Barton v Gwyn-Jones & Ors

A specified introduction fee does not automatically allocate the risk that an introduced purchaser will buy at a lower price. Where an agreement promises a fee on sale at a specified price but is silent about a lower-price sale, it does not necessarily exclude reasonable remuneration. The contractual risk-allocation principle prevents unjust enrichment from undermining defined contractual obligations, but does not bar relief where the relevant contingency was left unaddressed. The benefit is valued objectively, normally by reference to market value at the time it was received. A special fee influenced by prior losses or other extraneous factors may be rejected as a valuation benchmark.

Foxpace Limited owned Nash House. Following earlier failed purchases, it orally agreed to pay Mr Barton £1.2 million if he introduced a purchaser who bought the property for £6.5 million. Mr Barton introduced Western, but Foxpace sold the property to it for £6 million after the HS2 issue arose. Foxpace refused payment and rejected Mr Barton’s proof of debt, which he challenged under Insolvency (England and Wales) Rules 2016, rule 15.35.

His Honour Judge Pearce dismissed the contractual claim and held that unjust enrichment was barred by the principle in MacDonald Dickens & Macklin v Costello. The central issues in the Court of Appeal were whether the agreement excluded reasonable remuneration for the lower-price sale, whether contractual risk allocation barred restitution, and how the benefit should be valued.

Appeal allowed. The Court of Appeal held that Mr Barton was entitled to reasonable remuneration of £435,000.

1. Construction. The oral agreement promised £1.2 million if a purchaser introduced by Mr Barton bought Nash House for £6.5 million. It was not an agreement that payment would be made if and only if that price was achieved. Objectively construed, the agreement did not provide that Mr Barton would receive nothing if his purchaser bought at a lower price. The outcome depended on the actual terms of the agreement, consistently with the approach in Luxor (Eastbourne) Ltd v Cooper [1941] AC 188.
2. Contractual allocation and unjust enrichment. The principle in MacDonald Dickens & Macklin v Costello [2011] EWCA Civ 930; [2012] QB 244 prevents unjust enrichment from bypassing or undermining risks and obligations allocated by contract. That principle did not apply here. The agreement allocated the risk that there would be no sale, and did not confer the £1.2 million fee on a sale below £6.5 million, but it was silent about reasonable remuneration in that contingency. Relief therefore did not interfere with the parties’ contractual allocation.
3. Remuneration and valuation. Foxpace had received the benefit of a willing purchaser introduced by Mr Barton, at his expense, in circumstances where the service was not expected to be unpaid. The valuation principles in Benedetti v Sawiris [2014] AC 938 required an objective assessment of the benefit received. The £1.2 million figure was unreliable because it reflected sums lost on earlier transactions and other extraneous factors. In the absence of expert evidence, the judge was entitled to use the other introduction-fee agreements as benchmarks and to value the benefit at 7.25% of the £6 million sale price.
4. Alternative analysis. Asplin LJ considered that a term for reasonable remuneration might also have been implied where it was consistent with the express terms, obvious, clear, necessary for business efficacy and required for commercial coherence. Davis LJ preferred to analyse the claim as a contractual quantum meruit arising from an implied term, distinguishing that remedy conceptually from unjust enrichment. This alternative analysis did not affect the result.
5. The appeal was allowed to the extent that Mr Barton was entitled to £435,000.

1. Court of Appeal (Civil Division) allowed the appeal and held that Mr Barton was entitled to £435,000.
2. High Court (Chancery Division), Business and Property Court dismissed Mr Barton’s appeal against the rejection and valuation of his proof of debt. His contractual claim failed because the property sold below £6.5 million, and the unjust enrichment claim was held barred by contractual risk allocation. The detailed judgment was reported at [2018] EWHC 2426 (Ch).