The litigation in Conway v Prince Eze [2018] EWHC 29 (Ch) concerned the abortive sale of a London property for £5m. The sellers claimed that they had been forced to sell their home at a reduced price of £4.2m after the Nigerian businessman failed to complete the agreement that he had signed, and sued for damages for breach of contract. They claimed the difference between the price agreed with him and the price achieved on the subsequent sale to another purchaser, as well as costs that they had incurred because they needed bridging finance to complete their purchase of another property.
The buyer defended the claim, alleging that the transaction was void or voidable because the sellers had agreed to pay a third party, who had found the property and introduced it to him, a “secret commission” in the sum of £75,000 to secure the sale. He rejected suggestions that he had pulled out of the deal because of a fall in oil prices, and sought the return of his £500,000 deposit.
The judge upheld the seller’s claim. In his judgment, the relationship between the third party, Mr Obahor, who had acted for himself, and the buyer did not engage the law on secret commissions and bribes. Mr Obahor had negotiated for the purchase of the property on behalf of a non-existent buyer and had then gone looking for someone who would actually buy the property from the seller. He had introduced the property to the buyer as a salesman, and not as an agent, and was paid commission totalling £150,000 for having done so. The buyer had used Mr Obahor to facilitate the transaction; he did not regard him as a trusted adviser and had asked someone else to oversee matters and give him any necessary advice. So there was no inherent reason why he should not be paid by either side or, indeed, by both parties to the transaction.
Had he concluded otherwise, the judge agreed that he would have regarded Mr Obahor’s arrangement with the sellers as an agreement to pay a secret commission. And the authorities confirm that actual payment of a secret commission or bribe is unnecessary; it will suffice that an agent has accepted an offer of payment. Furthermore, it is unnecessary for a principal to show that his agent was actually influenced by a secret commission or bribe.
In this case, the buyer had broken his contract to buy the sellers’ property and was liable to pay damages. The sellers had subsequently exchanged contracts for a sale to another buyer for £4.2m, with an agreed completion date fifteen months later. Delaying completion in this way meant that the sellers had incurred further costs and had had to pay for their bridging finance for much longer, thereby reducing the value of the price paid for their property in real terms.
The judge accepted that it had not been reasonable to defer completion in this way. In his view, the sellers could have completed a sale at the same price to another buyer by the end of October 2016. Therefore, the damages payable for the sellers’ bridging finance would be limited accordingly.
Allyson Colby, property law consultant
