England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
(MR JUSTICE MALES)

		Royal Courts of Justice Strand London, WC2A 2LL
		11 February 2016

1. LORD JUSTICE CHRISTOPHER CLARKE: Moran Yacht and Ship Inc, which I will call "Moran", are yacht brokers. Mr Kirill Pisarev is a wealthy Russian one of whose companies is Galaxias Maritime Ltd, which I will call "Galaxias".
2. In late 2009 Galaxias became a client of Moran in respect of the motor vessel 4YOU, a 47 metre luxury yacht. On 29 February 2012, Galaxias contracted to sell the 4YOU to Gildo Finance Corporation, which I will call "Gildo", a company owned or controlled by Mr Miliavsky, another wealthy Russian, for €19.8 million.
3. The question at issue in this appeal is whether or not, contrary to the decision of Males J, Moran was entitled to commission from Galaxias in respect of that sale. Mr Stephen Auld QC for Moran identified the two issues which lie at the heart of this appeal as (a) whether Moran had any entitlement to commission in principle and (b) whether the introduction of Mr Miliavsky to the vessel in May 2010 was the, or an, effective cause of the sale on 29 February 2012.
4. The facts found by the judge are extensive. For the purposes of this appeal it is only necessary to refer to the bare essentials. Mr Robert Moran is the eponymous owner of Moran. He is its chief executive officer. His brother, Paul Moran, was employed by Moran as a senior sales executive.
5. In September 2009 Paul Moran met Mr Pisarev at the Monaco Boat Show. At that stage Galaxias was about to take delivery of the 4YOU, which was being built in Holland at the Heesen Shipyard. In October 2009 Paul Moran and Mr Pisarev met again at the Fort Lauderdale Boat Show. As a result of these encounters, they struck up a friendly relationship and Mr Pisarev decided to appoint Moran to be managers of the 4YOU and as Galaxias' exclusive chartering broker. These arrangements were embodied in a management agreement of 28 October 2009 and a chartering agency agreement of 5 November 2009.
6. The 4YOU was delivered to Galaxias in December 2009. On 29 December 2009 Mr Pisarev entered into an agreement with Galaxias, his own company, to charter the vessel for a week in January 2010. This charter was followed by others over the course of 2010, several but not all of which were with Mr Pisarev.
7. Sometime in March or April 2010 Paul Moran discussed with Mr Pisarev an opportunity to purchase a 54 metre yacht which was to be constructed at the Amels Shipyard in Holland at what was considered to be a bargain price. There was some discussion about selling the 4YOU.
8. On 10 May 2010 when the 4YOU was in Monaco, there was an open day when brokers were invited to look round and inspect yachts that their clients might be interested in chartering. On 11 May 2010 there was a meeting at the Amels yard attended by Paul Moran and a lady called Lidia Tsareva. She was a broker employed by Moran at its Moscow office. It was the evidence of Miss Tsareva and Mr Moran that at this meeting Moran was instructed to sell the 4YOU at a price between 27.75 and 28 million Euros.
9. The judge rejected that evidence, accepting the evidence of Mr Pisarev that he gave no such instructions. He also rejected the suggestion that there had been some lesser instruction to find out how much the vessel would fetch and held that, even if something to that effect had been said by Mr Pisarev, it would not be an instruction to offer the yacht for sale.
10. On 18 May 2010 Mr Miliavsky came on board the 4YOU, having been invited to do so by Miss Tsareva. The judge found that he spent about 15 to 20 minutes looking round the vessel and about 15 minutes having tea. He also found that Mr Miliavsky had no interest in purchasing the yacht and made it clear that that was so.
11. On 7 July 2010 Galaxias signed a letter of intent in relation to the purchase of the vessel that referred to "marketing after the summer". By September 2010, as was common ground, Moran had been instructed to market 4YOU for sale. It did so during the rest of 2010 and 2011 until its services were terminated in October 2011.
12. In December 2011 Mr Pisarev had dinner with Mr Miliavsky at a restaurant in Moscow. Mr Pisarev told him that the 4YOU was for sale and that the original price had been reduced. Mr Miliavsky recalled the name of the vessel and said that he had been on board her in May 2010. They discussed whether Mr Miliavsky might be interested in buying the 4YOU. By now, Mr Miliavsky had sold one yacht and bought another and had sold some businesses so his financial situation had materially improved.
13. In January 2012 Mr Pisarev and Mr Miliavsky met in Courchevel and Mr Pisarev told Mr Miliavsky that he could have the yacht for €22 million. Mr Miliavsky offered €19 million, the offer being, so the judge found, in the nature of an indication of what Mr Miliavsky might be willing to pay rather than a firm offer. On 27 January 2012 inspection of the yacht took place in Italy and on 29 February 2012 a contract was signed between Galaxias and Mr Pisarev's company, Gildo, for €19.8 million.
14. The judge was unimpressed by Moran's witnesses, but impressed by the evidence of Mr Pisarev. He recorded in paragraphs 26 and following of his judgment, that the legal basis for Moran's claim had gone through some remarkable shifts. Thus the date of any contract which was said to entitle Moran to commission had shifted from September 2010 to June 2010 and then to May 2010 and the date when Mr Miliavsky was said to have been introduced to the vessel had had the same change of month.
15. What the judge found was that there was no contract, express or implied, made, as had been alleged, on 11 May 2010 under which Mr Pisarev instructed Moran to market the vessel and that there was no implied contract to pay commission arising out of Mr Pisarev's awareness that from May 2010 Moran was marketing the vessel for sale and his acquiescence therein. Mr Pisarev, the judge held, had no such knowledge. He also held that, if there was any such contract, Moran was not an effective cause of the sale to Gildo. If the answer to both of these questions had been yes, the level of commission to which Moran would be entitled was 4 per cent.
16. Mr Auld recognises that the first thing that he needs to establish is that there was a contract under which Moran was to market the vessel. Before he came to specifics, he drew attention to the major role that Moran had fulfilled in respect of 4YOU from even before she was delivered, which should, he submitted, incline the court strongly to conclude that Galaxias was liable to pay commission and was not entitled to avoid doing so by terminating Moran's retainer shortly before it itself arranged a sale to Mr Miliavsky's company.
17. The first contract to which Mr Auld referred was the Charter Worldwide Central Agency Listing Agreement made between Galaxias and Moran on 5 November 2009. That provided:

"The Central Listing Agreement defines the terms and conditions whereby Moran Yacht and Ship Inc (hereafter called "Charter Broker") agrees to manage the charter of the vessel described on behalf of the undersigned owner/agent, hereafter called "Owner".

(1) Owner hereby grants to Charter Broker the exclusive right to manage the Charter of the Vessel described below together with all gear, machinery, furnishings and other articles belonging to the Vessel.

...

(4) The Owner agrees to pay the Yacht Charter Company or Brokerage Company a 15 % commission on all charters that are secured by the individual companies through the term of his agreement. Should another Yacht Charter Company or Brokerage Company secure a Charter on board the vessel named below, the Owner will pay a 15 % charter commission to that company and a further 2 per cent to Moran Yacht and Ship Inc as the Charter Management Company. Should Moran Yacht and Ship Inc be the sole company involved with the charter, then they will receive a 15 % commission, but not the additional 2 %.

(5) Owner shall pay the commission specified in paragraph 4 should any charterers recharter the vessel within a 12-month period from when they originally chartered the yacht...

(8) Owner acknowledges having understood the terms of this Agreement and receipt of a signed copy that this document represents the entire Agreement of the parties that no other representations, warranties, guarantees of sale or promises of any kind have been made other than those set forth herein and that this agreement is binding on all heirs, executors, successors and assignees of both Owner and Charter Broker."

18. This agreement by its express terms gives to the broker the right to manage the chartering of the vessel. It provides for 15 per cent commission on any charter. It says nothing about any sale of the vessel or any commission on sale. It would seem to me far from obvious that there should be implied, as was suggested, into the agreement that Moran would be entitled to market the vessel or bound to do so, or that the agreement must be taken to provide for commission on sales. The entire agreement clause also rules out any such implication.
19. As I understood him, Mr Auld said that the commission payable on sales should be at market rate, although at one stage of his submissions he said 15 per cent or, alternatively, the market rate. 15 per cent is far from obvious as a suitable rate of commission for sales (the judge arrived at 4 per cent): And there was no expert evidence of any going rate, although the judge reached his figure at 4 per cent by reference to the various matters set out in paragraphs 111 and following of his judgment.
20. The changes in Moran's pleading did not extend to reliance on the implied term now argued for. On that ground alone, it does not seem to me that we should now entertain the point. In any event, I do not regard the point as well-founded and, even if it was, it lacks, as Mr Auld accepted, the necessary evidential support for its application.
21. The second matter on which Mr Auld relied were the provisions in either clause 23(D) and (F) or 24(D) and (F) of the charter parties. These contemplate that the broker will be a party, but in some of them there is, in fact, no signature on the broker's behalf in the space provided for that purpose. The relevant sub-clauses provide:

"(d) If any Agreements should be reached directly between the CHARTERER and the OWNER for the purchase of the Vessel within two years from the date of commencement of this Charter, then the Broker shall be entitled to be paid by the OWNER a sales commission. However, should the CHARTERER purchase the vessel from the OWNER via a Sales Broker to whom commission is being paid, the owner shall pay or shall ensure the sale broker shall pay a sum equivalent to not less than 15 % of the gross sales commission. It is the responsibility of the OWNER to advise any future Sales Broker of this liability. This only applies following the free choice of the CHARTERER and is not relevant if the change of broker is suggested or solicited by the OWNER, his Agent, Captain or representative. Any dispute under this Clause should be separately arbitrated.

(F) For the purposes of this Clause, the terms OWNER and CHARTERER shall be understood to mean the named company or individual, or any company owned or controlled by them, including companies owned indirectly or Trustees, any Director of such company, Beneficial Owner, Nominee, Agent or Charterer's Guest."

22. These provisions govern the circumstances in which a charterer of the vessel decides to purchase it. In such circumstance, the broker is entitled to a sales commission, the amount being undefined. There is no provision for the broker to have been an effective cause of the sale, presumably on the basis that, if someone actually charters the vessel, and then seeks to buy it, the broker of the charter is very likely to have been at least an effective cause of the sale.
23. None of this helps Moran. Neither Mr Miliavsky nor Gildo ever chartered the vessel, nor do either of them fall within the extended definition of charterer in (F). Faced with this dilemma, Mr Auld formulated a new implied term to the following effect:

"If someone is shown round the vessel as a potential charterer, does not actually charter the vessel but then purchases within the two year period and the broker was an effective cause of the sale, Moran would be entitled to the same commission as that to which it would have been entitled if the person in question had chartered the vessel."

24. This contention fails for a number of reasons. First, it was never pleaded.
25. Second, the term that is sought to be implied has curious features. It expands the category of persons whose inspection may lead to an obligation to be paid commission, but it restricts the broker's entitlement to circumstances when it has been the effective cause of the sale.
26. Third, there was no evidence that Mr Miliavsky was ever interested in chartering the vessel. This is not surprising since, as the judge records at paragraph 100, he already owned a yacht, the MOSCA, with which he was quite content. In addition, Miss Tsareva's evidence was that she was showing Mr Miliavsky the yacht because she had been instructed to market it for sale.
27. Mr Auld candidly admitted that he could not succeed on the facts in relation to the implied term. I also think that no such term falls to be implied in any event. It seems to me far from necessary or obvious. Insofar as it gives greater rights to commission than those provided by the express terms, the implication would be inconsistent with them. In addition, I do not think that we should, in any event, allow the point to be taken now.
28. In those circumstances, it is not necessary to consider whether the judge was right to hold, as he did, that Moran was not in any event an effective cause of the sale.
29. Moran has enjoyed significant, possibly excessive, latitude in asserting an entitlement to commission both on the facts and the law. The development of its case has bordered on the shambolic. These last points are no better than their predecessors.
30. Accordingly, I would dismiss the appeal.
31. LORD JUSTICE LEWISON: I agree.
32. THE CHANCELLOR OF THE HIGH COURT: I also agree.