Perera and Boteju.
1943 Present: Soertsz S.P.J., Keuneman and de Kretser JJ.PERERA, Appellant, and BOTEJU, Respondent.
16—C. R. Colombo, 86,506.
Principal and agent—Commission to broker to find a purchaser for property—Right to remuneration—Terms of contract—Completion of sale.
Where a contract between principal and agent was expressed in thefollowing terms: — I .. .. haveauthorisedB …. to
negotiate the sale of my house and property for the sum of Rs. 11,500only. 1 further promise to remunerate B with 2 per cent, on the amountrealized,—
Held, that the right to the commission was dependent not on theagent finding a purchaser ready and able to purchase at the price buton the completion of the sale.
Luxor, Ltd. v. Cooper, Ltd. X.1941) 1 All Eng. Reports p. 33.
HIS was a case referred to a Bench of three Judges. Thequestion was whether aprincipal,who hascommissioned
anagent to find a purchaserfora property, at acertain price,
promising a remuneration to be paid on the completion of the sale is-bound by law, on such a purchaser being found, to complete the sale orin default to pay the promised remuneration or damages.
ff. W. Jayewardene (with him V. Wijetunge), for the defendant,,appellant.—The plaintiff cannot succeed in this action in view of therecent decision of the HouseofLordsin Luxor(Eastbourne>
Ltd. v. Cooper1 which is exactly in point. The right of the agentto recover his commission depends on the terms of his contract withthe vendor. Where the payment of the commission is conditionalupon the completion of the sale to the purchaser found by theagent then the agent cannot recover his commission until the sale iscompleted or a binding executory contract is entered into between thevendor and the purchaser. The contract in this case clearly contemplatesthe payment of the commission on the completion of the sale. The words“ negotiate the sale ” and “ on the amount realized ” can have no othermeaning. The decision in Bull v. Price’ deals with a case in almostidentical terms and it was there held that the parties contemplated acompleted sale. Here there was neither a completed sale.nor an executorycontract. There can be no binding executory contract unless there is anotarially executed agreement—see Tudavoe v. Keppitigala Rubber EstateCo.” In Ceylon the agent has been allowed to recover his commissioneven where there was no sale, on the basis of the existence in the contractof an implied term, namely, that the vendor would not without reasonablecause prevent the broker from earning his commission. An implied termis read into an express contract only when it is necessary to do so for thepurpose of rendering business efficacy to the transaction between theparties^see French & Co. v. Leeston Shipping Co. * To read such a term
* (1541) 1 A. E. R. 33.<3 (1929) 30 N. L. R. at pp. 391 and-393.
* 7 Bingham 237.'* (1922) I. A. Q. 451.''»..
SOERTSZ S.P.J.—Perera and Boteju.
into this contract would, be to make the contract unworkable because wewould be unduly fettering the liberty of the vendor to deal with hisproperty in any manner he pleases—vide Simpson 6- Co. Soyza'-,Perera v. Soyza’; Dissanayake v. Rajapakse' and Fernando v. PereraHamine'. The principle enunciated in these cases has no applicationnow in view of the fact that the House of Lords has held that in contractsof this nature one should not read into them the implied term suggestedby the plaintiff. This view has also been taken by Akbar J. in Tudawe v.Keppitigala Rubber Estate Co.5
Plaintiff has not'in this action sought to recover anything on the basisof a quantum meruit. Even if he had he cannot now recover anythingbecause the House of Lords has clearly laid down the rule that such aremedy is not available to a broker. No doubt our courts have recognizedthe right of an agent to sue on this basis—see Dissanayake v. Rajapakse"—but they have in doing so followed the English case of Prickett v. Badger ’.That case has been distinguished by the House of Lords as one turningupon its own peculiar facts.
S. Subramaniam (with him Tillainathan), for the plaintiff, respondent.—Luxor (Eastbourne) Ltd. v. Cooper ’(supra) has no application to the factsof this case. All that the broker had been employed to do in the presentcase was to “ negotiate ” for a sale, i.e., to bring the intending purchaserand the vendor into touch with each other. The meaning of the word“ negotiate ” is considered in Macgotvan v. Murray ’. In the case decidedby. the House of Lords the commission was to come from the purchaseprice. There is no such condition in the contract under considerationmow. A case which is in point is that of Mackay v. Dick’. See alsoDissanayake v. Rajapakse” and Fagan v. Pretorius." There is noquestion of reading an implied term into this contract. , The contractitself is clear, and the agent has established his right to recover hiscommission by introducing a purchaser to the vendor.
Cur. adv. vult.
April 5, 1943. Soertsz S.P.J.—
The question that has been reserved for our consideration is one thaitbad been discussed here in several earlier cases, and our Law Reportsshow that a substantially consistent view has been entertained about it.That view appears to be based on certain English cases. But there areother English cases in which a very different view has been taken, and thelaw on the point seemed so unsettled that Judges in England repeatedlycommented on it. Quite recently, Sir Wilfred Greene M.R. in the courseof his judgment in Trollope & Sons v. Clapan", said that the case law withregard to this question was not in a very satisfactory condition, and thatit was desirable that the whole position should be reviewed, if opportunity,arose, in the House of Lords. Du Parcq L.J. made a similar comment in thecase of Luxor, Ltd. v. Cooper.”. Fortunately, that case did the needfulwhen it came to the House of Lords, before Viscount Simon L.C., LordThankerton, Lord Russell of Killowen, Lord Wright, and Lord Romer.
1 (1900) 4 N. L. R. 90.
(1910) 13 N. L. R. 85.
3 (1918) 20 N. L. R. 353.
(1919) 21 N. L. R. 79.
6 (1929) 30 N. L. R. 389.
‘ (1918) 20 N. L. R. 353.a>1 * 3 (1936)
' 26 L. R. C. P. 33.
3 L. R. 1891 Ch. D. 105.*(1881) 6 A. C. 251.
■° (1918) 20 N. L. R. 353.
11 S. A. L. R. 1921, C. P. D. 502.11 (1936) 2 A. E. R. 842.
A. E. R. 841,
SOERTSZ SJJ.—Per era and Boteju.
Those Noble Lords, in the speeches they delivered, discussed the question,in all its aspects, reviewing the old cases bearing on it, and reached aunanimous^ conclusion ((1941) (All England Reports; p. 33)). That con-clusion refutes the view that had obtained in our courts, and as thequestion appertains to the law of Principal and Agent, for which we areunder the Law of England, a reconsideration of it has become necessary.
That question, in a few words, is whether a principal who has commis-sioned an agent to find a purchaser for a property of his, at a certain price,promising a remuneration to be paid on the completion of the sale, isbound by law, on such a purchaser being found, to complete the sale,or in default to pay the agent the promised remuneration or, at leastdamages on the basis of a quantum meruit.
In a long line of cases, this court has answered this question substan-tially in the affirmative. To name a few of those cases, there are: —Simpson & Co. v. Soysa'; Perera v. Soysa*; Dissanayake v. RajapakseFernando v. Perera Hamine *.
Then there is the case of Tudawe v. Keppitigala Rubber Estates Co‘, inwhich Akbar J. (Lyall-Grant J. agreeing) reviewed the earlier cases andalso many English cases, and came to the conclusion that the principleresulting from them was that, in order to entitle an agent, who has foundthe desired purchaser, to the promised remuneration or to compensationon a quantum meruit, the negotiations should have resulted in a bindingcontract between the principal and the proposed vendee or “ there shouldbe proof of default on the part of the proposed vendor ”. It would appeartherefore that, in this view of the matter, the agent’s claim was entertaineddespite the fact that the sale had not gone through in some cases, theCourt acted on the principle of a quantum meruit, and in others on thatof an implied term in the contract.
The House of Lords in the case of Luxor, Ltd. v. Cooper “ dealtwith both these pleas. In regard to the pleas of a quantum meruit LordWright, in the course of his speech, made the following observation:—
“ It has been said in some cases that the claim may be based on aquantum meruit on the principles expounded in the notes to Cutter v.Powell1 in Smiths’ Leading Cases, according to which the special contractis treated as rescinded, and the agent thereupon becomes entitled toclaim a partial recompense for what he has done. Such a claim is inthe nature of a quasi-contracfual claim. It is properly made in casesof contract for work and labour and the like, when the employer who. has got the benefit of part performance, but before completion hasrepudiated the contract, may be sued either for damages for breachor for restitution in respect of the value of the part performance whichhe has received. Such cases are, however, obviously different from
the present caseIn the case of the commission agent,
to whom payment is dependent on completion or the like condition, theprincipal does not promise that he will complete the contract.
.. .. His only promise is that he will pay the commission if the-
I (1909) 4 N. L. B. p. 90.1 (1919) 21 N. L. B. 79.
* (1910) 13 N. L. B. p. S50.4 (1921) 30 N. L. B. 389.
1 (1918) 20 N. L. B. 353.• (1941) 1 A. E.B. 33.
SOERTSZ S.P.J.—Perera and Boteju.
contract is completed. There is no promise to pay a reasonableremuneration if the principal revokes the authority of the agent;moreover, it is a further objection to a claim on a quantum meruitthat the employer has not obtained any benefit
Going on to discuss the other view, namely that there is an implied termin these contracts that the principal unless he has a reasonable cause forrefusing to complete the contract was obliged to complete it of to pay theagent his commission, their Lordships declared that contracts of thisnature are subject to no peculiar rules or principles of their own, and thatthe presumption is the general presumption that parties have expressedevery material term that is to govern their agreement, and that nothingwill be read into it unless the law requires that to be done, or unless itis necessary so to do in order to give the transaction such business efficacyas the parties must have intended.
If then the theory of a quantum meruit is foreign to these contracts andif, as the irresistible reasoning of the speeches delivered by their Lordshipsestablishes, there is no implied term in them, all that remains to be doneis to ascertain and interpret the actual terms of the contract in question.In the case before us, the contract is in writing and only a question of
interpretation arises. The relevant terms of this contract are “I
have authorised B to negotiate the sale of my house
and property for the sum of Rs. 11,500 only. I further promise
to remunerate — B with 2 per cent, on the amount realized”.
Except for the word “ only ”, somewhat surprising in the context, theseare unambiguous words, and if I may adopt the words of Lord Russell, Ishould say that “ I cannot imagine …. a clearer case of the titleto the commission being made wholly contingent on the sale being carriedto completion and of the agent taking the risk of the sale falling throughfrom any cause whatever ”. In other words, the title to the commissionis not made dependent on the agent finding a purchaser ready and ableto purchase at the price, but on the. completion of the sale. The claim of theplaintiff here, however, is based on the fact that he found a purchaser readyand abie to buy the property at Rs. 11,500, although there is not a wordin the agreement to suggest a promise of remuneration in such an event.
The rule enunciated by th,e House Of Lords which must now govern usmay, I think, be stated, thus:—Each case must depend on the exactterms of the contract under consideration and upon the construction ofthose terms, and the right to commission will accrue only when the thingor event which; upon a correct construction of the agreement, the partiescontemplated, is done or has happened, and that in cases "of this kindthere is no obligation imposed by law on the principal to co-operate withthe agent to enable him- to earn his commission. The principal may forany reason at all, or for no reason whatever other than that he has changedhis mind, refuse to sell, except, perhaps when in consequence of negotiationsconducted by the agent, a legally binding and enforceable agreement tosell and to buy has come into being between the principal and the proposedvendee.
If commission agents and brokers and others of that class are notdisposed to do business on those terms, it is for them to ask for and obtain,if they can, the terms they desire.
MOSELEY A.C.J.—Bonar Co. and Commissioner of Income Tax. 317
The application of this rule to the facts of this case results inevitably inthe failure of the plaintiff’s claim. The appeal must be allowed and theaction dismissed. In view, however, of the fact that the plaintiff waswithin the old rule, it will, in my opinion, be sufficient to direct him topay half the costs incurred here and below.
Keuneman J.—I agree.de Kretser J.—I agree.