Husband and Brown Ltd v Mitch Developments Ltd

An incentive fee agreement payable on a no win, no fee basis may entitle an agent to a percentage of the saving achieved against the original accepted price, even where the transaction is later restructured on different terms. The negotiations may be viewed as one transaction where the subject matter and commercial objective remain unchanged. A claim concerning the negotiation of a land purchase is not a Housing Grants, Construction and Regeneration Act 1996 construction contract merely because the purchaser intended to carry out development. Adjudication costs are consequently not recoverable as contractual loss where the statutory adjudication scheme did not apply.

Husband and Brown Ltd claimed an incentive fee under an oral agreement with Mitch Developments Ltd concerning the acquisition of a development site. The parties had initially agreed a conditional offer of £500,007. After the vendor entered liquidation, the site was acquired unconditionally for £325,000 following further negotiations in which the claimant participated.

The defendant accepted that an agreement existed but disputed the incentive fee, contending that the later purchase was a new transaction and that the incentive applied only to reductions arising from the original contractual conditions. The claimant also sought adjudication fees and related legal costs. The central issues were the construction of the fee agreement and whether the parties’ agreement was a construction contract under the Housing Grants, Construction and Regeneration Act 1996.

1. Incentive fee. The claim for the incentive fee succeeded. The negotiations from March to September were properly viewed, as between the parties, as one continuous transaction. The original offer remained part of the negotiations and was ultimately superseded, rather than replaced by an entirely new transaction. The gross price for the agreement was therefore £500,007.

2. The ordinary meaning of saving included the reduction between the original accepted offer and the price ultimately paid. The fact that the later negotiations moved from an offer of £280,000 to an agreed price of £325,000 did not prevent the overall negotiations from producing a saving when viewed in their totality. The claimant had participated in negotiations with the liquidator’s agent and had negotiated the acquisition on the defendant’s behalf.

3. The objective meaning of the agreement did not limit the incentive to reductions attributable to planning, site-condition or other conditions of sale. The claimant’s role was to secure the best possible price, and the incentive applied to any reduction achieved after acceptance of the original offer. The “no win, no fee” structure supported that construction.

4. Adjudication costs. The claim for the adjudicator’s fees and associated legal costs failed. The agreement concerned negotiation of a land purchase and did not involve carrying out, or arranging the carrying out of, construction operations. It was therefore not a construction contract within sections 104 and 105 of the Housing Grants, Construction and Regeneration Act 1996.

5. National Museums and Galleries on Merseyside v AEW Architects Ltd was distinguished. Its reasoning on foreseeability and causation concerned adjudication arising from a dispute under a construction contract and did not address a case where statutory adjudication jurisdiction was absent. In any event, recovery of the adjudication costs would subvert the statutory scheme. The court declined to make the requested declaration concerning the adjudicator’s jurisdiction because it was discretionary and served no useful purpose.

6. Following settlement terms agreed after circulation of the draft judgment, the proceedings were stayed by a Tomlin order.