Luxor (Eastbourne) Ltd v Cooper

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeThe Lord Chancellor,Lord Russell of Killowen,Lord Wright,Lord Romer
Judgment Date12 Dec 1940
Judgment citation (vLex)[1940] UKHL J1212-3

[1940] UKHL J1212-3

House of Lords

Lord Chancellor

Lord Thankerton

Lord Russell of Killowen

Lord Wright

Lord Romer

Luxor (Eastbourne) Limited (in Liquidation) and Others
and
Cooper

After hearing Counsel, as well on Wednesday the 7th, as on Thursday the 8th, Monday the 12th, Tuesday the 13th, Wednesday the 14th, Thursday the 15th, and Monday the 19th, days of August last, upon the Petition and Appeal of Luxor (Eastbourne), Limited (in Voluntary Liquidation), of Union House, 15 Regent Street, London, W.1., and Regal (Hastings), Limited, of Union House, 15 Regent Street, London, W.1., praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 4th of December 1939, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Norman Aldred Cooper, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 4th day of December 1939, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Branson, of the 7th day of February 1939, thereby set aside, be, and the same is hereby, Restored: And it is further Ordered, That the Respondent do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Court of Appeal and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

The Lord Chancellor

My Lords,

1

In this case the Respondent, who was Plaintiff in the action, issued his writ in April, 1937, claiming from each of the two Appellant Companies a sum of £,000 as commission alleged to be due under a verbal agreement made in September, 1935. Alternatively, he claims the same amount as damages for breach of this agreement. The trial judge, Mr. Justice Branson, decided in favour of the Appellants, but the Court of Appeal reversed this decision and gave judgment in favour of the Respondent for a total sum of £8,000 as damages for breach of a term alleged to be implied in the commission agreement to the effect that the Appellants would not without just cause so act as to prevent the Respondent from earning his commission.

2

The Appellants are private Companies and were the freeholders of the Luxor Cinema at Eastbourne and of the Regal Cinema at Hastings respectively. The Board of Directors of each of the Appellant Companies was composed of the same individuals and a Mr. Garton was solicitor to each company; their auditor was one Ewbank. Prior to his death on September 11th, 1935, one Walter Bentley, who was managing director of both Companies, held the majority of the issued ordinary shares in Regal (Hastings) Ltd. and also a large block of issued ordinary shares in Luxor (Eastbourne) Ltd. On Mr. Walter Bentley's death, his son, Mr. Harry Bentley, became a director in his place; Mr. Harry Bentley and his mother were administrators of the estate of Mr. Walter Bentley. In the summer of 1935 Mr. Walter Bentley had asked Mr. Ewbank to get an offer for the purchase of the Luxor and Regal Cinemas, and Mr. Ewbank said he would approach his "client," meaning the Respondent. Mr. Ewbank gave evidence that Mr. Bentley had said that he would see to it that Mr. Ewbank was paid a commission, but matters had not developed further before Mr. Walter Bentley's death. On September 16th Mr. Ewbank told Mr. Griffiths (who was one of the directors of the two companies) of his conversations with the late Mr. Bentley and two days later, after a directors' meeting of one of the Appellant Companies (as to which, however, no minute was produced) Mr. Griffiths told Mr. Ewbank that the directors had decided to sell, and that Mr. Ewbank's client should make his offer through Mr. Garton, who had the authority of the directors to deal with the matter. The next day Mr. Ewbank told the Respondent of this and the latter shortly afterwards introduced to Mr. Ewbank Colonel Burton, who was a director of the London and Southern Super Cinemas Ltd. as willing to negotiate for the properties on behalf of that company. Mr. Ewbank took the Respondent and Colonel Burton to meet Mr. Garton. Shortly before the meeting, Mr. Ewbank and the Respondent had a preliminary meeting with Mr. Garton, when the Respondent told Mr. Garton he wanted £10,000 as commission "to cover both himself and Ewbank".

3

It appears that the Regal (Hastings) Company was in a position to obtain leases of two more cinema theatres at Hastings called the Elite and the De Luxe without cost to themselves, and on September 26th, 1935, a company called Hastings Amalgamated Cinemas Ltd. was formed by Regal (Hastings) to acquire these leases, the intention being that they should be included in the proposed sale to Colonel Burton's company. Instead, however, of the shares in Hastings Amalgamated Cinemas Ltd. being all taken up by Regal (Hastings) Ltd. the directors and Mr. Garton between them hit upon a plan by which they should themselves apply for 3,000 out of the 5,000 shares to be issued at par, so that Regal (Hastings) Ltd. could only be allotted 2,000 shares. As it was intended that out of the total purchase price of the four cinemas £15,000 was to be allotted for the purchase of the two leasehold cinemas (for which Hastings Amalgamated Cinemas Ltd. had paid nothing), the result of this scheme would have been that the directors and Mr. Garton would have obtained for themselves a profit amounting to £6,000, which would otherwise have accrued to Regal (Hastings) Ltd. and its shareholders.

4

The discussions between Mr. Ewbank, Mr. Garton and Colonel Burton continued and at an interview, the date of which is not precisely fixed, but which was some day after September 19th, Mr. Garton told Colonel Burton that he wanted a net purchase price for the four cinemas of £175,000, to which £10,000 would have to be added for commission making a total of £185,000. Colonel Burton agreed "subject to contract," and gave evidence at the trial that his Company, the London and Southern Super Cinemas Ltd., remained throughout, as the Appellants knew, able and willing to buy the properties for this figure.

5

On October 2nd Mr. Ewbank wrote to Mr. Garton, enclosing a letter of the same date written by Colonel Burton on behalf of his Company offering £185,000 for the various properties, subject to contract, and Mr. Ewbank's letter went on to say that "These offers are subject to your clients confirming to Mr. Norman Cooper … the agreed Procuration Fees, namely £5,000 to be paid by each of the Vendor Companies, making a total of £10,000. The payments to be made on the completion of the purchases."

6

On October 11th Mr. Garton's firm replied to Mr. Ewbank— "We are instructed by our clients to confirm that, on completion of the sale of the two leasehold cinemas at Hastings, and the freehold cinemas at Hastings and Eastbourne, respectively, to the London and Southern Super Cinemas Ltd., a procuration fee of £10,000 is to be paid to Mr. Norman Cooper, being £5,000 in respect of each of the freehold cinemas at Hastings and Eastbourne."

7

There was a Board meeting of the directors of Regal (Hastings) Ltd. on October 2nd at which Mr. Garton reported the offer which he had received and stated the commission demanded. The majority of the directors present were in favour of accepting the offer, but Mr. Harry Bentley opposed the motion and this was followed up next day by a letter from Mr. Bentley's solicitors, writing in the interests of the late Mr. Walter Bentley's estate, objecting to the size of the commission and also criticising the way in which the shares in Hastings Amalgamated Cinemas Ltd. were being taken up. The letter asked for an assurance that the proposals put before the Board on the previous day would not be carried out, and added that if this assurance was not given, it would be necessary to consider the necessity of making an immediate application to the court. There are no directors' minutes produced to show how this letter was dealt with, and it may seem somewhat surprising that Mr. Garton's firm should none the less have written on October 8th accepting Colonel Burton's offer and, as already stated, should have sent a confirmation on October 11th to Mr. Ewbank of the proposed arrangements about commission to be paid to Mr. Cooper.

8

Neither Mr. Garton, nor any of the directors were called as witnesses at the trial and these matters were not cleared up. What, however, is more important is that, in the light of Mr. Bentley's protest, the sale to Colonel Burton's company was not proceeded with; indeed, no draft contract was ever submitted; and the disposal of the cinemas ultimately took place by way of a sale of shares in the Appellant Companies to another party.

9

The question to be now decided is whether the Appellant Companies are liable to the Respondent in damages for not carrying through the sale to Colonel Burton's company, in which case the Respondent would have earned his commission.

10

In the present case no commission note addressed to the Respondent is produced, and the express contract is not contained in any document. The proof of it mainly depends on evidence given...

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