Philip Barton v Timothy Gwyn-Jones and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Lord Justice Davis,Lady Justice Asplin |
| Judgment Date | 21 November 2019 |
| Neutral Citation | [2019] EWCA Civ 1999 |
| Date | 21 November 2019 |
| Docket Number | Case No: A2/2018/3005 AND A2/2018/3006 |
| Court | Court of Appeal (Civil Division) |
[2019] EWCA Civ 1999
Lord Justice Davis
Lady Justice Asplin
and
Lord Justice Males
Case No: A2/2018/3005 AND A2/2018/3006
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT (Chancery Division)
Business and Property Court
His Honour Judge Pearce
HC-2017-001285/C31MA513
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Brad Pomfret (instructed by Athena Solicitors LLP) for the Appellant
Mr Robert Sterling (instructed by Nicholas Woolf & Co Solicitors) for the First Respondent the Second, Third and Fourth Respondents not appearing and not represented
Hearing date: 22 October 2019
Approved Judgment
This appeal raises the issue of whether a contract for a specified introduction fee, payable to an agent if a property is sold at a particular price, leaves no room for remuneration to be payable, nevertheless, where the property is sold for a lesser sum to the party who has been introduced.
By an order dated 27 September 2018, His Honour Judge Pearce, sitting as a judge of the High Court, dismissed an appeal by the Appellant, Mr Barton. He held that Mr Barton's contractual claim for an introduction fee of £1.2 million failed because the property in question had been sold for £6 million rather than the stipulated figure of £6.5 million and that Mr Barton could not succeed in a claim in unjust enrichment because such a claim was barred by the principle in Macdonald Dickens & Macklin (a firm) v Costello & Ors [2012] QB 244; [2011] EWCA Civ 930. He also stated that, had it been necessary, he would have decided that the value of the benefit to the vendor of the introduction of a party which completed the purchase, albeit at only £6 million, was 7.25% of that purchase price, being £435,000. The citation for the judge's detailed judgment is [2018] EWHC 2426 (Ch).
The proceedings
The issue arose in the context of an appeal pursuant to rule 15.35 Insolvency (England and Wales) Rules 2016. Mr Barton appealed the decision of the First Respondent, Mr Gwyn-Jones, who is the sole director of the Fourth Respondent, Foxpace Limited (“Foxpace”) acting as convenor of the deemed consent procedure, taken at a creditors' meeting on 30 May 2017. Mr Gwyn-Jones rejected Mr Barton's proof of debt in the sum of £1.2 million, valued his claim for voting purposes in the liquidation of Foxpace at £1 and appointed the Second and Third Respondents, Ms Julie Swan and Mr Mark Phillips, as liquidators of Foxpace. Mr Barton did not and does not dispute that it is appropriate that Foxpace be placed into liquidation. He does oppose the appointment of Ms Swan and Mr Phillips, however, and seeks to nominate his own liquidator, a Mr Andrew Bland. It was for that purpose that he had sought to prove his debt in the sum of £1.2 million.
Mr Barton had also commenced separate proceedings against Foxpace to recover the alleged debt. Following a hearing before His Honour Judge Davies on 14 May 2018, the parties agreed, amongst other things, that Foxpace should be joined as a party to the appeal and that on the appeal the court should determine Mr Barton's claim against Foxpace for all purposes.
Ms Swan, Mr Phillips and Foxpace were not represented before the judge, nor were they represented before us. They remain neutral on this appeal, having reached an agreement with Mr Barton on alternative bases in relation to the costs of this appeal and the way in which Ms Swan and Mr Phillips' costs and expenses should be dealt with in the liquidation of Foxpace, should the appeal be allowed.
Property transactions in more detail
Foxpace was the owner of a property known as Nash House, in Northolt, London which it had purchased on 30 June 2006 for £3.75 million plus VAT. On 5 December 2012 Stonebridge Action Limited (“Stonebridge”), a company with which Mr Barton had considerable links, exchanged contracts with Foxpace to purchase Nash House for £6.3 million plus VAT. The completion date was extended to 9 May 2013 by agreement of the parties in consideration of payment of a fee by Stonebridge of £200,000 plus VAT. The contract was rescinded by Foxpace, however, on 17 May 2013 after Stonebridge failed to complete the purchase. Subsequently, on 7 June 2013, Mr Barton exchanged contracts with Foxpace to purchase the property himself for £5.9 million plus VAT. A deposit of £885,000 plus VAT was payable on exchange of contracts in three equal instalments between 1 July 2013 and 4 July 2013. Foxpace rescinded that contract on 1 July 2013 after Mr Barton failed to pay the instalment of the deposit which was due.
Thereafter, Mr Barton and Foxpace entered (as the Judge found) into an oral agreement under which Foxpace agreed to pay Mr Barton £1.2 million if Nash House was sold for £6.5 million to a purchaser introduced by Mr Barton. As a result, in or around early August 2013, Mr Barton introduced Western UK (Acton) Limited (“Western”) to Foxpace as a potential purchaser of Nash House at a purchase price of £6.5 million. In fact, by a contract dated 10 September 2013, Foxpace agreed to sell Nash House to Western for the reduced sum of £6 million plus VAT. The revised sale price was agreed on 9 September 2013, contracts were exchanged the next day and the sale was subsequently completed.
The reduction in price from £6.5 million was to take account of the fact that Nash House was situated on land that might be acquired by or on behalf of HS2. When the issue in relation to HS2 first came to light in August 2013, Western suggested that any exchange of contracts should be conditional upon the site being unaffected by the project but this was rejected in favour of a reduced sale price. It was accepted that this reduction in sale price was reached in good faith.
The sale having been completed, Foxpace refused to pay Mr Barton the £1.2 million he claimed that he was owed. Instead, it offered to pay him £400,000 as a “goodwill gesture” which he refused.
The Judge's Decision
In order to put the judge's decision in context, it is important to understand the way in which the case was put. The main issues before the judge were (i) whether there was a contract between Mr Barton and Foxpace at all, and, if so, what its terms were; and (ii) in the alternative, whether Mr Barton could claim compensation for unjust enrichment, having introduced Western to Foxpace. It was Mr Barton's primary case that Foxpace had agreed to pay him £1.2 million in the event that he introduced a party which purchased Nash House without stipulation as to the purchase price. In the alternative, he alleged that he was entitled to compensation for unjust enrichment because Foxpace had been unjustly enriched at his expense. It had accepted a benefit in the form of the introduction of Western at a time when it knew that Mr Barton expected to be paid and had not rejected the introduction. The Costello case having been raised with counsel by the judge during closing submissions, in subsequent written submissions it was contended, for the purposes of the unjust enrichment claim, that either there was no concluded agreement between Mr Barton and Foxpace or, if there was, the parties should not be held to have allocated the risk of Nash House being sold for less than £6.5 million.
It was argued on behalf of Mr Gwyn-Jones, on the other hand, that terms were not agreed; that even if they were they remained “subject to contract”; and in the third alternative, that even if an agreement had been reached the £1.2 million was payable if, and only if, Nash House was sold for £6.5 million. In relation to the alternative claim for compensation for unjust enrichment, Mr Sterling on behalf of Mr Gwyn-Jones argued that the only service, if any, which was accepted on the basis that it would be paid for was the introduction of a purchaser at £6.5 million and that the doctrine of unjust enrichment had no application where the parties have reached a concluded agreement.
The judge found that an agreement had been concluded orally between Mr Rooke (an associate of Mr Gwyn-Jones acting on behalf of Foxpace) and Mr Barton during discussions which took place in July 2013. These were evidenced, in part, by emails pursuant to which Foxpace was liable to pay Mr Barton £1.2 million in the event that Nash House was sold for £6.5 million to a purchaser introduced by Mr Barton (the “Agreement”). However, as Nash House was sold for £6 million the Judge held that the claim in contract necessarily failed. See paragraph [151] – [157] and [161] of the judgment. In reaching his findings about the nature and terms of the Agreement, the judge rejected the evidence of Foxpace's solicitor, Mr Morris, that it had been made clear to him that Mr Barton would receive £1.2 million “if, and only if” Nash House was sold for £6.5 million and that nothing was payable if the sale price was less than £6.5 million. The judge also noted that it would be “bizarre” to have entered into a contract on those terms because Mr Barton would have opened himself up to the possibility that a small reduction in the sale price would deprive him of any introduction fee at all. See paragraphs [141] and [143] of the judgment.
The judge also noted that Mr Rooke had accepted in his evidence that Mr Barton was involved in negotiating the deal at the reduced price of £6 million and that it was accepted that the £1.2 million fee was based upon the sums that had been forfeited to Foxpace as a result of the previous failed attempts to purchase Nash House, both by Stonebridge and Mr Barton himself. See paragraphs [113] and [197] of the judgment respectively.
The judge also commented at paragraph [164] that it was wise that Mr Barton did not seek to argue that he was entitled to £1.2 million or any other figure by way of an introducer's fee pursuant...
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