Husband and Brown Ltd v Mitch Developments Ltd
| Jurisdiction | England & Wales |
| Judge | Her Honour Judge Moulder |
| Judgment Date | 16 October 2015 |
| Neutral Citation | [2015] EWHC 2900 (TCC) |
| Date | 16 October 2015 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: A50MA101 |
[2015] EWHC 2900 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION
Her Honour Judge Moulder
(sitting as a Judge of the High Court)
Case No: A50MA101
Mr Riaz Hussain (instructed by Shulmans LLP, Solicitors) for the Claimant
Miss Stephanie Jarron (instructed by Harrison & Associates Solicitors) for the Defendant
Hearing date: 28 and 29 September 2015
INTRODUCTION
In this case the Claimant, Husband and Brown Limited are claiming the sum of £51,350 as an outstanding fee due under an oral agreement made between the Claimant and the Defendant, Mitch Developments Limited in relation to the acquisition by the Defendant of a Site known as Redhouse Garage Doncaster (the "Site") together with the adjudicators' fees and associated solicitors' costs incurred in relation to the adjudication which took place in December 2013 in relation to this matter. The Defendant has abandoned its counterclaim for the recovery of its adjudication costs but seeks a declaration that the adjudicator had no jurisdiction to make his award and accordingly that the award is of no effect.
The Defendant is engaged in commercial property development. The Defendant intended to purchase the Site in order to construct a care home which would be operated by a company, Willow Park Healthcare Limited, which was the operational arm of the Defendant. The Defendant identified the Site at Doncaster, a former petrol station, which they thought would be suitable. The Claimant is engaged in the business of land acquisition planning and development. Over the preceding couple of years the Claimant had looked at a number of potential Sites as agent for the Defendant but none of the Sites had come to fruition.
The Defendant initially agreed to purchase the Site in March 2012 and the Claimant made an offer on their behalf for £500,007. For reasons which go to the heart of this dispute the Defendant eventually purchased the Site for £325,000 on 21 September 2012. At the start of the trial the defence were relying on a defence to the effect that no agreement had been made between the parties as to the fee payable and that the Claimant would only be entitled to a fee based on quantum merit. In the course of the trial having heard the evidence of one of the directors of the Defendant, Mr Dixon, in cross examination, the Defendant has accepted that an agreement did exist in relation to the fee and that the terms of that oral agreement reached in April 2012 are as set out in an email of 11 July 2012 from Mr Lee Brown of the Claimant to Mr Dixon and Mr Murphy of the Defendant. [B 45]. An application was made after the evidence had been completed to amend the defence and after hearing argument from counsel on both sides and for the reasons given in that ruling, I granted the application.
Accordingly the primary issue which I now have to decide is the entitlement of the Claimant to an incentive fee payment from the Defendant in relation to the reduction in price paid for the Site from the initial offer of £500,007 to the price paid on completion of £325,000.
CHRONOLOGY
Mr Dixon of the Defendant received details of the Site on 24 February 2012 from the Vendor's agent, PPH Commercial. Mr Dixon responded expressing interest in the Site but stating that the Site was not worth £600,000 and asking what would be an acceptable offer as the land would have to be cleaned up.
On 2 March Mr Dixon emailed Mr Brown of the Claimant asking him to approach the Vendor's agent on behalf of the Defendant. The Claimant then made an offer of £500,007 for the Site which was accepted. The offer was conditional on obtaining planning permission, subsoil and technical investigation and vacant possession [B 15]. This offer letter was made on 20 March 2012 and accepted by the Vendor as is evident from the notice of sale dated 23 March 2012 [A166]
After the offer was made the Defendant wanted to renegotiate the fees which the Claimant would be entitled to receive in connection with the Site. The agreement at that point was that the Claimant would receive 2% of the purchase price. The Defendant wanted different fees to apply in the situation where the Defendant had found the Site rather than the Claimant. An email was sent by Mr Murphy of the Defendant on 12 April [B 17] to Mr Brown proposing a meeting to discuss the Claimant's fees going forward. He outlined "his thoughts" and suggested that where the Claimant was " commissioned to check out an area, find a site and negotiate an offer the fee would be 2% plus expenses. Where sites are found and [the Claimant is] asked to make an offer on behalf of [the Defendant] 1% +10 – 20% +? share of any reduction of previously agreed price (a sliding scale to suit size of reduction)".
On the following day, 13 April there was a meeting between the parties and the parties now agree that the agreement reached at that meeting was as stated in the email of 11 July sent by Mr Brown [B 45] to Mr Dixon and Mr Murphy. The email states:
" I write with reference to our meeting of 13 April 2012.
Please find set out below the site acquisition fees agreed between Willow Park and [the Claimant].
For the avoidance of doubt unless previously agreed by the client all fees are at risk on a no hay no pay basis and payable upon completion of the purchase.
• Sites introduced and purchased off market – 3%;
• Site introduced via a competitive tender – 2%;
• Sites introduced by the client – 1.5%.
In addition to the above agreed fees [the Claimant], as an incentive, to receive 25% of any negotiated saving from the gross price accepted to the actual net price paid upon completion."
At the beginning of August the Defendant's solicitors informed the Claimant and the Defendant that they had been informed that the Vendor was about to go into liquidation. The solicitor stated that the liquidator was expected to be appointed on 14th August and " obviously that will change the way in which the contract will proceed – the liquidators will not want any obligations to do anything and there may need to be a discussion on the conditionality. The impression I get however, is that the liquidators would still be willing to sell and the seller's solicitor is hoping that he will be instructed to deal with it." [B 46]
On 6 August 2012 Mr Dixon emailed Mr Murphy and copied Mr Brown stating " hi boys receivers might want to sell prior to planning. Have spoken to [Mr Brown] and suggested we could possibly get site for £300,000 unconditional. Iain is this worth perusing" (sic).
Mr Brown responded immediately " before I start making any unconditional offers I need to do a bit digging on what the outstanding debt is etc, waiting to speak with Martin [Defendant's solicitor] then I will be in touch."
Mr Brown sent a further email a couple of hours later " as an update I have just spoken to Martin and a colleague of his who knows Begbies in York quite well is going to have a word on the QT!" The Defendant's solicitor Martin Grange then replies later that afternoon that he had spoken to the liquidator " Begbies are confident they will be appointed as liquidator. At that stage they will be privy to the financials and therefore understand at what level a "quick and dirty" sale could proceed. They are happy for such a deal and accept that it will have to be much reduced to take into account our increased risk. They will however need to speak to the selling agents as well to make sure they are on board."
Mr Brown acknowledged that email: " Cheers Martin".
On 20 August Martin Grange noted that the liquidator wanted to do an unconditional deal and this was followed up by the solicitors by email on 23 August. The solicitor said that she had spoken to the liquidator who said he will be getting the valuations undertaken and is interested in an offer from the Defendant [B 55]. Mr Husband (a director of the Claimant) immediately responded by email to the solicitor: " thanks Alison any ideas on timescales for doing the [valuations] would be appreciated if poss."
On 29 August 2012 the solicitor wrote an internal email:
" the previous deal was agreed on the basis that it would be conditional on planning and environmental conditions being satisfactory. I actually think that the client would now look to proceed unconditionally as they appreciate that a conditional contract would not be attractive to the liquidator and they are keen to ensure that they do not lose the property."
The solicitor then emailed Mr Husband and Mr Brown [B61a]:
..." Helen has mentioned to me that it would be useful to know the deal we are offering – from recent emails would I be right to assume that we are now willing to agree to buy it unconditionally or would you like to start on a conditional basis in the first instance?"
Later that morning Mr Husband then emailed Mr Dixon and Mr Murphy attaching a draft offer and asking whether it was okay to send it out to the liquidator's agent. The draft offer stated:
" it was good to talk to you earlier re the above Site and reassuring that you feel the opportunity is very much still alive and kicking. As discussed through no fault of anyone's time has slipped away from us and our clients are keen to secure a site and get cracking on their development by early 2013 and therefore whilst the client's original offer remains we wanted to float the idea of an unconditional purchase passed (sic) you…Mitch Developments Limited would be prepared to offer the sum of £280,000 subject to contract only. … I understand that you have a meeting with the client next Tuesday and I would be grateful if you could discuss this alternative option with them and let me know their thoughts." [emphasis added]
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