Fee agreed to be payable on sale of particular property to buyer to be introduced by plaintiff – Buyer proposing take-over of vendor company – Revised agreement to pay fixed sum on conclusion of ‘anticipated transaction’ – Whether later promise unenforceable for want of consideration – Whether consideration furnished by forbearance to sue under initial agreement
The plaintiff was a property consultant. The second defendant Peter Lewin was at all material times managing director of and major shareholder in the first defendant (Union), which to the plaintiff’s knowledge wanted to dispose of a heavily mortgaged commercial property, City Central Estate, London EC1(the property). Having learned that property of this kind was being sought by Vizcaya Holdings Ltd (Vizcaya) the plaintiff offered to effect an introduction to its chairman, Desmond Bloom, on the understanding that he would, in the event of an ensuing sale of the property, receive a fee of 1% of the consideration paid. On acceptance of that offer by the second defendant, the plaintiff confirmed its terms by letter dated January 19 1993. After effecting the introduction two days later the plaintiff played no further part in talks between the second defendant and Mr Bloom but was soon to learn from another source that Mr Bloom, after showing initial interest in the property, was proposing a share acquisition whereby Union (net asset value approximately £7m) would become a subsidiary of Vizcaya. Anxious about how this news would affect his fee the plaintiff resumed contact with Mr Lewin and by letter dated April 19 1993 confirmed that in the event of ‘the anticipated transaction’ he would be looking for an introductory commission of £25,000 plus VAT as agreed. That figure was subsequently recorded in a disclosure document annexed to the acquisition agreement concluded between Vizcaya and the shareholders of Union. Following a denial by Union, acting on the instructions of Mr Bloom, of any liability in respect of the introduction, the plaintiff commenced proceedings in September 1993 to recover £25,000 plus VAT. The claim was dismissed and the plaintiff appealed.
Held The appeal was allowed.
1. There had been no basis for the judge’s finding that the revised agreement, as recorded in the letter of April 19, merely varied the amount of the commission. The ‘anticipated transaction’ could only refer to the share acquisition then being negotiated.
2. The plaintiff had furnished sufficient consideration for the revised agreement in forbearing to sue on the original agreement, it being immaterial that a lawyer might find little substance in such a claim. Provided that the claim was neither frivolous nor vexatious it was sufficient, as the evidence showed, that the plaintiff had (with no need to make a threat or demand) a bona fide belief in the rightness of his claim: see Callisher v Bischofsheim (1870) LR 5 QB 449.
3. Given that the revised agreement did not require the plaintiff to take positive action it was immaterial that the plaintiff’s introduction was not the proximate cause of the deal that was eventually done.
Philip Newman (instructed by Bray Noorani) appeared for the appellant plaintiff; David Matthias (instructed by Stringer Saul) appeared for the first respondent; Ian Clarke (instructed by Ritchard Englefield) appeared for the second respondent
