Norwich Union Life & Pensions Ltd v Strand Street Properties Ltd

A fee-sharing arrangement is not void for uncertainty merely because it does not specify the consequence of every possible circumstance. Where the agreement requires two parties to share development costs equally as they are incurred, either party may stop further expenditure, but costs incurred before that point remain subject to the agreement.

An agent may have implied authority to delegate agency functions where the principal knew and accepted the intended delegation, or where the parties’ conduct reasonably supports that inference. A principal may also ratify an unauthorised transaction through informed acquiescence or conduct clearly adopting it.

Norwich Union claimed £643,353.63 from Strand Street Properties Ltd, representing 50 per cent of professional and consultancy costs incurred in progressing a proposed development at the St Mary le Port site in Bristol. Norwich Union relied on fee-sharing agreements made by London & Paris Estates Ltd (LPE), said to have acted as SSP’s agent.

SSP disputed the existence, certainty and consideration of the agreements. It also argued that LPE lacked authority, that any authority belonged to Topside Properties Ltd and could not be delegated, and that the claim was in substance a time-barred claim for an account.

The issues were whether binding fee-sharing agreements existed, whether LPE acted with authority or its acts were ratified, and whether Norwich Union could recover an accrued debt.

1. Fee-sharing agreement. The court found that between October 2000 and January 2001 Norwich Union and LPE agreed to share equally the fees incurred in progressing the proposed development. Further agreements were made on 2 July 2001, covering fees incurred up to that date and up to 16 July 2001, and on 6 July 2001, covering invoices passed for payment by that date.
2. The arrangement was not limited to £325,000, to April 2001, or to the date on which the Courts Service might assume responsibility for some fees. Those were budgeting discussions, not contractual limitations. Either side could call a halt, but until then the 50/50 arrangement applied to fees incurred. The agreement was sufficiently certain and provided Norwich Union with a claim for payment of 50 per cent of fees it had paid. The arguments based on Green v Hertzog [1954] 1 WLR 1309 and Concorde Graphics Ltd v Andromeda Investments SA [1983] 1 EGLR 53 did not apply.
3. Agency. LPE held itself out as acting for SSP. If Topside was the formally appointed agent, it had implied authority to delegate its functions to LPE. SSP knew that LPE, rather than Topside, performed the project-management work and treated the distinction between the companies as immaterial. LPE therefore had implied actual authority to make the fee-sharing agreements.
4. The authority to coordinate the professional team, viewed against the development mandate and the parties’ dealings, included authority to agree the professional fees and to arrange for Norwich Union to bear 50 per cent of them.
5. Ratification. The principles summarised in Bowstead & Reynolds were applicable. SSP’s relevant representatives had knowledge of the fee-sharing arrangement. SSP allowed Norwich Union to pay the invoices, obtained the benefit of the arrangement, and did not repudiate it. That conduct amounted to ratification. A later witness statement authorised by SSP also confirmed the arrangement.
6. The court drew adverse inferences from SSP’s failure without explanation to call relevant witnesses, applying the principles reviewed in Wisniewski v Central Manchester Health Authority [1998] PIQR 324 and Benham Ltd v Kythira Investments Ltd [2003] EWCA Civ 1794.
7. Norwich Union was entitled to judgment for the principal sum claimed. Interest and consequential matters were left for further determination.