Introduction
A major issue that usually arises in almost every real estate transaction in Nigeria is the entitlement of estate agents to commission. In many cases, it is difficult to determine what actions usually entitle an estate agent to a commission on a transaction. Does the mere appointment of an estate agent to market a property entitle him to a commission? Or will an estate agent be entitled to a commission just because he introduced a property to a potential buyer?
In the recent case of Ojo v. SDV Nigeria Limited (2025) LPELR-81498(SC), the Supreme Court of Nigeria had the opportunity to determine whether an estate agent would be entitled to commission just because they introduced a property to a prospective purchaser.
Summary of the Facts of Ojo v. SDV Nigeria Limited
P.K. Ojo, an Estate Surveyor and Valuer, was the Appellant in this appeal, SDV Nigeria Limited was the 1st Respondent, and SCOA Nigeria Limited was the 2nd Respondent.
P.K. Ojo claimed that he sourced a property known as plots 9, 10, 11, Awodiora Industrial Estate, Kirikiri, Lagos State, measuring twenty acres, for purchase by SDV Nigeria through their agent, Mr Adebola Adejobi. SDV Nigeria eventually purchased the property directly from SCOA without involving P.K. Ojo in the transaction and without paying his professional agency commission of $1,250,000.00 (One million, two hundred and fifty thousand US Dollars).
P.K. Ojo commenced a lawsuit at the High Court of Lagos State for the recovery of his agency fee against SDV Nigeria and SCOA, and the High Court granted his claim. SDV appealed against the High Court’s decision to the Court of Appeal on the grounds that it was not obliged to pay P.K. Ojo any sum as agency fees since it did not appoint P.K. Ojo as its agent. It also contended that it did not appoint Mr Adebola Adejobi as its agent to liaise with P.K. Ojo. The Court of Appeal agreed with SDV’s case, and it set aside the High Court’s judgment based on P.K. Ojo’s failure to establish a direct link of agency between himself and SDV. The Court of Appeal also held that P.K. Ojo was unable to show that his introduction of the property to SDV was the efficient cause that led to the purchase of the property by SDV.
Summary of the Supreme Court’s Decision
P.K. Ojo appealed to the Supreme Court, arguing that there was an agency by estoppel between him and SDV Nigeria because he was dealing directly with Mr Adebola Adejobi, who was an agent of SDV Nigeria. He also argued that the Supreme Court ought to set aside the Court of Appeal’s judgment because SDV Nigeria had changed its name to Bollore Africa Logistics Limited before it filed its Notice of Appeal at the Court of Appeal in its old name.
The Supreme Court agreed with SDV Nigeria’s position and held that there was no agency relationship between P.K. Ojo and SDV because P.K. Ojo was unable to establish the relationship through any document or Letter of Engagement. The Supreme Court also referred to a letter that P.K. Ojo wrote to SDV (Exhibit J), in which he admitted that he was not instructed to act as an agent by SDV and that he was only seeking payment of his professional fees because he introduced the property to SDV. Ogbuinya, JSC at Pages 43-44 Paragraphs G-B, held as follows:
“The appellant’s undiluted admission of non-instruction to act as an agent by the first respondent defeats the crux of its case. I dare say, the wholesale admission is a pessimi exempli of an admission against interest – a party’s acknowledgment of a fact that is harmful to his position. In the eyes of the law, a party who makes an admission, formal or informal, surrenders himself to the facts and the law and becomes a prey in the waiting hands of his adversary.”
The Supreme Court also held that the mere fact that P.K. Ojo introduced the property to SDV Nigeria was not enough to entitle him to a commission, as he must establish that his introduction was the effective and efficient cause of the property’s purchase. Ogbuinya, JSC, at Pages 45 Paragraphs B-D, held as follows:
“The corollary of the foregoing evidential blights and lacunae was that it occasioned corrosive consequences on the appellant’s case. They are ample demonstrations that the claim of introduction of the property, which he brandished as a sword in his case, was an orphan devoid of any legal parentage. The dismal effect is that the purported introduction was not, in the least, the effective and efficient cause of the purchase of the property which is the only dependable passport that can fetch him professional commission/fee on the calibrated scale of the NIESV.”
Regarding the issue of the change of SDV’s name to Bollore Africa Logistics Limited, the Supreme Court held that a company was at liberty to continue a lawsuit in its old name and that doing so would not affect the competence of the lawsuit.
The Supreme Court accordingly dismissed the appeal and upheld the Court of Appeal’s decision.
Key Takeaways from the Supreme Court’s Decision
- An Estate Agent must be able to establish through documentary evidence that he was appointed as an Agent regarding a real estate transaction before he would be able to claim a commission. P.K. Ojo’s letter, in which he admitted that he was not instructed to act as SDV’s agent, was fatal to his case.
- An Estate Agent who provides services without a formal appointment has no enforceable basis to claim a fee, as there is no contractual foundation for the claim.
- The mere introduction of a property by an Estate Agent to a potential purchaser or tenant would not entitle the Estate Agent to any commission if they cannot establish that their action was the effective and efficient cause of the purchase or the leasing of the property.
- A company that changes its name can continue ongoing litigation under its old name without being accused of lacking the legal capacity to do so.
- Estate Agents must ensure they agree on their commission with their clients before rendering any professional services to them in connection with a real estate transaction.
- Estate Agents must confirm the authority of an employee of a company to relate with them on behalf of the company, because if the company denies the employee, the Estate Agent will be unable to establish that the employee was a lawful representative of the company.
Conclusion
The Supreme Court’s decision makes it clear that Estate Agents must do more beyond introducing properties to their clients, as the mere introduction of a property to a client will not entitle them to commission if they are unable to show that their action was the effective cause of the transaction. Going forward, estate agents in Nigeria should treat written engagement letters and verified principal-agent authority as non-negotiable preconditions to any work on a transaction. Anything less leaves the agent’s fee at the mercy of the client’s goodwill.
Please note that this article is for general information only. We do not offer it as advice on any particular matter, whether legal, procedural or otherwise. If you have questions about this article, please contact:
Faruq Abbas (Managing Partner): foa@abdu-salaamabbasandco.com.
Saidat Oyebanji (Associate): saidat.oyebanji@abdu-salaamabbasandco.com.
Follow us on social media:
LinkedIn: @Abdu-Salaam Abbas & Co.
YouTube: @Abdu-Salaam Abbas & Co.
X (formerly Twitter): @Abdu_ASandCo.
Instagram: @Abdusalaam_abbas_and_co.