ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Christopher Nugee QC
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE RIMER
THE HONOURABLE MR JUSTICE WARREN
| MAKRAM BARSOUM ESTAFNOUS
|- and -
|LONDON & LEEDS BUSINESS CENTRES LIMITED
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Ben Shaw (instructed by Davenport Lyons) for the Respondent
Hearing date: 6th October 2011
Crown Copyright ©
Mr Justice Warren:
"Our client is able to introduce to your client a party who is willing to purchase the above property at a price of 19 million pounds, subject to contract, and your client is apparently willing to sell the property at this price.
In consideration of the introduction to the interested Buyer, your client has agreed to pay our client the sum of 2 million pounds upon completion of the sale."
"I think that in the context of my undertaking given yesterday, we have taken matters almost as far as we can without my actually knowing with which firm of lawyers I should be corresponding, or, for that matter, my clients receiving a formal subject to contract offer from an identified purchaser." [Nothing turns for present purposes on the terms of that undertaking.]
This comment confirms that at that date Mr Kidd did not know either Mr Kapoor's name or those of his solicitors.
(A) LLBC has agreed, subject to contract, to sell the property situate and known as 24-25 Nutford Place, 136-138 George Street and 112-130 Edgware Road, London W1 at a price of 19 million pounds, subject to the existing occupancies thereof, at a price of 19 million pounds sterling to a party (the intending Buyer) who is to be introduced to LLBC to Mr Estafnous.
(B) LLBC and Mr Estafnous wish to agree certain financial arrangements in connection with the introduction of the Intending Buyer to LLBC as set out herein.
NOW IT IS HEREBY AGREED as follows:-
1. In consideration of the introduction of the Intending Buyer to LLBC and upon the Intending Buyer (or any other party related to or associated with the Intending Buyer) completing a purchase of the Property LLBC will forthwith upon such completion pay to Mr Estafnous or as he may direct the sum of 2 million pounds sterling.
2. Further in consideration of the introduction of the intending Buyer LLBC hereby agrees as follows:-
(i) To instruct as its solicitors acting on the sale of the Property the firm of Lawrence Graham and to give that firm unconditional and irrevocable instructions to give an undertaking in the form attached (the Undertaking).
(ii) In the event that Lawrence Graham for any reason cease to act on the sale of the property, to notify Mr Estafnous thereof forthwith and to procure that such Solicitors issue an undertaking to Mr Estafnous' Solicitors in respect of the payment of 2 million pounds sterling in terms mutatis mutandis identical to the Undertaking.
3. LLBC hereby acknowledges, agrees and undertakes that on completion of the sale of the property to the Intending Buyer or any party related to or associated with that party LLBC will pay Mr Estafnous the sum of 2 million pounds sterling notwithstanding any variations in the stated purchase price."
"Having given further consideration to the matter our client has come to the view that the only way in which he are [sic] prepared to progress the sale is if it is structured as a sale of the owning company."
"Our client is prepared to consider the transaction as one of sale and purchase of the shares in the owning company but is not prepared to commit to the same until we have fully investigated the owning company ..."
"The object is for our clients to acquire 24/25 Nutford Place, London W1H 5YN. We understand that there are other properties currently owned by the Company which will be transferred out of the company before the transaction can be completed."
"It is true that this gave Mr Kapoor control of the building. There is also no doubt that this was the purpose of the transaction, as shown by Manches' letter of 28 May 2002 which said that "the object is for our clients to acquire 24/25 Nutford Place" (paragraph 36 above). "
"But in law the purchase of shares in a company that owns land is self-evidently a different transaction from the purchase of land."
"16. Before discussing in greater detail the reasoning of the Court of Appeal, the Board will make some general observations about the process of implication. The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed….
17. The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls.
18. In some cases, however, the reasonable addressee would understand the instrument to mean something else. He would consider that the only meaning consistent with the other provisions of the instrument, read against the relevant background, is that something is to happen. The event in question is to affect the rights of the parties. The instrument may not have expressly said so, but this is what it must mean. In such a case, it is said that the court implies a term as to what will happen if the event in question occurs. But the implication of the term is not an addition to the instrument. It only spells out what the instrument means."
LORD JUSTICE RIMER
LORD JUSTICE LONGMORE