Why this matters to developers
A buyer was introduced. The deal was completed. So commission is automatically payable? Not necessarily. Commission disputes often arise where there is ambiguity over the agent’s role, the scope of engagement, or whether the agreed terms were actually fulfilled.
The legal focus
The court does not only ask: “Who introduced the buyer?” The more important question is whether the agent’s work was sufficiently connected to the completed transaction.
Simple developer lens
An agent may be the first person to bring a purchaser into the picture, but another party may later negotiate, revive, restructure or complete the deal. That is why the law asks whether the agent was truly the effective cause of the sale – not merely part of the background.
Key question: Was the agent the effective cause of the transaction?
The principle
Where an agency contract provides that the agent earns remuneration by bringing about a transaction, the agent may be entitled to commission if he is the effective – not necessarily immediate – cause of that transaction.
The connection the agent must prove
Agent’s effort
Introduction, viewing, follow-up or negotiation
Buyer / transaction
The purchaser or transaction remains linked
Completed sale
The deal eventually completes
Mere introduction may still fail
The book notes that an agent’s right to commission does not arise merely because the agent introduced a purchaser as a causa sine qua non. The agent must go further and show that the introduction was the efficient cause – the causa causans – of the sale.
Practical meaning
If the agent’s involvement stopped too early, became remote, or was replaced by another effective cause, the commission claim becomes weaker.
Chew Teng Cheong & Anor v Pang Choon Kong [1983] 2 CLJ 117
In Chew Teng Cheong, the Federal Court explained that the agent must be the effective cause of the transaction, although the agent does not have to be the immediate cause. Whether the connection is sufficient depends on the facts.
What the court may examine
- Who introduced the purchaser?
- Who arranged the viewing or meeting?
- Who followed up with the parties?
- Who helped move the deal forward?
- Was there a break in the chain of events?
- Was another party the true effective cause?
Evidence matters
The effectiveness of the agent’s work is a matter of inference from the evidence. This means the court reconstructs the factual chain using documents, messages, meetings, conduct and timing.
Developer note
A short introduction followed by silence may not be treated the same as an introduction followed by active involvement until completion.
Propnex Realty Sdn Bhd v Small Medium Enterprise Development Bank Malaysia Bhd [2023] 9 CLJ 639
In this case, the court found sufficient connection between the agent’s conduct and the eventual sale. The agent’s acts were not treated as remote.
The court considered a close sequence of events
Site visit
8 Jan 2021
Virtual meeting
13 Jan 2021
Follow-up interest
14 Jan 2021
Further site visit
16 Jan 2021
Offer to purchase
20 Jan 2021
Why the claim became stronger
The facts showed continuity within close proximity of time – from the moment the potential buyer was brought to the owner until the offer to purchase was made, which later culminated in a successful sale. This supported the finding that the agent’s efforts were the cause causans of the transaction.
Legal Principles
Where the agent’s involvement forms part of the live chain leading to completion, a commission claim becomes stronger. Where the chain is broken, the claim becomes more difficult.
Agent Entitled to Commission
Zerin Properties v Naza TTDI Sdn Bhd [2019] AMEJ 0557
The agent claimed professional fees after its work led to a joint venture transaction between the developer and Hap Seng Land Sdn Bhd for Plot 5A in the Kuala Lumpur Metropolis development.
What made the claim stronger?
Agent’s work
The agent was involved in bringing the transaction into motion.
Parties connected
The final transaction could still be traced to the agent’s efforts.
JV concluded
The Court of Appeal found sufficient connection despite the time gap.
Developer lens
A delay or later restructuring of the transaction does not automatically defeat an agent’s claim. If the agent brought the parties together and the final transaction can still be traced to the agent’s work, commission may still be payable.
Key point
Where the agent’s work remains part of the live chain leading to completion, commission may be payable.
Agent Not Entitled to Commission
Chow See Wan v GS Realty Sdn Bhd [2022] 2 AMR 661, HC
The plaintiff claimed referral fees from commission allegedly earned through Mah Sing Group projects introduced by her.
Why the claim failed
Dinner / name card
Mere attendance at a dinner and handing over a name card.
Meeting arranged
Requesting the client to bring projects and arranging a meeting.
Too distant
No evidence of active participation or negotiation leading to the transaction.
Developer lens
An introduction alone may not be sufficient if the agent’s role stops too early, becomes remote, or if the eventual transaction is completed through other efforts.
Key point
Where the chain is broken, or the agent did not actively contribute to the final transaction, commission may not be payable.
Before accepting or rejecting a commission claim, ask:
Was there a valid appointment or understanding? Did the agent merely introduce the buyer, or did the agent actively move the transaction forward? Was the final buyer still connected to the agent’s effort?
Risk checklist
Appointment
Is there a written or oral appointment? Are the terms clear?
Scope
Was the agent engaged only to introduce, or also to market and negotiate?
Connection
Can the final buyer be traced to the agent’s efforts?
Break in chain
Did someone else later become the true effective cause?
Keep proper records
Commission disputes are usually won or lost on evidence. Developers should keep emails, WhatsApp messages, buyer registration forms, site visit records, meeting notes, appointment letters and any documents showing who actually moved the deal forward.
Practical drafting point
Define the commission trigger clearly: introduction, booking, SPA signing, completion, payment of purchase price, or another event. A clear trigger reduces room for dispute.
For further information, please contact us at Miranda & Samuel:
- Dato’ George Miranda (george@mirandasamuel.com)
- Joy Sam Jia Qian (joy@mirandasamuel.com)
- Muhammad Amir Faiz Bin Mohd Idrus (amir@mirandasamuel.com)
🌐 Follow us for timely updates on legal news and insights:
LinkedIn: https://www.linkedin.com/company/miranda-samuel/
Instagram: https://www.instagram.com/mirandaandsamuel….
Facebook: https://www.facebook.com/mirandandsamuel…
– By George Miranda, Joy Sam Jia Qian, Amir Faiz –
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.
