The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Giannino Caruana Demajo and Mr Justice Noel Cuschieri on February 28, 2014, in the case ‘Michael McNamara v Mill Reef Ltd and others’ held, among other things, that the plaintiff had no legal claim for the broker’s commission or compensation vis-à-vis the buyers. He could, however, demand payment from the sellers of the Lm1,000 (€2,330) under the konvenju.
The facts in this case were as follows.
Michael McNamara filed legal proceedings against Eden Leisure Group Ltd and the companies Mill Reef Ltd, Suffolk Ltd and NS Properties Ltd, the buyers and sellers of the Ascot Hotel, in St Julian’s, claiming his brokerage commission in respect of the sale of the property.
Subsequently, another broker, George Grima, was called into the proceedings.
Originally, the sellers engaged McNamara, who was married to the sister of the Decesare brothers, to assist in the sale of their hotel. McNamara negotiated the sale of the hotel to the Eden Leisure Group, but at the time the Decesare brothers were not interested. Two years later, through the intervention of Grima, the sale was concluded.
On konvenju it was agreed that Lm1,000 commission should be paid to McNamara by the sellers.
At issue was whether McNamara was entitled to a full brokerage commission or payment of services rendered in addition to the Lm1,000.
On January 14, 2010, the first court dismissed all of McNamara’s claims and declared that he only had a right to be paid €2,329, equivalent to Lm1,000, from Suffolk Ltd and Mill Reef Ltd, in terms of the konvenju, with legal interests from the date of the contract.
The court said that, for McNamara to have the right to claim brokerage, there had to exist all the elements as mentioned in the case ‘Legend Real Estate Ltd v Paul Pisani’ dated October 29, 2004, that:
(1) the conclusion of the deal;
(2) the involvement of the broker was requested or at least accepted by bothparties; and
(3) the acts of the broker actually brought about the agreement – “in idem placitum consensus”.
In absence of one element, there was no right to the brokerage commission but only to payment of compensation for services rendered.
In ‘A. Degiorgio v Stephen Degiorgio’ dated November 23, 2005, it was held that there was no automatic right to a brokerage commission simply because the transaction was concluded. The broker had to bring about the agreement in respect of all its conditions, both substantial and accidental, in relation to the transaction.
It resulted that, in the circumstances, McNamara notified the Decesare brothers of the sale of the property, but never arranged a meeting between buyers and sellers. He was not even aware that the konvenju was signed until he was informed by the sellers. The first court felt that the sale did not happen through the intervention of McNamara and that, even without him, the deal would have gone through.
It said that he was not entitled to a brokerage commission nor to any right to compensation, re: ‘Legend Real Estate Ltd v Paul Pisani’. The broker had to be engaged expressly or tacitly and his intervention had to lead to the conclusion of the deal. The commission was not due simply for giving information and nothing further.
The first court was not satisfied that McNamara brought about the sale in the circumstances. It said that he did not have a right to brokerage nor to payment of compensation. The sellers, however, were obliged under the konvenju to pay him Lm1,000.
Aggrieved by the decision of the first court, McNamara appealed, calling for its revocation. He claimed that he was entitled to the broker’s commission. He said that the parties had accepted his assistance and services, which allegedly brought about the agreement. He claimed that the second estate agent had found all the ground work done by him.
The broker had to be engaged expressly or tacitly and his intervention had to lead to the conclusion of the deal. The commission was not due simply for giving information and nothing further
Should, however, the court find that he was not entitled to brokerage, he should receive payment for his services. He felt that €2,329 was not sufficient.
The Court of Appeal pointed out that it should not disturb the appreciation of facts of the first court, unless this was manifestly incorrect and for serious and grave reasons, in order to avoid any injustice: (CA) ‘E. Cardona et v Dr Graham Busutill et’ dated 10 January 10, 1995.
It noted that the first court concluded that McNamara did not bring about the sale of the hotel, and that his intervention did not lead to any agreement. He was not involved in the negotiations, whereby the deal was struck. Another estate agent matched the parties to conclude on the sale of the hotel for Lm1.8 million.
The Court of Appeal maintained that the first court was correct to say that McNamara did not bring about the sale and that he was not entitled to a brokerage commission.
At the time McNamara was involved, the Decesare brothers were not interested and the contract was not concluded. When Grima got involved, he managed to push the price down to Lm1.8 million, and an agreement was reached between the parties. It was only when Grima started to negotiate that the Decesare brothers become interested.
The court noted that McNamara’s intervention was limited simply to providing information but he failed to bring the parties to an agreement. The court was of the opinion that McNamara had no legal claim for the broker’s commission or compensation vis-à-vis the buyers. He could, however, demand payment from the sellers of the Lm1,000 (€2,330) under the konvenju.
The Court of Appeal, in addition, said that it should not disturb the first court’s appreciation of the facts.
For these reasons, on February 28, 2014, the Court of Appeal gave judgment by dismissing McNamara’s appeal and by confirming the decision of the first court.
Dr Karl Grech Orr is a partner at Ganado Advocates.