Al-Rawi v Sidawi and others 

Contract – Profit share agreement – Quantum meruit – Claimant alleging contractual entitlement to share of profits from the acquisition, redevelopment and disposal of prime real estate properties by defendants – Claimant bringing alternative claim for quantum meruit – Whether binding oral agreement between parties – Whether claimant establishing unjust enrichment – Whether unjust factor based on mistake – Whether claim barred by Limitation Act 1980  – Claim dismissed The claimant had worked in real estate and property for around 25 years. From 2009 to 2015, he operated his property business through two companies which were owned by him and another. The first defendant was a businessman who split his time between Abu Dhabi, where his construction company was based, and London, where his family lived. The claimant said that he was contractually entitled to a share of the profits arising from the acquisition, redevelopment, and subsequent disposal of four prime real estate properties in central London. The claimant introduced the first defendant to each of those investment opportunities. In relation to one of the projects, the first defendant involved the second and third defendants. If the claimant had no contractual entitlement to a share of profits, he brought an alternative a claim for a quantum meruit. The claimant said that he and the first defendant had reached binding oral contracts that he would be paid a share of the profits with no deduction for cost of capital. The first defendant said that in relation to each project (except one) it was a matter for his discretion to pay what was effectively a bonus for a good job, in the shape of a profit share, and in each case after a deduction of 5% interest by way of cost of capital. Witnesses gave oral evidence of their recollection of events, conversations and beliefs in the past. Held: The claim was dismissed. (1) The approach of the court to the assessment of the oral evidence was to weigh it in the context of the reliably established facts, including those to be distilled from contemporaneous documentation, the motives of the protagonists, the possible weakness of human memory and ultimately, the inherent probabilities. The risks of the fallibility of human memory did not displace the need in each case for a proper assessment of the oral evidence and the weight to be placed on evidence of recollection. There was no general principle that no reliance was to be placed on the recollection of witnesses: Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), R (on the application of Bancoult) (No 3) v Secretary of State for Foreign and Commonwealth Affairs [2018] UKSC 3 and Martin v Kogan [2019] EWCA Civ 1645 considered. (2) On the evidence, it was likely that much of the claimant and the first defendant’s dealings with each other were not intended to be contractual at all, but simply left as matters of honourable and fair dealing between those parties. It was clear that the absence of a written contract between them was a deliberate decision to rely on the trust they had that each would behave honourably and fairly and indicated that they did not intend to create a legal relationship. At some points their dealings undoubtedly gave rise to rights under English law but not every dealing gave rise to such rights. It followed that a failure to act honourably and fairly did not necessarily give rise to rights to relief under English law. Furthermore, there was no binding agreement for the claimant to have a profit share from three of the projects and no profit share was due to the claimant in respect of the fourth project. There was no other contemporaneous document reflecting a binding oral agreement, whether in the shape of an email or even a WhatsApp message. (3) As regards the claimant’s alternative claim for a quantum meruit, such a claim was for unjust enrichment. It was a claim which arose where there was no contractual entitlement to payment and a claim that services had been provided by the claimant which, if not paid for, would mean that the defendant had been unjustly enriched at the expense of the claimant. The four factors that a court needed to consider in a claim for unjust enrichment were: (i) whether the defendant had been enriched, (ii) whether the enrichment was at the claimant’s expense; (iii) whether the enrichment was unjust; and (iv) whether there were any defences available to the defendant. In relation to (iii), the claimant relied on the principle of free acceptance as the unjust factor: Barton v Morris [2023] EGLR 19 applied. A defendant would be held to have benefited from the services rendered if he, as a reasonable man, should have known that the claimant who rendered the services expected to be paid for them, and yet did not take a reasonable opportunity open to him to reject the proffered services. Moreover, in such a case, he could not deny that he had been unjustly enriched: see Goff & Jones, The Law of Unjust Enrichment (10th ed). (4) The claimant also relied on the principle of mistake as an alternative unjust factor. The concept of a “mistake” required, as a threshold matter, that a claimant believed that it was more likely than not that the true facts or true state of the law were otherwise than they actually were. That belief had to cause the claimant to confer the benefit on the defendant, in the required sense. Even if a causative mistake could be shown, a claimant might sometimes be denied relief on the basis that he responded unreasonably to his doubts, and so unreasonably ran the risk of error. Beyond that, a claimant who had doubts might be denied relief on the distinct grounds that he had compromised or settled with the defendant, or on the basis that he was estopped from pleading his mistake. (5) There could be no claim for a quantum meruit in respect of services which had been paid for. There was then no enrichment at the claimant’s expense because he had been remunerated, and there was no enrichment of the defendant which was unjust. In relation to all four properties, there was no profit share agreement; nor did the claimant believe he was contractually entitled to a profit share. There was therefore no unjust factor based on mistake and no cause of action to which s 32(1)(c) of the Limitation Act 1980 would apply. Max Mallin KC and Simon Atkinson (instructed by Teacher Stern LLP) appeared for the claimant; Peter Knox KC and Stephen Ryan (instructed by Taylor Wessing) appeared for the defendants. Eileen O’Grady, barrister Click here to read a transcript of Al-Rawi v Sidawi and others