In the case of Barton -v- Morris, the Supreme Court was recently asked to decide if commission should be paid to an individual who introduced a buyer for a property after the target price triggering the payment of the commission was not met. The introducer, Mr Barton, agreed with the owners of the building that he would receive a commission payment of £1.2 million if the property was sold for at least £6.5 million but there was no provision as to what sum, if any, would be paid if the building was sold for less than 6.5 million.
The building eventually sold for £6 million as a result of some issues which came to light during the sale process but not because the seller had artificially reduced the price to justify withholding commission. As the agreement with Mr Barton did not provide for him to be paid commission if the building sold for less than 6.5m, he sought to argue that a term should be implied into the contract entitling him to reasonable remuneration.
The Supreme Court refused to imply such a term into the contract because Mr Barton was taken to have assumed the risk that, if he did not introduce a buyer who would pay at least £6.5m for the building, then he would not be entitled to any commission. It was not necessary to imply a term requiring the seller to pay a reasonable amount of commission to make the agreement workable and as Mr Barton was not an estate agent or running an introduction business he could not have had a strong expectation of receiving any commission if the target price was not achieved. Mr Barton was simply engaged to find a buyer who would pay more than £6.5 m for the building so that he could recover some of the losses that he had sustained as a result of his own failed attempts to buy the building.
Mr Barton also sought to recover reasonable remuneration on the basis that the owner of the building had been unjustly enriched by being introduced to a buyer without having to any pay commission for the introduction but the Supreme Court rejected this argument on the basis that if a contract provides for a payment to be made when certain conditions are met then they can be taken to have excluded the possibility of no payment being due if the conditions are not met. The silence of the contract as to what payment might be due if the building is sold for less than £6.5m, did not necessarily mean that the seller had been unjustly enriched.
The decision of the Supreme Court was not unanimous and two of the judges felt that Mr Barton had a right to receive reasonable remuneration. The result might well have been different if the sale price had been artificially deflated to provide a pretext for withholding commission but in the present case the terms of the agreement were sufficiently clear and Mr Barton’s claim failed.
Nockolds’ Litigation Department has dealt with a number of claims for commission relating to property sales. Please contact Alexander Haddad (ahaddad@nockolds.co.uk / 0203 892 6805) to discuss similar claims or other property disputes.