An oral agreement was reached between the applicant and a representative of a company wishing to sell a property that, should the property be sold for £6.5m to a buyer whom the applicant introduced, the company would pay him a £1.2m fee. A buyer introduced by the applicant did offer £6.5m but, after an agreed price reduction to reflect a potential planning issue, the price paid on completion was £6m. The company disputed that the agreement had constituted a binding contract but that, if it had been, it only provided for payment in the event of the property having been sold for £6.5m. The applicant challenged the refusal to pay him during the course of proceedings against the company’s sole director connected with the company’s voluntary liquidation. The judge found that the parties had entered into a binding oral agreement whereby the company would pay the applicant £1.2m in the event that the property was sold for £6.5m to a purchaser introduced by the applicant, that the price reduction had been reached in good faith, but that the parties had not made any provision at all for payment in the event that the property sold at some lower price. The judge held that: (i) the sale having been completed for less than £6.5m, the applicant had no claim in contract, and (ii) the applicant had no claim in unjust enrichment for restitution of the market value of the work he had provided, which he assessed at £435,000, as to do so would undermine the contractual arrangements between the parties whereby they had defined the extent of their obligations to each other. The Court of Appeal allowed the applicant’s appeal in part, holding that the company was liable to pay the applicant a quantum meruit (at £435,000), whether arising from breach of an implied term in the agreement for reasonable remuneration for the services he provided or by reason of the company’s unjust enrichment as recipient of those services. The sole director being now deceased, his executors appealed.
On the appeal—
Held, appeal dismissed (Lord Leggatt and Lord Burrows JJSC dissenting). The company could be held to be contractually bound to pay a fee to the applicant in three different ways: an express term, a term implied on the facts (to give effect to the unexpressed intention of the parties either by reference to the “officious bystander” test or because the term was necessary to give the contract business efficacy) or a term implied by law as being an incident of a particular kind of contract, for example the understanding that estate agents should be paid for a successful introduction. Alternatively, it could be obliged to pay a fee under the law of unjust enrichment. On the judge’s findings, there had been no express contractual term creating an obligation on the company to pay the applicant a fee other than in the event that the price on completion was £6.5m. No term was to be implied on the facts because it was not possible to say that there was any particular fee to which the parties would clearly have agreed, or which was so obvious that it went without saying. Nor was payment of a fee for a sale at a lower price than that anticipated necessary to give the agreement commercial or practical coherence. No term was to be implied in law. The applicant was not an estate agent. Although the agreement was in a commercial context in which people did not tend to act gratuitously, he had taken a risk that if he did not find a buyer at £6.5m he would not be paid a fee. The applicant could not rely on unjust enrichment. The benefit to the company of a sale to a purchaser introduced by the applicant, for no reward to him, would not be unjust because it was an outcome provided for by the agreement. The stipulation as to the event that had to occur in order to impose a legal obligation on the company to pay (a sale at £6.4m) necessarily excluded any obligation to pay in the absence of that event (ie on a sale for a lesser sum). Although the outcome might seem unfair to the applicant, unjust enrichment mended no one’s bargain (paras 11, 17–18, 20, 24–26, 40, 51, 96, 103, 106–107).
Andrew Twigger KC and Robert Sterling (instructed by Phillips Law, Basingstoke) for the executors.
Brad Pomfret and Arnold Ayoo (instructed by Athena Solicitors LLP, Manchester) for the applicant.