Agents defeated in Kensington Palace Gardens commission case

Savills, Beauchamp Estates and Glentree Estates have lost their dispute with billionaire art collector and property investor Professor David Khalili over a £1.4m sale commission on one of the UK’s most expensive houses. On Thursday, Sir Edward Evans-Lombe gave judgment following a six-day trial in March between the agents and Khalili’s property firm Favermead. The three agents claimed that, in April 2001, Favermead had agreed to pay them £1.2m in commission if they introduced the buyer of 18-19 Kensington Palace Gardens, London W8, or £235,000 if Khalili himself found the buyer. In October 2001, Favermead sold the property to Formula One tycoon Bernie Ecclestone for a reported £50m. Khalili told Savills’ head of London residential agency, Jonathan Hewlett, that this formed part of “a business arrangement” in return for his help in securing a new Grand Prix venue for Ecclestone, and did not therefore amount to a sale. In June 2004, Ecclestone’s family trust, Corfiducia Anstalt, sold the property to Indian steel magnate Lakshmi Mittal for £57m, a buyer whom Savills claimed it had introduced to Khalili. However, following the sale to Mittal, Savills claimed that it discovered that the 2001 deal was a sale, and accordingly, the agents claimed that they were owed commission on both sales. Khalili insisted that no commission was payable on the 2001 deal and that Savills was not “the effective cause” of the subsequent sale to Mittal who had been introduced to the deal by a different agent. Dismissing the agents’ claims, Sir Edward Evans-Lombe ruled that although the 2001 transaction was a sale on which commission would have been payable, Hewlett had “waived” the claim to commission in order to pursue a higher commission on any subsequent sale. The judge added “In any event, it is counter-intuitive that an agent should expect to receive commission twice on successive dispositions of the same property by his principal.” Regarding the 2004 sale, he ruled that Savills and the other agents had “failed to discharge the burden of proof that rests on them to establish that they were the effective cause of the sale”. The judge ordered the agents to make a £100,000 interim payment on account of costs – an order that was stayed pending an application for permission to appeal.   A spokeswoman for the agents said: “We came to court very reluctantly, but felt that a clear point of principle was at stake. We are therefore very disappointed at the judge’s decision and are now considering the next steps.” Glentree Estates Ltd and others v Favermead Ltd Chancery Division (Sir Edward Evans-Lombe (sitting as a judge of the High Court)) 20 May 2010. Robert Deacon (instructed by CKFT) appeared for the claimants; John Wardell QC (instructed by Davenport Lyons) appeared for the defendant.