Commission — Claim by marine agents against marina operators in respect of commission for introducing the latter to a company responsible for the development of a marina at Langstone Harbour — Alternative claims were made under the headings of breach of contract and quantum meruit — Serious conflict of evidence, the version of the plaintiff agents being preferred by the judge to that of the defendants — Plaintiffs asserted that it had been made clear in negotiations that their remuneration would have to come from the party introduced, not from the company which owned the development rights — After considering the evidence, the judge concluded that the plaintiffs had established the existence of a contract by which the defendants were to pay the introduction commission; that the introduction by the plaintiffs had taken place; and that this introduction was the effective cause of the appointment of the defendants as the managing consultants for the development — The judge rejected a submission by the defendants that the effective cause of their appointment was the intervention of a third party — He held, however, that the remuneration to which the plaintiffs were entitled was not the commission of £15,000 claimed by them but a modest amount based on the time spent by them in effecting the introduction — The plaintiffs were not entitled to remuneration based on the commercial opportunity which their introduction afforded the defendants
The following
case is referred to in this report.
Millar,
Son & Co v Radford (1903) 19 TLR 575
In this action
the plaintiffs, Chaskill Ltd, who carried on business as marine agents, claimed
against the defendants, Marina Developments Ltd, who owned and operated
marinas, a sum of £15,000 as commission, alternatively as damages for breach of
contract or as a reasonable sum on a quantum meruit basis, in respect of
the introduction of the defendants to Marples International Ltd, the company
which had acquired the sole rights to develop a marina at Langstone Harbour on
the Eastney peninsula, Hampshire.
Nigel Jones
(instructed by Sheridans) appeared on behalf of the plaintiffs; David
Griffith-Jones (instructed by Boodle Hatfield) represented the defendants.
Giving
judgment, TUDOR EVANS J said: The plaintiff company carries on business as
marine agents. The defendants own and operate marinas. The plaintiffs claim
from the defendants £15,000 and VAT as commission, alternatively they claim
damages for breach of contract and in the further alternative a reasonable sum
upon a quantum meruit.
The claim
arises in these circumstances: a company named Langstone Marine Ltd, of which
Mr Brisland and Mr Fraser-Harris were the directors and owned the share
capital, acquired from the Portsmouth City Council the sole right to develop a
marina complex at Langstone Harbour, which is on the Eastney peninsula between
Hayling Island and Southsea. In January 1984 they sold their share capital in
the company to Marples International Ltd (‘Marples’), the well-known firm of
civil engineers. Marples thus became responsible for the development of the
marina. It is a necessary part of the history to mention at this stage that, as
a part of the purchase of the company, Marples undertook to offer to Messrs
Brisland and Fraser-Harris the right to manage and operate the marina when the
development was complete, subject to an option to buy them out upon payment of
£50,000.
It is the
plaintiffs’ case that in April or May 1984 Mr Bramall, who was then the senior
contracts manager employed by Marples, asked Mr EJ Lambah-Stoate [FRICS], a
partner in a firm of surveyors, J R Eve, for help in advancing the project. Mr
Lambah-Stoate had no expertise in the field and he approached Mr Gray who, with
Mr Hill, is and was at the time, a director of the plaintiff company. According
to Mr Gray, he was told by Mr Lambah-Stoate that Marples had tried
unsuccessfully to find a buyer for the project and that they felt that if they
could find a credible manager to operate the marina, financiers would be more
comfortable in providing finance. Mr Lambah-Stoate is said to have told Mr Gray
that Marples wanted to find a marina operator. Mr Lambah-Stoate made it clear
to them that he was not going to remunerate the plaintiffs: remuneration would
have to come from any person whom the plaintiffs introduced. Mr Gray and Mr
Hill made extensive inquiries and researches and eventually selected the
defendants.
On a date in
June 1984, which was probably the 24th, Mr Gray and Mr Hill met Mr Bramall,
first at the Crest Hotel in Portsmouth and they then went to the site. According
to Mr Gray and Mr Hill, Mr Bramall told them that the critical feature of the
project was to find an operator. He mentioned the question of raising finance,
especially by way of a business expansion scheme (BES), which is a
government-supported scheme whereby investors obtain tax relief, but that he
had been told that, without a credible operator, no money could be raised by
means of the scheme. Both Mr Gray and Mr Hill say that Mr Bramall made it clear
that he was not happy with the idea of Messrs Brisland and Fraser-Harris as
operators. There were then technical discussions about the project and Mr
Bramall gave them the plans and other relevant documents. Mr Bramall does not
accept this account of the meeting.
A meeting was
held on July 25 1984 between Mr Gray and Mr Hill at the office of Mr Perry, who
was then the defendants’ managing director. According to Mr Gray, and his
account is supported by Mr Hill, it was explained to Mr Perry how the
defendants could be involved in the marina, that the need was for an operator
and that, given the defendants’ experience, it was felt that the defendants
should operate the marina. Mr Perry was very enthusiastic, but he said that the
defendants could not invest money in the project because they were heavily
involved with a marina in Torquay. In the course of the discussion, Mr Perry
asked whether Marples would be interested in giving the defendants an option to
purchase the marina in four or five years’ time. After further discussion about
technical details, Mr Gray raised the question of the plaintiffs’ remuneration,
saying that the plaintiffs were not retained by J R Eve and that they would
look to the defendants for their remuneration. Mr Perry is said to have replied
that he did not like introductory commissions and offered to give shares in the
new company which would inevitably be formed to own the marina. Mr Gray replied
that it was not their policy to take shares as remuneration. According to him,
Mr Perry made no reply to this remark. Mr Hill agrees: he said in evidence that
Mr Perry did not say either ‘yes’ or ‘no’. Mr Perry, in evidence, gave a wholly
different account of this meeting, as I shall consider later.
On July 27
1984, Mr Gray wrote a letter to Mr Perry in which he said, inter alia:
The Project
Manager of the developers, Marples International Ltd, is Mr Michael Bramall and
we have tentatively arranged with his secretary for us to meet on site on
Thursday next, August 2 . . . subject to confirmation on Monday next when Mr
Bramall returns from leave. We confirm that Marples . . . and their chartered
surveyors, J R Eve, have discussed the Southsea project with us but we are not
retained by them and would, therefore, look to MDL [the defendants] for our
introductory commission when the discussions had developed into a contractual
arrangement. We also confirm that we have not approached any other Marina
owners or managers and that we have given you our complete set of background
material on the project for you to peruse prior to the site meeting.
Mr Perry did
not reply to this letter until August 24 1984, as I shall mention later.
The meeting
took place on August 2. It started at the Crest Hotel. It continued at the site
and they then went back to the Crest. Present were Mr Bramall, Mr Perry and Mr
Hill but not Mr Gray. According to Mr Hill, there was a full discussion of the
details and technicalities of the scheme. Mr Bramall repeated that Marples was
looking for a credible operator for the marina, and he said that he was not at
all happy for Mr Brisland and Mr Fraser-Harris to operate the marina. It was
left that Mr Bramall and Mr Perry would maintain close contact.
On August 24
1984, Mr Perry wrote to Mr Bramall stating that, from his initial discussions
with the defendants’ board, they were interested in the scheme and that
(quoting from the letter):
I will be
able to make a proposal to you early in September.
On the same
date, Mr Perry wrote to Mr Gray:
Thank you for
your letter of July 27 concerning the development in Southsea and I am pleased
to tell you that I have now had further information from Mr Bramall . . .
concerning expected income and costs for the Marina and I sincerely hope that
now various members of our Board have returned from holiday, I will be able to
discuss this matter with them during the next two weeks. I will then write to
you further to advise you of our feelings.
As I have
already mentioned, this letter was in reply to Mr Gray’s letter of July 27, in
which he had said that the plaintiffs would look to the defendants for their
introductory commission. Mr Perry ignored that part of the letter. On August
24, according to Mr Gray, he had further telephone conversations with Mr Perry
about the number of berths in the marina and whether Marples would give the
defendants an option to buy the marina. There was also further correspondence
from Mr Bramall to Mr Perry, indicating that the Portsmouth Council were
prepared to increase the number of berths: see letter dated September 6. A
meeting was arranged for October 26 1984 between Mr Bramall, Mr Perry and Mr
Gray, but, as I find, Mr Perry or his secretary rang up Mr Gray and said that
while he did not want to exclude him from the meeting, there was little point
in his attending because the meeting would be a short one. He told Mr Gray that
he would let him know the outcome. That was Mr Gray’s evidence of the
conversation, which I accept. It is fully supported by a handwritten note he
made at the time.
On October 15
1984 Mr Perry again wrote to Mr Bramall, in which, inter alia, he said:
Our Board
have now had an opportunity to consider this matter
the proposed
development of the marina
and have
asked me to write saying that we are interested and would like to be involved
in the management of the Marina and, to a certain extent, its development. As I
told you during our first meeting, we are stretched financially at this time
due to the very large new Marina we are building in Torquay and in order to
take on another project we would have to have considerable financial help from
Marples . . . Our suggestion is that you dig out the Marina basin and provide
the lock and retaining wall. We will then take over, provide the pontoons and
shore facilities and manage the Marina. This would mean of course, that the
actual cost for the construction of the basin would have to be borne by your
property development on the site but my understanding from our initial
discussions was that you thought that this may be possible.
A further
meeting was arranged for November 5, but, although Mr Perry sent Mr Gray the
agenda for the meeting, Mr Gray was again asked not to attend. The agenda for
this meeting is to be found in the papers. It is to be noted that it is headed
‘Notes for discussions — MDL’ (the defendants) ‘proposals’ and that, inter
alia, it proposes that the defendants will be appointed as managers of the
marina on a percentage basis to be agreed and that the defendants will be
granted first option to buy out Marples’ interest on a phased basis over the
first four years of operation.
According to
the evidence of Mr Gray, after the November 5 meeting had taken place he had
expected to receive a draft agreement reflecting the outcome of the meeting and
showing the defendants’ involvement in the scheme. He tried to speak to Mr
Perry on the telephone but he succeeded only once. Mr Perry told him that the
agreement was waiting to be drafted and that it would be with Mr Gray in a few
days. Nothing happened and, on November 7, Mr Gray wrote to Mr Perry saying
that he was anxiously awaiting the defendants’ proposals but that he had heard
that the defendants had withdrawn from the project because of their financial
involvement with their project at Torquay. On December 11 Mr Perry replied
that, because of the financial involvement at Torquay, the defendants’ board
had decided that they could not make any financial commitment in the marina. Mr
Gray assumed that the defendants had withdrawn. On January 21 1985 he replied to
Mr Perry, expressing his disappointment and asking for the return of plans,
photographs, reports and other documents he had given him. They were returned
and there was no further contact until September 1985 when, at a boat show, Mr
Hill came across the prospectus for a new company, the Langstone Yachting plc
(‘LY plc’), which had been formed to develop and operate the marina. Mr
Bramall, Mr Perry and Mr Leask, an accountant whose role has an important part
in the case, as I shall consider later, were, among others, the directors. The
only part in the scheme to which I need refer is the management agreement
whereby it was agreed between LY plc and the defendants that the latter would
act as the management consultants in return for an index-linked annual fee of
£10,000, a commission on boat sales and 3% of the profits before tax. I might
add at this stage that Mr Lambah-Stoate was called on behalf of the plaintiffs.
I shall refer to his evidence later.
It is the
plaintiffs’ case that the defendants agreed to pay them a commission for
introducing the defendants to Marples, the commission to become payable when a
contractual arrangement was reached. The agreement is alleged to have been made
in part orally, at the meeting of July 25 1984, partly in writing, by Mr Gray’s
letter of July 27 and partly by the conduct of Mr Perry when he confirmed the
meeting and then attended it on August 2. As I have already said, the
plaintiffs value the amount of commission at £15,000 plus VAT. In the
alternative they claim a reasonable sum as damages for breach of contract. But,
if the plaintiffs fail to establish an enforceable contract, they claim a
reasonable sum for their services upon a quantum meruit. The defendants
deny that any agreement was reached for the payment of an introductory
commisssion but, if such a contract were made, it is contended that the
introduction was not the cause of the transaction which was ultimately agreed
between LY plc and the defendants. Mr Griffith-Jones, counsel for the
defendants, relies upon the observations of Lord Collins MR in Millar, Son
& Co v Radford (1903) 19 TLR 575, where he said:
It was,
therefore, important to point out that the right to commission did not arise
out of the mere fact that agents had introduced a tenant or a purchaser. It was
not sufficient to show that the introduction was a causa sine qua non. It was
necessary to show that the introduction was an efficient cause in bringing
about the letting or the sale.
In this case,
Mr Griffith-Jones submits on the issue of causation that, on the evidence, the
introduction of the defendants to Marples was stillborn and that the scheme
ultimately adopted was derived from an entirely different source, Mr Leask, to
whom I have referred earlier.
The first
issue which I have to decide is whether there was an agreement between the
plaintiffs and the defendants. In evidence Mr Perry recalled the meeting of
July 25. He says that he had never heard of marine consultants such as the
plaintiffs and he therefore inquired what they did. He understood that they
wanted to introduce him to Marples with the idea of the defendants’ financing
the building of the marina. It is, according to Mr Perry, untrue that Mr Gray
and Mr Hill told him that Marples were looking for a manager to operate the
marina. There was no discussion about a fee: if there had been, he would have
wanted to know the basis of it and how it would be paid. Mr Perry described the
suggestion about taking a stake in a company as ‘nonsense’. There was no
mention of a new company being formed. Mr Perry accepts that he attended the
meeting on August 2. He says that he understood that Marples were looking for
finance so that they could go ahead with the development of the marina. Nothing
was said to show that Marples were interested in the defendants, other than as
the providers of finance. Mr Perry accepts that there was a mention of Mr
Brisland and Mr Fraser-Harris. Their names came up because Mr Perry feels that
he would have said that, if
marina. According to Mr Perry, Mr Bramall replied that if the defendants became
involved, Marples could buy out Mr Brisland and Mr Fraser-Harris. It is not
right that Mr Bramall said that he was not happy with Mr Brisland and Mr Fraser-Harris.
Mr Perry was
taken through documents in which various proposals were being considered by the
defendants’ board, and letters written to Mr Bramall. He said that at no time
did he have a discussion with Mr Bramall that the defendants would simply
manage the marina, although it is clear from some of the documents that
proposals for the defendants to manage the marina, and to make a financial
investment, were considered by the board and put forward to Mr Bramall. After
Mr Perry had written to Mr Bramall on November 23 1984 that the defendants
could not consider making any further financial commitment, according to Mr
Perry he had a chance meeting with Mr Leask, whom he had known for about five
years but who was not a friend of his. The subject of the marina came up and Mr
Leask mentioned that he was interested in the development. In the letter of
November 23 1984 to Mr Bramall (to which I have just referred) Mr Perry wrote:
Edward Leask
was at Hamble the other day and I understand has been involved in the BES
exercise. I have agreed to meet him on Friday to talk through things and see if
between us we can provide the management and the finances for which you are
looking.
According to Mr
Perry, Mr Leask did not know that the defendants had been in discussion with
Marples until, on the occasion of the meeting, Mr Perry told him. On December 6
1984, at the defendants’ board meeting Mr Perry reported that he would be
meeting Mr Leask and it was agreed that ‘the defendants were keen to be
involved on a management basis only’. The meeting took place between Mr Leask
and Mr Perry on December 7 1984. Mr Bramall was present. A Mr McCarthy also
attended. He was a member of investment brokers, Guinness Mahon, who with Mr
Leask are said to have been concerned in finding finance for the project.
Later, the defendants were prepared to underwrite, in the sum of £250,000, the
issue of shares of a company named Freshtide Ltd, but by February 26 1985 a new
proposal involving the formation of LY plc was in being. The proposal which was
subsequently implemented did not involve any financial commitment by the
defendants. Instead, they entered into the management consultancy agreement to
which I referred earlier. According to Mr Perry, the introduction of the
defendants by the plaintiffs played no part in the discussions and arrangements
which were ultimately adopted. They all came from Mr Leask.
In support of
their case, the defendants called Mr Bramall. He said that he was quite happy
for them to operate the marina. By the midsummer of 1984, when he approached Mr
Lambah-Stoate, there was no potential investor in the marina who would not
invest because of Messrs Brisland and Fraser-Harris, but some investors would
also want to manage, that is, they were prepared to invest only if they could
also manage. When he spoke to Mr Lambah-Stoate, his prime concern was to find a
purchaser of the marina.
At the meeting
of June 24 with Mr Gray, Mr Hill and Mr Lambah-Stoate, he was interested only
in finding a purchaser. Mr Bramall said that it was not correct that he was not
happy with Messrs Brisland and Fraser-Harris. Nor does he recollect a BES being
mentioned. As to the meeting on August 2, it was Mr Bramall’s evidence that he
had approached Mr Perry on behalf of the defendants as purchasers and not as
operators. He denies Mr Hill’s account of the meeting. According to Mr Bramall,
it was Mr Leask who wanted the defendants to become the managers of the marina.
As a result, discussions took place that led to the formation of LY plc and the
arrangements to which I have referred.
The first
issue of fact I have to decide is whether Marples was interested in the
defendants as operators or whether its interest was confined solely to a
financial investment. Involved in this issue is the question whether Mr Bramall
was unhappy with the idea of Messrs Brisland and Fraser-Harris as operators.
Mr
Griffith-Jones has submitted that a substantial body of the documentary
evidence supports the defendants’ case that Mr Bramall’s sole interest was in
finding an investor. It is true that in May 1984 Mr Bramall was canvassing
various sources for this purpose. It is also true that on June 15 1984 Mr
Lambah-Stoate, writing to Mr Bramall, said:
. . . I write
to record the introduction of Mr Gray’s involvement in the project and that in
the event of a sale of the project being arranged through this firm
J R Eve
then our fees
will be charged . . .
in accordance
with scales to which I need not refer.
Mr
Griffith-Jones laid great emphasis upon a letter written by Mr Lambah-Stoate to
Mr Gray. On October 24 1984 Mr Gray had written to Mr Lambah-Stoate saying that
he had made it clear to Mr Perry that the plaintiffs would look to the
defendants for their introductory commission when discussions had developed
into a contractual arrangement and asking for Mr Lambah-Stoate’s assistance, in
effect, as to the correct method of charging the defendants. On October 25 Mr
Lambah-Stoate replied and I quote the words upon which Mr Griffith-Jones
relies:
Obviously it
was originally envisaged that MDL [the defendants] would buy the completed
development . . . .
I shall now
summarise Mr Lambah-Stoate’s evidence. According to him, when he initially met
Mr Bramall, he was asked if he could assist in pushing the project forward. He
therefore approached Mr Gray, at which stage there was no particular aspect of
the project upon which Mr Gray was going to assist. At the meeting on June 24
Mr Bramall explained to those present about the option to purchase the marina
which Mr Brisland and Mr Fraser-Harris held. He also explained that he had a
moral obligation to the two men to allow them to operate it, but that, with the
benefit of them, Marples had been unsuccessful in raising finance. Mr Bramall
explained about the buy-out option and he said that, if necessary, a more
credible operator could be interposed. Mr Bramall’s main interest was to find a
means of unlocking the project. According to Mr Lambah-Stoate, he had the clear
impression that the best option for Marples (who were his clients) would be to
sell the marina to an operator, that Marples was under pressure in relation to
the development of the project and was desperately looking for some means to
achieve that end. As to his letter of October 25 to which I have referred, he
explained that the letter sprang from the June meeting and that Marples’
preferred option was a sale and that it would be helpful if the purchaser
operated the marina. In cross-examination, Mr Lambah-Stoate denied that the
letter indicated that the defendants would buy the whole project. The purpose
of the letter was, in any event, to describe the basis for Mr Lambah-Stoate’s
fees.
Upon the whole
of the evidence, I am satisfied, and I find, that in the summer of 1984 Marples
was indeed desperate to find some means for advancing the project, either by
sale or by a sale to someone who could operate the marina, and that it was
prepared to sever the sale and the management of the marina. Mr Bramall
accepted that some potential investors were not prepared to invest without at
the same time operating the marina. Marples, as civil engineers, were concerned
with the construction side of the project and felt an urgent anxiety to find
someone to invest and someone to operate it. If the investor was anxious to
operate it, then I have no doubt, if terms could be arranged, Marples would
have been prepared to accept such a deal. Mr Lambah-Stoate was plainly an
honest witness and I fully accept his evidence about Mr Bramall’s remark that
he had a moral obligation to Messrs Brisland and Fraser-Harris. I need not
repeat his evidence, which I accept. Mr Lambah-Stoate’s evidence shows, and I
find, that Mr Bramall was prepared to discard them. There is other evidence
that Mr Bramall was not solely concerned with the selling of the marina. While
it is true that among the various projects which were put to Marples by the
defendants was one whereby the defendants would contribute £600,000 (see the
notes on the meeting of October 26 1984), there was a later proposal whereby,
as I mentioned earlier, the defendants would contribute and would be appointed
as managers: see the agenda for the meeting of November 5.
But the
essential issue with which I am concerned is whether Marples were interested
only in finding an operator and whether this was the basis of the discussion at
the meeting on July 25. On these issues, in my judgment, the most important
document in the whole case is an extract from the minutes of the defendants’
board meeting which was held on July 26, the day after the meeting. It is
stated in the minute:
BEP [Mr
Perry] reported on a meeting with Chaskill Ltd re the development of a marina
at Langstone Harbour. Chaskill are seeking the services of a management agent
for the marina and BEP would monitor and report back.
If this minute
is accurate, it is a near contemporary confirmation from the mouth of Mr Perry
that the plaintiffs were seeking the defendants’ services as managers and it is
evidence which flatly contradicts the evidence of Mr Perry and Mr Bramall. But
Mr Perry said in evidence that the minute was inaccurate. In evidence-in-chief,
having said that the minute was an incorrect record, Mr Perry explained that he
did not correct it at the time because it was such an unimportant matter. In
cross-examination, he gave another explanation. Having said that he did not
tell the board that the plaintiffs were seeking the services of a management
agent, he said that the secretary had become confused with a marina at Hull.
I do not
believe Mr Perry’s explanation. I have no doubt, and I find, that the minute is
an accurate record of what Mr Perry said and that he did not correct it because
it was accurate. Indeed, in the minute of the defendants’ board meeting of
September 27 1984 Mr Aicher, the defendants’ chairman, is recorded as
instructing Mr Perry to write to Marples saying that the defendants were
stretched financially but that they would like to install equipment in the
marina and manage it. This is a substantial reflection of what, according to Mr
Gray and Mr Hill, Mr Perry was saying at the meeting of July 25. On October 15
Mr Perry wrote to Mr Bramall fully reflecting his instructions. As between Mr
Gray and Mr Hill on the one hand and Mr Perry and Mr Bramall on the other, I
very much prefer the evidence of the former whenever they conflict. Mr Gray and
Mr Hill were patently honest witnesses. Mr Perry was a combative witness, often
evasive in his answers and, at times, as I am satisfied, deliberately
untruthful. The charitable explanation of Mr Bramall’s evidence is that, with
the passage of years, and the various schemes with which he was involved, he
has become confused. I find that Mr Bramall did express dissatisfaction with Mr
Brisland and Mr Fraser-Harris. I find that Mr Bramall did tell Mr Gray that it
was critical to find an operator and an operator who was credible. I find that
at the meeting on July 25 it was explained to Mr Perry that there was a need
for an operator of the marina. I find that Mr Perry said that the defendants
were financially stretched and floated the idea of an option to purchase in
four or five years. I find that the conversation about remuneration took place,
as Mr Gray and Mr Hill stated in evidence, and I reject the evidence of Mr
Perry that the subject was not mentioned. Indeed, quite apart from my
preference for Mr Gray and Mr Hill as witnesses of truth, there is direct
confirmation of their evidence about remuneration in Mr Gray’s letter of July
27 1984, from which I read earlier. In the third paragraph are the words ‘we
confirm’, followed by the information that the plaintiffs had not been retained
by Marples and J R Eve, and then indicating that the plaintiffs would look to
the defendants for their introductory commission when discussions had developed
into a contractual arrangement.
I must now
turn to the question as to whether a contract was made between the plaintiffs
and the defendants. When I was reviewing the evidence of Mr Gray and Mr Hill as
to the meeting on July 25 I referred to both witnesses having said that Mr
Perry made no reply to the suggestion concerning remuneration. Mr Gray and Mr
Hill were making an offer, but in my view it was not accepted. Mr Perry’s
silence could not, in my judgment, constitute acceptance. But the letter of
July 27, the exact language of which I have quoted, clearly amounted to a
further offer. Mr Griffith-Jones did not dispute that if, following the offer
made in the letter, Mr Perry went to the meeting in response to the letter,
that would constitute acceptance of the offer. But Mr Griffith-Jones submitted,
relying on evidence from Mr Perry, that all the latter did, following the
letter, was simply to attend the meeting. The meeting of August 2, it is said,
had already been arranged before the letter was received. I do not accept this
explanation. In the second paragraph of the letter, Mr Gray wrote that the
meeting of August 2 had been tentatively arranged for 1600 hours on August 2
with Mr Bramall’s secretary, subject to confirmation when Mr Bramall returned
from leave. At the bottom of the letter are the words: ‘Confirmed 4 pm. Coffee
house. Crest Hotel.’ Mr Gray, in
evidence, explained that this was, as the language obviously shows, a
confirmation by Mr Perry’s secretary following the receipt of the letter. I
have not the slightest hesitation in finding that Mr Perry accepted the
invitation to go to the meeting after he had received the letter. He went to
the meeting, having been made an offer in relation to remuneration and, by
going to it, he accepted that offer. He thus accepted an obligation to pay to
the plaintiffs an introductory commission. It was submitted by Mr
Griffith-Jones that the terms of the contract, if such is proved as I have
found, were that the defendants would become liable only if a direct
contractual arrangement was made between Marples and the defendants. But that
was not the language of the offer: the words are ‘. . . when the discussions
had developed into a contractual arrangement’. The ultimate arrangement was a
contractual arrangement. The only question is whether the introduction of the
defendants to Marples was the cause of the arrangement.
As I said
earlier, Mr Perry said nothing in his letter of August 24 about the offer which
had been made to him in the letter of July 27. I am satisfied that he did not
do so because the offer had already been accepted and was, so to speak, water
under the bridge.
I have already
summarised the defendants’ case on causation: it is said that the effect of the
introduction of the defendants to Marples was limited, and that the cause of
the arrangement which was ultimately adopted sprang from the casual meeting of
Mr Perry and Mr Leask. This, if such it was, was probably shortly before Mr
Perry’s letter to Mr Bramall dated November 23 1984. It was in that same letter
that Mr Perry told Mr Bramall that the defendants could not assume any further
financial commitments and withdrew from negotiations. I shall have to consider
the contents of this letter again later.
I gave leave
to the defendants to put in evidence an affidavit from Mr Leask under Ord 32, 2
(1) on the ground that Mr Leask was overseas. In it, Mr Leask states that he
was first involved in the project in the spring of 1984, when he was approached
by a firm of surveyors, L S Vail & Co, asking if Mr Leask had some ideas
for the marketing of the marina. He was not retained by anyone. His involvement
was purely speculative. He first met Mr Bramall at about this time. There is a
document which shows that Mr Leask was indeed involved in financial
calculations of quite a detailed nature. Then, according to the affidavit, in
the summer he introduced Guinness Mahon to the project. He later mentioned the
project to Mr Perry and the involvement of the defendants then developed. He
was not able to give the date. Mr Leask states that he did not approach Mr
Perry at the request of Mr Bramall. He, Mr Leask, was acting quite
independently. Thus, if I accept the affidavit evidence, Mr Perry’s involvement
arose from a source entirely independent of Mr Gray and Mr Hill. But I should
say at once that I am not prepared to accept Mr Leask’s affidavit. I have not
seen and heard him give evidence and, particularly, I have not had the benefit
of hearing him cross-examined. This is a case in which it is particularly
important to have seen and heard the witnesses. It is true that the affidavit
confirms Mr Perry’s evidence, but I have regrettably found Mr Perry to be
unreliable and there are further features of Mr Perry’s evidence, to which I
shall now refer, which are highly unsatisfactory. First, as I mentioned
earlier, Mr Perry said in evidence that in effect Mr Leask was no more than an
acquaintance whom he had known probably for about five years. But, according to
para 8 of Mr Leask’s affidavit, he had known Mr Perry for about 20 years and he
had had business dealings with him before ever the matter of the marina arose.
I find that Mr Perry was not giving me truthful evidence when he described his
knowledge of Mr Leask. Moreover, I strongly doubt the honesty of Mr Perry’s
letter to Mr Bramall dated November 23 in which, as I have said, he in effect
withdrew the defendants from all negotiations with Marples. At the defendants’
board meeting on November 13 1984, it is recorded that:
BEP had been
in contact with Marples . . . who had proposed a 44% equity investment by MDL
for £600,000. The matter was discussed and Mr Aicher asked BEP to return to
Marples to say we were only interested in the Marina and would provide the
floating works if Marples would provide the balance ‘of the infra-structure. It
was he (sic) suggested to Marples that a five-year agreement be entered
into including a buy-out clause.
Those were Mr
Perry’s instructions and yet he wrote the letter of November 23 withdrawing
from negotiations. According to Mr Perry’s evidence, nothing happened between
the board meeting of November 13 and the letter, that is, he had no further
instructions, and yet he did not carry out his board’s instructions. It is
stated in the defendants’ solicitors’ reply to the letter before action dated
November 14 1985 that the defendants’ interest lapsed entirely, but I do not
accept that conclusion.
If the minutes
of the defendants’ board meetings and the letters in Bundle A are read, as a
result of the introduction of Mr Perry to Mr Bramall there were continuous
negotiations between the defendants and Marples. On November 13 1984 specific
instructions were given to Mr Perry, still, in my view, flowing as a result of
the introduction
apparently stopped by Mr Perry. And then, within a very short time, Mr Perry,
Mr Bramall, Mr Leask and Guinness Mahon were negotiating. I do not accept that
negotiations were broken off in reality. I find that Mr Leask, having been
involved earlier in the year, joined the scheme as a means of providing
finance. I find that the defendants were always interested in being managers
and that, although the idea of their making a financial contribution was
floated, because they were financially stretched it was not a practical proposition
and so they became management consultants. In other words, the defendants
wanted to manage the marina and that is what they did, the investment money
coming from other sources. Thus the whole purpose of the introduction was
effected. In my view, it was Mr Leask who joined the continuous negotiations
between Marples and the defendants, which I am satisfied flowed from the
introduction by the plaintiffs of the defendants to Marples. Mr Perry was
throughout using all the documents provided to him by the plaintiffs. I find
that the ultimate scheme whereby the defendants became managing consultants was
caused by the introduction effected by the plaintiffs and that the plaintiffs
are accordingly entitled to recover reasonable introductory commission.
I must now
consider what is the proper sum to compensate the plaintiffs. The agreement
between the parties was that the defendants would pay commission to the
plaintiffs for introducing them to Marples. That conclusion must follow from
the terms of the offer in the letter of July 27, which Mr Perry accepted by
going to the meeting on August 2. On September 29 1985, the plaintiffs sent an
invoice to the defendants claiming £15,000 plus £1,000 VAT. I accept Mr Hill’s
explanation that the figure for VAT was wrongly calculated by him. But the sum
of £15,000 was not quantified in any way, save that it was said to cover fees
and disbursements. In my judgment, the plaintiffs are entitled to reasonable
fees for their introduction. Annexed to the further and better particulars of
the reamended statement of claim is an estimate of the hours spent by the
plaintiffs from May 1984 to January 1985. It is based upon the hours spent in
writing letters, making telephone calls, meeting Mr Bramall, the defendants and
J R Eve, and carrying out research. But the agreement was confined to
introducing the defendants. As Mr Gray very frankly accepted when he was
cross-examined, the plaintiffs’ role was completed when the meeting of August 2
took place. He agreed that that was the role which Mr Lambah-Stoate asked the
plaintiffs to perform. In these circumstances, I do not accept the submission
of Mr Nigel Jones, counsel for the plaintiffs, that I should take a broader
view and compensate the plaintiffs for the commercial opportunity they afforded
to the defendants. I propose to value the plaintiffs’ claim on the basis of the
time properly spent in effecting the introduction. The first question I have to
decide is whether the plaintiffs are entitled to be compensated for the work
they did in acquainting themselves with the details of the project before the
meeting on July 25. At first sight, Mr Nigel Jones’ submission that it was
necessary preparatory work is attractive. But for whose benefit was this work
done? The defendants knew nothing about it.
They had not even heard of the plaintiffs. It seems to me that the plaintiffs
were preparing and informing themselves in order that they might be properly
equipped to interest the defendants and so to carry out the introduction. That
was nothing to do with the defendants. Equally, I do not think that the
plaintiffs can claim fees for the time spent in discussions and correspondence
after the introduction had been effected. There is a claim for many hours spent
after August 2. It may be that the purpose of the various discussions after
that date was to promote a deal between the defendants and Marples, but that
was not the subject of the agreement. I find that the plaintiffs are entitled
to be compensated for the hours spent at the meetings on July 25 and August 2.
According to the schedule attached to the further and better particulars, the
total number of hours is 15 1/2. I find that the schedule is accurate. Mr Perry
said that the meeting of July 25 took no more than half-an-hour to an hour, but
I do not accept that evidence. Although Mr Perry said otherwise, I find that
the plaintiffs made a presentation of the scheme to Mr Perry. Indeed, in their
letter at A, p125, the defendants’ solicitors wrote to the plaintiffs’
solicitors that there was a presentation, albeit they say it was short. I find
that it was full. I accept a period of seven hours, as stated in the schedule
to the further and better particulars, as reasonable. The meeting of August 2
began at 4 pm. Mr Hill had to travel from his office in Kensington to
Portsmouth via his house in Surrey. The allowance of 8 1/2 hours is, in my
judgment, a reasonable charge. Mr Gray, in evidence-in-chief, said that he had
in the past charged a range of £100 – £150 an hour for work in this country.
Bearing in mind the technical nature and the complexity of the work, I accept a
sum of £150 as a reasonable hourly rate as a fee. Taking the total hours spent
at 15 1/2, I make the total £2,325. I shall ask counsel to agree whether that
sum attracts value added tax and, if so, what the amount may be. It follows
that I need not consider the plaintiffs’ alternative claims in contract or upon
a quantum meruit. There must be judgment for the plaintiffs.
