Where a contract provides for payment of a fee in specified circumstances and those circumstances do not arise no fee is payable. The law of unjust enrichment mends no one’s bargain.
The Supreme Court has overturned the Court of Appeal ruling in Barton and others v Morris and another [2023] UKSC 3 which concerned the sale of a property in London owned by the fourth respondent, Foxpace Limited.
Foxpace and Barton, the first respondent, made an oral agreement whereby Foxpace would pay Barton £1.2m – representing deposits and other expenses Barton had lost in previous attempts to buy the property – if he introduced a purchaser who bought the property for £6.5m. There was no provision for what would happen if the sale was for less than £6.5m.
Barton introduced a buyer but because the property fell within an area safeguarded for the construction of the HS2 rail link the price was £6m plus VAT. Foxpace argued that it was not obliged to pay Barton anything. Barton claimed the reasonable value of his services. He lost at first instance but the Court of Appeal decided he was entitled to a reasonable fee of £435,000, otherwise Foxpace would be unjustly enriched.
The majority of the Supreme Court disagreed. There was no express term other than the obligation to pay £1.2m if the property was sold for at least £6.5m. To imply a term that Barton was entitled to payment if a sale was concluded for less than £6.5m contradicted the express terms of the contract. It was not possible to say what the parties would have agreed or to imply a term to give the agreement business efficacy.
Barton’s claim was not the same as cases where the courts have implied an entitlement to commission in informal contracts between sellers of property and estate agents when the property is sold to a purchaser introduced by the estate agent. Barton was not an estate agent and this was a one-off contract. The fee was substantially more than a reasonable fee for the introduction and calculated by reference to sums forfeited by Barton in earlier transactions.
A claim in unjust enrichment also failed. The law of unjust enrichment could not be used to circumvent the terms of an existing contract. The benefit to Foxpace of a sale to a purchaser introduced by Barton for no reward to him was not unjust as it was an outcome provided for by the agreement.
Louise Clark is a property law consultant and mediator
