England and Wales High Court (Chancery Division) Decisions

Background

“1.         Foxpace Limited should be joined as a party to the appeal on the basis that it takes no active part in the proceedings.

2.            There will be no costs consequences of Foxpace Limited in being joined as a party to the appeal;

3.            The aforementioned (sic) trial will be determinative of Philip Barton’s claim against Foxpace Limited for all purposes;

4.            The issue of any indebtedness on the part of Foxpace Limited to Philip Barton shall be argued at the hearing of the appeal by or on behalf of Philip Barton and Timothy Gwyn Jones;

5.            Paragraphs 1-4 are without prejudice to Timothy Gwyn Jones’ position as to costs including pursuant to Rule 15.35 (6) of the Insolvency (England and Wales) Rules 2016.”

The trial

The issues

a.        (Mr Barton’s primary case) an offer contained in an email from Mr Barton to Mr Rooke (acting for Foxpace) dated 31 July 2013 at B6/1561 , coupled with acceptance by Foxpace by its subsequent conduct; or

b.       (Mr Barton’s secondary case) an oral offer in a telephone call or a series of telephone calls on or around 29 July 2013 and acceptance during those telephone calls or by subsequent conduct.

a.        No terms of a contract were agreed either in the telephone calls or through offer in the email and acceptance by subsequent contract;

b.       Even if terms were reached they were cloaked by the umbrella of being “subject to contract” and therefore no concluded contract was reached;

c.        Even if a contract were reached between the parties, the terms of the contract were that Mr Barton would be paid £1.2 million if, but only if, Nash House sold for £6.5 million (or alternatively at least £6.5 million). Since the property sold for £6 million, no liability therefore arises under the contract.

The evidence - introduction

The evidence – a chronology from the documents

“ Following our discussion yesterday, please can you confirm when we are likely to hear from Andrew? As discussed, I am concerned that what you suggested was dramatically lower than what had been agreed previously.” ( B6/1559 ).

a.        At 10.48, Mr Rooke forwarded to Mr Barton an email from Mr Gwyn Jones which appears at B6/1563 asking for the identity of the proposed buyer and their solicitor and querying whether the proposed buyer would pay the cost of security.

b.       At 15.22, Mr Barton confirmed by email ( B6/1564 ) that the proposed buyer would pay the security costs.  

c.        At 15.37, Mr Rooke again asked Mr Barton to confirm the identity of the purchaser and their solicitor or whether in the alternative this was proposed to be a sub-sale ( B6/1565 ).

d.       At 16.02, Mr Teare, another partner at Bridgehouse, the solicitors acting for Mr Barton in the sale of Nash House, emailed Nick Morris as follows:

“ …I have just spoken with Philip Barton who has asked me to provide you with the contact details of the solicitor acting for the new sub-purchaser of Nash House. His details are:

Sean Daly

Abacus Solicitors

…

Philip has asked me to confirm with you whether he will be paid on an undertaking out of completion funds, where he is the purchaser or if it is agreed that Philip will be paid by way of commission on an undertaking to Philip?

Also, please could you confirm when you expect to be able to issue a contract and that it will contain a provision for completion 4 weeks later and a 10% deposit, with a purchase price of £6.5 m?”

“ Thank you for your time just now. I have spoken to Philip and he has clarified that the £1.2m is a rebate of deposits and costs incurred. Philip will discuss the calculation and invoicing with your client direct, but has confirmed that all of the £6.5m purchase price should be paid to you and that the rebate to him should be held for his benefit on an undertaking to hold and pay it for him.

Please could you take instructions on the above and, if confirmed, let Andrew and I have a form of undertaking for consideration…” ( B6/1590 ).

“Subject: Park Place, Nash House…We are the retained agent for an investor who wishes to acquire the above property. He is willing to make a cash offer, not subject to any further planning being sought, with an attended exchange if so required. To forward this enquiry I would need from you terms on which you would entertain an offer from us…” ( B6/1608 ).

a.        Mr Morris emailed Mr Carrier asking for a draft of the proposed undertaking ( B6/1627 ).

b.       Mr Morris on behalf of Foxpace replied to the enquires before contract ( B6/1628 ).

c.        Mr Carrier provided a proposed undertaking, the terms of which were that Mr Morris would assert that “my client has agreed to pay your client, Philip Barton, a commission from the proceeds of sale of the property” and that Mr Morris was “ instructed by the seller to send you £1,200,000 from the proceeds of sale of the property immediately following completion of the sale” ( B6/1632 ).

a.        There was further communication between Mr Hussain and Mr Rooke about the potential deal with Mr Hussain’s client ( B6/1662 -1664 ).

b.       Mr Morris emailed Mr Carrier in these terms: “I have further discussed this matter with my partners and as you will appreciate no firm of solicitors would be in a position to give an undertaking as requested. Having discussed the matter with my client the only alternative subject to contract is for Foxpace Limited to enter into an agreement with your client that on completion of the sale to Western UK (Acton) Ltd and upon receipt of the said sum on completion of £6,500,00 plus VAT my client will immediately pay to Philip Barton the sum of £1,200,000.” The email annexed an agreement in the same terms. ( B6/1666-1667 ).

c.        Later that day, Mr Morris corrected the price in the draft agreement at B6/16567 to £6,550,000 ( B6/1668-1669 ).

d.       Mr Hussain sent to Mr Rooke heads of terms for the sale of Nash House to Mr Abdul Haleem Kherallah for a price of £6.3 million plus VAT ( B6/1675-1677 ).

e.        Mr Carrier emailed Mr Morris to say that Mr Barton had approved “ the document” , which appears to be a reference to the draft agreement for payment of £1.2 million to him ( B6/1683 ).

f.        Mr Rooke emailed Mr Morris to indicate his agreement to a “profit share” agreement pursuant to which, if Foxpace sold Nash House to Mr Kherallah, Mr Hussain would be paid 70% of the sale price less £5.6 million. Since the sale price was anticipated to be £6.3 million, the anticipated amount to be paid to Mr Hussain was £490,000. (See B6/1685-1689 ).

a.        Mr Rooke emailed the relevant parties in respect of an intended exchange of contracts for sale with Mr Hussain ( B6/1708 ).

a.        Foxpace and Western UK (Acton) Ltd exchanged contracts for sale of Nash House for the sum of £6 million plus VAT. The contract signed by Mr Daly on behalf of Western Acton appears at B6/1768 ; there is confirmation of exchange at B6/1777 .

b.       Mr Carrier emailed Mr Morris ( B6/1775) stating, “Philip Barton has informed me that your client has exchanged contracts for the sale of Nash House to the party that Philip has been in discussion with. Please will you confirm your client’s intention to pay Philip £1.2m in accordance with the terms of the agreement that the parties settled in August and please send me that agreement for execution.”

The evidence - witnesses

a.        The Particulars of Claim in his claim against Foxpace ( A2/3 ), which is signed by Mr Barton with a statement of truth;

b.       His first witness statement in these proceedings ( A1/3-17 );

c.        His second witness statement in these proceedings ( A1/18-51 ).

a.        obtaining funding from a third party to enable Stonebridge or Mr Barton himself to complete the purchase;

b.       completing the purchase and developing the site as a joint venture with a third party;

c.        completing the purchaser but immediately selling on to a third party purchaser by way of sub-sale.

“ In view of the fact that there was now the possibility of a direct sale from Foxpace to Western, I wanted to protect my own position. This is why I made it a term of the above agreement and in my telephone conversation with Marcus that Foxpace would pay to me the £1.2 million on completion of the purchase. Marcus agreed to this. I made sure this was agreed before I provided Foxpace with the details of Western”.

“ Following the [Baker Street] meeting, Mr Barton approached Mr Rooke (who discussed the conversations with me) in which Mr Barton said that he no longer wanted to sub-sell the property and instead wanted to introduce a purchaser for a fee. This was discussed and Mr Barton informed us that he wanted to be reimbursed the sums that had he (sic) and Stonebridge had forfeited to Foxpace, and which he calculated at £1.2 million. He said that he had found a potential buyer for £6.5 million, and suggested that if the sale went through at that price, then he would receive £1.2 million. Whilst I was not opposed to this suggestion, so far as I was concerned, any payment of £1.2 million to Mr Barton was necessarily contingent on the property being sold to the introduced buyer at a price of not less than £6.5 million.”

“ … Had the discussions not been subject to contract, they would have been out of step with the way that the sale of the property was being conducted generally. At the same time as Foxpace were negotiating with Mr Barton and Mr Western, who was also negotiating with another prospective purchaser (Mr Abdul Haleem Kherallah) in a deal that would have involved a payment to the introducer (Mr Javed Hussain) in the event of it being successfully completed. A written introduction agreement was signed by Mr Hussain on 22 August 2013. Whilst the sale ultimately didn’t proceed, as the legal work with Western was at a more advanced stage, it nevertheless shows clearly my (and Foxpace’s) standard practice. There is no reason why this practice would be departed from in respect of Mr Barton and I had no intention of doing so.”

“ [17] … In or about mid-to-late July 2013, Mr Barton broached the idea with me over the telephone that if Western ultimately purchased the property for £6.5 million plus VAT, then he might be paid £1.2 million out of the proceeds of sale.

[18] I was not averse to this suggestion, neither was Mr Gwyn Jones, whose authority I needed in order to act on behalf of Foxpace, though I would not have entertained the idea had I not been told that Mr Barton had funded Stonebridge. If Mr Barton was indeed the funder of Stonebridge then it may well have been that developing a relationship with Mr Barton could have benefited us in the future, though I am confident that Foxpace would have received other offers to purchase the property that would have been at least as beneficial as the offer made by Western, particularly after it was negotiated down, had Western not been introduced to Foxpace. However, as far as I was concerned the discussions were, naturally, subject to contract. It was also clear to me and to Mr Barton that Mr Barton’s suggestion necessarily meant that if the property was sold for less than £6.5 million then Mr Barton would receive nothing.

[19] On 31 July 2013, Mr Barton emailed me to confirm that he had found a purchaser and referred to the £1.2 million that he hoped to receive. On reflection it now appears that Mr Barton was referring to Western in this email. In my view it was (at best) disingenuous for Mr Barton to send that email without being transparent as to what we had previously discussed; namely that any agreement to pay him £1.2 million would be contingent on the property being purchased by somebody he had introduced for a price of £6.5 million or more (plus VAT) …”

[11] … I was informed by Mr Rooke that the prospective deal involved the sale of the property to Western at a price of £6.5 million plus VAT with a payment of £1.2 million being made to Mr Barton if, and only if, that price (or higher) was achieved. It was made clear to me that Mr Barton would receive (and be entitled to) nothing if the property was sold to Western for less than £6.5 million plus VAT. In any event I also understood all discussions to be subject to contract. I was later informed by Mr Rooke that the purchase price had increased to £6.55 million plus VAT.

[12] I therefore drafted the various agreements on the basis of those instructions. This included, on or about 22 August 2013, my drafting contracts for Mr Barton’s approval which to my mind explicitly made clear that the payment of £1.2 million was contingent on Foxpace receiving the sum of £6.5 million plus VAT (later £6.55 million plus VAT) …”

The evidence – Appellant’s submissions

a.        Inconsistencies in the evidence of Mr Gwyn Jones as to the urgency with which Foxpace was approaching the sale of Nash House, especially as between his oral evidence and what was said in the statement at B5/1290 ;

b.       The implausibility of Mr Gwyn Jones and Mr Rooke being unaware of the HS2 issue at the time the documents were admittedly received by Foxpace in the circumstances described by Mr Rooke at paragraph 112 above.

a.        It is implausible that Mr Barton would have provided contact details for Western unless a contract had been reached;

b.       If contractual terms had been concluded, it is implausible that it would not have dealt with the possibility of a reduced purchase price.

a.        The length of time that the property had been unoccupied;

b.       The relatively large number of failed attempts to sell the property;

c.        The difficulties with the planning permission, in so far as it appeared to offer a development scheme that no one was interested in;

d.       The need to comply with the enforcement notice;

e.        The planning blight introduced by the HS2 safeguarding process.

The evidence – Respondent’s submissions

a.        The Appellant accepts that his account of entering into the alleged contract, to introduce a purchaser in exchange for a fee of £1.2 million, at the Baker Street meeting in paragraph 9 of his Particulars of Claim ( A2/4 ) is incorrect, in that the agreement was not reached during the Baker Street meeting, but rather in subsequent communication between the parties. The Respondent points out that Mr Barton’s error in this regard is not limited simply to the circumstances in which the agreement was entered into (namely by telephone and/or email communication, rather than at a face-to-face meeting) but also that the alleged terms of the agreement differ. His account in the Particulars of Claim is an agreement that £1.2 million was payable if the purchaser paid £5.75 million or more for the property. His subsequent account, including that given in oral evidence at trial, is that there was no minimum price for the property which gave rise to the obligation on the part of Foxpace to pay £1.2 million.

b.       Whilst Mr Barton asserts that he was responsible for the introduction of Mr Lipson to Foxpace, the reality is that the original connection was through Messrs Sumner and Cannon. The Respondent doubts that the Appellant played the major part in dealing with Mr Lipson that he asserts.

The evidence – Discussion

The contract claim – Appellant’s submissions

“ The court must then look at the whole correspondence and decide whether, on its true construction, the parties had agreed to the same terms. If so, there is a contract even though both parties all or one of them had reservations not expressed in correspondence. The court will be particularly anxious to hold that continuing negotiations have resulted in a contract where the performance which was the subject matter of the negotiations has actually been rendered.”

The contract claim – Respondent’s submissions

a.        By the time of this discussion, Mr Barton had twice attempted to purchase the property. He had considerable knowledge of the property and of the issues relating to its purchase. He could therefore be confident when speaking to Mr Lipson and Mr Rooke that the figure of £6.5 million would be acceptable to the other.

b.       None of the contemporaneous documents suggests that any price other than £6.5 million was discussed.

c.        Mr Barton’s evidence as to the discussion is considerably tainted by his previous erroneous account of a discussion about the introduction fee having taken place at the Baker Street meeting. It is conceivable that Mr Barton may have misremembered the circumstances in which the discussion had taken place. But the differences between his original account of the discussion and that which he now advances relate not only to the time and place of the discussions and the means of communication between the parties (telephone rather than face-to-face), but also as to the content of the discussions, he previously having said that the introduction fee was payable if the property sold for a figure in excess of £5.75 million. This, together with other inconsistencies in Mr Barton’s evidence as set out above, leads me to the conclusion that he cannot remember the contents of that conversation and is seeking to reconstruct the contents by reference to subsequent events and what he thinks he would have agreed to.

d.       Mr Rooke’s account of matters is also suspect for reasons that I have identified above. However, I acquit him of the allegation of dishonesty relating to the HS2 information. Given the points made at (a) and (b) above, it is more likely than not his version of events is correct.

a.        The contract that the Appellant contends he entered into is of a very different nature than the contract for the sale of Nash House, with which it was associated. The latter is required by law to be in writing and it is obvious that detailed consideration would have needed to be given to the terms of the contract before the parties could reasonably have been expected to be irrevocably bound by the negotiations. No such limitations apply in respect of the introduction of the purchaser. The terms of the proposed agreement that the parties were discussing was simple.

b.       The conduct of the Respondent in other cases does not seem to me support the contention that he either believed or intended these discussions to be “subject to contract”. To the contrary, his discussions with Mr Hussain, referred to above, led to an introduction before a written contract was entered into, just as was the case with Mr Barton. It seems to me more likely than not that the Respondent himself saw such written contracts as simply evidencing discussions between the parties rather than being the prerequisite of such discussions being binding.

c.        The willingness of Foxpace to invite the introduction of the purchaser without a written contract having been in place is an indication that they did not consider this aspect of the negotiation to be “subject to contract” at all.

“[a Defendant] will be held to have benefited from the services rendered if he, as a reasonable man, should have known that the Claimant who rendered the services expected to be paid for them and yet did not take a reasonable opportunity open to him to reject the proffered services. Moreover in such a case, he cannot deny that he has been unjustly enriched.”

a.        Foxpace received a benefit from Mr Barton, namely the introduction to Mr Lipson, a cash buyer who was able to exchange swiftly and unconditionally at a good price.

b.       At the time that Mr Barton rendered the benefit, he expected to be paid, as Foxpace well knew given their negotiations relating to paying an introduction fee.

c.        Not only did Foxpace fail to reject the proffered service, namely the introduction of the purchaser, they positively encouraged Mr Barton to provide the name of the purchaser – see in particular the emails at B6/1563 and B6/1565 .

d.       It would be unjust to allow Foxpace to be enriched by this benefit.

a.        There is no concluded agreement by which a claim in unjust enrichment may be barred;

b.       Alternatively, the parties should not be held to have allocated the risk of the property selling for less than £6.5 million to Mr Barton.

The unjust enrichment claim – Respondents’ submissions

“ Full protection for the Defendant’s freedom of choice can be given by the objective exercise of characterising precisely what it was that was chosen by the Defendant.”

The unjust enrichment claim - discussion

a.        Has the Respondent been enriched?

b.       Was the enrichment at the Appellant’s expense?

c.        Was the enrichment unjust?

d.       Are there any defences available to the Respondent?

a.        the undesirability of allowing the fact that the parties reached a concluded contract to stand in the way of the court granting relief;

b.       the obvious unfairness to Mr Barton of limiting his right to recover to the strict terms of the contract;

c.        the likelihood that the Respondent in fact would have agreed to the payment of a fee if the possibility of a reduced purchase price had been contemplated when the agreement was entered into.

The amount of the benefit – Appellant’s submissions

“In the absence of any other evidence or good reason to the contrary, where two parties agree, at arm’s length, that one of them will pay a certain sum, or at a certain rate, for a type of benefit to be provided by the other, there must be a prima facie presumption that the amount is, or at least is good evidence of, the market value of that type of benefit.”

a.        If the sale had concluded on the Barton contract (for £5.9 million), Mr Farnham would have been entitled to 5% (see B5/1312 ), It is asserted that, in addition, Jones Lang Lasalle would have been entitled to £100,000, giving a total fee of £395,000 (6.7% of the purchase price).

b.       If Mr Kherallah had purchased the property for £6.3 million, the sum of £490,000 would have been payable pursuant to the “profit share agreement” (7.8% of the purchase price).

The amount of the benefit – Respondent’s submissions

The amount of the benefit - discussion

a.        The fee reflected sale at a higher price than that actually achieved;

b.       The fee is far higher than any of the other figures that I have seen for providing a service of this nature, including the figures referred to by the Appellant as summarised at paragraph 207 above;

c.        I am not satisfied that the problems relating to Nash House were as serious as the Appellant contends or that the sale of the property was so urgent from the point of view of the Respondent;

d.       It is apparent from the dealings between these parties (as well as what can be seen of the dealings between the Respondent and Mr Farnham) that dealings between property developers and intermediaries involve a great deal of trust and associated close relationships. Mr Rooke’s comments from paragraph 18 of his witness statement cited above ring true as to why Mr Gwyn Jones should be apparently willing to pay so high a figure for the introduction in this case.

e.        In any event, the fee was based upon Mr Barton recovering his losses rather than on any attempt to value his services upon the open market.

a.        it would involve the parties in further expense;

b.       it would cause further delay;

c.        in any event, I am not satisfied that it would provide a more reliable figure than that which the court can discern from the material before it.

Conclusion