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
		29 June 2007

JUDGE BRUNNING:

1. It goes without saying that building land in southern England is in great demand. House building companies (of which there are a number) are always on the lookout for potential building sites. All of them have land acquisition teams for that purpose. They rely upon a network of agents as their eyes and ears for information, as well as upon matters that are well within the public domain. Agents who may act for the vendors as well as for themselves have a network of contacts with the major developers. There is thus two way information and very wide monitoring of development possibilities.
2. The Claimant in this case, John Pettigrew, is one such agent. He is based in Dorking. He is a chartered surveyor and an estate agent. He has himself worked at a high level in the construction industry for a number of years and is widely experienced. So, too, is a Mr Bob Hilder, who is based in Ruskington in West Sussex.
3. Both these men were involved over a number of years in the lengthy saga which led in 2004 to the purchase by the Defendant of land at Donnington on the outskirts of Chichester. Mr Pettigrew claims he is entitled to commission on that purchase. He says that is due to him under a contract made with the Defendants in 1996. The Defendants deny that that commission is payable as the introduction, made in 1996 by the Claimant, was not the effective cause of the Defendant's acquisition of the site.
4. I turn, first, to look at the nature of the relationship between the Claimant and the Defendant in the 1990s. In 1992, Wimpey Homes based in London, sent out to many of its agents a "flyer" which invited information on greenfield sites, redevelopment sites, derelict sites, upwards of an acre in size. It said that agents would be retained where 'effective introduction' were provided. It is clear that the Claimant saw that and indeed was in contact about a number of sites with the Defendant over the ensuing years.
5. In April 1996, Mr Peter Truscott was appointed as Regional land Manager for Wimpey Homes at its Hook office and he wrote to Mr Pettigrew, along with others, to inform him that he had recently re-joined Wimpey Homes (Southern Region) and was on the lookout for information about sites. In his letter he said:

"We very much look forward to receiving details of the sites that come to your attention and effective introductions will be recognised."

6. Mr Pettigrew replied to that letter on 3 May 1996. He gave details of four sites, one of which was the land at Donnington close to Chichester. He said that there was a site plan, but no planning application had been made. It was owned by trustees of an Estate and he advised that an interest ought to be expressed at an early stage. He concluded by saying:

"I will be pleased to provide any further information on the prospects described above, and will look to your company for commission … on the purchase price in the event of acquisition."

7. Mr Truscott responded on 16 May. He said simply that "Chichester is of interest and I would be obliged if you could register our interest." Mr Pettigrew did that by a letter to Mr Peterkin at the firm of Wannop & Faulkner ("Wannop & Fox") solicitors for the estate of the deceased owner of the land n question.
8. With House Building Companies there are frequent changes of personnel. From the evidence in this case, those who have experience within the construction industry move with regularity from one company to another. On 25 July 1997, Mr Nutt wrote to Mr Pettigrew telling him that he had been recently appointed as Regional Land Manager in succession to Mr Truscott and that he may be interested in sites that Mr Pettigrew might have information about, and invited his co-operation.
9. The next letter in the series that is of any significance is one in April 1999. There had been a telephone conversation with Mr Peterkin at Wannop & Fox and Mr Pettigrew simply said:

"Further to [that] I confirm that my clients, Wimpey Homes, will be interested in the above land when [planning matters] have been dealt with and you are able to take the matter … further."

10. Mr Pettigrew also wrote to Mr Nutt that a Local Plan Review had taken place but that matters were proceeding at a leisurely place. "There are still things to be dealt with."
11. Mr Pettigrew received a letter in 2000 from Mr Nutt telling him that he was moving on, that areas dealt with by the Hook office would continue to be dealt with by two different people, Mr Blake and Mr Fitzackerly; and he was invited to keep in touch.
12. The same year Mr Hilder, whom I have mentioned, had been appointed by the Estate, and Solicitors acting for the owner, to act as the Vendor's agent and he wrote to a number of his contacts in the house building business. One of the letters he wrote was to Mr Taylor, who was the land manager at Alfred McAlpine Homes (AMH) at Chandlers Ford. He mentioned that it was believed that the land at Chichester was possibly of interest to AMH. He said it was a site for 46 units and that he looked forward to hearing from him. It is clear that that marked the beginning of a relationship between Mr Hilder and Mr Taylor, which is of great significance in this case.
13. Mr Hilder had "in confidence" as he put it, sent a similar letter to others and he kept what are called Green Sheets in his office as a way of recording what approaches had been made on behalf of the vendor to other potential purchasers. The handwritten sheets are in the bundles at page 1153 onwards.
14. At page 542 is the computer generated document which sets out the information in schedule form and it is clear that subsequently Mr Hilder approached companies like Bovis, Wilson Connelly, Barratt, Belway, Crest Nicholson, Fairclough, Gleason, Kings Oak, Persimmon, and a number of other developers, including Wimpey through Mr Taylor. By then Alfred McAlpine had been taken over by Wimpey and Mr Taylor was working for Wimpey.
15. Mr Hilder, as his relationship with Mr Taylor grew, was accustomed to speaking to him on the telephone several times a week to discuss the various development opportunities that were around; sites that may be about to come onto the market, sites that were on the market; and so on. He learned that Mr Hill, a managing director of George Wimpey (Southern) was interested in hearing what kind of opportunities there were for acquisition and he arranged a lunch on 27 March 2002. He then met Mr Hill and Mr Taylor and, amongst other things, they discussed the site at Donnington. There were a number of other sites discussed at that meeting as well.
16. On Mr Hill's behalf, Mr Taylor wrote a formal letter thanking Mr Hilder for the lunch and commenting on the discussions, expressing interest in future business but saying that it was likely to be restricted to one or two of the sites discussed.
17. In April 2002, Mr Hilder wrote to Mr Taylor, telling him about the Donnington site, what the planning application was and what negotiations were going on. He supplied a layout plan, and clearly was keeping him fully informed of what was happening. The schedule at page 542 to which I have referred shows the interest and the steps which Mr Hilder took to keep the substantial number of companies, as well as Wimpey, abreast of what was happening.
18. In February 2003 Mr Pettigrew wrote to Mr Blake at Hook. Mr Blake was the Wimpey Homes Director. He said that he had introduced land in May 1996 at Donnington. He told him that the matter was about to called in by the Secretary of State and indicated he was keeping an eye on things. That produced a response telling him that Mr Taylor was the man responsible now and suggested that he get in touch with Mr Taylor at Chandlers Ford, the old McAlpine office, but now the Wimpey office. He duly wrote to Mr Taylor on 23 February 2003. No reply was sent to that letter.
19. The next letter was sent in February 2004 to Mr Taylor about the Donnington land, telling him that the Inspector's report was with the Minister. Mr Webster was asked to look into this since Mr Pettigrew's letter to Mr Taylor had not struck any chords. Mr Webster wrote this on the letter, in response to Mr Taylor's request that he look into it:

"This site is being sold by Bob Hilder - he is instructed for once. Bob and I have been speaking about this land for about 5 years, so can we dump this chap?"

20. On 4 May Mr Hollywood, who was then acting for Hilders wrote to Mr Mathews who had relatively newly arrived at Chandler's Ford office of George Wimpey enclosing a layout site, ordnance survey plan and copy of the inspector's report and said the full information pack would be forwarded once formal marketing commenced on 12 May. A decision had been taken by the trustees who were selling the land on Mr Hilder's advice, that tenders should be invited from a substantial number of potential purchasers. They included Wimpey at the Chandler's Ford office. They included all the other major House Building companies in Southern England, and it was proposed to send out the Tender Documents to them.
21. On 12 May 2004, Mr Peterkin wrote an email to Mr Hilder saying that one person to whom particulars must be sent was Mr Pettigrew, who had been in touch in April 1999 informing Mr Peterkin that he was instructed by Wimpey Homes. It seems that the email and the sending out of the tender documents occurred more or less at the same time. There is no indication that in fact this email altered the decision of Mr Hilder to send the documents to Wimpey at the Chandler's Ford office.
22. Subsequently, of course, the Company, as others did, made its own assessment of the commercial viability of the site. It carried out a number of different surveys looking at what could be put on the site, the cost of doing so, the cost of other works and meeting other planning requirements so as to come to a view about the value of the site for the purposes of the tender. That was duly done and Wimpey submitted a tender in the sum of £5.7 million. That was, as Mr Taylor told me in the course of the case, talked down to the purchase price of somewhere in the region of £5.2 million. In August contracts were exchanged and Wimpey purchased the site.
23. I turn now to look at the personalities of those involved. Mr Truscott was, between early 1996 and late 1997, the Regional Land Manager for the southern region of George Wimpey based at the Hook office. His job was to identify sites for his employers. His timeframe was to look for sites suitable for development within six months to two years. He told me in evidence that up to 500 possible sites were brought to his attention every year. He said that every company likes to have good agents who bring information about sites which are not known, or not in the public domain as a result of press comment or anything of that kind.
24. Some agents will deal with vendors who do not want a large tender exercise. It is important to be ahead of the market and buy ahead of the market; and an agent can, from time to time, enable a company to do so. It can be important to know what the level of bids is and to be able to adjust its strategy and its tactics accordingly. Agents are often of considerable help in that.
25. Thus in various ways, an agent can be of particular use and can be effective as the cause of the acquisition of sites.
26. Mr Truscott also said that because his focus was relatively short-term, he was not interested in anything much beyond two years. Anything of that kind was a matter for the Strategic land Division of Wimpey, who were concerned with the land bank for many years ahead. The site at Donnington was in the Draft Local Plan. But he said anything unlikely to become available within two years was for him, at the time he was at Hook, tenuous, long-term and not therefore of interest.
27. He told me about his filing system, something that he had developed in his early days in the industry and had continued unchanged and still continued unchanged.
28. He had a number of live files. They are kept on his desk. They are reviewed monthly. If nothing happened after a few months, they became what he described as "dead files". If they are not resurrected within three years, they were usually disposed of.
29. He said he had handed over to Mr Nutt in 1997. He had not mentioned the Donnington site to Mr Nutt nor some of the hundreds of other sites that he had been told about. The ones that were of interest, the live and current ones, were however mentioned.
30. I am satisfied that whatever correspondence there was, did, on the balance of probability, disappear from the Hook office within three years or so of it taking place. Any lead contained in the correspondence was no longer considered a live one, and it was forgotten about. I am satisfied that that accurately represents what happened.
31. I heard also from Mr Hilder. I have said he is a very experienced agent and was appointed by Wannop Fox to sell this site when planning permission could be obtained. He had, as I have indicated, made various contacts. Mr Taylor was one of those close associates with whom he had close contact, but there were others. It was a relationship which did not find expression in correspondence and it is not surprising that it did not. There would be telephone conversation; there would be drinks had from time to time and all the casual gossip and talk that professional men are used to exchanging in that profession.
32. The lunch with Mr Hill, as well as Mr Taylor in March 2002, was one of many that he held with potential purchasers. Mr Hilder obviously was a man who kept the wheels well oiled and built up a good working relationship with people. There was certainly such a relationship with Mr Taylor.
33. Mr Taylor himself was development director with George Wimpey between 2000 and 2004 and Mr Webster was one of his subordinates. Mr Taylor had known Mr Hilder for some 12 years but since 2000 on a much closer basis. He had very much "hands on" dealings with the project at Donnington. He coordinated it. He had Mr Webster and Mr Matthews prepare the viability studies and as a result of that sent in the bid on 30 June which subsequently led to the transactions and the purchase of the land.
34. Mr Pettigrew in his evidence accepted that the contractual documents were those that I referred to earlier in this judgment and which are found at pages 111A, 119, 120 and 122 of the bundle. Those were, he said, the basis of his agreement with this Defendant.
35. He was very straightforward in the way he gave his evidence. He strikes me as a patently honest, upright man, and he was very impressive as a witness. He is a man for whom high ethical standards are natural. He is not a forceful man in any way; and what he said I have no hesitation in accepting. He was slightly aghast that one should have to put anything in about good faith. He expected that those within his field of business would be as good as their word.
36. He agreed that after the initial contact in 1996, he made contact with the solicitor in 1999 and subsequently in 2004. He had written letters in 2003 to the Hook office and two letters in May 2004. He had had no replies, he said, to any of those letters.
37. He said, with some exasperation, "All Mr Taylor had to do was to call for past correspondence. That he did not know about me was due to incompetence and ignorance and certainly not to malice on Mr Taylor's part." At one stage it may have been suggested that there was malice there but Mr Pettigrew would have none of that.
38. He accepted that there was an established relationship between Mr Hilder and Mr Taylor, Mr Hill and, to a lesser extent, Mr Webster, and he accepted that Mr Taylor did not know of his, Mr Pettigrew's, existence. He said: "by registering interest with the solicitor in 1996, and repeating it in 1999, I made sure that Mr Peterkin would require Mr Hilder to send information to him on behalf of Wimpey". He said, "I accept there was no correspondence with Wimpey between 1997 and 2001. I accept that I was not included, that it was sent directly to Wimpey but my contract was there". He said, "I am entitled to be paid my commission on this sale." Is he right?
39. The law that I must apply here has been the subject of some argument but not great disagreement between counsel representing the parties in the case. It is agreed that the current edition for Bowstead at 7-028 has this concise distillation of the law:

"Subject to any special terms or other indications in the contract of agency, where the remuneration of an agent is a commission on a transaction to be brought about, he is not entitled to such commission unless his services were the effective cause of the transaction being brought about."

40. I was directed to dicta of Jacobs J in LJ Hooker Limited v WJ Adams Estates Property Limited 138 CLR at page 86. Part of the question in this case has been whether there needs to be the definite or indefinite article as "an" or "the" effective cause. Jacobs J said in his view it probably did not matter in the long run which article was used before the words "effective cause" and said in relation to the question whether the agent was entitled to commission for an introduction that the question in reality was:

"… 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."

As Waller LJ said, "did the agent establish that his actions really brought about the relationship of buyer and seller?"

41. In Egan Lawson v Standard Life [2001] 8 E.G. 168, February 24, 2001. Mummery LJ said at 29L:

"The issue of whether an introduction of a purchaser by an … agent to the vendor is the "effective cause" of the transaction that ultimately takes place, must be resolved by an examination of the facts."

At 29M he said:

"The first in time factor [an agent introduces to the vendor] is relevant, but it is neither determinative nor paramount in resolving rival claims…"

Browne LJ at page 31G said this:

"In the absence of clear terms, I would not regard the prospective purchaser as agreeing to pay a fee, providing only he purchases the property in question..."

That issue was considered in Brian Cooper & Co v Fairview Estates Investments Limited 282 EG 1131 which was cited to me. In that case, unlike this, there was a specific provision in the contract which said: "…should the agent introduce a tenant who subsequently completes a lease…" The court held that those words were very negation of causation and were evidently framed precisely to obviate arguments on causation on who was the effective cause of the introduction.

42. I approach the case on the basis that it is for the agent to establish that his actions really brought about the relationship of buyer and seller in this case.
43. The submissions of counsel at the outset of the case and at is conclusion, and their arguments in court, really focus upon two questions: should there be implied a clause in the agreement of 1996 that the Claimant's activity was the effective cause of the purchase? If such a clause should be imposed was the Claimant an or the effective cause?
44. The Claimant contended that such a clause is not needed. He says in a case like this the introduction is everything. The developer is looking for nothing more. When the introduction is made, the circle is completed.
45. The Defendant argues that the parties clearly intended that there should be such a clause in the short exchange of documents which took place. It is clear, said counsel for the Defendant, that the use of the word "effective" was part of that. This case, he says, is completely different from that which was considered in Brian Cooper v Fairview Estates where the key words were "should you introduce a tenant who subsequently completes a lease".
46. So far as this argument is concerned, I am satisfied that there was such a term implied the introduction should be an effective cause of the purchase. It was referred to in advertising and in the letter at 119. Mr Pettigrew accepted that those were the contractual documents. I have received evidence from those with lengthy experience in this world of property that such is the practice in the industry. Mr Taylor, who no longer works for the Defendant and has no apparent motive for being other than quite independent, said so, as did Mr Hilder and other of the Defendants employees.
47. Mr Pettigrew himself in his witness statement in the second paragraph under section 8 said so, and he accepted that it was so in cross-examination.
48. The next question which I must turn to is one of fact: was the Claimant the effective cause of this contract? I am satisfied that the burden of proof is on him to show that it was. The case of Nahum v Royal Holloway and Bedford New College [1999] ENLR 262 is authority for that proposition.
49. The Defendants argue that it was important to look at the Company's structures. These changed over the years, as did the personnel there and in order to determine the factual matrix, it is essential to look at how matters developed.
50. In 1996, at the time of the agreement, Wimpey Homes Holding Limited traded on its own account as a subsidiary of George Wimpey Plc. One of its offices was in Hook. It was later transformed into George Wimpey (West London) carrying on at Hook. At Chandler's Ford, prior to July 1999, Alfred McAlpine Homes (Southern) a subsidiary of Alfred McAlpine Plc carried on business there where subsequently George Wimpey Southern Counties was to do so. That company was the undisclosed agent of Alfred McAlpine Homes Holdings Limited between July 1999 and December 2001.
51. On 8 November 2001 George Wimpey took over Alfred McAlpine. The Chandler's Ford office became GW Homes Southern Limited. On 2 January 2002, that George Wimpey Southern Counties (GWSC) became the undisclosed agent for the Defendant. The staff, including Mr Taylor, who had worked for McAlpine, continued to be employed. All subsequent correspondence and the contract indeed was with GWSC.
52. Thus, prior to November 2001, the Defendants and GWSC conducted unrelated business at Hook and Chandler's Ford; Wimpey did so at Hook, McAlpine did so at Chandler's Ford. From November 2001 onwards, GWSC was undoubtedly at Chandler's Ford one of the undisclosed agents of the Defendant. The Hook office business was carried on by GW West London Limited. I have indicated that this was all very much a matter of change, both in structure and personnel. It does not affect, of course, the line of responsibility. The Defendant is rightly the Defendant.
53. Counsel for the Defendants in his opening submissions presses great stress on this. He says that they were entirely different businesses being carried on at Hook and at Chandler's Ford and that this is of great significance here. There was no causal link between the introduction of the site to Mr Truscott and the ultimate purchase by Wimpey in 2004. The introduction, counsel argued, was 'spent', as Latham LJ put it in Egan, by the end of 1996 and was certainly not communicated to GWSC at Chandler's Ford in 2001.
54. The site was introduced to GWSC by Mr Hilder in August 2000 when GWSC was still part of the McAlpine group. When GWSC's business became part of the Wimpey group in November 2001, the acquisition of this site was a development opportunity for GWSC on which it was aware and this, counsel argued, had nothing to do with the Claimant in this case.
55. The Claimant says that all these assertions of change and serendipity (as he put it) are illusory. Mr Truscott organised the business of the Hook office and handed it over to Chandler's Ford. A key member of the team, Mr Webster, was transferred and knowledge was, he says, inferably transferred, which preserves the link with the introduction effected by Mr Pettigrew in 1996.
56. I have set out Mr Truscott's evidence about these matters. I found him to be a sensible, straightforward witness. He was striving to deal fairly and accurately with matters put to him. I am satisfied that he is an honest witness. I accept his evidence that details were transferred to a dead file and would have been dumped after three years. I am satisfied there was thus no written record maintained at Hook.
57. It follows that no such record was transferred, since it did not exist, to Chandler's Ford.
58. Mr Webster has not been called. There is no indication of anything that indicates any knowledge in him of this 1996 transaction.
59. It is clear that contact between Mr Taylor of GWSC and Mr Hilder commenced in 2000. The introduction was made by Mr Hilder in 2000. The subsequent relationship, the lunch in 2002, is of importance in strengthening the relationship of vendor and potential purchaser.
60. Mr Taylor's name appears on the green list kept by Mr Hilder, which was used as a basis for inviting 26 tenders in 2004. Mr Pettigrew was involved after the letter inviting tenders was sent out, as a result of Mr Peterkins' email. But that was after the green list had been settled. Mr Pettigrew's letter in May 2004 made no impact and had no influence on the process at all.
61. In my judgment, the introduction effected by Mr Pettigrew in 1996 was spent by 1997, some seven years before the transaction took place. The events which I have related thereafter led to significant and widespread changes in the structure of the Defendant, its associated companies and changes in key personnel, who were the mind of the company. The relationship of purchaser and vendor came about because of those changes and the events I have set out.
62. Admiring as I am of Mr Pettigrew's quality and integrity, I nevertheless am driven to say that this claim must fail. There will be judgment for the Defendant, together with an order for costs.