Glentree Estates Ltd and Others v Favermead Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Edward Evans-Lombe |
| Judgment Date | 20 May 2010 |
| Neutral Citation | [2010] EWHC 1120 (Ch) |
| Docket Number | Case No: HC07C02681 |
| Court | Chancery Division |
| Date | 20 May 2010 |
[2010] EWHC 1120 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before: Sir Edward Evans-Lombe
(Sitting as a Judge of the High Court)
Case No: HC07C02681
Mr Robert Deacon (instructed by CKFT) for the Claimants
Mr John Wardell QC (instructed by Davenport Lyons) for the Defendant
Hearing dates: 11/3/10 – 18/3/10
Sir Edward Evans-Lombe:
In this case the Claimants are a group of three firms of well-known estate agents (“the Claimants”), of which the lead agent was the Third Claimant (“Savills”), for estate agent's commission in respect of two sums of £235,000 and £1,175,000, each inclusive of VAT, following successive sales of a property at 18-19 Kensington Palace Gardens (“the Property”) first, by a company called Laneprime Limited (“Laneprime”) to a company called Corfiducia Anstalt (“Corfiducia”) for £50 million (giving rise to a commission claim of £235,000) and secondly, by Corfiducia to a company called Laken Properties Limited (“Laken”) for the sum of $105 million (giving rise to a commission claim of £1,175,000). Laneprime is a subsidiary of the Defendant, Favermead Limited (“Favermead”). Corfiducia is a Liechtenstein company which is the trustee of a trust, the SE Property Trust, of which the beneficiaries are the former wife and children of Mr Bernard Ecclestone, who is well known in relation to his interest in Formula 1 motor racing (“Mr Ecclestone”). Mr Ecclestone is not a trustee or, in any way, a beneficiary of the trust. Laken is a company either associated or controlled by Mr and Mrs Lakshmi Mittal (“the Mittals”). The Property was purchased by Laken pursuant to the second transaction as a home for the Mittals. Mr Ecclestone was joined as a Part 20/ Third Party to a claim for contribution by Favermead. After the close of the evidence I was informed that this contribution claim had been settled and, accordingly, no closing submissions were made on Mr Ecclestone's behalf. Favermead has at all material times been owned and controlled by Professor Khalili, an expert and collector of Middle Eastern and oriental art. The Property consists of the unexpired period of a long lease from the Crown, having 96 years to run.
The background facts of the case, though complex, are not, in any important respect, in issue between the parties and I will now set them out.
The Property was purchased by Favermead in 1995 and, thereafter, it seems that a large sum of money was spent on its refurbishment. In 1997 a property consultant, Ms Adina Kohn (“Ms Kohn”), drew the Property to the attention of the Mittals, with whom she had an arrangement under which they had instructed her to search for an appropriate property as a residence for them. In the result, in February 1998 the Mittals offered £45 million to purchase the Property which offer was rejected, as was a subsequent offer the following year at a lower price.
In March 2001 Professor Khalili entered into an arrangement with a Mr Dato Osman, another property consultant, that if he found a purchaser for the Property at a price of more than £85 million, he would be paid a commission of 4% of the purchase price and who, in turn, appointed a Miss Doris Beger as his sub-agent to find a purchaser for the Property. On 20 th March 2001 she wrote to Mr Ecclestone sending him particulars of the Property. On 3 rd April 2001 a meeting took place between Miss Beger, Mr Ecclestone and Professor Khalili concerning the Property.
Meanwhile, on 24 th January 2001 a meeting took place at Favermead's offices, attended by Mr Hewlett of Savills, to discuss the appointment of the Claimants as joint sole agents of Favermead to promote the sale of the Property, but final terms for such an appointment were not agreed at this meeting. A further meeting took place on 6 th February attended by representatives of all three Claimants with Professor Khalili. In a letter recording the meeting from Mr Hewlett of Savills to Mr McKeown of Favermead there was included a leaflet showing the “fees and terms of business” which the Claimants were putting forward to govern the relationship between them and Favermead. The letter records that “our fees have been agreed at a fixed sum of £1m exclusive of VAT and agreed marketing charges.” It continues “we propose that our agency runs for a period of 12 months after which termination of the agency can be terminated [sic] by either party giving not less than 28 days written notice”. On 19 th March Mr Hewlett wrote to Professor Khalili confirming the “revised fee structure” discussed at the 5 th March meeting. At the fourth paragraph of that letter he says:—
“As part of our open and frank discussions, you have indicated that if you procure a purchaser who could be a social friend, etc. then you feel it is appropriate for us to charge a greatly reduced “handling fee” and if this were the case, I would suggest that the figure would be 50% of the fees that would have been payable to us, under normal arrangements.”
On 3 rd April 2001 on Favermead-headed paper Professor Khalili wrote to Mr Hewlett at Savills’ address as follows:—
“18/19 Kensington Palace Gardens, London W8
Thank you for your letter of 19th March 2001 setting out the fee structure regarding the sale of the above property.
I agree that I have appointed FPD Savills, Glentree Estates and Beauchamp Estates to act as my joint sole agents in respect of the above property with FPD Savills acting as the main co-ordinating agent.
I confirm that I will pay a fixed fee of £1m (excluding VAT), on completion of the sale of the property. The matter of the sub-division of the fee is a matter solely for agreement between the three agents.
The Terms of Business for Sales which accompanied your letter to me does not form part of our Agreement.
I will pay the agreed fee on the basis that one of you introduces an applicant, who subsequently purchases the property from us. (My emphasis added)
If I procure a purchaser through my own endeavours, then you will be entitled to a reduced fee of 20% of the £1m.
I am not bound to pay fees to you under any other circumstances.
The content of this letter is our sole agreement and shall remain fully confidential.”
On the evening of 3 rd April Mr Osman and Miss Beger introduced Mr Ecclestone to Professor Khalili, at which meeting Professor Khalili said that his price for a sale of the Property was £85 million. On 4 th April Mr Ecclestone and his wife were shown around the Property by Professor Khalili. In the result this meeting matured into a contract for the purchase of the Property by Corfiducia as described at paragraph 13 of Professor Khalili's witness statement as follows:—
“13. I had a meeting with Mr Ecclestone in mid to late July 2001 and we shook hands on a deal that we had originally discussed in May namely that he would pay £50 million in consideration of a transfer of the head lease in the property to him upon the basis that if he was to sell it in five years we would share any profit made 50:50. This was attractive to Favermead, because we would recoup some of the company's outlay on the property and make further money in the event of a re-sale of the property. This was likely because Mr Ecclestone was buying the property not as a family home but as an investment. During this period we also discussed other business opportunities.”
The contract for the sale of the Property pursuant to this arrangement is dated 17 th September 2001 and made between Laneprime, a subsidiary of Favermead, to which the lease of the Property had been transferred, and Corfiducia, the trustee of a trust for the benefit of Mr Ecclestone's wife Slavica and her children. The transaction was completed on 8 th October and on that day the parties entered into a written agreement (“the Overage Agreement”) setting out the terms upon which the parties would share equally any profit over the £50 million purchase price at which the Property could be sold in the course of the next five years after the deduction of certain expenses.
It is the Claimants’ case that this sale triggered an entitlement in them to recover commission of £200,000 plus VAT pursuant to the provisions of the 3 rd April 2001 agreement dealing with the consequence of Favermead procuring a purchaser for the Property through its own endeavours.
It seems that the Claimants were not directly informed of this sale but rumours of it leaked out into the market prompting enquiries by the Claimants. On 16 th November Mr McKeown of Favermead sent a fax to Mr Hewlett confirming “that the property is still for sale at the asking price of £85 million.” This in turn caused the Claimants to circulate all likely interested agents with the same message that the Property was still for sale, including a letter to Knight Frank of 30 th January 2002, agents later engaged by the Mittals.
Meanwhile, on 9 th October Mr Mullens, Corfiducia's lawyer, wrote to Mr McKeown of Favermead indicating that he was confused about Professor Khalili's agenda and continuing:—
“The position of the trustees is that they anticipated that Dr. Khalili would continue marketing the property until 30th September but at that point of time active marketing would cease. There is an overage provision in the contract which takes care of the situation of a sale during the specified period.
The trustees, having purchased the property, need to take stock and control of what they have purchased. I would therefore appreciate receiving today all keys, parking badges etc. I understand Dr. Khalili's emotional involvement with the property but that has now come to an end subject to his...
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