Barton and others v Morris and another in place of Gwyn Jones

The Supreme Court allowed the appeal and set aside the Court of Appeal’s decision that Mr Barton was entitled to be paid a reasonable sum on the basis of unjust enrichment (or by implication of a contractual term). The majority (Lady Rose, with Lord Briggs and Lord Stephens agreeing) held that the oral agreement, as found by the trial judge, expressly obliged Foxpace to pay £1.2m only if Nash House was sold to a purchaser introduced by Mr Barton for at least £6.5m and therefore there was no contractual obligation to pay in other circumstances.

The majority further held that neither implication of a term (under the Marks and Spencer/BP Refinery/Belize principles) nor a restitutionary claim in unjust enrichment (including failure of basis) could be used to override or subvert that express allocation of risk: the silence of the contract as to sales at less than £6.5m did not import a right to payment. Section 15 of the Supply of Goods and Services Act 1982 was considered but held inapplicable to alter that result on the facts. The trial judge’s assessment of a reasonable fee (£435,000) was not challenged but was not payable in law on the majority’s analysis.

Background and relief sought.

• The dispute concerned whether the claimant, Mr Barton, who introduced Western UK (Acton) Limited as the purchaser of a property owned by Foxpace Ltd (Nash House), was entitled to payment for that introduction given that the parties had an oral agreement that Foxpace would pay £1.2m if the property was sold for £6.5m. The sale completed at £6m. Mr Barton claimed £1.2m under contract or, alternatively, a reasonable sum by way of unjust enrichment/quantum meruit. The context included Foxpace’s insolvency and a challenge to a proof of debt under the Insolvency (England and Wales) Rules 2016.

Procedural history. The claim was tried before HHJ Pearce [2018] EWHC 2426 (Ch) who found an express unilateral contract limited to payment if the sale was at £6.5m and rejected payment at other prices; in the alternative he assessed a reasonable fee at £435,000. The Court of Appeal allowed Barton’s appeal and awarded £435,000: [2019] EWCA Civ 1999, [2020] 2 All ER (Comm) 652. The executors of Mr Gwyn Jones (Foxpace) appealed to the Supreme Court.

Issues framed by the Supreme Court.

1. Whether Foxpace could be unjustly enriched by retaining the benefit of the introduction given the terms of the oral contract found by the judge.
2. Whether there was an unjust factor (in particular, failure of basis) sufficient to found a restitutionary claim.
3. Whether a term should be implied into the contract that Mr Barton would be paid a reasonable fee if the property was sold for less than £6.5m.

Court’s reasoning.

• The majority accepted the trial judge’s factual findings that the parties had concluded an oral unilateral contract under which Foxpace promised £1.2m if Nash House was sold to a purchaser introduced by Mr Barton for £6.5m and that they did not address what should happen if the sale were at a lower price.
• On implication, the court applied the established tests (Marks and Spencer; Belize; Moorcock/BP Refinery and the officious bystander/business efficacy formulations) and concluded that it was not possible to imply a term that a reasonable fee would be payable for a sale below £6.5m: such a term would contradict the express agreement or, at least, could not be shown to be what the parties would unhesitatingly have agreed.
• On unjust enrichment, the majority held that where the parties have defined and allocated the consequences of the relevant event in their contract, the law of unjust enrichment should not be used to alter that bargain. The court considered authorities on failure of basis (notably Barnes and Roxborough) but concluded that the facts did not show a shared assumption fundamental to the arrangement that had failed so as to make retention unjust in law.
• The Court therefore allowed the appeal and set aside the Court of Appeal’s award of £435,000. The dissenting judgments would have upheld a right to reasonable remuneration (implied term or restitutionary quantum meruit) and would have dismissed the appeal.

Appeal allowed. The majority held that the oral agreement, as found by the trial judge, entitled Mr Barton to £1.2m only if the property was sold to a purchaser introduced by him for at least £6.5m; neither implication of a term nor a claim in unjust enrichment could displace that express allocation of risk, so the Court of Appeal’s award of a reasonable fee was set aside.

Trial: HHJ Pearce sitting as a High Court Judge, [2018] EWHC 2426 (Ch) (contractual finding; alternative assessment of reasonable sum £435,000). Court of Appeal: Barton v Morris (Asplin, Males, Davis LJJ) [2019] EWCA Civ 1999, [2020] 2 All ER (Comm) 652 (allowing appeal and awarding £435,000). Supreme Court: Barton and others v Morris and another in place of Gwyn Jones [2023] UKSC 3 (appeal allowed).