The defendant desired to sell his property, No.1 Horbury Mews and engaged the claimant (an estate agent) to assist him. On the advice of the claimant the defendant agreed, on the 29 June 2001, to market his property at £1.5m. An offer from a third party was received and accepted. Contracts were subsequently exchanged on the 22 August 2001. Meanwhile, and unknown to the defendant at the time of exchange, a neighbouring property, No. 4 Horbury Mews, was put on the market with an asking price of £1.95m. An offer of £1.8m for No. 4 was accepted on the 23 August 2001.
The claim was for commission due to the claimant on the sale of 1. Horbury Mews. The defendant while admitting liability for the amount, argued that he was entitled to set off those sums against his counter-claim that the claimant was in breach of contract and/or negligent in his advice regarding the asking price and in failing to pass on information concerning the marketing of No. 4 Horbury Mews.

Reference

The court held that in giving advice as to the asking price the agent owed a duty to give reasonably competent advice. In the circumstances the defendant was placing himself in the agents hands and had relied on his advice as to the asking price. While the advice was not a valuation so called, it was in this situation very near to one. Short of competition driving the price higher, the asking price was the top price and it was important to get it right. The court further held that the claimant’s advice was not negligent in that he did not have all the information now at hand and so did not fall below the standard of a reasonably competent estate agent. However, the court went on to hold that an agent had a duty to exercise reasonable care when marketing a property for sale and if in the course of doing so he became aware of any significant event in the market that might influence his principal’s instructions he had a duty to inform the principal thereof and advise him accordingly. As the claimant had not done so he was in breach of his duty. The court accordingly held that, taking contingencies into account, the defendant had suffered loss of £120,000 (a 66% chance of obtaining £1.7m). ¶ For further information, call Tony Francis or Nicholas Gould on 0207 956 9354 **Full case details
John D Wood & Co (Residential & Agricultural) Ltd vs Michael John Knatchbull, 16 December 2002, Judge Heppel QC

Postscript

With the current upward trend in house prices not showing any signs of receding estate agents need to be wary. A continuing duty of care to advise until exchange of contracts may cause particular problems where there is a protracted sale. In such circumstances estate agents are advised to ensure they are consistently reviewing house prices within the area and are advising clients if they feel asking prices should be revised.