Court allows estate agent's commission claim where a ready and willing purchaser was found despite vendor's subsequent failure to complete the sale.

[*1373] 1972 March 30

(STAVRINAKIS, AG. P.D.C., EVANGELIDES, AG. D.J.)

IN THE DISTRICT COURT OF NICOSIA

Costas Kalisperas, etc.,

Plaintiff,

and

Solea Ltd., Building Contractors,

Defendants.

(Action No. 5051/70).

Contract - Estate Agent - Agency Contract - Construction - Commission or damages - Authority to find a ready and willing purchaser - Purchaser found but vendor failed to complete - Commission payable.

Company - Contract signed by one of the Directors as a representative of the Company - Not ratified by the Company and not bearing its seal - Whether it binds the Company - Section 33(2) of the Companies Law, Cap. 113.

Contract - One of the parties indisposed at material time - Allegations of fraud and unfair advantage.

Estate Agent - See under "Contract".

Agency Contract - See under "Contract".

A. Paikkos, for the Plaintiff.

I. Papaphilippou, for the Defendants.

JUDGMENT

The judgment of the Court was delivered by:-

STAVRINAKIS, AG. P.D.C.: The plaintiff in this action is an estate agent carrying on business in Nicosia under the name "KALISPERAS". [*1374]

The defendant is a company registered under the Company Law, Cap. 113.

The plaintiff’s claim against the Defendant Company is for £575 as remuneration and/or commission and/or damages for breach of an agreement whereby the Defendant Company gave a mandate to plaintiff to sell a building site, Plot 177, Plan ΧΧI/55.I.III, Block A. Ayios Antonios Quarter, Nicosia.

According to the statement of claim on the 20th August, 1970 the Defendant Company authorized in writing the plaintiff to find a purchaser ready and willing to buy the aforesaid property of the Defendant Company. The plaintiff acting on the aforesaid authority found a ready and willing purchaser, but the defendant refused to sell the property, hence the present action.

The defendants in their statement of defence do not deny that the Defendant Company is a Company registered under the Companies Low, Cap. 113, but they allege that the authority in writing given to the plaintiff is void for the following reasons:-

A. that is does not bear the seal of the Company.

B. That it was not ratified by the Board of Directors of the Company.

C. That it does not contain the true agreement between the parties.

Regarding the last-mentioned ground, they aver that an employee of plaintiff took advantage of a dizzy [*1375] spell the representative and Director of the Defendant Company had at the time and induced the said Director, (Ioannis Roupinas) to sign the agreement for the sale of the property, whereas the authority given to plaintiff's employee was for the sale of the shares of the Defendant Company. They further allege that the reason the sale had not been concluded with the purchaser found by the plaintiffs was because their intention and authority was not to sell the property, but the shares of the Defendant Company to which the purchasers did not agree. In conclusion, they deny that the purchaser found by the plaintiff was a ready and willing one, and that the plaintiff did not earn his commission.

At the hearing of the case Medon Hj. Antoniou (P.W.1), the employee of the plaintiff who negotiated with Ioannis Roupinas, the Director of the Defendant Company stated that he did not take any unfair advantage of the said Director’s condition and that the authority he was given was for the sale of the property described in the agreement. The said agreement has been produced and is before us as exhibit No. 1. Also, in cross-examination the said Medon Hj. Antoniou (p.W.1) was asked to produce the notes he was taking before the contract, exhibit 1, was prepared. These notes are before us as exhibit 8.

Ioannis Roupinas (D.W.2) who signed exhibit 1 as Director and on behalf of the Defendant Company, in giving evidence he alleged that the authority he gave to Medon Hj. Antoniou was for the sale of the shares of the Company and not of the property which was forming the only asset [*1376] of the Company. He admitted having signed the agreement, but he alleged that he did not read the contents thereof, owing to the fact that he was feeling ill at the time and because he had full confidence in the said Medon Hj. Antoniou. He only had a look, as he alleged, on the first page to see Whether the amount was correct. The defendant called Dr. Roupinas (D.W.1) who is the son of Ioannis Roupinas (D.W.2), to state that his father and patient is suffering with his heart, that he has attacks from time to time and that during those attacks his judgment is impaired. He did not go as far as to say that he (his father) by reason of these attacks is rendered incapable of knowing what he is doing, but when he is in that condition he is more susceptible to influence by others.

Various legal points were raised by learned counsel of the defendant in his final address. He contended -

A. That the said Ioannis Roupinas signed the contract not as the Director but as a representative of the Company.

B. That there was no resolution of the company ratifying the contract.

C. That the contract does not bear the seal of the Company and that the initials of the said Roupinas do not appear on the front page of the contract.

He further argued that the parties were not ad idem, owing to the fact that the clerk of the plaintiff exploited [*1377] the indisposition of the said Roupinas and induced him to sign a contract which was contrary to the instructions he gave him. Further, he argued that even if the Court rejects this contention, that the plaintiff is not entitled to the agreed commission, but to a reasonable compensation.

We shall deal with the aforesaid points in the sequence hereinabove set out.

A. Ioannis Roupinas signed the contract for the Defendant Company. He is one of the Directors of the Company and in our opinion, it makes no difference whether a Director signs as a representative of the Company or with the authority of the Company. A Director is an agent of the Company and in entering into contracts either as director or as representative, the Company is bound.

B. Regarding the ratification of the contract by the Company, we do not think that such ratification is necessary to give the contract validity. Furthermore, we have an express authority to Ioannis Roupinas to sell the property. (Exhibit 9 dated 7.8.1970).

C. Regarding the seal of the Company, we are of the opinion that a contract binds the company even if it does not bear its seal. According to section 33(2) of the Companies Law, Cap. 113, contracts on behalf of a Company may be made as follows:-

"(a) A contract which if made between private persons would be by law required to be in writing, and if made according to English Law to be under [*1378] seal, may be made on behalf of the company in writing under the common seal of the company.

b) A contract which if made between private persons would be by law required to be in writing, signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied;

(c) a contract which if made between private persons would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied.

(2) A contract made according to this section shall be effectual in law, and shall bind the company and its successors and all other parties thereto.

(3) A contract made according to this section may be varied or discharged in the same manner in which it is authorized by this section to be made".

It is correct that the first page is not initialled, but this, to our opinion, is not fatal and of any great consequence. The document consists of one sheet of paper and the signature at the end thereof is quite sufficient. [*1379]

Allegations of fraud and unfair advantage

We have considered the evidence before us and we must say that we are not satisfied that Ioannis Roupinas had the attack he alleged at the time of the negotiations, but even assuming that he did have an attack, we are satisfied that P.W.1 took no unfair advantage of the indisposition of Ioannis Roupinas. We do not accept Ioannis Roupinas's evidence that he did not know that the authorization was for the sale of the building site or that his instructions to P.W.l were for the sale of the shares. He admitted having read the paragraph regarding the sale price and by just reading it, it is quite obvious that such price is for the sale of an immovable property. To quote –

"Το τίμημα του ρηθέντος

ακινήτου ωρίσθη εις Λίρας Είκοσι Δύο χιλιάδας (£22,000) Δύναται όμως ο

ιδιοκτήτης εντολεύς να δεχθή, διά γραπτής προς τούτο δηλώσεώς του, χαμηλωτέραν

προσφοράν".

Clause 4 speaks clearly for the sale of the building site in question and no mention is made of sale of shares. The negotiations started before the said Roupinas had the alleged attack, and we cannot possibly accept that P.W.1 was so cunning as to suspect that this attack would have as a result the impairment of the judgment of the said Ioannis Roupinas so as to take an unfair advantage of him.

One more reason for not accepting the

evidence of Roupinas is the fact that it is highly improbable for [*1380] a person to go to an estate agent to sell the shares of a Company

without producing at least the Memorandum or Articles of Association and a balance sheet showing the assets and the liabilities of the company, if for no other reason, at least to let the prospective purchaser to know what he is buying. It is an admitted fact that the only asset of the Company was the building site in question, but the purchaser could not possibly know if the Company had no liabilities.

We reject the allegations of fraud and accepting the evidence of Medon Hj. Antoniou in the light of all the surrounding circumstances and on the balance of probabilities, we find that the authority Ioannis Roupinas gave to plaintiff was for the sale of the building site and not of the shares of the company as he alleged. We also find that the contract denotes the true intention of the parties at the time.

Commission or damages:- The authority given to plaintiff was for the sale of the above described property. The sale price was fixed at £22,000 and the commission as follows:- 5 per cent on the first £1,000 and 2½ per cent on the balance. The duration of the mandate was for two months commencing on the 20th of August, 1970, and ending the 20th of October of the same year. The plaintiff on the strength of the aforesaid mandate came in contact with various persons and finally the property was offered to Pharos Estates Limited who accepted the offer paying £2,200 by cheque No. P 72413l and the balance to be paid upon the transfer of the property which should have been effected not later than the 4th September, 1970. Needless to say that the offer was made [*1381] on the 31st of August and accepted on the same day (exhibit 2).

By a letter dated the 1st September, 1970, the plaintiff sent to Ioannis Roupinas, as an authorized representative of the Defendant Company, a letter informing him about the finding of a purchaser (exhibit 3). It appears that at some time between the 1st and 8th of September, 1970 the matter of selling the shares of the Defendant Company instead of the building site was discussed and three more letters were sent to the defendant protesting and commenting about the demand of the defendant to sell the shares of the Company instead of the building site (exhibits 4, 5 & 6). The cheque received from the purchaser was returned to him and by exhibit 6 the plaintiff claimed his commission.

Learned counsel of the defendant argued that the plaintiff is not entitled to the agreed commission but to reasonable compensation to be assessed, in the light of the work done and the time lost by the plaintiffs in their efforts to find a purchaser.

We have a number of cases regarding commission of estate agents in Cyprus, but none of them is on all fours with the facts of the present case. In the case of Orphanides v. Michaelides

(1967) 1 C.L.R. 309 the introduction of a purchaser was the cause of the sale, but there was no express agreement for commission.

In the case of Kalisperas v. Kababe

(1971) 6 J.S.C. 827, there was an exclusive authority but the sale [*1332] was not the result of the agency. It was held that damages and not commission were payable.

In the case of Kalisperas v. Papadopoullos

(1969) 10 J.S.C. 1204 there was a repudiation of the mandate during its continuance. The property was sold and it was held that damages again were payable and not the commission.

According to Bowstead on Agency, 13th Edition, page 185 -

"Whenever an estate agent claims his remuneration the Court must determine, as a matter of construction of the particular agency contract concerned, whether the event has occurred upon which the agent’s entitlement to remuneration accrues".

As it was said by Lord Russell in Luxor (Eastbourne) Ltd. v. Cooper (1941) A.C. 108-

"No general rule can be laid down by which the rights of the agent or the liability of the principal under commission contracts are to be determined. In each case these must depend upon the exact terms of the contract in question, and upon the true construction of those terms".

According to the facts of the present case the property was not eventually sold, but a willing and ready purchaser was found. We, therefore, have to look at the contract and see whether there was a breach on the part of the defendant. The authority was for the sale of the [*1383] property. The facts in the case of Midgley Estates Limited v. Hand (1952) 1 All E.R. p. 1394, bear a close similarity to the facts of the present case. Briefly, the facts of the said case are as follows:-

"On June 23, 1950, the plaintiffs, a firm of estate agents, having been instructed by the defendant to dispose of his property, wrote to him acknowledging his instructions and adding: ’The following conditions of sale are taken as agreed on by both parties. Commission at the rate of five per cent, to be paid to the company as soon as our purchaser shall have signed a legally binding contract effected within a period of three months from this date'. The defendant accepted these terms and the plaintiffs introduced M. who, on July, 6, 1950, signed a binding contract to purchase the property, paid a deposit, and was let into possession. Owing to financial difficulties, M. was unable to complete the purchase with the result that he forfeited his deposit and the defendant regained possession. On a claim by the plaintiffs for commission. HELD: on construction of the letter of June 23, the plaintiffs having introduced a person who within the time specified had signed a legally binding contract to purchase the property, were entitled to commission notwithstanding that the sale was never completed". [*1384]

Jenkins, L.J., in his judgment has this to say regarding the interpretation of an agency contract (p.1396):-

"The question depends on the construction of each particular contract, but, prima facie, the intention of the parties to a transaction of this type is likely to be that the commission stipulated for should only be payable in the event of an actual sale resulting. The vendor puts his property into the hands of an agent for sale, and, generally speaking, he contemplates that, if a completed sale results, and not otherwise he will be liable for the commission which he will then pay out of the purchase price. That is, broadly speaking, the intention which, as a matter of probability, the Court should be disposed to impute to the parties. It follows that general or ambiguous expressions, purporting, for instance, to make the commission payable in the event of the agreed 'finding a purchaser' or ’selling the property' have been construed as meaning that the commission is only to be payable in the event of an actual and completed sale resulting, or, at least, in the event of the agent succeeding in introducing a purchaser who is able and willing to purchase the property. That is the broad general principle in the light of which the question of construction should be approached, but this does not mean that the contract if its terms are [*1385] clear, should not have effect in accordance with those terms even if they do involve the result that the agent's commission is earned and becomes payable although the sale in respect of which it is claimed for some reason or another turns out to be abortive".

Having considered the evidence as a whole, we are of the opinion and so find that the authority was to find a ready and willing purchaser which the plaintiff did. In fact the purchaser paid £2,200 by way of deposit and he was ready to pay off the balance within four days. We might even say that the facts of the present case are stronger than those in Midgley case where the sale failed through no fault of the principal but of the purchaser who was unable to raise funds necessary to complete the sale.

We shall not make any finding as to who is responsible for the sale to Pharos Estates Limited falling through, because as we understand, there is an action between Pharos Estates Ltd. and the defendant and we do not wish to make any unnecessary findings regarding a pending case.

For all the above reasons, we find that the plaintiff is entitled to his commission and not to damages because he has done all that he was given instructions to do.

Judgment is given for plaintiff as per claim, with costs to be assessed by the Registrar.

Counterclaim dismissed. No order as to costs.