Q&A: Commission fees – finders, keepers?
Laura Bushaway and David Nicholls answer a question about whether a finder’s fee was payable.
Question
I agreed with my neighbour that I would help him find a purchaser for his flat in Bristol and would receive commission of £40,000 if the flat was sold for £1m. I introduced him to a company which bought the flat for £925,000 and my neighbour is refusing to pay mycommission fee. Is there anything I can do?
Answer
Unless you expressly agreed with your neighbour that a fee would be payable in the event that the flat was sold for less than £1m, you will not be able to compel your neighbour to pay you a commission fee in the sum of £40,000 or for any other amount. The court is unlikely to imply a term into the contract with your neighbour because it is not necessary to enable the contract to be performed and to give it business efficacy. Further, a claim in restitution for the value of the services provided based on an argument that your neighbour has been unjustly enriched is likely to fail because it would be inconsistent with the agreement that was made.
Explanation
The Supreme Court has recently grappled with similar issues in Barton and others v Morris and another [2023] UKSC 3; [2023] PLSCS 17. In that case, there was an oral agreement between Foxpace Ltd (the seller) and Philip Barton. Under their agreement, the seller agreed to pay Barton £1.2m if he introduced a purchaser for the seller’s property at a price of £6.5m. Barton did introduce a purchaser, Western UK (Acton) Ltd (the buyer) to the seller but the buyer bought Nash House for only £6m. Barton claimed his introduction fee, but the Supreme Court held, by a majority of three to two, that he was not entitled to any remuneration because Nash House was sold for less than £6.5m.
The Supreme Court considered three potential avenues for payment of an introduction fee to Barton:
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Was there an express term in the agreement?
The parties had agreed that the seller was obliged to pay Barton a specified sum (ie £1.2m) on the occurrence of a particular event (ie a sale for £6.5m). There was therefore no express term in the agreement that Barton would be paid a fee if Nash House was sold for less. -
Was there an implied term that the seller would pay a fee if there was a sale for less than £6.5m?
After reviewing the relevant authorities, including Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] EGLR 8, the court held that it was not necessary to imply such a term into the agreement in order to give it business coherence, nor was such a term so obvious that it went without saying. This was because an implied term would not give effect to the unexpressed intention of the parties as it was not possible to say what fee the parties would have agreed for an introduction that resulted in a sale for less than £6.5m. -
Had the seller been unjustly enriched so that Barton could make a claim in restitution?
A claim in restitution is not based on any agreement or contract and focuses on the unjust enrichment of the potential defendant rather than the damage suffered by the claimant.
Although the seller had been enriched, that enrichment was not unjust. The agreement stipulated the circumstances in which Barton was entitled to his fee and it necessarily excluded any obligation to pay a fee outside of those circumstances. It could not be inferred that the parties had not contemplated what should happen if the property was sold for less than £6.5m. The parties had effectively agreed that Barton would get nothing in those circumstances, even though the seller might benefit from an introduction achieved by Barton. Consequently, an unjust enrichment claim would be at odds with that agreement.
If we apply these principles to your case, unfortunately it seems clear that you do not have any basis for a claim against your neighbour. There was no express agreement between you and your neighbour that you would receive any payment if the flat sold for less than £1m, so you could not bring a claim based on an express term in the agreement. Following the reasoning in, there is unlikely to be any basis for implying a term into your agreement with your neighbour that you should receive payment in the event of a sale for less than £1m. Finally, it cannot be said that your neighbour has been unjustly enriched or that you have a claim in restitution because there was no discussion about what would happen if a sale occurred for less than £1m.
Therefore, unless you discussed (if not agreed) with your neighbour what would happen if the property was sold for less than £1m, then it is unlikely that you have a claim for any commission fee.
Laura Bushaway is a knowledge development lawyer in the real estate disputes team at Charles Russell Speechlys LLP and David Nicholls is a barrister at Landmark Chambers.
An original version of this article was first published on Estates Gazette.
