Sale or Purchase of Property, Contract of Agency and the Law: On Whether a Party Can Claim Remuneration as Agent in the Absence of Contract of Engagement

Citation: (2024) 13 NWLR PT. 1956 AT 511- 515.
PARTIES IN FULL:

1. AIGBEKAN OSAS
2. HYACINTH OSEJI
   [Trading under the name of Osas Oseji
   Estate Surveyors and Valuers]
   V.
   MRS. FAITH TUEDOR – MATHEWS

Courtesy: Moruff O. Balogun, FIMC, CMC, CMS.

Summary of facts:
The appellants were authorized by the 2nd defendant in the original suit to market its property at No. 12 Alexander Avenue, Ikoyi Lagos, for sale and the appellants, in compliance with the 2nd defendant’s instruction, advertised and put up the said property in the market for sale. The appellants introduced the property to the respondent, who showed interest and instructed the appellants representative, Mr. Kehinde Akinyemi, a partner in the appellants firm who had several meetings with the respondent at her office, to pursue the sale of the property with the owner for her. The appellants took the respondent’s daughter on the instruction of the respondent to inspect the property on May 21, 2012.

By a letter dated 27th May 2013, the appellants, based on the figure given by the 2nd defendant, notified the respondent of the price of the said property in the sum of N1,025, 000, 000.00 One Billion Twenty five Million Naira). The respondent then requested from the appellants the name of the property owner and offered to pay the sum of N850,000,000.00 (Eight Hundred and Fifty Million Naira) for the said property. By letter dated 3rd July 2013, the appellants notified the respondent that the said property was owned by the 2nd defendant and further promised to convey the respondent’s offer to the 2nd defendant. That was how the respondent came to know that the 2nd defendant was the owner of the said property.

On 3rd July 2013, the appellants notified the 2nd defendant of the respondent’s offer of N850,000,000.00 (Eight Hundred and Fifty Million Naira) for an outright purchase of the said property.

On 4th July 2013, the 2nd defendant informed the appellants that the selling price of the property was N960,000,000.00 (Nine Hundred and Sixty Million Naira) and that it was unable to accept the proposed price.

On 5th July 2013, the appellants notified the respondent that her offer had been rejected and also informed the respondent that the 2nd defendant was willing to sell the property for N960,000,000.00 (Nine Hundred and Sixty Million Naira).

Immediately the respondent was notified by the appellants of the 2nd defendants ownership of the property, the respondent rebuffed all attempts by the appellants to see her and also ceased all communications with the appellants and even refused to pick up calls from the appellants’ representative, Mr. Kehinde Akinyemi who at all material times had been communicating with the respondent. The 1st respondent’s actions made the appellants to be suspicious and put the appellants on alert and subsequently, the appellants discovered that the respondent had purchased the said property from the 2nd defendant.

The appellants’ grouse was that the respondent, after utilizing the appellants’ services and obtaining all the necessary information in respect of the said property from the appellants, went behind the appellants’ and surreptitiously purchased the property from the 2nd defendant either in her name or proxy or a nominee. By letters dated 27th January 2014 and 25th July 2014, the appellants demanded from the respondent its unpaid professional fees as regards the purchase of the property and demanded that a meeting be held with the respondent.

By several letters, the appellants’ solicitors, A. O. Fayemiwo & Co., demanded from the respondent the appellants’ professional fees and that, in default thereof, the appellants would institute legal proceedings against the respondent so as to recover its professional fees. The respondent failed, refused, and/or neglected to pay the appellants their professional fee or reply to the said letter. It was on that basis that the appellants claimed jointly and severally against the respondents as follows:

An order that the 2nd defendant should disclose the name of the purchaser of No. 12 Alexander Avenue, Ikoyi, Lagos based on the fact that the claimant acted as an agent to the 1st defendant and/or on the instruction of the 2nd defendant.

An order that the 1st defendant pay the sum of N48,000,000.00 (Forty Eight Million Naira) as the agency fee accruable to the claimant for the sale of No. 12 Alexander Avenue, Ikoyi, Lagos and interest on the said sum at the rate of 21% until payment.

Solicitors fee in the sum of N4,800,000.00 (Four Million Eight Hundred Thousand Naira) and cost of this action.

Upon the objection of the respondent and the 2nd defendant to the suit on the ground, inter alia, that it disclosed no cause of action against them, the trial court held that the suit disclosed cause of action against the respondent herein, but not against the 2nd defendant and struck out the 2nd defendant’s name.

Dissatisfied, the respondent appealed against the trial court’s decision to the Court of Appeal. In its judgment, the Court of Appeal held that there was no cause of action against the respondent.

Dissatisfied, the appellants appealed to the Supreme Court.

At the Supreme Court, the appellants contended that the decision of the Court of Appeal was wrong in that their claims disclosed a reasonable cause of action against the respondent as correctly held by the trial court.

Held (Unanimously dismissing the appeal):

On whether a party can claim remuneration as agent in the absence of contract of engagement
If there is no contract under which a party is engaged to secure the purchase of property, he cannot claim to be remunerated for rendering such services. In the instant case, the statement of claim did not contain any facts of the existence of an agreement between the appellants and the respondent or show the terms under which the respondent appointed the appellants her agent to use their best professional endeavor to secure her purchase of No. 12 Alexander Avenue, Ikoyi, Lagos from the 2nd defendant and that shows that the respondent agreed to pay them an agency fee of 48 million naira or any other sum if she was able to purchase the said property. There were no facts in the statement of claim that gave the appellants the right or cause of action against the respondent for professional fees for the assumed or actual purchase of the said property.

On whether an agent for sale or purchase of property must take part in negotiation on the transaction:

Although an agent does not have to complete or even take part in the negotiations resulting from the introduction of a buyer to a property, it must be shown that there has been no break in the chain of causality resulting from that introduction.

In the instant case, assuming it was the respondent that purchased the property as pleaded in the statement of claim, the appellants would still have no right or cause of action against her. This was because the pleaded facts in the statement of claim show that the connection between the appellant’s introduction of the property to the respondent and the purchase was merely casual and not contractual. No facts pleaded to show it was contractual. The introduction of the respondent to the property must be more than a cause sine qua non of the purchase of the property.

It must be an efficient cause in bringing it about. It is clear from the pleaded facts that the connection resulted in a failure of negotiation as there was no agreement on the purchase price. The pleaded facts show that the appellants played no role in what happened after the collapsed negotiation. There was a clear break in the chain of causation.

On conditions guiding payment of commission to agent engaged in sale or purchase of property

• When an agent claims that he has earned the right to commission, the tests are:
• whether, upon the proper interpretation of the contract between the principal and the agent the event has happened upon which commission is to be paid;
• whether there are no special principles of construction applicable to commission contract with estate agents, and
• whether contracts under which a principal is bound to pay commission for an introduction which does not result in a sale must be expressed in clear language.

In the instant case, there was no contract between the appellants and the respondent for the sale of the property, for which the appellants laid claims for agency fee. The appellants pleadings were harebrained in that they neither disclosed any contractual obligations or duty on the part of the respondent owned to them nor any contractual right against the party that initially engaged them as agents to sell the property in question. The appellants pleadings did not contain facts that, if proved, would entitle them to a judicial remedy arising from the breach of a legal right and so no cause of action was disclosed therein. Hence, there was no cause of action against the respondent.

Courtesy:
MORUFF O. BALOGUN, FIMC, CMC, CMS
Former Vice Chairman, NBA Ijebu Ode Branch.
08052871414
09121207712 [WhatsApp]

Source: loyalnigerialawyer