Prince Arthur Ikpechukwu Eze v Conway and Another

JurisdictionEngland & Wales
JudgeLady Justice Asplin,Lord Justice Peter Jackson,Lord Justice Longmore
Judgment Date06 February 2019
Neutral Citation[2019] EWCA Civ 88
Docket NumberCase No: A3/2018/0816
CourtCourt of Appeal (Civil Division)
Date06 February 2019
Between:
Prince Arthur Ikpechukwu Eze
Appellant
and
Conway and Another
Respondent

[2019] EWCA Civ 88

Before:

Lord Justice Longmore

Lord Justice Peter Jackson

and

Lady Justice Asplin

Case No: A3/2018/0816

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

His Honour Judge Keyser QC

[2018] EWHC 29 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Edmund King QC (instructed by Watson Farley & Williams LLP) for the Appellant

Mr Matthew Collings QC and Mr G L Darbyshire (instructed by Kennedys Law LLP) for the Respondent

Hearing dates: 11 th–12 th December 2018

Approved Judgment

Lady Justice Asplin
1

This is an appeal from the order of His Honour Judge Keyser QC, sitting as a Deputy High Court Judge in the Business and Property Courts (Chancery Division), dated 19 March 2018 and sealed on 21 March 2018. The appeal is concerned with whether the law in relation to bribes and secret commissions is engaged in the circumstances of this case and the nature of the relationship which must exist between the proposed recipient of a secret payment and a contracting party before the effect of the promise to make the payment renders a contract between that contracting party and the promisor in relation to the secret payment void or unenforceable. The Judge gave judgment for the Respondents, Richard and Deborah Conway, (“Mr and Mrs Conway”) in the sum of £1,041,389, having found that the contract for the purchase of 86 Uphill Road, London NW7 4QE (the “Property”) was enforceable despite the promise of payment of a fee by them to a Mr Richard Obahor (“Mr Obahor”) which was not revealed to the Appellant, Prince Arthur Ikpechukwu Eze (“Prince Eze”) who was the purchaser. The citation for his judgment is [2018] EWHC 29 (Ch).

Background

2

I take the essential facts from the judgment, which contains a detailed consideration of all of the relevant circumstances. As this matter turns, in part, upon the precise nature of the relationship between Mr Obahor and Prince Eze, it is necessary to set out the facts in some detail.

3

Turning to the facts themselves, on 7 August 2015 Mr and Mrs Conway and Prince Eze exchanged contracts for the sale of the Property to Prince Eze for £5million. Prince Eze subsequently decided not to proceed with the purchase and failed to comply with two notices to complete. The Conways commenced these proceedings for damages for breach of contract and claimed losses, including the difference between the price agreed with Prince Eze and the price achieved on the subsequent sale of the Property to another purchaser, and bridging finance costs which they incurred to enable them to proceed with their purchase of another property, whilst giving credit for the deposit of £500,000 paid by Prince Eze on exchange of contracts. Once he became aware of the material facts, Prince Eze defended the claim on the principal basis that the contract was concluded following the Conways' promise to pay a bribe or secret commission to his agent, Mr Obahor, which Prince Eze contended rendered the contract void or at least voidable and unenforceable by them.

4

The Conways had placed the Property on the market in 2010 at an asking price of £7 million, which was reduced to £5,495,000 in 2012. They felt, nevertheless, that the prospects of achieving a sale price of £5million were not good. This was borne out by the expert evidence. Their expert's evidence was that it was worth £4.5–4.75 million in the period April – August 2015 and the expert on behalf of Prince Eze considered that it was worth £4.2 million.

5

Mr Obahor is a UK based Nigerian property developer, property manager and “acquisition agent”. The Judge found that his work as an acquisition agent involved finding UK properties for British and foreign investors and that sometimes he looked for a property for a specific client, whilst on other occasions he found a property and then looked for a client who might be interested in purchasing it. The latter was the order of events in this case. The Judge found that in either case, Mr Obahor's role typically involved not only finding the property but also co-ordinating the activities of all those involved in the transaction in order to ensure that they were doing what needed to be done at the right time. See judgment at [8].

6

Mr Obahor viewed the Property on 6 April 2015 and told the Conways that he was acting on behalf of a Nigerian person whose identity was confidential, although in fact he had no client interested in purchasing the Property and was proceeding speculatively in the hope of finding a client in the future. Negotiations were commenced directly between Mr Obahor and Mr Conway and within a few days a price of £5 million had been agreed, subject to contract. Mr Obahor considered the purchase price as representing an “ok deal”. He informed the Conways that his client would wish to complete the purchase by the end of May 2015. The agreement was recorded in a memorandum of sale dated 15 April 2015 which named Roudo Limited, a Nigerian company in which Mr Obahor had an interest, as the purchaser. The Conways instructed solicitors and asked for proof of funds to be sent to that firm. It was received the next day, 16 April 2015.

7

Having raised the topic of a “finder's” or “introduction fee” on the first visit to the property, Mr Obahor raised the issue a second time when he re-visited the property on 18 April 2015 and Mr Conway indicated that, if necessary, he would be prepared to pay £75,000, being 1.5% of the purchase price.

8

On 27 April 2015, Mr Obahor contacted Prince Eze for the first time and mentioned the property. They had had no previous dealings and did not know each other. Mr Obahor stated that he had negotiated the price down from £5.5 million to £5 million and expressed the opinion that it was a “good deal”. He also mentioned that he wanted a 3% fee, being £150,000. Prince Eze agreed the fee, made it clear that he wanted to proceed with the transaction and told Mr Obahor to get in touch with his independent private wealth adviser, a Mr Richard Howarth, to progress matters. It was accepted that no one told Prince Eze that the Conways were paying Mr Obahor a 1.5% fee at that time, or at any time until after these proceedings were commenced.

9

Prince Eze contacted Mr Howarth, informed him about the transaction and told him to monitor what was going on and to “tell him the truth”. As the Judge recorded at [29] of the judgment, in cross examination Prince Eze had stated:

“So then he call me. He tell me about the property. I said, ‘Go ahead, but contact Howard [scil. Richard Howarth], a British man.’ When I found out it's a Nigerian I say, ‘Get in touch with the British man so I can know the truth what's going on.’ Then I phoned Howard and said, ‘This man is going to call. Please monitor what's going on, tell me the truth regards …”

“I just ask him, ‘Go ahead’—and it is less than two minutes—‘Go ahead, contact Richard.’ [Q. And that was really it?] Yes, because I know Richard, I don't know Obahor very well. So get in touch with Richard. Richard will advise me, tell me truth.”

Mr Howarth was also required to “oversee the mechanics of the transaction”, arrange the necessary finance, provide any necessary “know your client” information and identify the corporate vehicle to be used in the purchase. When Mr Obahor contacted him that day, 27 April 2015, Mr Howarth informed him that the Prince would purchase the property through Azarvale Ltd (“Azarvale”) a company registered in the British Virgin Islands which was owned by Prince Eze and administered by Confiance Ltd, a financial services company based in Guernsey (“Confiance”). Mr Howarth contacted a Mr Chick of Confiance and introduced Mr Obahor who sent further details of the proposed purchase. On 29 April 2015, Mr Chick confirmed the name of Azarvale's solicitors, BPE Solicitors, and on 30 April he sent an email to Mr Howarth asking him to provide due diligence documentation concerning Azarvale. That email was forwarded on to Prince Eze without reference to Mr Obahor.

10

In the following days and weeks, Mr Obahor communicated with the Conways and those dealing with the matter on behalf of Prince Eze “with a view to progressing matters” including moving towards exchange of contracts. On 6 May 2015 he emailed Mr Howarth to see how things were progressing and in response to a query about whether he could speak to Prince Eze to move things along, Mr Obahor replied that “Prince has clearly indicated he wants all requirements/funding instructions to come from you.”

11

On a third visit to the Property on 21 May 2015, Mr Obahor told the Conways that his client would not pay him a finder's fee and that they would have to pay him the 1.5% (£75,000) fee which he had previously mentioned. He also threatened to introduce his client to another property and abort the transaction if they did not make the payment. The Conways agreed to pay the fee if Mr Obahor really could not persuade his client to do so. It was untrue that Prince Eze would not pay a fee and in addition, the Judge found that Mr Obahor would not have “scuppered” the deal.

12

In late May, in order to provide the Conways with false comfort in relation to the continuing delay, Mr Obahor sent them false information about the source of Azarvale's funds which he said he had provided to them in breach of confidence. He even patched the Conways into a confidential telephone conversation with Mr Howarth without the latter's knowledge. In late May, Mr Chick of Confiance told Mr Obahor that the solicitors were satisfied with the due diligence procedure but asked him to arrange a survey of the Property. Mr Obahor did instruct surveyors but required them to carry out a valuation instead. A valuation report valuing the property at £5million was produced. The Judge found nothing amiss...

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