluded that the provision for payment of

the remuneration of Foxtons on exchange of unconditional contracts for the sale and

purchase of the Property was unfair. The effect of Unfair Terms in Consumer

Contracts Regulations 1999 Reg. 8(1) was that that term ceased to be binding on Mr.

and Mrs. O’Reardon. Did that mean that no time ever arrived at which Mr. and Mrs.

O’Reardon had to pay Foxtons, so that, in effect, they did not have to pay at all? Miss

Lippold did not adopt such an extreme position. Her initial stance was that Mr. and

Mrs. O’Reardon were liable to pay, but only after completion of an actual sale by Mr.

and Mrs. O’Reardon of the Property, in the present case to Ealing on 13 June 2011. I

am afraid that the logic of that submission was elusive. Foxtons had no involvement

in achieving that sale. The court had no power to re-write the provision in the Terms

as to the time for payment of Foxtons’ commission. Miss Lippold’s ultimate position

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Foxtons Ltd. v. O'Reardon

was that, the actual term as to time for payment having been determined not to be

binding upon Mr. and Mrs. O’Reardon, there was no term as to time for payment, and

so it was necessary to imply a term. The appropriate term, she submitted, was that

payment should be due within a reasonable time. That submission begged the

question, a reasonable time from what? Mr. Davis submitted that the effect of the

Terms, on proper construction, was that the remuneration of Foxtons was payable

only upon the happening of an event, exchange of unconditional contracts, and even if

one struck out the express term as to time for payment, the answer remained the same.

I accept that submission.

63. It seems to me that it may be helpful to say that I was not impressed by any of the

points pleaded in paragraph 10 of the Amended Defence and Counterclaim in support

of the allegations of unfairness. I have already commented upon the allegations at

paragraph 10.1 and expressed the view that the Terms as printed on the Standard

Form were perfectly legible. I have also commented upon what was pleaded at

paragraph 10.4. I cannot see how the fact, if it were a fact, that Mr. and Mrs.

O’Reardon were not provided with a copy of the Standard Form after Mrs. O’Reardon

had signed it could impact upon the fairness or otherwise of any of the Terms. It could

only be relevant to their awareness of what the Terms, whether fair or unfair, were.

Again the alleged vulnerability of Mr. and Mrs. O’Reardon and the ill-health of Mr.

O’Reardon, could not, of themselves, impact upon the question whether the provision

for payment of Foxtons’ remuneration on exchange of unconditional contracts was

unfair. There was just no link between the term said to have been unfair and any

vulnerability or ill-health. If Mr. and Mrs. O’Reardon wished to delay completion of

the sale of the Property for reasons of their own, it was up to them, as it seems to me,

with the assistance of their conveyancing solicitors, to make appropriate provision in

the contract of sale for payment of a deposit by the purchasers in an amount sufficient

to enable Foxtons to be paid, and which Mr. and Mrs. O’Reardon were to be free to

use in advance of completion, if they did not otherwise have the means to pay

Foxtons. In fact the evidence was unclear as to what resources Mr. and Mrs.

O’Reardon had available other than the asset represented by the Property. As matters

unfolded, they were certainly able to purchase another property, at 17, Barn Hill,

Wembley. How precisely that purchase was funded did not emerge, although it did

appear that in order to be able to complete the purchase it was necessary for Mr. and

Mrs. O’Reardon to obtain a bridging loan. Whether a deposit was paid on exchange of

contracts to purchase 17, Barn Hill, and, if so, of what amount, was not investigated in

evidence. At a later point Mrs. O’Reardon was able to borrow amounts totalling

£95,500 from her sister.

Discretion to delay demanding payment

64. At paragraphs 11 and 12 of the Amended Defence and Counterclaim was pleaded the

case of Mr. and Mrs. O’Reardon concerning the discretion of Foxtons regarding

demanding payment of its remuneration. Omitting allegations struck through, what

was pleaded was:-

“11. In the further alternative if, which is denied, the Claimant

is entitled to its commission; on its proper construction, or

alternatively by way of implication, the Claimant must act

reasonably when it exercises its discretion to defer payment of

its commission until completion.

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Foxtons Ltd. v. O'Reardon

12. In the circumstances, the purported demand by the

Claimant was unreasonable and as a consequence of no effect.”

65. No particular alleged circumstances were specifically pleaded as amounting to an

unreasonable exercise of its discretion on the part of Foxtons.

66. Logically two questions arise. Did Foxtons have an unfettered discretion to determine

whether its fees could be paid out of completion monies? If not, did it exercise its

discretion in the present case reasonably?

67. In some circumstances, for example in relation to the question of whether a bonus

should be paid to an employee, the law may consider that what might appear to be an

unfettered discretion in fact must be exercised reasonably. Usually, to fall within that

category, the discretion must be one in relation to which the other contracting party

has some sort of legitimate expectation. The present was, I think, such a case. The

only relevant issue was the timing of the discharge of the liability of Mr. and Mrs.

O’Reardon to pay Foxtons. The Terms were clear: payment was due on exchange of

unconditional contracts. The Terms could have provided for payment to be due only

on completion, but they did not. However, there was no reason for the Terms to

mention at all a discretion on the part of Foxtons to permit its fees to be paid out of

completion monies unless it was to create some expectation on the part of the other

party to the contract that, in each case, Foxtons would consider whether to exercise

that discretion. Foxtons could, without making any mention whatever in the Terms of

a discretion, simply, as a matter of practice, not have submitted an invoice in any

particular case until completion. Thus once it was clear, as it seemed to me that it was

clear, from the Terms that Foxtons should consider whether to exercise its discretion

in the case of Mr. and Mrs. O’Reardon, I think that it followed, as a matter of

construction, that Foxtons would act reasonably in deciding whether to exercise its

discretion.

68. In fact it was plain on the evidence led before me that Foxtons actually exercised its

discretion in favour of deferring the liability of Mr. and Mrs. O’Reardon to pay its

remuneration until completion. In a letter dated 25 July 2007 to Healys Mr.

Reichman, on behalf of Foxtons, wrote, so far as is presently material:-

“We have pleasure in enclosing our sales memorandum

relating to the proposed sale of the above property and a copy

of our Terms and Conditions of business, as signed by our

mutual client. Please note that in signing these Terms and

Conditions our client has authorised you to pay our

commission account out of the completion monies. We would be

grateful if, prior to exchange of contracts, you would confirm

that you have been instructed accordingly.”

69. In the letter dated 2 August 2007 addressed to Healys Mr. Reichman wrote:-

“We were pleased to learn recently that contracts for the sale

of the above property have now been exchanged and

accordingly have pleasure in enclosing our account.”

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Foxtons Ltd. v. O'Reardon

70. The account enclosed was that dated 1 August 2007. It was not itself addressed to

anyone, but it identified the “Vendor” as Mr. O’Reardon and gave his address as the

address of the Property. Given that under the Terms Foxtons was only entitled to be

paid by “your lawyers”, rather than by Mr. and Mrs. O’Reardon, “out of the sale

proceeds”, given the terms of Mr. Reichman’s letter to Healys dated 25 July 2007,

and given that the account enclosed with the letter dated 2 August 2007 was not

actually addressed to Mr. or Mrs. O’Reardon, it seems to me to be plain that, by the

letter dated 2 August 2007 and the account enclosed therewith, Foxtons was

confirming the exercise of its discretion to defer demanding payment of its

remuneration until completion of the sale of the Property.

71. Thus, in the event, the allegation that Foxtons had failed to exercise reasonably its

discretion to defer demanding payment of its remuneration from Mr. and Mrs.

O’Reardon failed because, on the evidence, it did in fact exercise that discretion in

their favour in the first instance.

72. The real questions in relation to the discretion actually appeared to be different ones,

and ones which were not pleaded on behalf of Mr. and Mrs. O’Reardon. They were

whether, having elected to defer demanding payment of its remuneration until

completion, Foxtons could thereafter change its mind and demand payment in

advance of completion; if so, whether Foxtons had to act reasonably in deciding to

change its mind; and, again if so, whether Foxtons had in fact acted reasonably in

deciding to change its mind. These issues were rather hinted at in the plea on behalf of

Foxtons at paragraph 14 b of the Reply and Defence to Amended Defence and

Counterclaim:-

“In any event, the Claimant avers that it has acted reasonably.

Contracts were exchanged on 1 August 2007, and these

proceedings were not instituted until May 2009, some 21

months after the Claimant‟s entitlement to remuneration

arose;”

73. In her written skeleton argument Miss Lippold dealt with the substance of the

complaint about the exercise of discretion in this way:-

“36. The clause relating to the timing of payment of

remuneration under the Agreement as set out at paragraph 30

above contained a discretionary element allowing the Claimant

to postpone the time of payment until completion.

37. By necessary implication, the Claimant had to exercise

such a discretion reasonably.

38. The Defendant [sic] contends that the discretion to extend

the demand of payment to 21st October 2008, rather than to

eventual completion, was not reasonable in all the

circumstances, given the following:

(i) The Claimant was aware of the serious ill-health of the First

Defendant and the delay which this could cause to the

completion of the contract;

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Foxtons Ltd. v. O'Reardon

(ii) Had the Claimant made enquiries of Mr. Leonard (which

the Defendant [sic] asserts it should have done), the Claimant

would have been made aware that completion could be delayed

or even prevented by Mr. Leonard requiring planning

permission as a pre-condition of obtaining a mortgage;

(iii) The Defendant [sic] repeats its assertion that Mr.

Reichman informed the First Defendant that monies would not

be payable if the sale did not complete;

(iv) The Claimant sent a letter to the Defendants‟ solicitors

dated 25th

July 2007 which confirms that, “in signing these

Terms and Conditions our client has authorised you to pay our

commission account out of the completion monies”. In the

circumstances where the Defendants were not provided with a

copy of the Agreement, the clear implication of this letter is that

monies would not be payable until completion.”

74. Mr. Davis, in his written skeleton argument, dealt with the point briefly:-

“39. The basis for this clause is unclear. The Claimant‟s case is

there are no grounds for such discretion.

40. It cannot be argued that the Claimant ought to defer

payment to completion of a transaction that does not take

place. Further, one suspects that the Defendants intend to

argue that such „reasonableness‟ is actually intended as a

reference to the Claimant knowing the Defendants‟ personal

circumstances: that would be unworkable.

41. If there is such a requirement, the Claimant has in any

event been reasonable: an invoice was sent on exchange … and

not chased in writing until October 2008 …”

75. It was not suggested on behalf of Mr. and Mrs. O’Reardon that Foxtons, having

elected to defer claiming its remuneration until completion, could not thereafter

change its mind. The focus of attention was upon whether the change of mind was

itself reasonable. The ill-health of Mr. O’Reardon was actually irrelevant to the

question whether completion of the Contract would take place or not. The real

problem was that Mr. Leonard and his business partners who joined in the Contract as

purchasers were unable or unwilling to raise the funds necessary for completion to

take place, and sought, on a number of occasions, to renegotiate the terms of the

Contract. Rather than seeking to enforce the Contract, or to rescind it, Mr. and Mrs.

O’Reardon participated in the process of discussion and renegotiation over a long

period, which only came to an end when they entered into a contract to sell the

Property to Ealing. Thus the substance of the matter is that, having originally elected

to exercise its discretion to defer demanding payment of its remuneration until

completion of the sale of the Property to Mr. Leonard and his associates, and having

waited for some 14½ months after the date of the Contract for that to happen, Foxtons

chose to send the letter dated 21 October 2008 to Mr. and Mrs. O’Reardon demanding

payment of its remuneration within seven days. I find it impossible to see that that

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Foxtons Ltd. v. O'Reardon

decision was unreasonable. By that stage the long stop date for completion of the sale

had long passed. It was unclear whether completion would ever take place. Foxtons’

remuneration was linked to completion of the transaction which it had introduced, not

to completion of any other transaction. Essentially, if Foxtons did not pursue Mr. and

Mrs. O’Reardon for payment in October 2008, there was no reason to suppose that it

would ever get paid.

Interest

76. The remaining live issue in this action was interest.

77. In the Particulars of Claim, issued in Central London County Court, no reference was

made to the term as to interest included in the Terms. Instead there was a prayer for

“Interest pursuant to section 69 of the County Courts Act 1984 at the rate of 8% per

annum”.

78. At paragraph 14 of the Amended Defence and Counterclaim it was pleaded on behalf

of Mr. and Mrs. O’Reardon that:-

“The Claimant‟s claim for interest as pleaded at paragraph 6 is

denied. If the Claimant is entitled to interest, which is at the

court‟s discretion in any event, the Defendants will aver that

any interest awarded should only run from 28 days following

formal demand. Further or alternatively, the rate of interest

should be confined to that specified in the Agreement, namely

2% above the HSBC base rate.”

79. By the conclusion of the trial it was common ground that the entitlement, if any, of

Foxtons to interest on the sums claimed as its remuneration and Value Added Tax

thereon, depended upon the Terms. Two issues arose. The first was when were

“Foxtons fees … first demanded”. Mr. Davis contended that it was by the account

dated 1 August 2007 sent with Mr. Reichman’s letter dated 2 August 2007 to Healys.

Miss Lippold, on the other hand, submitted that the first demand was that by the letter

dated 21 October 2008. The second issue, which may, in the end, not have been in

dispute, was whether the words, “2% above the HSBC base rate as at the date they

are first demanded” meant 2% above the HSBC base rate on 1 August 2007, or 21

October 2008, as the case might be; or 2% above the HSBC base rate from time to

time from whatever was the appropriate starting date to the date of judgment.

80. In my judgment the words “Foxtons fees are first demanded”, as a description of a

date, meant, as a matter of construction, the date as at which Foxtons asserted as

against Mr. and Mrs. O’Reardon that the fees had to be paid, not the date as at which

Mr. and Mrs. O’Reardon or their solicitors were first notified of the amount which

would eventually be payable. As against Foxtons only Mr. and Mrs. O’Reardon, and

not Healys, were liable to pay its remuneration. A notification to Healys of how much

Foxtons would like to receive out of the completion monies was not a demand made

of Mr. and Mrs. O’Reardon for immediate payment. The first, and, indeed, it seems

the only, demand made by Foxtons of Mr. and Mrs. O’Reardon prior to the

commencement of this action was by the letter dated 21 October 2008. Interest

therefore is payable as from 18 November 2008.

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Foxtons Ltd. v. O'Reardon

81. As to the rate of interest, it is plain, as it seems to me, as a matter of construction of

the relevant term, that that was 2% above the base rate of HSBC as at 21 October

2008, not 2% above the base rate of HSBC from time to time since 18 November

2008.

Conclusion

82. For the reasons which I have given, there will be judgment for Foxtons against Mr.

and Mrs. O’Reardon in the sum of £96,937.50, together with interest at 2% above the

base rate of HSBC as at 21 October 2008, such interest to be calculated from 18

November 2008 until the date of judgment.