Oral agreement – Enforcement – Unjust enrichment – Claimant giving defendant advice with view to increasing value of land – Claim seeking enforcement of alleged oral agreement with defendant for payment in respect of advisory services in connection with land – Whether oral agreement being established – Whether claimant entitled to payment for work done – Claim dismissed
The defendant owned land at Owls Castle Barn, near Horsham, West Sussex comprising his home and around 31.4 acres of agricultural land. From 2009, the land was promoted for development in the Horsham local plan. A scheme was proposed including a development of 4,500 homes, of which the defendant’s land would form part.
The owners of land likely to be included in the scheme, including the defendant, entered into land collaboration agreements (LCAs) to promote the inclusion of their various holdings in the local development framework: Their plots would not to be sold for less than £250,000 per acre; and the landowners would grant one another rights of pre-emption.
In February 2011, a developer (L) was recommended as the “development partner” for the purposes of the LCAs. L offered the defendant a call option for his land at £250,000 per acre with provision for indexation at 2.5% per annum. Negotiations followed but the defendant ultimately never accepted that offer.
On 22 January 2013, the claimant offered to introduce the defendant to a larger residential developer at no expense to the defendant. The claimant also advised the defendant with a view to increasing the value of his land.
The claimant subsequently claimed that, at a meeting on 3 August 2013, an oral agreement was reached under which the defendant agreed to pay him 15% of any increase in value of the land over £250,000 per acre or 15% of any payments made to the defendant above that figure. He claimed for breach of contract and unjust enrichment.
Held: The claim was dismissed.
(1) An offer of a unilateral contract was made when one party promised to pay the other a sum of money (or to do some act, or to forbear from doing something) if the other would do (or forbear from doing) something without making any promise to that effect. The offer could be accepted by fully performing the required act or forbearance without giving advance notice of such acceptance. The offer could be accepted only by performance and not by a counter-promise, which would not be what the promisor had bargained for. And the offer could, like all offers, be withdrawn before it was accepted: see Chitty on Contracts at 4-102.
Applying those principles, on the evidence, any initial proposal must have been for a bilateral contract and nothing was discussed to change that aspect of any agreement. The parties both accepted that any agreement reached on 3 August 2013 was purely oral, with the subsequent correspondence being evidence of the agreement, rather than the agreement itself.
(2) The approach that the court adopted to an alleged oral contract was different to that adopted for written agreements. Determining the terms of an oral contract was a question of fact. Establishing the facts would usually, as here, depend upon the recollections of the parties and other witnesses. The accuracy of those recollections might be tested and elucidated by things said and done by the parties or witnesses after the agreement had been concluded. Receiving evidence of such words or actions did not mean that the judge was losing sight of his task of deciding what the parties agreed. It was simply helping him to decide whose recollection was right: Maggs v Marsh [2006] EWCA Civ 1058 and Zymurgorium v Hammonds of Knutsford [2023] EWCA Civ 529 considered.
The best approach for a judge to adopt in the trial of a commercial case was to place little if any reliance on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts: Gestmin v Credit Suisse [2013] EWHC 3560 (Comm) considered.
Undisputed contemporaneous documents would provide a better guide to the truth than oral testimony, which was inherently unreliable, particularly where witnesses claimed to be able to recall events or conversations many years back and where their recollection of events was necessarily overlain with the events that had happened since and the willingness to support one side or the other. Where the documentary record was limited, as here, or unreliable, witness recollection should be tested primarily against objectively ascertainable facts: Wrangle v Brunt [2021] EWHC 368 (Ch) considered.
(3) On the evidence, the parties entered into an oral agreement on 3 August 2013 under which the claimant was entitled to 15% of any amount offered for the land in excess of £250,000 per acre. However, the claimant had to be at least an effective cause of the improved terms. If no improvement was achieved, or if it was achieved independently of the claimant’s work, he would receive nothing. In light of the findings regarding the terms of the agreement, the claimant could not succeed even if it was binding.
It was not entirely clear whether the claimant’s work needed to be the effective cause or simply an effective cause of the improvement in terms or the increase in the value of the land. In this case, on either measure the claimant could not succeed. The defendant proceeded with a party whose introduction was not effected by the claimant who was neither “an” nor “the” effective cause of the ultimate sale: EMFC Loan Syndications Lip v The Resort Group Plc [2021] EWCA Civ 844 distinguished.
(4) In the alternative to his claim in contract the claimant sought to recover a quantum meruit based on unjust enrichment: The court had to consider whether the defendant was enriched; whether it was at the claimant’s expense; whether that enrichment was unjust; and whether there were any defences.
The terms of the agreement taken together, including in particular the express term that the claimant was not to be paid if no improved terms were achieved, precluded a claim for quantum meruit. As the claimant recognised, this was a no-win, no-fee deal. If he did not achieve the trigger for payment in the 3 August 2013 agreement he could not fall back on unjust enrichment: Barton and others v Morris and others [2023] UKSC 3; [2023] EGLR 17 applied.
If the court was wrong about the existence of the agreement then there was a claim in unjust enrichment for failure of basis. The appropriate hourly rate was £190.
Damian Falkowski (instructed by DMH Stallard LLP) appeared for the claimant; Clifford Darton KC (instructed by Wannops LLP) appeared for the defendant.
Eileen O’Grady, barrister
