Barton and others v Morris and another in place of Gwyn-Jones (deceased) [2022] UKSC 3 – UKSC Blog

On appeal from: [2019] EWCA Civ 1999

Foxpace Limited (“Foxpace”), the Fourth Respondent, owned a property known as Nash House in London. This appeal concerns an oral agreement between Foxspace and Mr Barton, the First Respondent, regarding the Nash House. In the High Court it was held that Foxspace agreed to pay Mr Barton £1.2 million if he introduced a purchaser for Nash House who bought it for £6.5 million. The £1.2 million represented deposits and other expenses that Mr Barton had lost on two previous attempts to buy Nash House.

Mr Barton introduced to Foxspace a purchaser who attempted to buy Nash House for £6.55 million. However, it came to light that Nash House fell within an area protected for the purpose of the construction of the HS2 rail link. As a result, Western acquired Nash House for £6 million plus VAT. Since the oral contract between Foxspace and Mr Barton made no provision as to what would have happened if Nash House was sold for anything less than £6.5 million, Foxpace argued there was no contractual obligation to pay anything to Mr Barton. Accordingly, Mr Barton brought a claim for the reasonable value of his services.

The first instance judge held that Mr Barton was not entitled to any payment. In case he was wrong, the judge assessed a reasonable fee for Mr Barton’s services as being £435,000. The Court of Appeal allowed Mr Barton’s appeal and held that he was entitled to a reasonable fee. The Appellants now appeal to the Supreme Court.

HELD – Appeal allowed, by a 3-2 majority.

Foxspace could be contractually bound to pay a fee to Mr Barton in three different ways: (1) an express term; (2) a term implied on the facts; and (3) a term implied by law. Alternatively, Foxspace could be obliged to pay a fee to Mr Barton under the law of unjust enrichment. The majority held that none of these avenues leads to the conclusion that Mr Barton should be paid a fee.

The express terms of the contract

There was no express contractual term creating an obligation on Foxspace to pay Mr Barton a fee if Nash House was sold to Westerners for less than £6.5 million.

A term implied as a matter of fact

The majority hold that implying a term that Foxspace is contractually bound to pay Mr Barton an unspecified sum if a purchaser buys Nash House for less than £6.5 million contradicts the express terms of the contract. It is not possible to say that there is any particular fee to which the parties would have clearly agreed, or which is so obvious that it goes without saying.

A term implied as a matter of law

Section 15 of the Supply of Goods and Services Act 1982 implies a term that the party contracting with the supplier for services will pay a reasonable charge where consideration for the service is not determined by the contract. The majority hold that this section does not apply in the circumstances of this case because consideration was in fact determined by the contract.

The law also implies a term as an incident of the particular kind of contract in issue. Mr Barton relied on a series of cases in which the courts have implied an entitlement to commission as an incident of informal contracts commonly entered into between sellers of property and estate agents when the property is sold to a purchaser introduced by the estate agent. The majority held that Mr Barton’s contract is not the same as the contract in those cases.

The claim in unjust enrichment

The majority held that Mr Barton’s claim in unjust enrichment also failed. An obligation on Foxspace to pay any commission to Mr Barton when there has been no sale to Western for £6.5 million is at odds with what was agreed and the law of unjust enrichment cannot be relied on to circumvent the terms of a subsisting contract.

Dissenting judgments

Lord Leggatt and Lord Burrows dissented and would both dismiss the appeal. Lord Leggatt holds that Mr Barton was entitled to a reasonable remuneration under a term, implied by law, to pay a reasonable sum for the supply of services where no sum is fixed by the contract. He holds that this entitlement to reasonable remuneration is not inconsistent with the inference that, if Nash House sold for less than £6.5 million, Foxspace would not be obliged to pay Mr Barton £1.2 million. Lord Leggatt also holds that the law of unjust enrichment does not assist Mr Barton’s claim.

Lord Burrows holds that there was a term implied by law into the contract that Mr Barton would be paid reasonable remuneration by Foxspace if he successfully introduced the buyer of Nash House to Foxspace. He holds that the express terms of the contract, for payment of £1.2 million if the purchase price of Nash House was £6.5 million, did not exclude this implied term. Lord Burrows also holds that had there been no such implied term, the same result would have been reached in the law of unjust enrichment.

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