Docklock Ltd v C Christo & Co Limited

An accounting agent must prove each item of discharge, while the beneficiary bears the burden of proving surcharges. Contractual and restitutionary claims must be analysed separately. An informal arrangement may create a binding contract where its terms are sufficiently certain and the parties objectively intended legal relations. Where services are supplied without a contract, a quantum meruit depends on unjust enrichment, with market value ordinarily the starting point and subjective devaluation available where the evidence supports it. A general waiver of claims is construed according to its express exceptions. It may exclude pre-period balances and sums outside the preserved accounting period. An agent’s authority to make payments may continue without a contract, but payments outside the ordinary course of business require proof of authority. Forfeiture of remuneration is fact-sensitive and need not be decided where no remuneration was payable for the relevant services.

Docklock, a property investment company, claimed an account from its former property manager, C Christo & Co Limited, for monies received during the period 1 October 2014 to 1 September 2016. Christo claimed deductions for transfers, disbursements, management fees, professional fees and other expenses.

The claims were preserved as exceptions to the parties’ divorce settlement and waiver arrangements. The issues included the construction of those exceptions, the effect of a pre-period client-account balance, whether Christo had contractual or restitutionary entitlement to fees, the value of an occupation charge, the authority for disputed payments, and whether any remuneration should be forfeited.

1. Account and waiver. Applying Exsus Travel Ltd v Turner [2014] EWCA Civ 1331, Docklock bore the burden of proving surcharges and Christo bore the burden of proving its discharges. The settlement waiver preserved claims for monies received as agent during the specified period, but not the sitting balance held before that period. The principles in Re Clayton’s Case (1816) 35 AER 767, The Mecca [1897] AC 286 and Barlow Clowes International Ltd v Vaughan [1992] 4 All ER 22 therefore did not assist Docklock.
2. Fees. No binding agreement authorised general management charges before Chris ceased to be a director of Docklock. However, by January 2013 Docklock and Christo had agreed that Docklock would pay Nicholas’s and Mr Forrester’s salaries in lieu of management fees. That contract ended by agreement on 9 February 2015, or alternatively on reasonable notice expiring four months later. No later contract for management fees arose.
3. The expression “management fees” in the settlement exceptions included letting and renewal services. Those services were not covered by the earlier salary agreement, but Christo recovered their reasonable value on a quantum meruit. Under Benedetti v Sawiris [2014] AC 938, the court asked whether Docklock was enriched, whether the enrichment was at Christo’s expense, whether it was unjust, and whether any defence applied. Market value was the starting point. The evidence showed that Docklock wanted and would have paid for the services, so no subjective devaluation was made.
4. Christo remained Docklock’s agent after the contractual relationship ended. Its authority to make ordinary business payments continued, subject to instructions and the undertaking not to deal with assets outside the ordinary course of business. Several challenged payments were unauthorised or outside that course.
5. Under section 34(1) of the Landlord and Tenant Act 1954, the open-market rent for 66–70 Parkway was £79,000 per annum. The occupation charge and service charges were set off against Christo’s recoverable fees. The court declined to decide the general legal test for forfeiture, because the relevant management services were largely gratuitous and the remaining breaches were not sufficiently serious.
6. The final account showed that Christo had failed to account for £282,372. Judgment was entered for Docklock in that sum, subject to the permissions to apply identified in the judgment.

First-instance trial judgment. No appellate history was stated in the judgment.