Agents launch appeal in Kensington Palace Gardens commission case

Savills, Beauchamp Estates and Glentree Estates have appealed 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. The Court of Appeal is being asked to overturn a ruling in which Evans–Lombe J rejected the agents’ claim against Khalili’s property firm Favermead for commission on two sales of the £50m property at 18–19 Kensington Palace Gardens, London W8. The agents say that, in 2001, Favermead agreed to pay them £1.2m in commission if they introduced the buyer 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, whom Savills claimed to have introduced to Khalili. Following the sale to Mittal’s nominee company Laken, Savills claimed that it discovered that the 2001 deal was a sale and, accordingly, the agents argued that they were owed commission on both sales. Khalili insisted that no commission was payable on the 2001 deal and that Savills had not been the effective cause of the subsequent sale to Mittal, who had been introduced to the deal by a different agent. Dismissing the agents’ claims, the judge 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. He added: “In any event, it is counterintuitive that an agent should expect to receive commission twice on successive dispositions of the same property by its 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 agents are asking the court to overturn that decision. They say that there was no basis for the judge to find that they had waived the lower commission claim and that he should have held that the two bases for commission were contained in two entirely separate agreements. They contend that the judge misled himself in finding that the claim was “counterintuitive” because the two commission claims were each in respect of a different agreement. They also claim that the judge was wrong in law to find that they had failed to establish that they were the effective cause of the sale. Favermead argues that the claim for commission on the first transfer is an “afterthought” by the agents’ lawyers, rather than a genuine belief on the part of the agents that they are entitled to it. They say that no invoice for the lower sum was ever rendered against them. Moreover, they maintain that the agents were “plainly not the effective cause” of the sale.