England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London. WC2A 2LL
		19/09/2007

Mr Justice Nelson :

1. Mr Waleed Aboualsaud, the Claimant, claims €21.5M commission from the Defendants on the sale of the Monte Carlo Grand Hotel to FHR European Ventures LLP on 22^nd December 2004. The entitlement to commission arises, the Claimant claims, by virtue of an oral agreement made between him and the First Defendant, Bassam Aboukhater, in various meetings and telephone calls in late November or early December 2002. That oral agreement, which was made by the First Defendant on his own behalf and on behalf of his father Toufic Aboukhater, was a binding oral contract under the terms of which the Claimant was to be paid commission if he introduced a party to the Defendants who went on to purchase the hotel for a price which was acceptable to them. This, the Claimant contends, he achieved by introducing HRH Prince Al Waleed bin Talal bin Abdulaziz al Saud (the Prince), whose group of companies, referred to in this judgment as Kingdom, was one of the members of the joint venture FHR European Ventures LLP which purchased the hotel. The introduction of Kingdom to the Defendants occurred on 5 December 2002 and led to a letter of intent by them to purchase the hotel for US $215M on 21 March 2003. After a meeting on 9 May 2003 this deal did not go ahead but, the Claimant contends, the introduction remained the effective cause of the eventual purchase of the hotel on 22 December 2004.
2. The Defendants deny that there was any binding oral agreement; it was simply a case of one friend seeking to help another, and if that help were to be successful then payment in recognition of it could be expected. There was no binding agreement to pay commission as alleged by the Claimant, nor in any event was the introduction effected by the Claimant an effective cause of the eventual sale.

The Facts.

3. Mr Aboualsaud is a financial adviser and manager. He graduated at Harvard in Economics, and has an MBA from the Wharton School of Business in Philadelphia. He worked for JP Morgan for two years in New York before going to the Kuwait Investment Office in London where he rose to executive vice-president. Shortly before the hearing he had moved to Kuwait Petroleum Corporation which, like the Kuwait Investment Office, is wholly owned by the Kuwait government. He acts as financial adviser to the company and to the Minister of Energy. He advises his employers on acquisitions and their investment programme. They have £20 billion in cash available for starting a fund and for financial investment. Mr Aboualsaud is a highly intelligent, well educated and sophisticated man.
4. During the 1990's he met Mr Bassam Aboukhater who, like him, lives in London. They became close friends, seeing each other every week and speaking on the telephone most days.
5. Bassam Aboukhater was educated in the UK and the USA and holds a BA from Colorado College. He has never worked full-time, but for seventeen years was the commercial director of the office of the government of one of the United Arab Emirates in London. He relies for his income upon his father, Mr Toufic Aboukhater, who lives and works in Monaco. Toufic Aboukhater is a very wealthy man; he was the beneficial owner of the Dorchester Hotel in London between 1976 and 1978, the Garden House Hotel in Cambridge in the early 80's, Isola 2000, the ski resort in the South of France between 1979 and 1991 and the beneficial owner of the Monte Carlo Grand Hotel from 1998 until 2004. He did not attend university but went to work for Shell in 1959. In 1964 he became the manager of Shell Markets Middle East Trucial States and between 1964 and 1970 made substantial sums of money buying and selling real estate. He expressed pride in the fact that he had been able to achieve this at the same time as working for Shell and without disrupting their business.
6. He paid around US $140M for the Monte Carlo Grand Hotel in 1998 and thereafter spent a lot of money on it. The legal owner of the hotel is MCGH SAM, a Monegasque company. He owned the house in which his son Bassam lived in London and also the private plane in which his son from time to time flew. He purchased the hotel through a corporate structure of which he was the majority shareholder. He made his daughter in law, Bassam Aboukhater's wife, a director of this company, though she played no role in the decision making of the board. Toufic Aboukhater was the majority beneficial owner of the hotel until its sale and was solely responsible for major or strategic decisions relating to the hotel. The day to day running was left to the general manager. Toufic Aboukhater was in the words of his son, very much in control of all the family wealth and took a hands on approach to his investments which he controlled closely.
7. Bassam Aboukhater and Toufic Aboukhater are both shrewd, intelligent men. They have a close and good father and son relationship, and although Bassam Aboukhater is dependent upon his father financially they are capable of working together when that occasion arises. There is however no doubt that it is Toufic Aboukhater who makes the decisions. He is a self-made man who has amassed a very considerable fortune during his life. He is now in his early 70's with a reasonably good command of English but not in any sense the total fluency in the language which both his son Bassam and Mr Aboualsaud have. I shall return in. further detail to the relationship between the parties later in this judgment.
8. In November 2002 Mr Aboualsaud and Bassam Aboukhater were on holiday in Barbados with their wives. During this holiday the Claimant contends that Bassam Aboukhater told him that he and his father were thinking of selling the Monte Carlo Grand Hotel and were looking for a premium price for it. Bassam Aboukhater said that this meant US $200M or higher but when asked to say what the minimum price would be by the Claimant, said, after some thought, that if it was less than US $160M his father would definitely not sell. He asked Mr Aboualsaud if he knew of and could introduce a purchaser in return for a high fee; hiring a bank would not be possible as Toufic Aboukhater wanted confidentiality and deniability that the hotel was for sale. He did not wish Prince Rainier, who was a friend of his, to know that the hotel was for sale, until he had found a buyer.
9. Mr Aboualsaud said he thought that he could identify a purchaser and mentioned a wealthy Russian, and the Prince, with whom his friend Mr Hani Al-Qadi had close business connections. Mr Aboualsaud says that he told Bassam Aboukhater that the Prince was known to use 'leverage (i.e. debt) for his properties and usually to bring in other equity investors.' Bassam was very interested, particularly in the Prince.
10. Bassam Aboukhater's account of the first discussions about the sale of the hotel is entirely different. It was raised in conversation before Barbados and then continued on the holiday. There was no request for Mr Aboualsaud to act as agent nor any offer of a fee. The topic was simply one of many things discussed between two friends and came up when they were discussing the fact that the Russians were buying properties at silly prices. 'My Dad's hotel popped in in the context of: if there was someone crazy - I mean, if a Russian could buy my Dad's hotel at a silly price. And that is the idea - that is how the talk about selling the hotel popped up.'' (T6/119-120)
11. There was no question of Bassam Aboukhater acting on behalf of his father, indeed on the contrary his father did not wish to sell the property. It was Bassam Aboukhater who was hoping to tempt his father with an offer. If there was a really genuine big offer for his Dad he could tempt him and make him change his mind. (T6/121) Bassam Aboukhater had never been a champion of the hotel and had always resisted attempts by his father to persuade him to leave London and go to Monaco to help him run the hotel. He did not want his father to own the hotel. His father had told him that he believed that one day the hotel would be worth in excess of US$ 200M. (T6/131) When Mr Aboualsaud mentioned the Prince, Bassam Aboukhater was therefore interested.
12. On their return to London, Mr Aboualsaud contends, several discussions took place in November and early December 2002, sometime during which a fee was agreed at Bassam Aboukhater's suggestion, except for one element, namely the sliding scale, which Mr Aboualsaud said in cross-examination was suggested by himself. The fees were discussed over a number of conversations and Mr Aboualsaud was unable to say whether the final agreement was over the phone or in person. (T266) The agreement was that Mr Aboualsaud was to be paid 5% of the sale price if the hotel sold for up to US $ 160M, 10% if it sold for US $200M or more and if it sold for between those sums the fee was to be on a sliding scale of between 5% and 10% of the hotel's price. The Claimant contends that the First Defendant assured him that he was acting on Toufic Aboukhater's behalf with his full authority as well as for himself.
13. At around this time, or as he said in cross-examination only when the fee had been agreed, Mr Aboualsaud discussed the hotel with his friend Mr Al-Qadi who thought the Prince might be interested in buying it. The Claimant said he agreed to share his fee with Mr Al-Qadi, and informed Bassam of this. Mr Al-Qadi contacted Mr Sarmad Zok, a senior adviser to the Prince, whom Mr Al-Qadi knew personally. Mr Zok referred Mr Al-Qadi to Mr Ramsey Mankarious, an employee of Kingdom who advised them on the development of hotels; he was also known personally to Mr Al-Qadi. Mr Mankarious e-mailed Mr Al-Qadi on 2 December 2002 that Kingdom would be interested in the hotel. Mr Al-Qadi put Mr Aboualsaud in touch with Mr Mankarious and the Claimant arranged a meeting between Bassam Aboukhater and Mr Mankarious that took place at Bassam Aboukhater's home in St John's Wood on 5 December 2002. Mr Mankarious expressed interest at that meeting even after a price in excess of US $200M had been mentioned by Mr Bassam Aboukhater.
14. The account given by Mr Bassam Aboukhater as to how the question of fees was raised and what was said, differs markedly from the Claimant's account. It was only after the meeting on 5 December 2002, Mr Bassam Aboukhater says, that there was any discussion of a payment to Mr Aboualsaud. The account he gave in evidence was as follows:-

"So Mr Aboualsaud, in fact, did not ask me for any commission right until I met with Mr Mankarious and there was a prospect of having an offer. There was a prospect we were talking about, we threw numbers at Mr Mankarious - 220, 230 and he was not surprised... He was waiting for more documentation.

At that particular time, we did not have anything to give him. We had very little because the idea came from us, it did not come from my Dad. I wanted to establish that, yes, if there was a really genuine, genuine big offer, for my Dad, that hotel, I could tempt him, change his mind and say: Look, Dad, there is something on the table.

Now, I did not discuss any numbers with Mr Aboualsaud until Mr Mankarious left the room. He left after that 5^th December meeting. We sat down, we were excited - in fact I was sitting on the stairway. And he said: Yes, there is a chance now that this deal may develop. I said fine, and he said: Well - he indicated that he wanted 20M or 10%. I did not see anything wrong with that if we could achieve a number that was big enough to satisfy both parties: Mr Aboualsaud and my Dad." (T6/121-122)

15. This was the nature of the agreement or understanding between them; if they were able to pull off a sale which left his father with US $200M in his pocket he would do everything to get his father to agree to pay Mr Aboualsaud around US $20M. When he told his father of the meeting with Mr Mankarious his reaction was cold. His father told him to stop dreaming and did not think that he was big enough to pull off such a deal through the Prince. Nevertheless, once he was satisfied on the issue of confidentiality his father saw no harm in letting the discussions continue. If his father had been a seller he was the last person his father would have chosen to sell on his behalf. He would have used professional people. Bassam did not mention the Claimant's request for commission at this stage.
16. Shortly after he had provided some financial information to Mr Mankarious, Bassam Aboukhater said that he learned that there was an outstanding loan on the hotel of €50M which he had not taken into account when giving an indication of a price in excess of US $200M. Mr Mankarious told him that the best he could expect was US $150M net. He felt this would mean no deal. When he told the Claimant about the loan the Claimant said that he wanted 5% commission instead but Bassam Aboukhater said that even 5% didn't work because the numbers were not correct. The 5% request was never agreed. The Claimant also raised the question of a sliding scale but Bassam Aboukhater said that he was not interested in a sliding scale because he didn't think his father would sell for any number under US $200M. There was therefore, on the Defendant's case, no agreement as to the payment of commission.
17. Kingdom were interested in purchasing the hotel. Mr Mankarious sought the views of Chuck Henry of Hotel Capital Advisers who worked exclusively for Kingdom from New York advising them on their hotel interests in Europe and North America. He expressed interest on 6 March 2003 but also raised a concern about the size of the investment and the need for a substantial bank loan. Mr Mankarious responded by stating that he was assuming that they would have at least one other partner with them. Mr Mankarious also contacted Fairmont Hotels and Resorts Inc. to invite them to manage and market the hotel as part of the Fairmont group. Fairmont is one of three hotel management companies affiliated with the Prince; he only buys hotels that can be managed by one of those companies. Mr William Fatt of Fairmont responded on 18 February 2003 stating that his initial reaction to the proposal was that he was ' quite excited about this'.
18. Negotiations proceeded and on 21 March 2003 Kingdom entered into a letter of intent with Toufic Aboukhater, which recorded the parties' intention that Kingdom should buy the hotel for US $ 215M. Discussions about commission continued though there is a dispute about their form and contents. Mr Aboualsaud says that when Kingdom looked as if they might be prepared to pay more than US $200M for the hotel Bassam began to suggest that he and Mr Al-Qadi had done little for their fee and that it should be split with him. This the Claimant rejected. Mr Aboualsaud and Al-Qadi became unhappy about the fact that the agency agreement had not been put into writing so Mr Aboualsaud took this up with Bassam Aboukhater who reassured him and said he should speak directly to his father and obtain reassurance from him.
19. Mr Bassam Aboukhater denies that he suggested that any fee should be split with him but says that the Claimant tried to justify his request at 5% on the basis that he would have split his fee with a third party in the Prince's camp in addition to Mr Al-Qadi and himself. It was the Claimant who at one stage suggested that he could share his cut with Bassam Aboukhater. And not the other way round. Bassam Aboukhater says that he suggested a flat fee but the Claimant's response was that 5% was the minimum anyone could expect for selling a hotel. It was because there had been no agreement between them as to commission that the Claimant wanted to meet Toufic Aboukhater; it was not because the Claimant and Mr Al-Qadi wished to have the agency agreement to be recorded in writing. There was no agreement to record.
20. There is no doubt that Bassam Aboukhater, as he admitted in evidence, did arrange a meeting between the Claimant and his father, Toufic Aboukhater, even though he asserted in his first witness statement that he had not done so. There remains a dispute as to the date of the meeting, namely as to whether it was on or around 8^th April 2003 as the Claimant initially thought, or 29 March as the Defendants believe from their records it must have been, or later in April as Mr Al-Qadi believes. This dispute is relevant as to whether Bassam Aboukhater could have been present at the meeting or not as well as on the issue of general credibility, but the more important difference between the parties is as to what transpired at the meeting. Toufic Aboukhater, having in his first statement denied that the Claimant had ever been to his home in Monaco, accepted in his second statement, having consulted his diary, that such a meeting did take place. However having accepted that, he stated in his second witness statement that he had no recollection of the visit. The Claimant says that at the meeting Toufic Aboukhater confirmed that his son Bassam was authorised by him to deal with the Claimant on his behalf with respect to the sale of the hotel and that he was aware of the agency agreement and agreed to its terms. He refused however to record the agreement in writing because he said that if the agreed fee were disclosed to the purchasers they would have tried to negotiate the price down by the equivalent sum. Toufic Aboukhater reassured Mr Aboualsaud that he would honour the agency agreement and as a result it was never reduced into writing.
21. Mr Toufic Aboukhater said that whilst he has no recollection of the meeting, what the Claimant alleges could not have taken place. He could not have told Mr Aboualsaud that Bassam was authorised by him to deal with him on his behalf as he was not so authorised and Toufic Aboukhater was far from convinced that he wanted to sell the hotel. He would not have agreed any commission as there had been no such agreement between Bassam and the Claimant and there was certainly no agreement between him and the Claimant. Had there been such an agreement he would have insisted that it was put in writing. All he would have told the Claimant would have been that if the hotel was sold they would sit down and talk with him about how much they were ready to give him and if he did not agree they would not sell the hotel. Toufic Aboukhater would have given the Claimant about 2M as a reward to a friend not as an agent if the sale had gone ahead. And if he did not accept it he would not make the sale. (T3/76, 79-80) Mr Aboualsaud contends that in a telephone conversation between Mr Al-Qadi and Bassam Aboukhater on 21 February 2005 Bassam Aboukhater not only confirmed that a meeting had taken place but also that Toufic Aboukhater had ratified the agency agreement at that meeting. The Claimant alleges that the First Defendant was present at this meeting in Monaco, but this is denied by the First Defendant.
22. Preparations were made for due diligence of the hotel but this did not in fact take place. Toufic Aboukhater says that this is because he told his solicitor just before Easter not to give any due diligence as he had had another thought about the matter, which he would deal with when he came back from the United States. During the holiday he felt that he did not want to sell the hotel, never mind the price, and hence arranged a meeting in May with Ramsey Mankarious. (T3/93) By the time the meeting took place on 9 May 2003 at the Dorchester Hotel the casino licence at the hotel had been extended but there had been a down turn in hotel profits because of the outbreak of the Iraq war. Toufic Aboukhater sought an increase in the price because of the extension of the casino licence and Mr Mankarious said that the price would have to be decreased as a result of the lower 2003 and 2004 figures. At the conclusion of his note on this meeting Mr Mankarious states:-

"He basically was trying to find a way to get out of the deal and so was I. We agreed that we have no deal. Bassam said his Dad was really unhappy with the price. He wants E200M which equates to $227M today, versus the $215M we already agreed."

The Defendants' case is that after this meeting the deal was over, whereas the Claimant contends it was essentially put on hold awaiting for a time to see whether the position improved. A Fairmont e-mail of 22 May 2003 stated '..If the deal is resurrected, which we think is possible, we will arrange for a conference call or meeting to have more in depth discussions.' A Fairmont e-mail of 28 May 2003 included investment summaries for the proposed project with an attachment stating that 'Kingdom's negotiations with the seller are ongoing but slow. Decision unlikely until the Fall of 2003'. On 27 June 2003 another e-mail from Fairmont referred to 'watching revenues, currently on track with last year.. Kingdom wants to reduce the price based on the new forecast and owner will not; so they are monitoring. Casino licence extended to 2020'. Mr Fatt said however that Fairmont were not interested in the hotel at that time but pre-occupied with other matters, such as SARS.

23. Mr Mankarious made contact with the Defendants over the following year by, for example, an e-mail of 11 September 2003 and a phone call on 16^th April 2004.
24. On 19 May 2004 he met with both Defendants at the Dorchester. Mr Mankarious' note reads as follows:-

"Met Bassam and his father at the Dorchester. They wanted to discuss selling the Monte Carlo Grand Hotel. The father said he can get lease extended to 99 years. He has this all done, just needs to finalise it. They said they wanted north of E200M. Bassam will send me 2003 financials and YTD for 2004. I will then come back to him with an offer."

25. The Defendants' case is that this note reflected simply what Mr Mankarious hoped for, and that Bassam Aboukhater had never said more to him than that there was no point in returning to them unless more than €200M was on offer. On 25 June 2004 Bassam Aboukhater sent an e-mail to Mr Mankarious stating that the 'month of June is closing at 76% occupancy'.
26. On 30 June 2004, Mr Mankarious left the employment of Kingdom and set up his own business, Cedar Capital Partners. Kingdom remained one of his clients though he had others as well. His first transaction was to act for Kingdom on the acquisition of the Savoy Hotel. This was acquired in a 50/50 joint venture between HBOS plc and Kingdom, each providing 50% equity with HBOS providing the debt.
27. On 17 July 2004 Mr Mankarious sent Bassam Aboukhater an e-mail stating I have not forgotten about our conversation. I will give you a call later in the week, as I am currently buried with the acquisition I told you about.' This referred to the Savoy Hotel deal. In an undated note believed to be July 2004 HBOS state, inter alia, 'We have developed a good relationship with Ramsey/Kingdom and we would anticipate that this is the 'foot in the door' with Kingdom who clearly have substantial assets to grow their hotel business.'
28. On 3 August 2004 Mr Broderick of HCA sent a valuation of the hotel to Mr Mankarious and on 4 August 2004 another valuation was sent to Mr Mankarious from Kimmo and Eija Virtanen whose employers are unknown. On 9 August 2004 a further valuation was sent by HCA to Mr Mankarious. These valuations, each of which related to the Monte Carlo Grand Hotel, contained capitalisation assumptions which involved Kingdom providing equity for the acquisition of the hotel. Those assumptions ranged from 30% to 50% equity from Kingdom. Mr Mankarious described the HCA valuations as mere templates and the Vertanen valuation as a test for a prospective employee. The Claimant contends that these valuations were all part of the process of preparing for the acquisition of the Monte Carlo Grand which started whilst the arrangements for the Savoy deal were being finalised.
29. On 11 August 2004 Mr Mankarious sent an e-mail to Mr Peter Cummings of HBOS stating that he was in the process of finalising the meetings for Cannes, suggested a meeting with the Prince, and further stated:-

"On another note, there is a hotel in Monte Carlo that we have been trying to acquire for a number of years. I have an excellent relationship with the owner and he has finally agreed to sell the property. The hotel is the Monte Carlo Grand in Monaco. It is over 600 rooms and has great upside potential.

Fairmont are very interested in operating and investing in the ¦ hotel. I have arranged for Bill Fatt to take a tour of the hotel on the morning of Wednesday 18^th. It would be great if you could join us on the tour as I believe this could be our next investment together."

This letter makes no reference to the joint venture arrangement between HBOS and Fairmont for the purpose of investing in hotels, of which Kingdom was to become a late entrant though Mr Mankarious said that he spoke to HBOS about it before the flight to Cannes. Mr William Fatt of Fairmont has said in evidence that as far as he was concerned the first musings on the concept of a fund to invest in prime hotels in Europe was discussed on the plane en route to Cannes with HBOS on 17 August 2004. On 18 August 2004 Mr Fatt and Mr Mankarious visited the hotel and also a hotel in Nice 'as early potential candidates for the Fund.' In the meantime Bassam Aboukhater had called Mr Mankarious on 14 August 2004 to say that his father no longer wanted to sell at any price, apologised and asked if Mr Mankarious could help him with other projects on the hotel. Later however on 26 August 2004 Bassam Aboukhater told Mr Mankarious that his father would sell for around €225M but was talking with Brunei Investment Agency and proposing to offer it to them for €250M.

30. No doubt fired by the success of the Savoy Hotel Joint Venture, HBOS and Fairmont were enthusiastic about setting up the joint venture fund for investing in the hotel industry. HBOS were prepared to commit £100m of equity to the fund, with Fairmont to commit £50m and the balance from the third investor. HBOS were also to contribute £600m debt. The transactions on a deal by deal basis would be modelled on the Savoy Hotel transaction. (Fairmont Board Minute 12^th September 2004).
31. On 16 September 2004 Mr Mankarious informed Mr Fatt by email of his proposals for a Joint Venture Fund about which he said he had been in discussion with, with HBOS for some time.
32. On 1 October 2004 Mr Mankarious entered into an agreement with the Defendants under which he was to be paid a fee of £10m for securing a purchaser for the hotel. The terms of this brokerage agreement with the Defendants required Mr Mankarious to disclose his fee to the purchasers. The evidence shows that he disclosed the fee, but not its amount, to HBOS, but neither the existence of the fee nor its amount to Fairmont. The brokerage agreement referred to Cedar's intention to introduce a purchaser, which is a group consisting of a number of investors including but not limited to HBOS, Fairmont, Kingdom and the Prince. Other documents during the run-up to the formation of the joint venture hotel fund referred to Kingdom as a possible investor though not all. In a note from HBOS written sometime between 29 September 2004 and 5 October 2004, it was stated that the proposed equity providers included Kingdom/Other at 25% but that "no certainty" that Kingdom will be third party investor but they will be offered a position once HBOS and Fairmont broadly agree terms" the Monte Carlo Grand was the "proposed cornerstone asset for the fund".
33. Negotiations continued between Mr Mankarious and the Defendants and the Letter of Intent was signed on 5 October 2004. The proposed agreement was between a joint venture company held by the Bank of Scotland as a subsidiary of HBOS, Fairmont Hotels and other potential investors. The purchase price was €215m.
34. Letters to the Prince from HBOS, Fairmont and Cedar were sent to the Prince on 9 October 2004 inviting him to commit the remaining 25% of the equity required for the joint venture. Chuck Henry of HCA was asked to advise and endorsed the joint venture enthusiastically, describing it as a "Mom and Apple Pie" opportunity. In his e-mail sent on 19 October 2004 he states, inter alia:-

"We analysed this property when Ramsey first worked on it a couple of years ago, and a lot of our concerns have been addressed. For instance, it had a lease that would have impacted the financing of the deal, but the current owners have apparently extended the lease."

35. The Prince decided to back the proposal and the purchase took place on the 22 December 2004. Cedar were paid their commission by the Defendants though Fairmont when they had learned of Mr Mankarious' commission agreement with the Defendant were concerned about his conflict of interest representing the joint venture and Kingdom/HCA at the same time. Mr Al-Qadi said that Mr Henry had told him that when Kingdom learned of the commission agreement between Mr Mankarious' company, Cedar Holdings and the Defendants, they were no longer prepared for him to act for them. This was not confirmed by Mr Henry when his deposition was taken in the United States.
36. On the day that the share purchase agreement between Monte Carlo Grand Hotel Ltd and FHR European Ventures LLP was signed, namely 22 December 2004, Mr Henry sent an e-mail to Mr Mankarious and others which stated :-

".. the Deal is Done. Let me add my congratulations to everyone at HBOS and Fairmont and the advisors. As Terry said, you all got this done in some kind of record time. At the same time, Ramsey deserves special recognition for hanging in on this transaction for more than 2 years. Speed and efficiency are extraordinary valuable, but sometimes it takes perseverance over a long period of time to make a deal happen. Well Done."

It is clear that Kingdom were the preferred additional investors to both Fairmont and HBOS. Mr Fatt made it clear in his evidence that whilst this was so, if the Prince had not wished to invest in the joint venture it would still have gone ahead and Fairmont would have been prepared to have gone to 50% as a contribution to fund the joint venture and complete the first purchase. Thereafter Fairmont would have looked for an investor, a third investor and sold down their interest to 25%. Fairmont would have proceeded without Kingdom in Mr Mankarious' opinion because the joint venture was a perfect opportunity for Fairmont and without HBOS who were putting up £700m, nothing would have happened.

37. Mr Chuck Henry said in the course of his deposition that Kingdom "would have gone ahead with the joint venture with or without the Monte Carlo Grand but we would not have gone ahead with the Monte Carlo Grand without the joint venture."
38. The Claimant learned of the sale of the hotel to a consortium including Kingdom and Fairmont in January. He had in fact met Mr Mankarious by chance on a flight to Nice on 21 December 2004 when the sale of the hotel had been discussed but Mr Mankarious had not told him that a share purchase agreement for the sale of the hotel was just about to be signed. The Claimant telephoned Bassam Aboukhater in January 2005. He did not deny that an agreement had been reached but said that it was a different transaction from the one which the Claimant had introduced. He said Mr Mankarious came to the Defendants independently on behalf of Cedar Capital and it was a different deal than the one with Kingdom. Mr Mankarious had done the deal and therefore he should be paid and they were not going to pay a fee to Mr Aboualsaud or Mr Al-Qadi.
39. Mr Aboualsaud and Mr Al-Qadi decided that a telephone call should be made to Bassam Aboukhater which should be recorded so that they could obtain some evidence of the existence of the Agency Agreement in case the Defendants denied that it had ever been made. Mr Al-Qadi telephoned Bassam Aboukhater on 21 February 2005 from the offices of the Claimant's solicitors, Taylor Wessing. A copy of the briefing note which Mr Al-Qadi had during the course of this telephone call was produced during the trial. The note instructs the caller to state the terms of the agreement, that they know the hotel was sold, that the Prince did buy it and that the Claimant is entitled to his fees. The penultimate entry on the note states "the idea is to then focus his denials on the identity of the purchaser and to effectively admit the fee arrangements." Mr Bassam Aboukhater was not informed that the call was being recorded.
40. During the telephone call, Mr Bassam Aboukhater stated that commission was not payable to the Claimant because the Kingdom deal which he had introduced never came about. It was Ramsey Mankarious who introduced HBOS and hence created the project which did go ahead. There are passages in the conversation from Bassam Aboukhater which implicitly accept that an agreement had been reached without stating what it was for (for example the answers at B8 and B28 of the transcript of the calls "very simple and a hundred per cent correct" and "... What you are saying, would be correct..." He also states at B32 and B33 that the agreement died because it was time elapsed, it could not be exclusive forever. He also states at B38 "there is no agreement between me and him, written or non-written". At B39 he said there was no agreement "my agreement with him was oral but if he brought me Kingdom at time he would get a ... what you call it.. an account. He did not bring me Kingdom and we say that this project died. Ramsey came to me independently representing Cedar Capital." At B47 he said that there was no agreement, no exclusivity "it was all just talk"; he wished it had been signed because "it would have had an expiry date and a time limit.." He agreed that the Claimant had spoken with his father and said "..and he told him that what Bassam is saying that if this project of yours happens, you're more than welcome" B49. At B50 he said that the agreement did not exist. At B53 "that your first agreement was on the premise that you were to bring me the Prince. But that did not happen! It died!"
41. When proceedings were issued and served an application was made by the Defendants to strike out the claim. In support of that application were the first witness statements from the Defendants denying that there had been any agreement to pay commission to the Claimant or that any meeting between the Claimant and Toufic Aboukhater had been arranged by Bassam Aboukhater or that such meeting had ever taken place.

The Issues

There are essentially two main issues to be determined, firstly, whether there was an agency agreement made between Waleed Aboualsaud and Bassam Aboukhater, acting on his own behalf and that of his father, and if it was, secondly whether the introduction made by Waleed Aboualsaud of Kingdom to the Defendants in December 2002 was an effective cause of the sale of the hotel to the joint venture consisting of HBOS, Fairmont and Kingdom in December 2004.

The Submissions

42. I have been greatly assisted by the quality and depth of the opening and closing, written and oral submissions by Counsel in this case. I have considered them in detail and taken them into account in preparing this judgement. I propose to set out here the main submissions made by each party on the two issues;-

1. The Agreement

(a) The Claimant's Submissions

43. The Claimant is an honest, reliable and impressive witness whose account was truthful and convincing. By contrast both the Defendants were unreliable and dishonest witnesses. Bassam Aboukhater had lied in his first witness statement about arranging the meeting between his father and Mr Aboualsaud and had deliberately played down his knowledge of the finances of the hotel and the extent to which he dealt with matters relating to it on behalf of his father. His explanation for providing financial information in the summer of 2004 was implausible. The suggestion that he had given Mr Mankarious the occupancy rate of 76% for June 2004 simply by way of conversation as a good piece of news to share was not true.
44. Toufic Aboukhater's evidence was, Mr Richard Spearman QC, on behalf of the Claimant submitted in his oral closing submissions, that of a strong-willed, cunning, controlling and manipulative man. He kept his son at his beck and call, discussed the hotel with him frequently, gave him money and even owned the house that he permitted his son to live in. Bassam Aboukhater was at the mercy of his father and was certainly not the sort of man who wouldn't tell his father what was happening. Toufic Aboukhater was an uncooperative witness who was at times incomprehensible in his evidence in spite of the fact that his witness statements were expressed in lucid and sophisticated English. He could be entirely clear when he wished to be. His evidence that he intended to give the Claimant a present and that if he did not accept it, he would not sell the hotel was manifestly absurd. In spite of his evidence to the contrary, he was always interested in selling the hotel as the negotiations beyond the letter of intent in March 2003 demonstrated. Both he and Bassam Aboukhater had lied in denying that they had discussed the sale of the hotel with Mr Mankarious at the meeting of 19 May 2004 as Mr Mankarious' note demonstrates.
45. Mr Aboualsaud's evidence was convincing. Mr Spearman submitted he would have been regarded as a suitable agent for the purpose of selling the hotel because of his extensive contacts with international investors, knowledge of financing using high debt leverage and multi-equity investors, and his knowledge of the Prince. He would also enable Toufic Aboukhater to deny that he was seeking to sell the hotel which he could not do had he used the services of a bank. Even if Toufic Aboukhater was not really interested in selling the hotel he had nothing to lose by following up the lead to the Prince. Clearly Mr Aboualsaud believed that a binding agency agreement had been made as otherwise he would not have agreed to share his fee with Mr Al-Qadi. The agreement was not recorded in writing because of his complete trust in Bassam Aboukhater. Toufic Aboukhater's reason for refusing to commit the agreement to writing, thought by the Claimant to be ridiculous at the time, "was shown to be correct by Mr Fatt's evidence that disclosure of the commission fee could indeed have led to a request for the reduction of the price agreed by the amount of that commission. In any event, Mr Aboualsaud trusted Toufic Aboukhater as well. The fact that the Brokerage Agreement with Mr Mankarious was reduced to writing was entirely different, as by that time the Defendants wished to protect themselves against allegations that they paid a secret commission to Mr Mankarious.
46. The Claimant would not have said that a sliding scale of fee was agreed if it had not been. Had he been fabricating his claim such an unnecessary complication would not have been included. There was indeed a reputational risk in acting as an introducing agent and every reason for requiring a firm offer of remuneration.
47. The telephone call of 21 February 2005 strongly supported Mr Aboualsaud's case. Bassam Aboukhater made no reference to simply recommending a fee rather than agreeing it, but instead admitted that the agency agreement was made. His evidence was made up to fit the transcript.
48. Mr Aboualsaud's explanation of high debt leverage in order to obtain a premium price was entirely persuasive. He could hardly have invented the points in retrospect to tally with the facts of how the eventual sale was structured when the Defendant's own reply to the letter before action said that Mr Mankarious, at the meeting of 5 December 2002, had himself referred to Kingdom's use of equity participants. The Claimant would have known that the Prince would have been likely to use high debt leverage for such transactions.
49. The Claimant's answers as to whether Bassam Aboukhater was a party to the agreement were entirely honest. He did consider that Bassam Aboukhater was bound by the agreement, but that basically Toufic and the family would pay the commission.
50. There was no reason to put the binding agreement into writing because of the Claimant's trust of both Toufic and Bassam Aboukhater. Nor was there any purpose, as he said in evidence, for him to jot it down himself. There is no reason why he would consider that a written note, unsigned by the Defendants would get him anywhere as it didn't have the Defendant's signatures on it.
51. The evidence of Toufic Aboukhater was that it was not possible for his son to enter into an agency agreement without at first having obtained his authority to do so. If the agreement was made then Toufic would be bound by the acts of his son as his authorised agent.
52. Mr Aboualsaud's account of the meeting with Toufic Aboukhater should be accepted; he is the only witness who has any recollection of it, and Toufic Aboukhater put forward no positive case on the matter. The fact that there is no reference on the tape recorded telephone call of assurances being given by Toufic Aboukhater to pay the fees is a point of no force as the tape is entirely consistent with Mr Aboualsaud's account. The tape is relevant, admissible and persuasive.
53. The Court should approach the matter on a broad and reasonable basis. The Defendants' arguments as to the implausibility of the Claimant's account are circular. It is only if friends never make business arrangements, or if they do, they always record them in writing that the argument can be sustained as to the absence of writing. It was not impossible, Mr Spearman said, that the parties simply misunderstood each other but that went against the very clear evidence of the Claimant and the admissions on the tape. The truth is that the Defendants were always willing sellers whose imagination was fired by the possible introduction of the Prince. It was the Claimant who had the only lead which was needed. The First Defendant's role was essentially to be used as a buffer to deny the enthusiasm and increase room for manoeuvre as to price.

(b) The Defendants' Submissions

54. The submissions made by Mr Christopher Butcher QC on behalf of the Defendants on the Claimant's evidence are as stark as the Claimant's submissions on the First and Second Defendants' evidence. The Claimant's account, Mr Butcher submits, was completely unpersuasive; his case has been reconstructed and is supported by demonstrable untruths. It is wholly implausible and never gets past first base. By contrast, Bassam Aboukhater's evidence is convincing. He was fluent, conspicuously truthful and frank. Where Mr Aboualsaud was well aware of his case and tailoring his answers to fit it, Bassam Aboukhater was spontaneous and truthful. Mr Aboualsaud's evidence was argumentative and focused on his desired result. Toufic Aboukhater was not a dishonest witness intending to mislead nor was he in any way obstructive. He was at all times attempting to give honest and accurate evidence to the best of his recollection.
55. Bassam Aboukhater's account was plausible because his evidence described what took place between two very close friends, namely himself and Mr Aboualsaud. His account of how the discussions about the possibility of selling the hotel arose was natural and probable. His father was not a seller but a difficult man set in his ways whom he needed to tempt with a substantial offer. Hence Bassam Aboukhater did not tell his father about making contact with Mr Mankarious until that meeting had happened. The discussions were at all times between friends and no legally binding contract was envisaged or reached. Bassam Aboukhater's account of the discussion of payment and his recollection of the discussion on the stairs after the Mankarious meeting is a detailed and accurate recollection.
56. Once Bassam Aboukhater discovered that there was a loan on the hotel which would have to be paid out of the proceeds he realised there was little prospect of the sale going through and could not support the Claimant's request for a commission of 5%. The fact that discussions continued as to what the fee might be, shows that there had been no binding commitment at the time the Claimant alleged, namely prior to 5 December 2002.
57. Bassam Aboukhater's account was natural-sounding and convincing whereas the Claimant's was unconvincing. The Claimant's evidence of a worked out agency agreement with a sliding scale is formalistic and incredible. That such an arrangement was not going to be made between two friends was well exemplified by the Claimant's own evidence in cross examination that he trusted Bassam Aboukhater blindly, he was my best friend, "it was like my brother calling me up saying can you please help me sell my house and if it sells for a good price I will give you something..." T2/75
58. The absence of writing also suggests that neither of them considered that there was any agreement. The Claimant's recollection of when and where the contract was made was extremely vague. There was no basis upon which Bassam Aboukhater could have assumed personal responsibility for payment of such a substantial fee, yet it was the Claimant's case that he did, albeit it was going to be paid through the family. Why should the family pay a fee when a holding company existed?
59. Furthermore there is doubt on the Claimant's own evidence as to what he was supposed to do to perform the agreement he asserted. Was he to introduce just the Prince? Or was he, as he also said in evidence, going to have to call a lot of people and make a lot of contacts?
60. The real falsity of the Claimant's account can be seen from the fact that Toufic Aboukhater was not seeking to sell the hotel and a premium price of US$160-200 million would simply not have been discussed. This is clear from the ending of the deal with Kingdom on 9 May 2003. Toufic Aboukhater would not have considered on the evidence a sale at anything near the $160 million level. The hotel had cost him $140 million plus additional spending. The Claimant's evidence about an earlier price indication from an unidentified source of $100 million was not even put in cross examination.
61. As Toufic Aboukhater was not a seller he would not have given Bassam Aboukhater authority to make a contract on his behalf. In any event he would not have asked his son to approach the Claimant as he was a very well connected person. As Bassam Aboukhater said, he was the last person his father would have chosen. Nor did the Claimant have any relevant experience.
62. The Claimant's evidence about Toufic Aboukhater not wanting to reveal to Prince Rainier that he was seeking to sell a hotel and to be in a position to deny it to him was an extraordinary allegation refuted by the evidence. The argument as to confidentiality was preposterous; there were many contacts whom Toufic Aboukhater could rely upon for confidentiality.
63. The absence of any written record is fundamental. If a binding contract had been entered into for such a large sum of money both sides would want to set it out formally. The Claimant, as a sophisticated international business man knew very well that deals needed to be recorded however much the other party is trusted. He knew full well how memories could fade. The reasons given by the Claimant for accepting that the matter could not be put into writing were incredible. The only sensible explanation of the failure to make any written record of the agreement was the fact that no such agreement was ever made. Mr Al-Qadi's evidence that he never kept aide-memoir was clearly false.
64. The Claimant's evidence that he was reluctant to become involved and had to be enticed by the offer of a high fee to do so was implausible. His evidence that there was fear of damage to his reputation was unpersuasive. Unfounded allegations such as doubts as to Toufic Aboukhater's means to purchase The Dorchester showed that the Claimant was prepared to make unfounded assertions if they seemed to support his case.
65. The Claimant's account of the meeting with Toufic Aboukhater was also highly implausible and his evidence that Toufic Aboukhater looked him in the eye and confirmed all the details of the agreement were, as Toufic Aboukhater said, fantasy. The surreptitiously recorded telephone conversation did not indicate that there had been any binding agreement to pay fees. The use of the word "account" in the conversation showed that this was a number which was to be agreed. The use of the phrase "you're more than welcome" showed that only generalities were involved. The Claimant's case as to the agreement should fail.

2. Performance of the Agreement

(a) The Claimant's submissions

66. The purchase in December 2004 stemmed directly from the Claimant's original introduction in the case of each one of the equity buyers, Fairmont, HBOS and Kingdom. Mr Aboualsaud introduced Kingdom, through Mr Mankarious. Kingdom did not buy it immediately; but the Defendants informed Mr Mankarious after a period that they again wanted to sell the hotel; Fairmont HBOS and Kingdom were informed by Mr Mankarious that the hotel was for sale again and they bought it.
67. The test is whether Mr Aboualsaud's introduction was "an" effective cause of the sale not "the" effective cause. It is not therefore a question of which of different competing causes is "the" effective cause as there may be many effective causes. Mr Aboualsaud has to show that his was among them and once he has established that his introduction caused the sale he is entitled to be paid, unless some new and independent cause supervenes and his introduction ceases to have any real effect.
68. The eventual sale stemmed from the introduction of the hotel to HBOS, and the reintroduction to it to Fairmont and Kingdom by Mr Mankarious whose links with HBOS and Fairmont arose directly from his involvement with Kingdom and latterly by his retention by Kingdom as an independent agent on the Savoy Hotel deal.
69. The Defendants' submission that the European joint venture was the true cause of the sale of the hotel is to confuse the cause of the transaction with the means by which it was carried out. The joint venture was merely the financing arrangement used to acquire the hotel; it says nothing about how the buyers came to want to buy the hotel in the first place.
70. If the hotel had been sold to Kingdom in 2003 there is no doubt that the Claimant would have been entitled to his commission. That result should have been no different if other equity participants had been brought in as co-purchasers from the Defendants. On the evidence this may well have been Kingdom's intention. Kingdom would typically bring in other equity investors and the valuations demonstrated this to be so.
71. The contention by the Defendants that there were two different deals in this case, the first to Kingdom alone and the second to the consortium is misconceived. Even if there were two different planned structures that would make no difference to the Claimant's entitlement. The proposition that the introduction has to be not merely to the property but to the transaction is based on a misapplication of the case of John D Wood v Dantata (1987) EGLR 25.
72. After the negotiations in 2003 with Kingdom were brought to a halt neither Kingdom nor the Defendants really thought the possibility of selling the hotel to Kingdom had come to an end. The Fairmont emails demonstrate this. Mr Mankarious admitted to keeping up contact with the Defendants between 2003 and 2004 in order to try and find a way of bringing the deal back up. That is why he asked about the revenues, expenses and performance of the hotel.
73. On 19 May 2004 the Defendants approached Mr Mankarious as an employee of Kingdom. HBOS still thought that he worked for Kingdom in July 2004 according to their briefing note F1/3A/3B. HBOS were keen to get their "foot in the door" with Kingdom.
74. The email of 11 August 2004 was sent at a time when Mr Mankarious was retained by Kingdom to act on the Savoy deal and it is most unlikely that he was seeking to set up the joint venture with HBOS and Fairmont without ensuring that the Prince was content that it conformed with his investment objectives.
75. The proposal to buy the hotel predated the joint venture on the evidence. The valuations of 3/8/04, 4/8/04 and 9/8/04 show Mr Mankarious for Kingdom knew this. The first musings about the joint venture only took place on the flight to Cannes on 17 August 2004. Had it originated earlier as Mr Mankarious suggested but did not state clearly in evidence, his email of 11 August 2004 would have mentioned the joint venture, but it did not. The letter of 16 September from Mr Mankarious to Mr Fatt can only mean that any discussions Mr Mankarious was having with HBOS about a joint venture fund included Kingdom since the Savoy hotel deal was a deal in which Kingdom and HBOS took a 50% share of the equity. The joint venture fund was not formed in order to buy a hotel specifically and, if it had been discussed at all, was in its very early stages on 10/11 August 2004. It was in Mr Mankarious's interest to delay any involvement of Kingdom as late as possible as he had effectively appropriated for his own benefit a business opportunity that was rightfully Kingdom's.
76. It matters not whether Kingdom participated in the sale at all, as a sale to HBOS and Fairmont alone would have been caused by the introduction of Kingdom in the first place.
77. The joint venture fund was merely a financing mechanism for purchasing the hotel. If the particular joint venture fund had not been set up the hotel could have been acquired using a one off joint venture fund as the Savoy Hotel was.
78. In May 2004 Mr Mankarious was still an employee of Kingdom and the approach on 19 May 2004 was plainly made to him as an offer to sell the hotel to Kingdom. It was the Claimant's introduction which brought this about. He referred the possible acquisition of the Monte Carlo Grand to precisely the two parties to whom it would have been natural for him to refer as possible participants had he still been employed by Kingdom. He merely did what came naturally as a result of Kingdom's involvement as introduced by the Claimant. Until the joint venture became a player after 17 August 2004 it appears the plan was to sell the hotel to Kingdom, HBOS and Fairmont on a deal similar to the Savoy deal. HBOS and Fairmont were always keen on investing with Kingdom. HBOS and Fairmont were both involved in the transaction because of their close relationship with Kingdom which made it natural for the possible acquisition to be referred to them by Kingdom through Mr Mankarious with his involvement on the Savoy Hotel deal.

(b) The Defendants' Submissions

79. The party introduced by the Claimant, namely Kingdom, did not go on to purchase the hotel. The purchaser was not only a different entity, but was the product of a joint venture which did not exist, and was not in contemplation at the time of the introduction. Kingdom did not seek to make the first purchase with other equity investors and Fairmont would not at that time have been interested in an equity investment in the hotel.
80. The driving force of the joint venture was HBOS. Because of the attractions of the joint venture by autumn 2004 Fairmont was prepared to put up equity to the extent of 50%. By contrast Kingdom's participation was late and inessential. Mr Henry's evidence was that Kingdom would have gone ahead with the joint venture with or without the Monte Carlo Grand but would not have gone ahead with the Monte Carlo Grand without the joint venture. The Claimant's introduction was at its highest no more than part of the background, that is a sine qua non of the eventual transaction. That in law is insufficient. The Claimant's submissions in relation to Dantata are incorrect: the requirement that the introduction must be an effective cause of the transaction does no more than illuminate the test of effective cause rather than refine it. Nor is the Claimant right to submit that the test is whether there has been a break in the chain of causation. The test remains whether the introduction has brought about the sale. As was said by Lord Atkinson in Burchell v Gowrie and Blockhouse Collieries Ltd [1910] AC 614 the test is whether the "relation of buyer and seller is really brought about by the act of the agent". Here the Defendants' case is that the effective cause of the ultimate transaction lay in the formation of the HBOS/Fairmont joint venture.
81. In 2003 no one other than Kingdom had any interest in acquiring or contributing equity to acquire the hotel at that time. Kingdom were at least in part reluctant as Mr Henry's lack of interest showed and Mr Mankarious made it clear that at the price level being spoken of they were "pushing the envelope". The Defendants submit that it should also be noted that Toufic Aboukhater himself was not that enthusiastic about the sale in view of the fact that he effectively brought due diligence to a halt in 2003. The negotiations which came to an end in May 2003 were never re-started. The documents relied upon by the Claimant to show that negotiations were continuing demonstrate no more than the echoes of the negotiations which had in fact ceased. The emails and valuations relied upon by the Claimant do not demonstrate continuing negotiations. There are no other documents between May and July 2003 which evidence any negotiation. Nor is there any evidence that Kingdom showed any interest in buying the hotel during this period.
82. It was Mr Mankarious who was seeking to keep any future deal alive at the same time as Bassam Aboukhater wished to persuade his father to sell the hotel if a price of €200 million could be achieved. Mr Mankarious's notes, as the Claimant himself said, were often extremely optimistic rather than accurate.
83. Mr Butcher submits that there was no actual discussion about selling the hotel at the meeting of 19 May 2004, Toufic Aboukhater's presence at the meeting was partial and coincidental and that no financial information was provided to Mr Mankarious after this meeting had taken place save for the year to date figures for May 2004 which were not scanned into the Cedar computer system until 4 August 2004. Mr Mankarious himself said that the Defendants often changed their minds so Mr Mankarious never took anything very seriously. The evidence of Mr Henry is that Kingdom were not interested in purchasing the hotel at all at that time let alone at a price in excess of €200 million. Even if instructions for a sale were given on 19 May 2004, that could not make the 2002 introduction of Kingdom the effective cause of the 2004 purchase. The meeting on 19 May 2004 is irrelevant. The email from Bassam Aboukhater of 25 June 2004 does not call into question Bassam Aboukhater's evidence that the discussions between him and Mr Mankarious had changed from the topic of sale to consultancy services for the hotels. Negotiations with Kingdom came to an end on 9 May 2003 and were never resumed.
84. Discussions about the joint venture started in early August 2004 between Mr Mankarious and Douglas Middleton of HBOS. These discussions were with Mr Mankarious as Cedar and not with Kingdom.
85. The correspondence between Mr Mankarious, Peter Cummings and Douglas Middleton 11-13 August 2004 show that discussion had already gone beyond just the Savoy transactions. The opportunity for the nascent joint venture fund to purchase the hotel was obvious and taken up with Bassam Aboukhater as the email of 6 August 2004 shows. The evidence clearly demonstrates that Kingdom were not at that stage part of the discussions on the joint venture or the acquisition of the hotels. The evidence of Mr Fatt at E5/76, Mr Henry's, his memorandum of 19 October and the invitation letters of 9 October 2004 all demonstrate that this was so. Nor did Kingdom participate in the negotiations for the acquisition of the hotel or in the conduct of due diligence. In both the letter of the 16 September 2004 and the note of his conversation with Bassam Aboukhater of the same date, Mr Mankarious refers only to the joint venture consisting of HBOS and Fairmont. There was no reason for him to have hidden the involvement of Kingdom from Bassam Aboukhater had Kingdom been involved.
86. Kingdom were in fact a late entrant to the joint venture which would have proceeded without them as Mr Fatt's evidence made clear. The European joint venture was very important to Fairmont and quite different from the simple purchase of the Monte Carlo Grand. There is no basis for the Claimant's case that there was in effect only one transaction.
87. The Claimant's case on causation is, Mr Butcher submits, hopeless and his attempt to demonstrate the continuum of events from 2002 to 2004 not merely fails, but shows a failure to distinguish between a causa sine qua non and a causa causans. The introduction of the Defendants to Kingdom in 2002 is simply a causa sine qua non. From a business point of view the real cause was the advent of HBOS and the formation of the joint venture with Fairmont. He is wrong to address the matter upon the basis of a break in the chain of causation as that simply reverses the burden of proof. The Claimant has failed to demonstrate that the 2002 introduction was a real cause of the actual sale in December 2004.

Conclusions The Agreement

88. Whether an agency agreement was concluded between the parties or not is an issue of fact, the resolution of which depends upon my assessment of the witnesses, aided as I have been by Mr Spearman's and Mr Butcher's helpful analysis of, and comments upon, their evidence.
89. It is not infrequently the case that a witness's evidence consists of part truth, part accurate recollection, and part untruth and part inaccurate recollection. This case is no exception and therefore requires a careful and thorough assessment of the witnesses, and an evaluation of the significance of their accounts, each with its own imperfections, in the context of this particular issue and indeed the case as a whole.
90. The relationship between Waleed Aboualsaud and Bassam Aboukhater, and the relationship between Bassam Aboukhater and his father, Toufic Aboukhater are important matters which are relevant to my assessment of the witnesses and their evidence. There is no doubt that Mr Aboualsaud and Bassam Aboukhater were very close friends. They saw each other on a regular basis, communicated almost daily and met with their respective families. Both testified to the strength of their relationship. It is not surprising that in such a friendship they "discussed everything under the sun" as Bassam Aboukhater said in evidence T6/119. Such a close friendship is no bar to the creation of a business contract but the relationship makes it necessary to consider whether a binding legal contract rather than an informal arrangement between friends has been entered into. No presumption arises, it is simply a question of taking the relevant background into account.
91. The relationship between Bassam and Toufic Aboukhater is another matter which needs to be given due weight as it is important to understanding the witnesses and their evidence. Toufic Aboukhater made very considerable sums of money from the property market and is a very wealthy man. He provides his son Bassam with his sole source of income and indeed his house. He did not give the house to his son but held the ownership himself. I have no doubt that Toufic Aboukhater is a man who has over the years become used to exercising power as and when he wishes to do so. He is a man who has become used to getting his own way and expects to do so. He is not merely used to power but completely at ease in exercising it. He is a shrewd and successful business man but someone who, as he said in his witness statement, is guided substantially by instinct in his decisions.
92. In spite of his dependence on his father financially Bassam Aboukhater has a close and good relationship with his father based on mutual respect and affection. I accept Bassam Aboukhater's evidence that he jealously guards his independent life in London and had no desire whatever to go to Monaco and assist his father in running the Monte Carlo Grand Hotel. I am satisfied that this was a significant factor in his wish for the hotel to be sold. He did not want his father to own the hotel. T6/131.
93. I formed the clear impression, observing Toufic Aboukhater giving evidence, that he was a tough and uncompromising man who, in his son's words could be "very difficult... set in his ways" T6/129. He was capable of agreeing to sell, or withdrawing from the sale of his assets, following his instincts. He was thereby able to assert his ownership and demonstrate his complete freedom to dispose of his assets in his own time.
94. I am conscious of Mr Spearman's attack on the manner in which Toufic Aboukhater gave his evidence and have considered it. There were occasions when he appeared reluctant to commit himself to an answer but equally occasions when his knowledge of English was not sufficient to enable him to fully comprehend the form or language of the question. I have no doubt having heard him give evidence that his witness statement was not drafted word for word by him. The style and form of the English used there is quite different to that of his own use and command of English. I have also considered whether his account of the meeting in Monaco with the Claimant was dishonest and should cause me to question the whole of his evidence. I have concluded that even if his account of that meeting was less full than it should have been, his evidence is not so tainted that it should be completely disregarded. Having heard his evidence and that of the Claimant, Bassam Aboukhater and Mr Mankarious I am satisfied that Toufic Aboukhater was not an initiator of any discussion about the sale of the hotel as he had not yet contemplated selling it. He was however prepared to sell if he received an offer sufficiently large to persuade him that it would be right to sell.
95. I am therefore satisfied that he did not give his son Bassam authority to enter into discussions with Mr Aboualsaud to ask him to find a purchaser before his son went on holiday to Barbados. Nor do I accept Mr Spearman's argument that the relationship between the father and son was that Bassam was at the mercy of his father and would inevitably have kept him informed about any discussions that he was having about the sale of the hotel.
96. I reach these findings firstly because I accept Toufic Aboukhater's evidence as to his attitude towards selling the hotel, secondly because I accept Bassam Aboukhater's evidence that he neither had prior authority to discuss the matter with the Claimant nor kept his father informed of the discussions as they developed and thirdly because I am satisfied on the evidence that if Toufic Aboukhater had made a decision to sell the hotel he would have approached his well established contacts rather than use his son to speak to the Claimant. I am quite satisfied having heard the evidence of Toufic Aboukhater and Bassam Aboukhater that their account of this is correct, in spite of the challenges to their credibility on other issues. In particular I have considered what I regard as Bassam Aboukhater's less than truthful account about whether he had arranged the Monaco meeting between his father and Mr Aboualsaud and its effect upon his evidence as a whole. Nevertheless, I accept Bassam Aboukhater's evidence that it was he who was seeking to tempt his father into selling the hotel so that all further pressure upon him to go to Monaco would be removed, not his father asking him to find a purchaser through the Claimant. In addition had Toufic Aboukhater had wished to sell the hotel, he would have, as he told me in evidence, approached one of his influential contacts whom he knew he could rely upon to find potential purchasers. At T4/33 he said that the General Manager of HSBC on Monaco and the Chairman of HSBC were friends of his, as were Michael Pastor, the biggest real estate owner in Monaco and Jean-Luc Biamonti a Senior Partner of Goldman Sachs and Chairman of a substantial company in Monaco. These were some of the names amongst others that he could have approached with numerous contacts had he wished to sell the hotel. Kingdom was of course a trophy buyer to whom he was attracted, but there is no evidence before me that Kingdom, or the Prince, had been mentioned as possible purchasers of the hotel before Barbados.
97. As to confidentiality and deniability I see no basis upon which any of Toufic Aboukhater's personal contacts in Monaco would be less likely to keep the matter confidential than the Claimant's potential contacts which included not only the Prince but wealthy Russians. As to deniability no bank would say anything other than it couldn't comment on any particular transactions.
98. I turn next to the evidence of both the Claimant and Bassam Aboukhater as to the discussions in Barbados and then in November and December in London. There were unsatisfactory features in the Claimant's evidence, the First and Second Defendants' evidence, and Mr Mankarious' evidence. Mr Henry's evidence was defensive and Mr Al-Qadi's evidence contained an attack on Toufic Aboukhater's reputation which had not been foreshadowed in his witness statement. T3/30. The only witness to have emerged from the process of giving evidence entirely unscathed was Mr Fatt, who by any standards was an impressive witness. The evidence of Mr Henry and Mr Fatt goes to the issue of effective cause but that of Mr Mankarious affects the agreement issue as well because of his direct dealings with the Aboukhaters in 2003 and 2004. I have taken into account the vagaries of the witnesses' evidence in reaching my conclusions. As a preliminary matter however I shall consider first the recorded telephone call of 21 February 2005 upon which the Claimant relies in support of his contention that Bassam Aboukhater in that call admitted, in effect, the agency agreement.
99. It is important to consider the transcript of the call not only as a whole, but also to consider various individual answers. I have no doubt that when taken as a whole there appears to have been an implicit acceptance by Bassam Aboukhater that an agreement had been reached. It is clear from the transcript and indeed from his evidence before me, that he chose to state that the Claimant was not entitled to commission because the Kingdom deal had died. He does not at any stage say that he had never done any more than say that he would recommend to his father that a sum should be paid. On the other hand it is equally true to say that no questions were asked as to whether the agreement was intended to be or was binding or precisely what its terms were. Was the First Defendant saying that it was an agreement, as the Claimant contended which was invalid because it had no expiry date or was there no agreement save to pay the Claimant "an account" which may mean a sum to be calculated? Does the phrase "you're more than welcome" mean welcome to pay the commission the Claimant seeks, or some unspecified reward? Mr Al-Qadi seemed to suggest that the agreement was solely to introduce the Prince whereas in evidence the Claimant said it was other contacts including Russians.
100. I conclude that the transcript is ambiguous; it is not possible to come to any sensible conclusion as to whether an agreement was clearly being admitted or if so what that agreement was for. At the time that I saw the video and read the transcript, and upon re-reading it, I remain of the view that its content is as consistent with the Defendants' case as it is with the Claimant's case. It would not in my judgment be safe to draw any adverse inference against Bassam Aboukhater based upon the contents of this transcript.
101. I shall first set out the specific areas in the evidence where I have concerns about the honesty or accuracy of what I was told. Firstly I have grave doubts about the Claimant's evidence as to the mentioning of the figure of 160 million as a minimum price which the Defendants would accept, secondly, I find it difficult to accept that the Claimant was ever told that an informal valuation of 100 million had been made to the Defendants by someone of whose identity the Claimant was uncertain, thirdly I doubted his evidence as to reputational risk, fourthly I doubted his evidence as to the Second Defendant's desire to falsely deny any proposed sale to Prince Rainier if necessary, fifthly his assertions as to the wealth of the First Defendant and the Second Defendant's capacity to buy The Dorchester were unfounded in fact, and sixthly I consider that his account about Toufic Aboukhater looking him in the eye and saying that he would pay him the 20 million not the 8 million not the 5% of 160... the full amount, as an elaboration of his evidence.
102. In so far as the First Defendant is concerned his witness statement stating that he had not arranged a meeting between the Claimant and his father was in my judgment less than fully truthful, secondly his evidence that he and his father did not say that the hotel was for sale again on 19 May 2004 was inaccurate, thirdly his evidence that he only informed Mr Mankarious that the June occupancy of the hotel was 76% in order to exchange a piece of good news was less than wholly truthful, fourthly, his evidence that he gave the year to date figures of May 2004 only in late July/early August was inaccurate.
103. The Second Defendant's first statement in which he said that there was no meeting with the Claimant in Monaco and his second statement that he had no recollection of that meeting may be a genuine recollection in a man in his 70s though I have my doubts about that. His evidence that no reference to the sale of the hotel was made at the meeting at the Dorchester on 19 May 2004 is less than truthful.
104. Mr Al-Qadi made a gratuitous assertion against the Second Defendant's reputation which he had not set out in his statement and which was not cross examined upon.
105. I did not find Mr Mankarious' evidence independent as Mr Butcher submitted. He was understandably defensive about the Cedar fee arrangement and his conflict of interest which he had not properly disclosed, and he was vague, and in my judgement appeared to be seeking to help the Defendants, in relation to what transpired at the meeting of the 19 May 2004.
106. Clearly the Claimant considered that he had come to an agreement with Bassam Aboukhater as to the receipt of a fee, as otherwise he would not have agreed to share such fee as he received with Mr Al-Qadi. The Claimant's belief that a commission had been agreed or that an understanding had been reached as to a commission does not however establish in itself what that agreement was. The Claimant is vague as to when and where the agreement was finalised. It was discussed in many conversations. It was agreed and finalised, but a couple of loose issues were left and talked about, and the Claimant was unable to remember whether it was confirmed over the phone or in person. T2/65, 66. In his statement the Claimant had said that it was Bassam Aboukhater who had put forward the fee structure. In his evidence however the Claimant said that he was the one who suggested the sliding scale if the purchase price was less than $200 million. The Claimant told me that Bassam Aboukhater said that they were looking to get a price of US $200 million or higher and that he had asked him what was the minimum price at which they were willing to sell. After he had given it some thought he said that if it was less than US $160 his father would definitely not sell. Bassam Aboukhater on the other hand told me that no minimum price was stated by him, that nothing less than $200 million was contemplated and it was only when that looked unrealistic that the Claimant raised the question of 5% commission which he said he considered unacceptable.
107. I prefer the evidence of Bassam Aboukhater on this issue. Toufic Aboukhater was not, as I have already found, seeking to sell the hotel. It cost him around US$140 million between 1998 and 2000 and he was also spending a lot of money on the hotel. T4/2, 3. I am satisfied that Toufic Aboukhater would not have sold the hotel for US $160 million and that Bassam Aboukhater did not say that that was the minimum price. On 9 May 2003 when Kingdom and the Defendants withdrew from negotiations about the proposed purchase of the hotel it appeared that a price well in excess of US $160 million could have been obtained, but Toufic Aboukhater simply withdrew from the negotiations at that time. The Claimant's evidence that Bassam Aboukhater had told him that the hotel had been informally valued around $100 million by some person whom he could not identify was not raised in his written statement nor even put in cross examination. This evidence, which in my judgement was used to bolster the Claimant's case on the minimum price, was unreliable and I reject it.
108. Mr Spearman submits that the Claimant's evidence as to a sliding scale would never have formed part of the alleged agency agreement had his account been untruthful; it was quite unnecessary for such a complication to be added. For my part I am satisfied that the Claimant did raise the question of a sliding scale if the $200 million figure was not achieved but Bassam Aboukhater rejected this as he did not think his father would sell for any number under $200 million. T6/122.
109. I also accept Bassam Aboukhater's evidence as to the time when the Claimant wished to discuss the agreeing of a fee. This only arose after the meeting with Mr Mankarious had taken place. Bassam Aboukhater's account of the discussion, with both of them elated after Mr Mankarious had left, sitting on the steps, was in my judgement convincing. Had this been a commercial relationship then of course the question of fees would have been raised at the very outset in the first discussion in Barbados; but this was not a commercial relationship: it was two very close friends, having discussed the possibility of finding a trophy buyer for the hotel, becoming elated at the realisation that this might actually come about. It was at this point that the Claimant raised the question of commission and the First Defendant said that he did not see anything wrong with that if a number big enough to satisfy his father and the Claimant could be achieved. T6/121. It was because they were close friends that the Claimant did not raise the question of commission earlier and strive for an agreement upon it before the meeting with Mr Mankarious.
110. There is also considerable vagueness as to the parties to the agreement. It is alleged by the Claimant that Bassam Aboukhater agreed to enter into the fee agreement because he would personally benefit from the sale. In evidence the Claimant said that Bassam Aboukhater did not say he would pay out of his own resources but that "we will pay the fees". Mr Aboualsaud understood that to mean basically Toufic and the family. There is therefore lack of clarity as to what the Claimant says was agreed as to whether or not Bassam Aboukhater was himself a personal party to the agreement. There was no discussion as to the holding company owning the hotel. The Claimant said in evidence that Bassam Aboukhater, in spite of the fact that he derives all his income from his father lives in a 20 million house and flies in a private jet worth 35 million; he seems to have substantial assets and acts as if his assets are his own. T2/53. Both assets in fact belong to Toufic Aboukhater rather than Bassam Aboukhater. This evidence was in a similar vein to the Claimant's evidence that he could not understand how Toufic Aboukhater could have afforded to purchase The Dorchester Hotel, an allegation which equally proved to be unfounded.
111. One of the reasons why Mr Aboualsaud says that a fee was agreed, is that he was reluctant to act because of a risk to his reputation in doing so and therefore needed the security of a substantial fee to compensate him for that risk. He also states that the Defendants enticed him to act as their agent by putting forward a substantial fee. I do not credit either of these assertions. Firstly I see little reputational risk in merely effecting an introduction between a possible buyer and a possible seller. Secondly if such a risk was real, a substantial fee would not diminish it. Further, I do not accept that it was the Defendants who enticed the Claimant to make the introduction: he was willing to do so out of his friendship for Bassam Aboukhater.
112. There is no doubt the Second Defendant was, as Mr Mankarious said, like many potential asset rich sellers, very concerned about confidentiality until at least a firm offer had been made. I do not however accept that Prince Rainier was raised in conversation by Bassam Aboukhater as the prime need for confidentiality. I accept Toufic Aboukhater's evidence that he and his family were close friends of Prince Rainier and his family and that whilst he would have preferred not to have discussed the possible sale until an offer had been made, his relationship with Prince Rainier was such that he could and would have done so had the need arisen. In any event as I have already found in the judgment there is no reason why the Claimant's contact with the Prince or Russian investors would have presented a lesser risk of confidentiality or deniability than an investment bank or other personal contacts of the Second Defendant.
113. The Claimant said in evidence that he and Mr Aboualsaud became concerned after Bassam Aboukhater had wanted to share the commission, that the agreement had not been put into writing, and that it had been their concern which led to the request for a meeting with Toufic Aboukhater. Bassam Aboukhater on the other hand says that it was after he had declined to agree the request for 5% commission that the Claimant wanted a meeting with Toufic Aboukhater. I am clear that such a meeting did take place, probably on 29 March 2003 and not later, and that the question of commission was discussed. It may be that Toufic Aboukhater's lack of recollection of the meeting is genuine, or it may be that he feels more comfortable, having denied in the first place that any meeting took place, in now saying that he has no recollection of it even though he accepts that it did take place. What I am however satisfied about, having heard both Toufic Aboukhater and the Claimant give evidence on what was said and what would have been said, is that there was no ratification of any earlier agreement between the Claimant and the First Defendant. No such agreement had been made. I have no doubt that assurances that a substantial reward would be forthcoming were made. The Claimant may have considered that something more definite was being offered and left with the warm glow of misunderstanding, but I am satisfied that Toufic Aboukhater did not confirm that he would pay a precise amount of commission. I accept his evidence that he would simply not have done so in such circumstances where his son's friend was effecting an introduction. The Claimant's evidence that Toufic Aboukhater "looked him in the eye" and told him that he would pay him 20 million, not the 8 million, the "20 million, not the 5% on the 160", is in my judgement an elaboration of his evidence. I am inclined to agree with Toufic Aboukhater's description of this part of his evidence as fantasy.
114. Nor do I find convincing the Claimant's evidence that he went to see Toufic Aboukhater because of his concern about the agreement not being in writing. Bassam Aboukhater could easily have communicated that, had that been his concern, and the absence of any draft agreement or note or memorandum as Mr Butcher submits, throws great doubt upon the Claimant's account. The evidence of Mr Fatt has given credence to the assertion that the agreement could not be put in writing because the amount of commission would simply be deducted from the purchase price, but if this was the reason, as Mr Butcher submits, it is even more surprising that the Claimant did not make a note for himself of the terms of the agreement. In fact I accept Toufic Aboukhater's evidence that it was his practice in circumstances such as this to reduce such an agreement into writing. Although, as Mr Spearman submits, the agreement with Mr Mankarious was in different circumstances because of the conflict of interest, I accept that if a binding agreement as to commission had been reached, Toufic Aboukhater would have wished it to have been put in writing.
115. It is in any event very surprising that the fee agreement alleged by the Claimant was not put into writing. Mr Spearman has submitted to me that there is a danger in placing too much emphasis upon this point. He submitted that unless it can be said that friends would not have reached an agreement such as this, or if they had they would have put it into writing, no proper reliance can be made upon the absence of writing. There is a danger, he submitted, in such an argument being circular or self-corroborating. It seems to me however that on these particular facts one would have expected the agreement to be put into writing whatever the level of trust between the friends who entered into it. Once the relationship moved from friendship to business partnership the need for writing was obvious. There was a very substantial sum of money involved; the fee agreement had evolved over "many conversations" or "several discussions"; it was a detailed agreement involving a sliding scale: there was a holding company. Mr Aboualsaud is a sophisticated and intelligent business man. It is therefore inevitable that he is aware that substantial deals needed to be reduced to writing so as to have certainty and avoid later arguments because of misunderstandings or fading memories. Where, as here, the alleged agreement involved different rates of commission on different figures with a sliding scale the need to put the matter into writing was obvious. If the Defendants declined to do so then one would have expected the Claimant and Mr Al-Qadi to do so. Even if no formal agreement could be drawn up, a contemporaneous note or memorandum of it was clearly required whatever the level of trust between the parties. Nor did the Claimant confirm his arrangement with Mr Al-Qadi in writing. His explanation that he did not use emails with a friend such as Mr Al-Qadi was not convincing. Nor did Mr Al-Qadi make a note of the matter or send any email in relation to it. Nor did he keep an aide memoir of his discussion with Mr Aboualsaud even though he used such a note during his conversation on the telephone with the First Defendant on 21 February 2005, and made manuscript notes upon it.
116. There is therefore no written agreement, no draft for the other side's consideration, no note or memorandum of any agreement and no reference to it in correspondence or email. On the facts of this particular case I find this a strange omission and one which is more consistent in my judgement with the fact that no binding legal agreement was ever reached than with any other explanation.
117. I have therefore concluded for the reasons set out above that there was no concluded agreement between the parties relating to the payment of commission to the Claimant and no intention that there should be a binding legal agreement. There was no more than an understanding or acceptance that it would be appropriate to recommend and pay a suitable sum which was not agreed, if the introduction were to prove successful and lead to a sale of the hotel to Kingdom for a sum in excess of US$ 200M. The Claimant's own unguarded example given in evidence sums up the true position even though it was given to demonstrate why the agreement was not reduced to writing.

"I trusted him blindly. He was my best friend. It was like my brother calling me up saying can you please help me sell my house and if it sells for a good price I will give you something. I say no, put it in writing first. It was not. We were very close. His word was good enough for me."

118. I have set out above the reasons why I have reached this conclusion but I must make it plain that in doing so I have been substantially influenced by my preference of the evidence of Bassam Aboukhater to that of Mr Aboualsaud upon this issue. I found Bassam Aboukhater's account more convincing as to how the discussions between friends arose, how they progressed and what they resulted in. Bassam Aboukhater gave his evidence in an intense and somewhat emotional manner. He was fluent and spontaneous and in spite of the fact that he was untruthful in his evidence in some respects I found his account as to his dealings with the Claimant to be credible. I preferred it to the account given to me by the Claimant.

Performance of the Agreement

119. As I have found that the Claimant has not established the agency agreement or any basis upon which he can establish a binding legal contract, his claim must fail and the question of the performance of the agreement or effective cause does not arise. Whatever the conclusion on this aspect of the case there is no agreement upon which the Claimant is entitled to commission. Nevertheless detailed evidence and argument has been put before me on this second issue and I consider it appropriate to determine it.
120. I propose to deal firstly with my findings of fact upon this issue, secondly with the law relevant to the determination of effective cause and thirdly the application of the law to the findings of fact and the conclusions.

Findings of fact as to the performance of the agreement

(1) The introduction to the Defendants was of Kingdom through Mr Mankarious, not of Mr Mankarious himself.

(2) Fairmont and Kingdom started working together in 1999.

(3) The 2003 deal with Kingdom effectively came to an end on 9 May 2003. Both Kingdom and the Defendants were trying to "find a way to get out of the deal". Kingdom considered the price was now too great in view of the downturn in profits because of the Iraq war, Mr Henry had always had his doubts about financing the purchase and there was a concern on Fairmont's part as to whether this was the appropriate hotel for their first in Europe. Mr Mankarious, on behalf of Kingdom, considered that in the circumstances they were "pushing the envelope". The Defendants wanted out because Toufic Aboukhater became uncertain as to whether he wished to sell at the price on offer and hence prevented the due diligence process from starting. He wanted a greater price and certainly no less than that which was on offer.

(4) Ramsey Mankarious kept in contact with Bassam Aboukhater in 2003 and 2004 in order to try and find a way of bringing the deal back up. He therefore asked about revenues, expenses and performance of the hotel.

(5) Bassam Aboukhater was still hoping throughout 2003 and in 2004 that the hotel could still be sold, even if his father was an unconvinced seller.

(6) The Fairmont emails were simply Fairmont's own internal comments on the post 9 May 2003 situation, and do not establish that Kingdom was still negotiating or was interested in the purchase. Mr Henry's evidence was that Kingdom was not interested in buying the hotel then and there is no document from Kingdom to suggest that they were. This did not stop Mr Mankarious being prepared to persuade them to consider purchasing the hotel again if the figures came good but there were no negotiations between Kingdom and the Defendants from 9 May 2003 to 19 May 2004.

(7) On 19 May 2004 Toufic and Bassam Aboukhater indicated to Ramsey Mankarious that they would again be interested in selling the hotel provided the price exceeded €200 million. The note and evidence of Ramsey Mankarious satisfy me as to this. Although Toufic Aboukhater's interest in selling the hotel waxed and waned, there was never any real prospect of Mr Mankarious acting as a consultant for the management of the hotel.

(8) Thereafter Mr Mankarious became involved in the Savoy Hotel joint venture deal after he had left Kingdom and become Cedar Holdings. That transaction involved Kingdom and HBOS in a 50% 50% equity split. The Savoy Hotel joint venture

had arisen out of Kingdom's desire to purchase and Fairmont's desire to manage (with a loan or key money) the Savoy Group. HBOS came on board as a potential debt provider, but expressed a desire to provide equity. When the Savoy Group bid failed, the joint venture between Kingdom and HBOS was formed to purchase the Savoy Hotel.

(9) On 17 July 2004, before the Savoy Hotel joint venture had been finalised, Mr Mankarious began to turn his mind to the sale of the Monte Carlo Grand Hotel. Hence his email of that date to Bassam Aboukhater.

(10) HBOS, whilst involved in the Savoy deal with Kingdom, said in their note of July 2004 that they had a good relationship with Ramsey/Kingdom (thereby not distinguishing between the two) and anticipated this was a foot in the door with Kingdom who clearly had substantial assets to grow their hotel business. HBOS were therefore interested in doing further hotel deals with Kingdom and hoped or expected to be able to do so.

(11) Mr Mankarious sought valuations from Kingdom employees in August 2004 of the hotel, in part because he wished to involve Kingdom or saw a prospect that Kingdom could be involved in the purchase of the hotel, and in part because this gave him access to existing valuations which he could utilise. I reject his evidence that the Virtanen valuation of 4 August 2004 was simply to test prospective employees. At that time, i.e. between 3 August and 9 August 2004 Mr Mankarious envisaged that Kingdom might become involved in the purchase of the hotel with an equity contribution.

(12) By 9 August 2004 Mr Mankarious had not contacted the Prince. He was awaiting developments and there was no need to contact the Prince at that stage. There is no evidence that he either did so directly or that he did so through Chuck Henry. Indeed the evidence of Mr Henry is that he did not contact him. In any event Mr Mankarious would not in my judgement have contacted Kingdom at this stage as he was busy looking after Cedar Holdings' interests by waiting to see how matters turned out.

(13) Mr Mankarious' email of 11 August 2004 did not make any mention of the European joint venture because it had not by then been formed as an idea. Had it been, it would certainly have been mentioned in the 11 August email.

(14) At that time, i.e. just before the European joint venture was formed, Mr Mankarious contemplated a sale of the hotel to Kingdom/HBOS on the lines of the Savoy Hotel joint venture, but there is no proper evidential basis for finding that he involved the Prince or Mr Henry in these thoughts.

(15) The European joint venture was discussed on 17 August 2004 on the flight to Cannes. It may have been discussed with HBOS at some time between 11 August and 17 August 2004. Once Fairmont, through Mr Fatt, had expressed interest and decided to join a European joint hotel venture with HBOS, Kingdom became an inessential, albeit hoped for participant in the venture. Mr Mankarious felt that Kingdom as one of the investors would make his claim for commission more certain but Kingdom was not an essential investor.

(16) On 8 October 2004 the Prince was formally invited to join the European joint venture with HBOS and Fairmont. Mr Henry was consulted and advised the Prince to accept which he did. Kingdom played no part in the negotiations for the purchase of the hotel nor in the due diligence relating to it.

(17) Mr Mankarious became unpopular with Kingdom and Fairmont by failing to disclose the terms of his brokerage agreement and his potential conflict of interest.

(18) Fairmont would have taken up the balance of the equity interest had Kingdom not agreed to participate in the European joint venture and then found another partner later after the first acquisition had been completed. Kingdom would have gone ahead with the joint venture with or without the hotel but would have not have gone ahead with the hotel without the joint venture.

(19) On the 22 December 2004 the sale of the hotel to the HBOS, Fairmont and Kingdom joint venture was completed. The shares were 50% HBOS equity, 25% Fairmont equity and 25% Kingdom equity though the actual payment Fairmont and Kingdom had to make was considerably less than this.

(20) Kingdom were not actively interested in acquiring the hotel after negotiations had ceased in May 2003, and played no active part in any attempt to acquire it thereafter until the formation of the European joint venture between HBOS and Fairmont which Kingdom later joined. It is probable that Kingdom would not have acquired the hotel except as part of the European joint venture.

The Law

121. The circumstances in which an agent is entitled to commission are set out in Bowstead and Reynolds on Agency 18^th edition para 7-027. In the case Burchell v Gowrie and Blackhouse Collieries Ltd [1910] AC 614 Lord Atkinson said:-

"There was no dispute about the law applicable to the first question. It was admitted that, in the words of Erle CJ in Green v Bartlett [1863] 14 C.B.(NS) 681, "if the relation of buyer and seller is really brought about by the act of the agent, he is entitled to commission although the actual sale has not been effected by him." Or in the words of later authorities, the plaintiff must show that some act of his was the causa causans of the sale.. or was an efficient cause of the sale {Millar v Radford [1903] 19 Times L.R. 575).."

122. In Hooker Ltd v WJ Adams Estates PTY Ltd [1977] 138 CLR 52 Jacobs J said:-

""Effective cause", means more than simply "cause". The enquiry is whether the actions of the agent really brought about the relation of buyer and seller, and it is seldom conclusive that there were other events which could each be described as a cause of the ensuing sale. The factual enquiry is whether a sale is really brought about by the act of the agent."

123. In the same case Gibbs J at 69 said:-

"Burchell v Gowrie does not establish that if an agent introduces A as a possible buyer, and a sale is later made to B, who happens to be a co-adventurer of A, but whose association with A did not cause him to make the purchase, the sale must necessarily be held to have resulted from the agent's efforts."

124. In Price, Davies and Co v Smith [1929] 141 LT 490 the test was described as whether the agent was "instrumental in bringing about the sale".
125. There was initially a dispute between the parties in the present case as to whether the terms of the alleged agency agreement necessitated the implication of the effective cause test. It is however now conceded by the Claimant that it does. There was a further dispute as to whether that test should properly be expressed as requiring the agent to establish that his introduction was "the" effective cause rather than "an" effective cause. That issue has also now been resolved as Mr Butcher has accepted that the test is whether the introduction was "a" real cause of the transaction which happened. This concession is correct. As is stated in para 7-029 of Bowstead, recent judicial authority prefers "an". There may be some cases where two agents are acting contemporaneously in competition as to who should earn the commission where "the" is the appropriate test but that is not so here, where what must be established is that the introduction was an effective cause of the sale.
126. I do not consider that the case of Dantata lays down any new principles. It is simply an alternative way of putting the same test on effective cause; it certainly does not create a new test where the terms of the transaction which achieves the sale have to be precisely those envisaged when the introduction was first made.
127. Nor is whether there is a break in the chain of causation a separate test: it is simply one way of concluding whether the introduction was an effective cause of the sale.
128. Mr Butcher relies upon a case in the Supreme Court of New South Wales, Moron v Hull [1967] 1 NSWR 723 for the proposition that to show that he was the effective cause of the sale, an agent must adduce evidence from which it can be inferred that his intervention brought about the sale in the sense that business men understand it. This does not in my judgement lay down any new test but indicates that a court must approach the application of the test in a sensible and realistic manner considering all the relevant facts. There is no general requirement that the test is that of the businessman bystander.
129. Whether or not an introduction is an effective cause of a sale is a question of fact in each individual case. Here the main issue which I have to determine is whether the introduction was causa causans of the 2004 sale or whether it was merely a causa sine qua non.

Conclusions on performance of the agreement

130. The Claimant's introduction of the hotel to Kingdom brought about the negotiations between the Defendants and Kingdom, and the letter of intent to purchase the hotel in 2003. Had the hotel been sold to Kingdom at that time, then commission, if an agreement had been in place to pay it, would have been payable. It would not have mattered how the transaction was funded, whether the transaction was by joint venture of several parties, or by Kingdom alone. Nor would it have made any difference if Kingdom's contribution had been the smallest of all the contributing purchasers. If Kingdom had dropped out of the purchase, but nevertheless had before that introduced the actual purchasers to the sale of the hotel commission would still have been payable.
131. The sale to Kingdom did not however go ahead. Negotiations ended on 9 May 2003 and, as I have found, thereafter Kingdom played no part in any attempt to acquire the hotel, or to be part of any group acquiring the hotel until the European joint venture. At no time from 9 May 2003 until then did they enter into any negotiations to purchase the hotel nor did they at any time enter into the process of due diligence in respect of it.
132. The Claimant's introduction of Kingdom to the Defendants did not bring about Kingdom's relationship with Fairmont which had commenced some years earlier in about 1999. Nor did the introduction bring about Kingdom's or Fairmont's relationship with HBOS. This arose out of the failed Savoy Group bid where HBOS had been approached as a potential debt provider, but then expressed a desire to provide equity. They did so in the joint venture to purchase the Savoy Hotel, formed between them and Kingdom. It was through this relationship that the eventual purchasers formed the desire to establish the European joint venture fund for the hotel industry.
133. I do not accept Mr Spearman's submission that the European joint venture fund was merely a financing arrangement used to acquire the hotel. It was a new idea leading to a wholly different sale. I accept Mr Henry's evidence that it was the joint venture which brought Kingdom on board. Kingdom would have gone ahead with the European joint venture fund without the purchase of the Monte Carlo Grand Hotel but would not have purchased the Monte Carlo Grand Hotel without the European joint venture fund. They would not therefore have purchased the hotel alone through a Savoy Hotel type joint venture. Mr Fatt's evidence together with the absence of any documentation suggesting the involvement of Kingdom, as opposed to Mr Mankarious, in the possible acquisition of the hotel between 9 May 2003 and the formation of the European joint venture, support this. It is my view that Mr Mankarious was at all times seeking to bring the deal with the Defendants back up in case Kingdom might be interested and for his own interests after Cedar Holdings had been formed. Kingdom were not approached until 9 October 2004 as to joining the European joint venture or as to the purchase of the Monte Carlo Grand Hotel.
134. Nor do I accept Mr Spearman's submission that there was in effect only one transaction here which took many months to be achieved in a different format to that originally envisaged. The deal with Kingdom alone did effectively come to an end after 9 May 2003 and was not as such revived. There was no continuum of involvement between Kingdom and the Defendants which rendered this effectively only one transaction. Mr Henry's reference to "this transaction" in his email of 22 December 2004 does not mean there was only one transaction. The question then arises as Mr Spearmanrsubimts, that even if there were two different transactions does that make any difference to the Claimant's entitlement?
135. It is certainly correct that Mr Mankarious suggested the possible acquisition of the Monte Carlo Grand Hotel to Fairmont and HBOS but that opportunity arose out of the joint venture for the purchase of the Savoy Hotel, which as set out above Kingdom would not have agreed to participate in, in the absence of the European joint venture fund.
136. The question which has to be answered is whether the Claimant's introduction of Kingdom to the Defendants was an effective cause of the sale in 2004. The question can be posed on the authorities in various different ways but they all ask essentially the same question. Thus was the sale in December 2004 brought about by the act of Mr Aboualsaud? Was the Claimant's introduction a real cause of that sale? Did HBOS and Fairmont's association with Kingdom cause them to make the purchase of the Hotel? Was the Claimant instrumental in bringing about the sale?
137. I confess that in spite of the vigour with which each side has made its submissions about the hopelessness of the other side's case I have not found this issue entirely straightforward to determine. Having considered the matter and weighed both parties' submissions, however I have concluded that Mr Butcher's submissions are correct. The sale was not brought about in any realistic way by the Claimant's introduction. The genesis of the sale was, as Mr Butcher submits, in HBOS's coming into the market. The transaction would, on the evidence, not have gone ahead without the arrival of HBOS with its very significant funds, and the formation of the European joint venture fund. Kingdom only participated in the transaction and hence in the acquisition of the hotel because they were invited to do so by the other participants who had already decided to go ahead and would have gone ahead without Kingdom had they not wished to join. Kingdom would not have gone ahead with the purchase of the hotel had it not been for the existence of the European joint venture fund. I do not consider that it can be properly said in those circumstances that the introduction was brought about by the Claimant's introduction or that that was a real cause, or an effective cause. It does not make any difference that Kingdom was one of the participants in the purchase through the joint venture as its participation was not brought about by the Claimant's introduction but by HBOS and Fairmont requesting them to join that particular joint venture fund.
138. It is not, as the Defendants themselves thought, a question of expiry of time as even if any agency agreement which existed had been terminated the issue of whether the agent's introduction was an effective cause of the sale would still have had to be determined.
139. I conclude that the Claimant's introduction was a matter of essential background, in other words a causa sine qua non. It was not an effective cause of the sale of the Monte Carlo Grand Hotel in December 2004. I therefore conclude that even had the Claimant succeeded in establishing an agreement for commission his claim would have failed on the issue of causation.
140. The claim must therefore be dismissed. The successful Defendants are prima facie entitled to their costs of the action but I shall hear any argument as to costs when this judgment is handed down.