Makram Barsoum Estafnous v London & Leeds Business Centres Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warren,Lord Justice Rimer,Lord Justice Longmore |
| Judgment Date | 14 October 2011 |
| Neutral Citation | [2011] EWCA Civ 1157 |
| Docket Number | A3/2009/1424 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 October 2011 |
[2011] EWCA Civ 1157
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Christopher Nugee QC
Royal Courts of Justice
Strand, London, WC2A 2LL
The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Rimer
and
The Honourable Mr Justice Warren
A3/2009/1424
Philip Newman (instructed on a direct access basis) for the Appellant
Ben Shaw (instructed by Davenport Lyons) for the Respondent
Hearing date: 6 th October 2011
Introduction
This appeal concerns the construction of a commission agreement dated 30 March 2001 entered into between the Appellant (" Mr Estafnous") and the Respondent (" LLBC"), the question being whether the obligation on LLBC to pay commission to Mr Estafnous was triggered by the transaction which actually took place. The Judge (Christopher Nugee QC, sitting as a Deputy Judge of the Chancery Division) held that it did not. The Judge gave Mr Estafnous permission to appeal on this point of construction. The Court dismissed the appeal at the hearing on 6 October 2011 This judgment contains my reasons for doing so.
The facts
So far as material to the issue of construction, the facts can be shortly summarised:
Mr Estafnous is an estate agent and the director of a company called Swiss Deal Limited which, at the material time, had its offices in a building known as Regent House Business Centre, 24–25 Nutford Place, London W1 (" Regent House").
Regent House was held on a long lease from the Portman Estate and a company known as Drillray Properties Limited (" Drillray") was registered at HM Land Registry as proprietor of the leasehold interest. In 2001, there were some 64 years unexpired of the lease.
Drillray was itself a subsidiary company and in 2001 the corporate structure was as follows. Three shareholders, namely Robert Kidd, David Serr and Linda Serr (or Linda Plant as she at some stage became), held the issued shares in Regent Street Estates Limited which in turn held the one issued share in LLBC. LLBC held the issued shares in Drillray. Drillray as already mentioned was the registered proprietor of the leasehold interest in Regent House, but in fact held that interest on trust for LLBC pursuant to a deed dated 22 September 2000.
Mr Estafnous approached Mr Kidd and asked if he could sell Regent House to one of his clients; Mr Kidd's reaction was that everything is always for sale at the right price. This approach had taken place by 12 January 2001. On that date, Mr Kidd (as director of LLBC) wrote to Mr Estafnous giving some brief details of Regent House, indicating that "we would only be prepared to consider a sale of our long leasehold interest at a figure of £22 million", and saying that he would not give further details without heads of agreement and satisfactory evidence of "your client's funds".
Sometime before 20 March 2001 – nothing turns on how long before, or indeed on how the introduction took place – a Mr Charnesh Kapoor had been introduced to Mr Estafnous as a person interested in buying Regent House. By 20 March 2001, he had made an offer of £19 million for the purchase although he had not by that date been told the identity of the owner of Regent House.
On 21 March 2001, Mr Estafnous wrote to Mr Gouldman of his solicitors, England Palmer, referring to the offer of £19m and expressing his confidence that he would get the acceptance of it on Friday 23 March. He gave Mr Kidd's contact details; he said that LLBC would confirm their acceptance of the sale for £19m and their acceptance to pay him £2m on completion; and he asked Mr Gouldman to prepare a contract for the payment of the £2m commission. He said that, as soon as that contract was signed, he would "pass all the details about my client [Mr Kapoor]." He stressed the urgency of the matter as the offer was only valid for 7 days.
On 23 March 2001, England Palmer wrote to Lawrence Graham, who were LLBC's solicitors. They said:
"Our client is able to introduce to your client a party who is willing to purchase the above property at a price of 19 million pounds, subject to contract, and your client is apparently willing to sell the property at this price.
In consideration of the introduction to the interested Buyer, your client has agreed to pay our client the sum of 2 million pounds upon completion of the sale."
On 28 March, Mr Gouldman drafted and sent to Mr Fielding of Lawrence Graham a form of agreement; Mr Fielding returned this on 29 March with some manuscript amendments (asking Mr Gouldman to incorporate these in a clean version for signature) and the comment
"I think that in the context of my undertaking given yesterday, we have taken matters almost as far as we can without my actually knowing with which firm of lawyers I should be corresponding, or, for that matter, my clients receiving a formal subject to contract offer from an identified purchaser." [Nothing turns for present purposes on the terms of that undertaking.]
This comment confirms that at that date Mr Kidd did not know either Mr Kapoor's name or those of his solicitors.
Mr Gouldman presumably drew up a clean version, and the agreement (" the Agreement") was then executed. It is dated 30 March 2001. It is made between LLBC and Mr Estafnous. It was signed by Mr Kidd expressly on behalf of LLBC as a director, and by Mr Estafnous. It is quite short and reads as follows:
"WHEREAS
(A) LLBC has agreed, subject to contract, to sell the property situate and known as 24–25 Nutford Place, 136–138 George Street and 112–130 Edgware Road, London W1 at a price of 19 million pounds, subject to the existing occupancies thereof, at a price of 19 million pounds sterling to a party (the intending Buyer) who is to be introduced to LLBC to Mr Estafnous.
(B) LLBC and Mr Estafnous wish to agree certain financial arrangements in connection with the introduction of the Intending Buyer to LLBC as set out herein.
NOW IT IS HEREBY AGREED as follows:-
1. In consideration of the introduction of the Intending Buyer to LLBC and upon the Intending Buyer (or any other party related to or associated with the Intending Buyer) completing a purchase of the Property LLBC will forthwith upon such completion pay to Mr Estafnous or as he may direct the sum of 2 million pounds sterling.
2. Further in consideration of the introduction of the intending Buyer LLBC hereby agrees as follows:-
(i) To instruct as its solicitors acting on the sale of the Property the firm of Lawrence Graham and to give that firm unconditional and irrevocable instructions to give an undertaking in the form attached (the Undertaking).
(ii) In the event that Lawrence Graham for any reason cease to act on the sale of the property, to notify Mr Estafnous thereof forthwith and to procure that such Solicitors issue an undertaking to Mr Estafnous' Solicitors in respect of the payment of 2 million pounds sterling in terms mutatis mutandis identical to the Undertaking.
3. LLBC hereby acknowledges, agrees and undertakes that on completion of the sale of the property to the Intending Buyer or any party related to or associated with that party LLBC will pay Mr Estafnous the sum of 2 million pounds sterling notwithstanding any variations in the stated purchase price."
Mr Kidd and Mr Kapoor, or Lawrence Graham (LLBC's solicitors) and Gordons (Mr Kapoor's solicitors), were put in touch with each other by Mr Estafnous. After this, matters proceeded slowly. On 30 May, Lawrence Graham wrote to Gordons saying that
"Having given further consideration to the matter our client has come to the view that the only way in which he are [ sic] prepared to progress the sale is if it is structured as a sale of the owning company."
Lawrence Graham also mentioned that their client had had discussions with "your client's agent" about a redemption penalty which...
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