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Cite as: [1999] ScotCS 1

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OPINION OF LORD HAMILTON

in the cause

G. & S. PROPERTIES AND GORDON ADAMS, SANDRA ADAMS AND MARK ADAMS, THE WHOLE PARTNERS THEREOF AND CLUTTONS DANIEL SMITH, FORMERLY KNOWN AS CLUTTONS,

Pursuers;

against

ARCHIBALD McINTYRE HENDERSON AND JENNIFER ISOBEL HENDERSON,

Defenders:

________________

6 January 1999

To the north-west of Glasgow lies the affluent residential district known as Milngavie. A short distance north of Milngavie is the village of Mugdock. In 1988 the defenders, who are husband and wife, purchased the property known as Easterton of Mugdock. It then comprised a farm extending to about 110 acres on which stood a dilapidated farmhouse. Following their purchase the defenders carried out substantial redevelopment at the property. A large country house with private stabling and a stable flat was built. Later there was constructed, several hundred yards from the house, an equitation centre from which a livery and riding school business was conducted. That business was run by the second defender, the first defender who had other business interests providing some financial services. The equitation centre included twenty six stables, a tackroom and a small house for the accommodation of staff. Part of the estate was used for the purposes of the riding school.

Early in 1995 the second defender decided that she no longer wished to continue carrying on the equitation business. The defenders then sought advice in relation to a possible sale. They approached a number of agents, including the first pursuers and the second pursuers (the latter then styled "Cluttons"), and invited a representative from each to visit the property separately. Mr Gordon Adams, the senior partner of the first pursuers, and Mr Robert Cherry, a partner of the second pursuers, attended at Easterton initially on separate occasions in late February or early March 1995. Each had previously acted professionally for the defenders in the late 1980s, the former in valuing their prior residence in Rhu and the latter in valuing the farm of Easterton of Mugdock prior to the defenders' purchase of it. The first pursuers had an established reputation in the valuation and in the sale and letting of residential properties, including properties in the more expensive range, situated to the west and north-west of Glasgow and in rural districts beyond; the second pursuers had an established reputation in the valuation and sale of rural properties generally.

Following their initial separate visits Mr Adams and Mr Cherry were each telephoned by one or other of the defenders and advised that they had decided to engage both as joint agents for the purposes of a prospective sale. They were invited to come together to Easterton with a view to taking matters further. That meeting took place on 28 March 1995. It was attended by Mr Adams, Mr Cherry and both defenders.

By the time of that meeting, if not earlier, the defenders had decided that the greater part of the property owned by them at Easterton should be exposed for sale. That part comprised the main house, the equitation centre and some contiguous additional land, the whole amounting to about 65 acres; the remaining 45 acres, which lay more remotely from the main house and the equitation centre, were to be retained meantime. The second defender testified that the defenders did not at that stage wish to sell the main house, their purpose being to sell the equitation centre. I accept that disposal of the equitation centre was the initial motivation for what subsequently occurred. I am, however, satisfied that by March 1995 the defenders had decided not only to expose for sale the 65 acres with the buildings on them but, if the price or prices were right, to carry through a sale of the whole or of a part or parts of it, subject to the proviso that the main house would not be sold prior to the equitation centre.

At the meeting held on 28 March the defenders confirmed their instructions that the pursuers act for them on a joint basis. A range of matters was discussed. The lots in which the property would be exposed for sale were decided on. The first defender made available a plan of the relative subjects which had been prepared at about the time of the defenders' purchase of Easterton. Five lots were identified, Lot 1 being of the main house with 5.14 acres of ground, Lot 2 being the equitation centre with about 34.76 acres of ground and Lots 3, 4 and 5 each being of grazing land of about 7.63, 5.65 and 10.18 acres respectively. The plan was passed to the pursuers for the purpose of being used in the sale brochure to be prepared by them. For that purpose the pursuers subsequently marked on it, among other things, the various lots and their boundaries, certain access rights (existing and prospective) and certain location features. The asking prices for the various lots were decided on, although in one instance the price was subsequently revised. A decision was made that a brochure be produced in a particular form, with photographs, floor plans, narrative and other elements. The photographs were to be taken professionally at or about the end of April or the beginning of May when the property could be shown to best advantage. Arrangements for advertising were settled. These were to comprise four insertions in the Herald newspaper (to be made through the first pursuers) and two insertions in the Scottish Farmer and one in the Horse and Hound (to be made through the second pursuers). In relation to all these matters the pursuers each gave to the defenders the benefit of their advice founded on their respective expertise. Certain further matters (bearing on the agents' fee and on the terms of their engagement) were also discussed. I shall return to those last matters later.

By letter of 3 April to the first defender Mr Cherry confirmed various matters discussed at the meeting. His letter included the statement -

"We agreed a joint agency fee of 3% of the price achieved plus expenses and VAT. A revised estimate of these expenses is shown on the attached confirmation of sale instructions schedule. If in order please sign and return one copy to me...".

The confirmation of sale instructions schedule attached to that letter comprised a single sheet with printing on both sides. It had been based on a style of confirmation of sale instructions used by the second defenders and adapted by Mr Cherry to deal with the fact that two agents were being instructed on a joint basis; it was also revised by Mr Adams in certain respects before its issue to the defenders. On the face of the document there were set out among other entries -

"CLIENT: Mr A Henderson".

"COMMISSION/FEES: 3% Joint Agency".

The expenses and estimated costs were tabulated and totalled. On the lower half of the face appeared "PLEASE SEE CONDITIONS OVERLEAF", followed by the words "I have read and accept the conditions and/or the Advertising Schedule and agree to the scale of commission and authorise the above expenditure on my behalf". Provision was made for signature and dating of the document. On the reverse appeared the heading "STANDARD AGENCY CONDITIONS" followed by five numbered conditions. Condition 1 commenced:

"The Seller agrees that Cluttons and G. & S. Properties are appointed as the Joint Sole Agents with sole selling rights and that commission, at the rate shown overleaf, will be payable to Cluttons and G. & S. Properties on completion of a sale...".

Towards the foot of the reverse appeared in bold the heading "Definition of Sole Agency & Sole Selling Rights". That was followed by the words -

"The Seller will be liable to pay remuneration to the Agents in addition to any other costs or charges agreed if at any time unconditional missives for the sale of the property are concluded:

(a) with the (sic) purchaser introduced by the Agents during the period of their sole agency, or with whom the Agents had negotiations about the property during that period, or

(b) with a purchaser introduced by another agent during that period."

Although the client referred to in that document was the first defender, it is undisputed that instructions were given by both defenders, the pro indiviso proprietors of the property. The first defender in many respects acted for both of them in their dealings with the pursuers. The first defender did not sign or return the confirmation of sale instructions, although requested on a number of occasions to do so. However, in respect only of one particular did he positively demur to its terms. Shortly after 3 April 1995 he telephoned Mr Adams concerning the level of the agents' joint fee. As a result the commission rate was reduced to 2%.

The brochure was duly prepared. Both pursuers contributed to its drafting and layout. It identified the property as "EASTERTON OF MUGDOCK, MILNGAVIE, GLASGOW" describing it as "a magnificent Country Estate in about 63 acres" and as "Available for sale as a whole or in 5 lots". The pursuers' names and relevant offices were identified. The pursuers were described on the first page of text as "Joint Sole Selling Agents". Several hundred brochures were printed. They were available for distribution by late May.

In the course of the meeting on 28 March the discussion had included the prospects of a sale or sales to neighbouring proprietors. Among those proprietors was a Mr John (subsequently Sir John) Harvie who lived at Auchencraig, by Mugdock and whose properties included the former Middleton Farm lying immediately to the west of Easterton of Mugdock. It was well-known (including known to both defenders and to Mr Adams) that Mr Harvie had a policy of acquiring, whenever possible, land in the vicinity of Mugdock. Mr Harvie in 1988 had been the under-bidder for Easterton of Mugdock. By 1995 he was known to the defenders personally. In these circumstances it was decided at the meeting on 28 March that, when the brochure was available but before public advertisement, the first defender should advise Mr Harvie privately of the prospective sale and give to him a brochure. In due course this was done.

The property was advertised as arranged. Enquiries were made of the agents. Between ten and twenty people viewed the property or parts of it. Sufficient interest was quickly generated to set 29 June 1995 as a closing date for offers. Three formal offers were received for Lot 1 (the main house with adjoining land). The highest offer (of £565,000) was by a Mr Watson and the next (of about £550,000) by a Mr and Mrs McInally. A third person made an offer below the asking price of £525,000. Mr Harvie did not make an offer for Lot 1. He submitted offers for each of Lots 2, 3, 4 and 5. He was the only offeror for Lot 2. That offer was accepted and in due course proceeded to settlement, Mr Harvie becoming proprietor of the equitation centre and its 34.76 acres of ground by about September 1995. None of Mr Harvie's offers, nor any of the offers of other persons, for Lots 3, 4 and 5 was accepted, the defenders deciding shortly after the closing date not to dispose of those lots until the disposal of Lots 1 and 2 had been finalised.

Immediately after the closing date the defenders decided that the offer by Mr Watson for Lot 1 should be accepted. They gave instructions to their solicitors to that effect. Although the exact details were not before the court, it seems that missives were not, in the event, concluded with Mr Watson. About two weeks after the closing date he announced to the defenders that he was unhappy with the fact that Mr Harvie had acquired the equitation centre. He had, it seems, an apprehension that at some time the land associated with it would come to be developed for residential purposes. He was unwilling to pay the offer price for a country house situated relatively close to where a housing development might take place. He attempted to negotiate a lower purchase price. The defenders responded that they were not prepared to conclude a bargain with Mr Watson otherwise than for the price he had originally offered. Although matters appear to have drifted on for some weeks, by about late July it was clear that a concluded bargain would not be made for the sale of Lot 1 to Mr Watson. No such bargain was ever concluded.

Among those who had viewed the main house in June were a Mr and Mrs Ferguson. They carried on a hairdressing business in Glasgow. Their home was then in Milngavie. They had been interested in moving house for some time and were on the lookout for a suitable residence. Mrs Ferguson saw one of the advertisements in relation to Easterton of Mugdock inserted by the first pursuers in the Herald newspaper. It attracted her attention since the house appeared to be the kind of residence she was looking for. She telephoned the first pursuers' office and made arrangements to obtain a copy of the brochure and to view the house. She received a copy of the brochure from the first pursuers which she read, though not in much detail. Her primary interest was to view the house as she would not consider buying any house merely on the basis of information contained in a brochure. The house was in an area where she wished to live. She was familiar with the location and had seen the main house in the course of its construction, though she had not previously been inside it. Mr and Mrs Ferguson viewed the house on a Sunday in mid-June. Their visit lasted some 10 to 15 minutes. They viewed the main house only. Mrs Ferguson took the view at that time that she was not interested in acquiring the house. She regarded it as too much of a "country type" house. Her view, which appears to have been determinative of the joint view of Mr and Mrs Ferguson, was communicated to the first pursuers some two days later after they had followed up the Fergusons' visit with a telephone call. The Fergusons did not instruct a valuation or other survey of the house; nor did they submit any offer for it at that time. They continued to look for a place to live.

Mr Harvie was a regular customer of the Fergusons at their hairdressing establishment. At some time after Mr Harvie had acquired the equitation centre an arrangement was entered into between him and the Fergusons concerning a possible purchase by the latter of the staff house at the equitation centre and its development as a private dwellinghouse. How precisely this arrangement came into being was not clear on the evidence. However, the Fergusons visited the staff house (probably in the late Summer or early Autumn of 1995), paid a substantial deposit to Mr Harvie and, having instructed professional advisers, lodged with the local planning authority an application for planning consent. Negotiations with planning authority officials proceeded for some months but did not result in a consent being granted.

On 30 January 1996 the defenders separated, the first defender departing from the house at Easterton and leaving his wife and children there. The first defender on occasion thereafter visited the house primarily to see his children. On one such occasion, at about the end of February or the beginning of March 1996, he happened, when out walking, to meet Mr Harvie. A conversation ensued in which Mr Harvie asked after both defenders. In the course of it the first defender told Mr Harvie that it was proposed that the second defender continue living at Easterton until the Autumn of 1997 (when their daughter was expected to complete her schooling) after which the house would probably be sold. Mr Harvie responded to this by stating that he would be prepared to purchase from the defenders further land at Easterton including the main house. An informal agreement, including agreement on price, was reached in the course of that conversation.

Mr Harvie's attitude was that he was interested in acquiring further land at Easterton and was prepared, if necessary, to acquire the main house with that land. He initially thought that the house might be of interest to his son but that turned out not to be so. A few weeks later Mr Harvie attended the Fergusons' hairdressing salon on one of his regular visits. There was conversation about Easterton. Mr Harvie by this time had satisfied himself that the Fergusons' planning application for development of the staff house at the equitation centre was unlikely to be successful. Although the Fergusons were more optimistic about their prospects in that regard, conversation turned to the main house at Easterton. Mr Harvie offered to sell it to the Fergusons. Within a very short time (either that day or within a day or two) agreement in principle was reached that the Fergusons would purchase the main house from Mr Harvie (whom they assumed at that stage already to be the owner). The price agreed (£585,000) was a non-negotiable figure stated by Mr Harvie. The Fergusons' attitude was that, having for some time looked unsuccessfully for a suitable house and their application for development of the staff house at the equitation centre now having, it seemed, poor prospects, they would buy the main house at Easterton and change those features which they did not care for, rendering it more like a "town house in the country". Although they viewed the house again before formal missives were concluded, their decision to purchase the property had been taken well before that second viewing.

Formal arrangements in respect of those transactions followed later in 1996. On 23 August 1996 Mr Harvie's solicitors submitted to the defenders' solicitors a formal offer to purchase the main house at Easterton with associated ground - what, with minor and unimportant modifications, had been the property exposed for sale as Lot 1 the previous Summer. Separate offers were submitted by Mr Harvie for Lots 3 and 4. The offer for Lot 1 included the term - "The Seller accepts that the Purchaser may assign his rights in terms of the missives of which this formal letter forms part to a third party......". On the same day Mr Harvie's solicitors submitted to the Fergusons' solicitors a formal offer to assign to the Fergusons his right in and to the terms of the missives to be concluded in connection with the purchase of Easterton of Mugdock (i.e. Lot 1). The last offer was subject to certain conditions including a condition that Mr Harvie receive a formal unqualified acceptance from the defenders' solicitors in terms of Mr Harvie's offer to purchase that property. On the same day the Fergusons' solicitors sent on their behalf to Mr Harvie's solicitors an unqualified formal acceptance of the offer made to them. On 30 August 1996 the defenders formally accepted in unqualified terms Mr Harvie's offer for the main house. Although not positively established by the evidence, it seems likely that formal missives for Lots 3 and 4 were completed at or about the same time, the conveyance of those plots being made by the defenders to Mr Harvie in late November 1996. By not later than 23 October 1996 intimation had been given by the Fergusons' solicitors to the defenders' solicitors of the assignation by Mr Harvie of his rights under the missives to purchase the main house. By disposition dated 27 and 29 November 1996 the defenders, with the consent of Mr Harvie, conveyed the main house to the Fergusons. They moved in shortly thereafter and were still living there at the time of the proof. The consideration for that disposition was £585,000, the same sum as that for which Mr Harvie agreed to purchase the property from the defenders in terms of the missives of 23 and 30 August.

In this action the pursuers sue the defenders for payment of the sum of £13,745 being 2% of £585,000, together with VAT thereon. That sum is claimed as being due under the agency contract entered into between the parties. The pursuers sue in the alternative for payment of the sum of £11,700 as damages for alleged breach of that contract.

It is not disputed that a contract was entered into between the parties. Nor in the end, as I understood it, was there any important difference as to its material terms. It was accepted by both counsel that the contract was not one entered into wholly orally or wholly in writing but by a combination of oral communings and the passing of the written, but unsigned, confirmation of sale instructions and possibly also by actings of the parties in furtherance of those communings. It was accepted that, although agreement was reached on various matters at the meeting on 28 March 1995, a contract was not concluded at that time. It had, however, been concluded by not later than about the end of May 1995 when the brochures were ready for distribution. The contract did not provide for the agency to end at any specific time. It was not disputed that the contract included a term that the defenders

"will be liable to pay remuneration to the [pursuers]..... if at any time unconditional missives for the sale of the property are concluded.... with [a] purchaser introduced by the [pursuers] during the period of their sole agency....".

It was agreed that the definite article appearing in the written confirmation of sale instructions before the word "purchaser" was properly to be read as the indefinite article. It was not disputed that, subject to an issue of enforcement discussed later, the rate of remuneration was 2%.

The first principal submission advanced by Mr Sandison for the pursuers was that the pursuers were entitled to remuneration under the contract because the Fergusons were purchasers who had been introduced by the pursuers during the period of their sole agency and that unconditional missives for the sale of the property had been concluded by the defenders with them. Mr Sandison's second principal submission was that the pursuers were entitled, additionally or alternatively, to remuneration under the contract because Mr Harvie was a purchaser who had been introduced by the pursuers during the period of their sole agency and that unconditional missives for the sale of the property had been concluded by the defenders with him. Mr Sandison advanced a third principal submission which I shall discuss later.

In relation to the proper approach in law to the concept of "introduction" in the context of a contract of agency, counsel referred to four Scottish authorities. In Walker, Fraser & Steele v Fraser's Trs. 1910 S.C. 222, where property agents were found entitled to commission in respect of the sale of the estate of Balfunning, Lord Dundas, with whom the other judges agreed, said at p.229:

"Shortly put, I think the test is whether or not the ultimate sale of Balfunning was brought about, or materially contributed to, by actings of the pursuers, as authorised agents of the defender. Actual introduction of the purchaser to the seller is not a necessary element in a case of this sort; it is enough if the agents introduce the purchaser to the estate, and by their efforts contribute in a substantial degree to the sale. A careful consideration of the evidence leads me to hold that the pursuers have sufficiently complied with the test indicated...

It was through the pursuers that Mr Scott first really got into touch with this estate, and got full information and particulars about it; and that they did not effect an actual introduction between him and the defender was only due to the facts that Mr Scott did not permit them to disclose his name in any way, and that he did not choose, at the pursuers' invitation, to submit an offer. It seems to me that the facts of this case bring it well within the region in which property agents have been found entitled to a commission upon a resulting sale. I think the fair inference to be drawn by the Court, viewing the matter as a jury, from the evidence, is that the pursuers' exertions, as duly authorised agents in the matter for the defender, did to a sufficient extent contribute to the ultimate purchase of the estate by Mr Scott...".

By "actual introduction" Lord Dundas was referring to a personal introduction of the ultimate purchaser to the seller, that being held by the court not to be a necessary element of an introduction for the purposes of an entitlement to commission.

In Brett & Co v Bow's Emporium 1928 S.C. (H.L.) 19, in which Lord Shaw of Dunfermline cited with approval the first two sentences above quoted from Lord Dundas' opinion, his Lordship also observed:

"Introduction is not a vox signata; all that is meant is that the agent shall have been the means of bringing a willing seller and a willing buyer into relations with each other in regard to a business transaction, and that a business transaction results."

He later stated:

"In my view the sum of the matter is as follows:- (1) When it is proved - and it must, of course, be proved - that parties to a transaction are brought together, not necessarily personally but in the relation of buyer and seller, through the agency of an intermediary employed for the purpose, the law simply is that, if a transaction ensues, the intermediary is entitled to his reward as such agent; (2) nor is he disentitled thereto because delays have occurred, unless the continuity between the original relation brought about by the agent and the ultimate transaction has been, not merely dislocated or postponed, but broken; and (3) finally, the introduction by one of the parties to a transaction of another agent or go-between does not deprive the original agent of his legal rights, and he cannot thus be defeated therein."

Both of those cases were referred to recently by the Second Division in Christie Owen & Davis plc v King 1998 S.C.L.R. 786 where Lady Cosgrove, delivering the Opinion of the Court, is reported at p.791 as having stated:

"It is in our view sufficient to being a potential purchaser within the ambit of clause 5(b) of this contract if it is established that he was introduced to the property or brought into a relationship with it through the actings of the agent. We do not consider that any personal introduction to the defender is required. This construction is consistent with the various authorities to which reference was made and is also supported by the commercial realities....". (Perusal of the Opinion, as issued by the court, discloses that "being" in the opening sentence of the reported passage is a misprint for "bring").

Her Ladyship later observed:

"We consider further that the inference that the agents introduced the purchaser to the defender's property can legitimately be drawn from the primary facts in this case. In so deciding we are influenced by the discreet nature of the marketing of the property and by the absence of evidence of any other factor which could have generated an approach by the ultimate purchaser. Although no direct evidence was led as to the causal connection, it is significant in our view that there was no competing explanation for the purchasers' interest or for the fact that Mr Douglas, according to the defender's own evidence, asked when he telephoned him if the property was 'still' on the market...".

Mr Douglas was a principal of the ultimate corporate purchaser.

The remaining Scottish case cited to me in argument was Lord Macfadyen's recent decision in Robert Barry & Co v Doyle 1998 S.L.T. 1238 to which I shall return.

Both Walker, Fraser & Steele v Fraser's Trs. and Brett & Co v Bow's Emporium were concerned with the analysis and application of common law principles to the relationship of agent and principal; Christie Owen & Davis plc v King was a decision upon a particular contractual term in such a relationship. That term was essentially the same as the relative term in the present contract. It read:

"You will be liable to pay remuneration to us...

if unconditional missives for the sale of the property are concluded after the expiry of the period during which we have sole selling rights but to a purchaser who was introduced to you during that period...".

Read literally, the contract in the present case (and that in Christie Owen & Davis plc v King) might arguably entitle the agents to remuneration whether or not there was a causal connection between an introduction effected by them and the conclusion of unconditional missives with a purchaser. Mr Sandison, no doubt wisely, did not so argue. He adopted the approach that a connection had to be demonstrated, taking as the test whether the ultimate sale was "brought about or materially contributed to by the actings of the pursuers". He relied on that phrase as formulated by Lord Dundas in Walker, Fraser & Steele v Fraser Trs. and as repeated with approval by Lord Shaw in Brett & Co v Bow's Emporium. He also placed reliance on the later passage quoted above from Lord Shaw's speech.

Mr Rae for the defenders emphasised the words "by their efforts contributed in a substantial degree to the sale" also used by Lord Dundas and repeated by Lord Shaw. He submitted that the phrase "materially contributed to" was possibly misleading, it being used in other areas of law to indicate any causal relationship which was more than de minimis; the appropriate test in present circumstances might, he suggested, be that of a "significant contribution". He also relied on the phrase "really brought about by the act of the agent" used by Chief Justice Erle in Green v Bartlett (1863) 14 C.B. Rep. N.S. 681 at p.685, cited by Lord Shaw. Although Lord Shaw referred to English as well as to Scots authority and stated (in 1927) - "In Scotland, later decisions appear to me to have come exactly into line with the acknowledged law of England", neither counsel in this case sought to rely on modern English authority for the relevant test in Scots law. In England the more modern test appears to be whether the acts of the agent were "the effective cause" (sometimes "an effective cause") of the sale. It was not argued that I should apply that test in either formulation.

It is, in my view, clear from the Scottish authorities (including Christie Owen & Davis plc v King) that, in a contract such as that in the present case, entitlement to remuneration (or commission) exists only where there is a causal relationship of some degree between the agent's acts and the completed purchase. What is perhaps less clear is the relevant threshold of causative potency. Under Scots law it is unnecessary, in my view, that the agent's acts should be the sole or even the predominant cause of the ultimate purchase. The language of Lord Dundas, in particular the phrase "brought about or materially contributed to", is inconsistent with such a proposition. I do not read Lord Dundas' later words "contribute in a substantial degree" as intended to qualify his earlier words. Those earlier words are encompassed within "the test". That test has not subsequently been disapproved in any Scottish authority cited to me. It is the test which I must apply.

A closely related issue is whether or not there is continuity between the original relationship brought about by the agent and the ultimate transaction. As Lord Shaw observed, that continuity may subsist, albeit dislocated or postponed, provided it is not broken.

In the present case a relationship of sellers and prospective purchasers between the defenders on the one hand and the Fergusons on the other, was, in my view, brought into existence by the activities of the pursuers as agents. The Fergusons responded to an advertisement inserted by the first pursuers in the Herald as part of the advertising strategy adopted on the advice of the pursuers as joint agents. The first pursuers sent to the Fergusons a copy of the brochure and made arrangements for them to view the property. Although the brochure may have been perused somewhat cursorily, the viewing was from the Fergusons' point of view of critical importance. They would not have contemplated making an offer for the house without seeing it internally. Although much of what they saw internally was not to their taste and they then decided not to take matters further, the knowledge which they thus obtained remained with them over the succeeding months with the result that they were prepared, without first viewing the house again, to make a rapid and firm decision that they wished to buy it, albeit with a view to making internal changes. They would not have reached that decision at that time had they not viewed the house in June 1995. Although some nine or ten months elapsed between their first viewing and their decision to purchase, and although other events intervened, including their looking at other properties and their pursuing the possibility of acquiring and developing the staff house at the equitation centre, the continuity of the original relationship brought about by the pursuers and the Fergusons' ultimate purchase, although postponed and possibly dislocated, was not, in my view, broken. Although the actings of Mr Harvie may properly be seen as the immediate and possibly the predominant cause of the Fergusons' purchase, the actings of the pursuers materially contributed, in my view, to that purchase. In those circumstances the Fergusons were, in my opinion, purchasers introduced by the pursuers during the period of the latter's sole agency.

Mr Rae also submitted that, in any event, the pursuers were not entitled to commission under the contract because "unconditional missives for the sale of the property" had not been concluded between the defenders and the Fergusons. The quoted phrase, he argued, was a technical expression and should be presumed to have been used in a technical sense (Wickman Tools v Schuler A.G. [1974] AC 235, per Lord Simon of Glaisdale at p.264). The only unconditional missives for the sale of the property concluded by the defenders with any party were those concluded with Mr Harvie. The contract envisaged liability to pay commission arising on the occurrence of a single identifiable event. It did not envisage liability arising on each of a multiplicity of events, such as upon every assignation of original missives. Any argument that liability might artificially be avoided by a man of straw being inserted as purchaser under the missives and he then assigning them to the true purchaser could be met by implying a term (Barry & Co v Doyle, per Lord Macfadyen at pps.1242-3). Here there was no room for implication of a term. The possibility, necessarily inherent in the pursuers' contention, of a multiplicity of liabilities was destructive of that contention.

In my view unconditional missives for the sale of the property within the meaning of the contract were concluded by the defenders with the Fergusons. Upon intimation to the defenders of the assignation by Mr Harvie to the Fergusons of his rights as purchaser under the missives entered into by him with the defenders, the Fergusons and the defenders stood in the relationship of purchasers and sellers under unconditional missives for the sale of the property. Such missives were, in my view, concluded between the defenders and the Fergusons at that time - whether in a technical or a non-technical sense. The defenders were not entitled in law to object to that relationship coming into existence. Provision to avoid any such objection being taken was expressly made in the missives between Mr Harvie and the defenders. That relationship proceeded to a transfer of the ownership of the property from the defenders to the Fergusons by a conveyance directly from the former to the latter. Under the agency contract commission is payable "on completion of the sale". It is unnecessary for the purposes of this case to decide whether there may be circumstances and, if so, what these are in which liability to pay the same agents could arise more than once. Suffice it to say that double commission is not claimed here and, in my view, could not successfully be claimed. If not excluded on a construction of the express terms, a term excluding a second liability arising out of the same completed sale transaction would, in my mind, be implied (Robert Barry & Co v Doyle, per Lord Macfadyen at pp.1242-3). Mr Rae's contention has the consequence that, if unconditional missives were first concluded with a person who was not introduced by the agents and who did not fulfil the missives by completing the purchase but unconditional missives were subsequently concluded with a person who had unquestionably been introduced by the agents and who did complete the purchase, no commission would be payable. Such a situation could arise in the event of assignation of the missives by the original purchaser or on the original missives being rescinded and being followed by missives with another party. Assignation may, as here, have been expressly contemplated when the original missives were concluded. It would be remarkable if in such circumstances no commission was payable. In my view the contract between the parties does not have that effect.

In the whole circumstances I am satisfied that, as a matter of contract, the pursuers are entitled on the basis of Mr Sandison's first principal submission to payment as first concluded for. One further hurdle for the pursuers, however, remains. Section 18(1) of the Estate Agents Act 1979 provides:

"... before any person (in this section referred to as 'the client') enters into a contract with another (in this section referred to as 'the agent') under which the agent will engage in estate agency work on behalf of the client, the agent shall give the client -

...

(b) any additional information which may be prescribed under sub-section (4) below."

The Estate Agents (Provision of Information) Regulations 1991 have been made under sub-section 18(4). Regulation 5 of those Regulations provides:

"(1) If any of the terms 'sole selling rights', 'sole agency'... are used by an estate agent in the course of carrying out estate agency work, he shall explain the intention and effect of those terms to his client in the manner described respectively below, that is to say -

(a) 'sole selling rights', by means of a written explanation having the form and content of the statement set out in paragraph (a) of the Schedule to these Regulations;

(b) 'sole agency', by means of a written explanation having the form and content of the statement set out in paragraph (b) of the Schedule to these Regulations...

Provided that if, by reason of the provisions of the contract in which those terms appear, the respective explanations are in any way misleading, the content of the explanation shall be altered so as accurately to describe the liability of the client to pay remuneration in accordance with those provisions.

(2) Any other terms which, though differing from those referred to in paragraph (a) above, have a similar purport or effect shall be explained by the estate agent to his client by reference to whichever of paragraphs (a), (b)... of the Schedule to these Regulations is appropriate, subject also to the proviso to paragraph (1) above.

(3) The explanation of the terms mentioned in paragraphs (1) and (2) above, shall be given by the estate agent to his client in a document setting out the terms of the contract between them...".

The Schedule to the Regulations provides the following explanations for transactions in Scotland:

"SOLE SELLING RIGHTS

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, in each of the following circumstances -

if unconditional missives for the sale of the property are concluded in the period during which we have sole selling rights, even if the purchaser was not found by us but by another agent or by any other person, including yourself;

if unconditional missives for the sale of property are concluded after the expiry of the period during which we have sole selling rights but to a purchaser who was introduced to you during that period or with whom we had negotiations about the property during that period."

"SOLE AGENCY

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if at any time unconditional missives for the sale of the property are concluded -

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."

Section 18(5) of the 1979 Act provides:

"If any person -

(a) fails to comply... with any provision of regulations under subsection (4) above relating to [the obligation under sub-section (1)]... the contract... shall not be enforceable by him except pursuant to an order of the court under subsection (6) below."

Section 18(6) provides:

"If, in a case where subsection (5) above applies in relation to a contract... the agent concerned makes an application to the court for the enforcement of the contract... -

(a) the court shall dismiss the application if, but only if, it considers it just to do so having regard to prejudice caused to the client by the agent's failure to comply with his obligation and the degree of culpability for the failure; and

(b) where the court does not dismiss the application, it may nevertheless order that any sum payable by the client under the contract... shall be reduced or discharged so as to compensate the client for prejudice suffered as a result of the agent's failure to comply with his obligation."

In the standard agency conditions referred to in the confirmation of sale instructions sent to the defenders the terms "Joint Sole Agents" and "Sole Agency" are used; the term "sole selling rights" is also used. It was not suggested that there was a non-compliance with the regulations in respect of the explanation of "Sole Agency" or of the cognate term "Joint Sole Agents". Mr Rae did, however, contend that there had been a non-compliance by reason of failure to give in the document an explanation of the term "sole selling rights".

I shall require to deal more fully in a later context with non-compliance in respect of failure to explain in writing the term "sole selling rights". For present purposes it is sufficient to note that it was acknowledged that no prejudice had been caused to the defenders by such failure. Assuming for present purposes that there was culpability on the part of the agents in that respect, the failure was wholly technical in so far as the pursuers rely upon a case based on sole agency rather than on sole selling rights. In these circumstances I am satisfied that it would not be just to dismiss this application to enforce the terms of the contract in so far as based on sole agency.

The sum sued for represents 2% (plus VAT) of the consideration of £585,000 paid by the Fergusons to the defenders of which the latter acknowledged receipt in the disposition. It is not of relevance that that consideration was ultimately directed to the second defender alone. There was no dispute in respect of the rate or of the period of interest. I shall accordingly on the above grounds grant decree in terms of the first conclusion of the summons.

In these circumstances I shall deal somewhat more briefly with other issues raised before me. I would have rejected Mr Sandison's second principal submission insofar as it concerned the contention that Mr Harvie was a purchaser who had been introduced by the pursuers. Mr Harvie was a person who, to the knowledge of the defenders and of Mr Adams, had an interest in acquiring land in the vicinity of Mugdock whenever it might become available. He was known personally to the defenders. In these circumstances it was decided, as a matter of deliberate strategy, that Mr Harvie should be approached by the first defender in advance of public advertisement. He was so approached and a copy of the brochure (presumably with the loose sheet of asking prices enclosed) was handed to him. He made no offer for the main house at that stage. It is true that from the brochure and its enclosure (both prepared by the pursuers) he derived information about lots and about prices which may ultimately have been of use to him when he came in about February 1996 to offer to purchase from the defenders more property than he had acquired in 1995. However, that information had been channelled and deliberately channelled to him through the first defender making use of the pre-existing personal connection between them. I am not satisfied that Mr Harvie was introduced by the pursuers to the relationship of prospective purchaser either of the equitation centre in 1995 or of the main house and attached ground in 1996. Mr Harvie had no dealings with the pursuers in either year except to instruct his solicitors to submit to the first pursuers in 1995 the formal offers for various lots (which did not include Lot 1). That procedure was in accordance with the direction in the brochure. His formal offers in 1996 were, at the first defender's request, submitted to solicitors then acting for the defenders. In so far as any inference can be drawn from the fact that the defenders, without hesitation, paid the commission on the sale of the equitation centre, such payment is more consistent with a recognition that the pursuers enjoyed sole selling rights than with a recognition that Mr Harvie had been introduced by the pursuers.

Although it is undisputed that unconditional missives for the sale of the main house were concluded with Mr Harvie, I would not for the above reasons have been satisfied that he was a purchaser introduced by the pursuers within the meaning of the parties' contract.

Mr Sandison also presented a third principal submission. That was that liability arose in the alternative by reason that the pursuers enjoyed sole selling rights under the contract. That liability was initially expressed as being a liability in damages for breach by the defenders of those rights so that decree should be pronounced in terms of the second conclusion; it was later submitted that such liability could also be characterised as an obligation to pay commission under the contract so that decree should be pronounced in terms of the first conclusion.

Mr Rae's response to Mr Sandison's third principal submission was threefold. First, he submitted that there was no basis for a finding that the defenders had breached the contract. Secondly, he submitted, that on the acceptable evidence the pursuers' contract with the defenders had come to an end by not later than September 1995 so that, by the time unconditional missives were concluded in the latter part of 1996, the pursuers no longer had any sole selling rights. Thirdly, he submitted that, having regard to the degree of culpability on the part of the pursuers for failure to comply with the 1991 Regulations, insofar as concerned with sole selling rights, their application for enforcement of the contract should, under section 18(6)(a) of the 1979 Act, be dismissed.

As I understood Mr Rae's submissions, it was not disputed that the contract between the parties conferred on the pursuers sole selling rights. That term is used in condition 1 of the standard agency conditions on the reverse of the confirmation of sale instructions; by condition 1 the pursuers' appointment as Joint Sole Agents is "with sole selling rights". While the defenders did not sign those instructions, they received a copy of them on two occasions; at no stage did they demur to their terms except in respect of the rate of commission. There is a dispute in the evidence (to which I shall return) as to whether sole selling rights were referred to at the meeting on 28 March 1995 and, if so, whether that expression was then explained. However, I did not understand that, howsoever that dispute might be resolved, there was any issue but that the contract as finally entered into included that term. Mr Rae further adopted the position that, having regard to the surrounding circumstances, that term was to be presumed to have the same meaning as the explanation of it in the Schedule to the 1991 Regulations. That explanation included a provision that the client would be liable to pay remuneration to the agent if unconditional missives of sale were concluded in the period during which the agent had sole selling rights even if the purchaser was not found by the agents but by another agent or by any other person, including the client.

It is convenient to deal first with Mr Rae's second submission. There is a factual dispute as to what occurred in the late Summer of 1995 between Mr Adams, on the one hand, and the defenders on the other. Shortly after the closing date of 29 June 1995 a decision had been taken to accept Mr Watson's offer for Lot 1 and Mr Harvie's offer for Lot 2. Mr Adams then went abroad for an extended period. However, he kept in touch with his business affairs by telephone and by faxed correspondence. He learned that difficulties had arisen over concluding missives with Mr Watson at his offer price. When it became reasonably clear that such missives would not be concluded, Mr Adams, from abroad, urged the defenders to approach the under-bidders, the McInallys. He did so in a letter faxed to the first defender to which he did not receive a reply in writing; there may also have been a conversation or conversations by telephone between Mr Adams and the first defender in the same period (about August 1995). The defenders were not disposed to approach the under-bidders and did not do so. After Mr Adams returned from abroad, he arrived, according to the defenders, without prior announcement one day in about September at the main house at Easterton bringing with him the pursuers' account for the commission due on the sale of the equitation centre to Mr Harvie. According to the defenders they made it clear to Mr Adams at that time that the main house was no longer for sale and that his services were no longer required. The first defender also testified that he had made a similar statement to Mr Adams by telephone some time earlier.

Although Mr Adams had no clear recollection of a meeting and discussion at Easterton about that time, I accept the defenders' evidence to the effect that he did call unannounced in about September 1995 and that there was some discussion then about the situation relative to the main house. I also accept that the defenders made it clear then, if not earlier, that they were not interested in approaching the under-bidders and did not wish any active marketing of the house. I am not, however, satisfied that it has been established that the agency contract, with the sole selling rights under it, was then terminated. Such termination would have required a clear statement that the agents' instructions were forthwith withdrawn. The second defender accepted that the discussion was very casual. The first defender, who is an experienced business man, accepted that nothing in the nature of legal language was used. While such language is not a prerequisite, I am not satisfied that lay words were then or at any other time used which made it plain that the agency relationship was at an end. I accept Mr Adams' evidence to that effect. Nothing was put in writing by the defenders. No communication of any kind was made with Mr Cherry or with anyone else of the second pursuers, the firm from which the written communications in relation to the establishment of the agency relationship had been received by the defenders. There remained unsold of the previously marketed property not only the main house but Lots 3, 4 and 5 which might in due course secure acceptable prices. Although, of course, it was in Mr Adams' interest to press for a sale of the house upon which commission would be earned, I am satisfied that throughout the Winter and into 1996 he remained, and reasonably remained, under the impression that the agency contract subsisted, albeit no active marketing was then being pursued. Mr Adams wrote to the first defenders on 29 March 1996 in language which suggested that "our sole selling rights contract" still subsisted. The first defenders did not respond by stating orally or in writing that that contract had long been at an end. When Mr Cherry, having received information that the main house at Easterton had been sold to the Fergusons, wrote to the first defender towards the end of August 1996 seeking clarification, he received a far from candid reply. The first defender did not then state that he had long since terminated the relationship. In the whole circumstances, I am not satisfied that it has been proved that prior to the sale to the Fergusons the defenders' instructions to the pursuers had been effectually withdrawn.

In these circumstances that sale amounted either to a breach of the pursuers' sole selling rights under the contract or to an event giving rise to an entitlement to commission under that contract. I am inclined to prefer the latter legal solution, partly because of the terms of the standard agency conditions and partly because of my conclusions (referred to below) in relation to what occurred at the meeting on 28 March 1995. However, in the circumstances of the present case it is unnecessary to reach a definite view as to the appropriate legal basis of liability. There is no dispute that the measure of damages for such a breach of contact is, except in relation to the incidence of VAT, the same as the commission which would be payable under it. The legal distinction is technical. The pursuers' pleadings in this commercial action are sufficient to allow the claim to be presented on either basis. Mr Rae's first submission on this branch of the case accordingly falls to be rejected.

With respect to Mr Rae's third submission, he acknowledged that no prejudice had been caused to the defenders by the pursuers' failure to comply with the statutory obligation to give in a document an explanation of the term "sole selling rights". He submitted, however that, having regard to the degree of culpability for the failure, the pursuers' application for enforcement of those contractual rights should be dismissed. I reject that submission. While non-compliance with the statutory obligation is not to be viewed lightly, it arose in this case by inadvertence contributed to by the fact that the pursuers had been instructed jointly and their respective pre-existing standard forms had not dealt with such a situation. Mr Cherry prepared and Mr Adams revised the document which was sent out but that failed to contain the statutory explanation of "sole selling rights". The omission was not deliberate. Nor were the defenders materially misled. I am satisfied that some reference at least was made at the meeting of 28 March 1995 to sole selling rights. It arose against the background of discussion of Mr Harvie and other neighbours as potential purchasers. I am satisfied that in that context it was explained to the defenders at the meeting that, if in the period of the agency a purchaser was introduced who had been found by the defenders rather than by the pursuers, the defenders would be liable to pay commission on the purchase price. To the extent that there was a conflict of evidence in relation to that matter, I prefer the evidence given by Mr Cherry and Mr Adams to that given by the defenders. In the whole circumstances I am satisfied that it would not have been just to dismiss the pursuers' application to enforce the contract in respect of sole selling rights. Under section 18(6)(a) no question arises of any reduction in the sum payable. Accordingly, had I not found for the pursuers on the basis of Mr Sandison's first principal submission, I would have found for them to the effect of granting decree in terms of the first conclusion on the basis of his third principal submission.

I should add that, while Mr Sandison anticipated a possible argument for the defenders that under the contract the expression "sole agency & sole selling rights" had been compositely and exclusively defined by the words at the end of the standard agency conditions, no such argument was in the event presented by Mr Rae. I accordingly say nothing further about it. Mr Sandison in the course of his submissions also cited a number of English cases, primarily for illustrative purposes. I find it unnecessary to discuss these.

In the whole circumstances I shall sustain the pursuers' first and third pleas-in-law, repel the defenders' first, second, third, fifth and sixth pleas-in-law, order that the contract between the parties is enforceable and grant decree in terms of the first conclusion of the summons.