Grosvenor v High-Point Rendel Group Plc [2004] EWHC 2407 (TCC)

Case No HT- 03 - 438[2004] EWHC 2407 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Date: 27.7.04
Before
HIS HONOUR JUDGE PETER COULSON QC
Between
THE HON RICHARD GROSVENORClaimantHIGH-POINT RENDEL PLCDefendant
Mr James Aldridge (instructed by Fenwick Elliott) for ClaimantMr Akash Nawbatt (instructed by Mace & Jones) for DefendantHearing Hearing dates : 5 th, 6 th, 7 th July 2004
JudgmentIntroduction
[1]By his claim, issued on 12th December, 2003, The Honourable Richard Grosvenor (“the Claimant”) seeks to recover against High-Point Rendel Group PLC (“the Defendants”) commission on certain business introductions to the Defendants which he claims to have effected. The quantum set out in the Particulars of Claim was re-amended, by consent, on 5th July 2994, the first day of the trial, such that the Claimant’s total claim is now for £53,242.83, together with VAT: see Appendix 3 to the Re-Amended Particulars of Claim (“RPOC”). The claims relate to introductions , which the Claimant claims to have made between 1999 and 2001 as a result of which the Defendants secured engineering and other related work from Pfizer, Bouygues Travaux Publique, Burges Salmon, S J Berwin, and the National Audit Office.

The Matters Which Are Not Disputed

[2]A number of important matters are not disputed. Firstly, it is agreed that, from about 15th February 1999 to 1st August 2000, the Claimant’s work was the subject of an oral agreement between the parties, pursuant to which the Claimant was entitled to be paid (and was paid) a monthly retainer by the Defendants. Secondly, it is agreed that, pursuant to a Written Agreement dated 1st August 2000 (“the Written Agreement”), the Claimant was entitled to be paid (and was paid) a monthly retainer of £5,737.50 by the Defendants, and that, in addition, the Claimant had an express entitlement to 5% commission on all fees earned by the Defendants up to £1.5 million as a result of introductions effected by the Claimant, with the percentage reducing to 2.5% on all fees earned in excess of £1.5 million. This arrangement lasted for one year from 1st August 2000 to 1st August 2001. Thirdly, it is agreed that, whatever else happened in July/August 2001, the Claimant continued to be paid the monthly retainer thereafter and that this arrangement continued until May 2003.

The Issues

[3]The Issues between the parties concern the Claimant’s entitlement to be paid commission in addition to his monthly retainer for the periods before 1st August 2000 and after 1st August 2001. The Issues relating to the period prior to the signing of the Written Agreement can be summarised as follows : Issue 1 : Was there an oral agreement in December 1998 (or February 1999) that the Claimant would be paid commission as well as a monthly retainer? Issue 2 : Was it agreed that the Claimant’s entitlement to commission pursuant to the Written Agreement would be backdated to February 1999? It is not unfair to say that both of these Issues arise because the Written Agreement does not itself expressly provide for any entitlement on the part of the Claimant to commission prior to 1st August 2000.[5]The Third Issue covers the period from 1st August 2001 onwards and can be summarised as follows : Issue 3 : On what basis was the Claimant to be paid between 1st August 2001 (when the initial fixed term of the Written Agreement expired) and the eventual termination by notice in May 2003? This Issue arises (at least in part) because there is no written record of any agreement between the parties in respect of the period after 1st August 2001. It should be noted that it is the Defendants’ case that there was an oral agreement between the parties in August 2001 that, as from 1st August 2001, the Claimant would no longer be entitled to claim commission in addition to his monthly retainer.

Events Prior to the Written Agreement

[6]Once answers are provided to the three Issues identified above, three further Issues fall to be determined : Issue 4 : In relation to each period in which a commission agreement was in force, did the Claimant perform services as a result of which fees became due to the Defendants? If so, what has become due ? Issue 5 : What effect (if any) did the termination of the Claimant’s contract have on his entitlement to commission? Issue 6 : Is the Claimant entitled to a Declaration in respect of any future entitlement to commission on repeat business? Events Prior to the Written Agreement There were three meetings between December 1998 and February 1999 between the Claimant and Mr Hingley. At the third meeting, on 15th February 1999, the Claimant was appointed as a consultant to the Defendants with the express purpose of introducing new business to them. This was an oral agreement. It was agreed at that meeting that the Claimant would be paid a monthly retainer of £3000 per month, for 2 days work a week.[7]There were delays in the agreement of a written contract. Certain key terms of this proposed contract were identified by Mr Hingley in his memo of 7th September 1999 as follows : “ a) monthly fee to 31st July 1999 £3,000 (plus VAT) in advance b). monthly fee from 1st August 1999 £4,500 (plus VAT) in advance [based upon a commitment from you of 3 days per week] 9. a success fee for work secured from clients introduced by you in a range of 2% to 5%; and c). an initial twelve month contract.” 11. The expression “success fee” is sometimes used in the correspondence instead of “commission” but in this case they have precisely the same meaning.[8]A first draft agreement was prepared by the Claimant in September 1999. A very different draft was prepared by the Defendants and sent to the Claimant in the first part of 2000. The Claimant’s solicitor, Dr Julian Critchlow of Fenwick Elliott, commented on the draft in writing on 6th April 2000, and his comments were responded to by the Defendants, also in writing on 10th May 2000. Further drafts were sent out by the Defendants on 27th June 2000 and 21st July 2000, the latter being the subject of Dr Critchlow’s letter of the same day, in which he said that the draft “seems to me fairly to set out the rights and responsibilities of the parties.” Following a series of further comments by Dr Critchlow on 27th July 20000, the Agreement was signed by the Claimant and Mr Darling of the Defendants on 1st August 2000. The Written Agreement

[based upon a commitment from you of 3 days per week]

[9]The important provisions of the Written Agreement were as follows :

The Written Agreement

“1. The Consultant shall devote 135 full days (a full day being at least 7 hours) a year for the provision of the Services. 2. In consideration of the Services the Client shall pay the Consultant £510 plus VAT per day (“the Daily Rate”) paid monthly in advance plus commission (“the Commission”) as set out in Paragraph 4 hereof. ….. 4. The Commission shall be 5% of those fees, calculated gross but net of VAT, that become due to the Client from time to time as a direct consequence of the Consultant’s performance of the Services and shall include repeat business. Commission shall be paid to the Consultant within one calendar month of the time when the fees in question have been received by the Client. In the event that the value of those fees produce an annual turnover for the client in excess of £1,500,000 then the Commission on the excess value shall be 2½%…… …… 6. The Consultant excludes all warranties and conditions and there are no other terms other than as expressly set out herein in respect of the Consultant’s duties or obligations…. …… 8. The parties enter into this Agreement as independent contractors and, in particular, the Consultant is not an employee, agent or partner of the Client. 9. This Agreement shall be for an initial fixed term of 12 months expiring 1st August 2001. If the parties elect to continue the Agreement thereafter, then either party may terminate it after having given the other party 6 months notice of its intention to do so.”
The Daily Rate produced a monthly retainer figure of £5737.50p per month, and this was the sum invoiced by the Claimant.[10]The Services to be performed by the Claimant were defined in the Written Agreement as “the general promotion of the Client and its business; the introduction and facilitation of introduction of new clients and business opportunities both in the United Kingdom and abroad.”

Later Events

[11]Throughout the period between August 2000 and August 2001, the Claimant invoiced the Defendants for his monthly retainer, expenses and the like. At no time before, during, or after this period did the Claimant include in his invoices any claims for commission. In June 2001, the Claimant met Mr Darling of the Defendants who told him that the Defendants’ overheads had to be reduced. Accordingly, Mr Darling proposed that the Claimant’s retainer would be reduced back to £3,000 per month whilst the commission would be increased by 1%. This proposal was confirmed in Mr Darling’s letter of 11th June 2001. The Claimant did not agree to this proposal and made his own suggestion (which Mr Darling agreed to consider) whereby any commission would be offset against the retainer, which would otherwise remain unchanged in the sum of £5,737.50 per month (“the offset proposal”).[12]The Claimant accepted in his evidence that, at the end of the meeting on 13th June 2001, there was no agreement as to the way forward. He was therefore bound to accept that his email of 13th June 2001, which stated that his off set proposal had been agreed by Mr Darling, was incorrect. He described this as “an error”. On 14th June 2001, Mr Darling reiterated his proposal of a stepped reduction in the retainer and an increased commission. The Claimant accepted in cross-examination that, as a result of this email, he was aware that his offset proposal had been rejected. Despite this, on 27th July 2001, the Claimant wrote to Mr Bradley of the Defendants (who had replaced Mr Darling) to say again that the offset proposal had been agreed by Mr Darling in June. The Claimant could only say that this second incorrect reference to an agreement with Mr Darling was “another error”.[13]There was a meeting between Mr Bradley and the Claimant in August 2001. It is agreed that, at that meeting, Mr Bradley proposed that the retainer could continue to be paid if the Claimant agreed to forgo any additional entitlement to commission for the period from 1st August 2001 onwards. Mr Bradley’s evidence was that the Claimant agreed to this proposal; the Claimant’s evidence was that he did not. There was no record of the discussion. The Claimant’s invoices thereafter continued to be limited to a claim for his monthly retainer.[14]The terms of the Claimant’s continuing agreement with the Defendants were not discussed again until 2003 when, following a notice of termination dated 6th December 2002, the Claimant asserted an entitlement to commission in his letter dated 6th February 2003. This was the very first time that the Claimant had indicated any such entitlement, and the Defendants’ email response of 5th March 2003 referred to the oral agreement in August 2001 that commission would not be claimed. Following a meeting on 12th March 2003, between Mr Bradley and the Claimant, the Claimant on 13th March pointed out to the Defendants in writing that, in respect of the dispute about commission, “there is no evidence to the contrary to show that the terms of my contract have changed.” This remark echoed the Claimant’s email of 5th March, which referred to “the plain absence of any unequivocal, binding change to our original arrangement.” It was Mr Bradley’s evidence that the Claimant made the same point, about the absence of any record of the alleged agreement in August 2001, at the meeting on 12th March 2003.[15]The first formal claim for commission was made on 16th May 2003 by Dr Critchlow on behalf of the Claimant. Although attempts were made to continue the consultancy arrangement on different terms, agreement could not be reached and so the relationship between the parties came to an end in May 2003. As noted above, these proceedings were commenced on 12th December 2003. Issue 1 : Was there an oral agreement in December 1998 (or February 1999) that the Claimant would be paid commission as well as a monthly retainer?[16]Paragraph 4 of the RPOC alleges that, at the meeting in December 1998, Mr Hingley agreed to pay the Claimant 5% of the value of all business introduced by the Claimant to the Defendants. It is said that this was a formal, binding agreement. I have no doubt at all that no such binding agreement was reached at the meeting in December 1998. The Claimant confirmed in his cross-examination that the meeting in December 1998 was the first of three and that, at the end of this first meeting, no concluded agreement of any kind had been reached. Later in his cross-examination he expressly repeated his evidence that there was no agreement with Mr Hingley at that first meeting in December 1998. This evidence alone is sufficient for me to find that the allegation in paragraph 4 of the RPOC has not been made out, a position which Mr Aldridge, who appeared on behalf of the Claimant, very properly conceded in his Closing Submissions .[17]During his re-examination of the Claimant, Mr Aldridge effectively advanced an alternative case, to the effect that a binding agreement to pay commission (as well as the retainer) was reached in February 1999 rather than December 1998. In my judgment, such an alternative case is open to the Claimant on his pleadings despite the emphasis in paragraph 4 of the RPOC on the meeting in December 1998. Mr Nawbatt, who appeared for the Defendants submitted that, whilst this alternative case may technically be open to the Claimant, he was entitled to emphasise the point that it only emerged during the re-examination and was not only contrary to the main thrust of the RPOC, but was also contrary to the Claimant’s Statement, which, at paragraph 4, asserts that “a formal and binding agreement” as to the payment of commission was reached at the meeting in December 1998, a position which his oral evidence did not support. It should also be noted that this alternative case was not explored in the Claimant’s Written Opening, which properly reflects the PROC and the Statement, and therefore describes Issue 1 as concerning whether or not there was an oral agreement to pay commission “in 12/98”.[18]I have reached the clear conclusion on the evidence that this alternative case should also fail. I have no doubt at all that there was no oral agreement in February 1999 to pay the Claimant 5% Commission. There are a number of reasons for my conclusion.[19]Firstly, not only is there no record of any such agreement, but there are also no later documents, which even refer to it. Indeed, even when the relationship between the parties broke down, in late 2002/early 2003, the Claimant still made no reference to any such agreement. As a result, the first time that the existence of any oral agreement in 1998 or 1999 to pay commission for the period prior to 1st August 2000 was asserted by the Claimant was in December 2003, in the first version of the Particulars of Claim. I consider that it is inconceivable that, if there had been such an agreement, it would not have been expressly referred to either during the negotiations leading up to the Written Agreement, or at the time of the proposed changes to the relationship in June-August 2001. I also find that, had there been such an agreement, it would inevitably have been referred to in the correspondence of 2003, when, as a result of the notice of termination, the parties were setting out their respective positions on the issues that had arisen between them.[20]Amongst the many documents which contain no reference to any such agreement are the Claimant’s own invoices. The Claimant’s explanation for this was that he knew that the Defendants were in a poor way financially and he did not wish to add to their burden. However, as the Defendants have pointed out, when the Claimant worked days in addition to the 135 days set out in the Written Agreement, he claimed promptly for an additional daily rate in the next invoice.[21]Accordingly, I find that, if the Claimant had thought that he had a legitimate entitlement to commission pursuant to an oral agreement in either December 1998 or February 1999, he would have asserted that entitlement somewhere within the contemporaneous documents generated between 1999 and 2003; and the absence of any such assertion is the best evidence that there was no such oral agreement.[22]Secondly, in the memo from Mr Hingley to the Claimant of 7th September 1999, there is a reference to the need to draw up a written contract which would contain commission (it is here described as a success fee) “for work secured from clients introduced by you.” The percentage is not, in this memo, identified as 5%; instead it is said to be “in a range of 2% to 5%”. The Defendants submit that this is plainly inconsistent with a pre-existing agreement that they would pay commission at a flat-rate 5% and I accept that submission. It is a point which is given greater force by the fact that, later on in the negotiations for the Written Agreement, the possible basis for the payment of commission was changed on three further occasions. I should also note that the Claimant did not write or ring back in response to the memo of 7.9.99 to say that the percentage had already been agreed at 5%. In cross-examination, the Claimant said that he thought that this was actually a reference to the proposed rates of 5% on £1.5 million and 2.5% on fees in excess of that. I cannot see how such an interpretation can be justified: it is simply not what the words say. Furthermore, even on that basis, the memo would have been wrong in any event because it referred to 2% not 2.5% : the Claimant said that this was “an error” but again confirmed that he did not point it out to the Defendants.[23]Thirdly, when asked in cross-examination as to when and with whom the oral agreement to pay 5% commission was reached, the Claimant was unable to give any clear answers. He could not say that the question of commission was even discussed at the February meeting. His evidence has to be contrasted with that of Mr Hingley who said that, whilst the Defendants had originally proposed that the Claimant be paid on a pure commission basis, the Claimant had made plain that he had to have the security of a monthly retainer and that, accordingly, in February, the Defendants agreed to pay him a retainer for a few months, “to see how things went”. Mr Hingley was clear that there was never any agreement in 1999 that the Claimant would be paid commission in addition to his retainer and I accept Mr Hingley’s evidence.[24]I consider that the points outlined by Mr Aldridge on behalf of the Claimant at paragraph 7 of his helpful Opening (and reiterated at Paragraph 2 of his Closing Submissions) demonstrate the Claimant’s difficulties on this part of the case. A commission element may or may not be usual in agreements of this sort: it must always depend on what the parties actually agree. In addition, neither of the memos of 14th July 1999 and 7th September 1999 evidence a pre-existing agreement to pay commission. The memo of 14th July 1999 is concerned with the possibility that the Claimant might share some of the commission paid by the Defendants to a Mr Campbell, because the Claimant had introduced Mr Campbell to the Defendants and Mr Campbell was going to act in a similar capacity to the Claimant. The memo certainly does not assume that the Claimant was already entitled to commission on his own account in addition to his retainer. The memo of 7th September 1999 is concerned with the proposed key terms of the proposed Written Agreement (set out in Paragraph 7 above), and also makes reference to the position of Mr Campbell : again, there is nothing in the memo that could be said to evidence a pre-existing agreement to pay commission at 5%; indeed, for the reason noted at Paragraph 22 above, I consider that the contents of this memo are inconsistent with such an agreement.[25]Ultimately, in both his Opening and Closing Submissions, Mr Aldridge had to rely heavily on the documents generated by the negotiation of the Written Agreement in 1999-2000 as somehow evidencing a prior oral agreement to pay commission to the Claimant. On examination, I do not believe that any of those documents evidence any such prior agreement. I find that the only potential relevance of those documents is in respect of the argument that, in 2000, the parties agreed that the Claimant’s entitlement to commission under the Written Agreement would be backdated to February 1999. I therefore deal with those documents under Issue 2 below.[26]Accordingly, on Issue 1, I find that the principal case, that there was a binding agreement to pay commission in December 1998, must fail. The alternative case of a binding, oral agreement to pay commission in February 1999 must also fail. I have no hesitation in concluding that there was no such oral agreement, and that, prior to the negotiations in respect of the Written Agreement of 1st August 2000, there was no pre-existing entitlement on the part of the Claimant to be paid commission in addition to his monthly retainer. Issue 2 : Was it agreed that the Claimants entitlement to commission pursuant to the Written Agreement would be backdated to February 1999?[27]In his Opening and Closing Submissions, Mr Aldridge was at pains to emphasise that the Claimant’s case as to backdating did not arise out of the Written Agreement itself, but out of a collateral contract to that effect. He therefore invited me to reject many of the Defendants’ submissions on Issue 2 because they arose out of the Defendants’ construction of the Written Agreement. However, he did accept the general proposition that, if I found that the collateral contract was contrary to the terms of the Written Agreement, the latter would ordinarily prevail.[28]It seems clear to me that, in order properly to address Issue 2, I have to start my analysis with the terms of the Written Agreement. The first question I must decide is whether, on the evidence I have heard, the Written Agreement is a complete record of the contract between the parties. If it is, there can be no question of any binding collateral agreement : see Paragraph 12-098 Chitty on Contracts 29th Edition, Volume 1, and the unreported decision of the Court of Appeal there cited of Wild v Civil Aviation Authority (25.7.87). If it is not, I must secondly consider whether or not the alleged oral agreement is contrary to the terms of the Written Agreement because it would generally be difficult for a Court to find the existence of an oral agreement, which is contrary to a written term. Thirdly, I must consider whether, on the evidence, there was in fact any collateral agreement to backdate the payment of the commission to February 1999. For the reasons set out in Paragraphs 29 – 37 below, I have concluded that the Claimant’s case fails on each of these three points.[29]On the question as to whether or not the Written Agreement was a complete record of the contract between the parties, I have no doubt at all that it was. I bear in mind the length of the time that it took to conclude the terms of the Written Agreement, a point about which, during his evidence, the Claimant lost no opportunity to complain. I also note the number of drafts that were exchanged between the parties between September 1999 and July 2000, and the fact that, from about April 2000 onwards, the Claimant was being advised on the proposed contract by Dr Critchlow. Both parties were taking time and trouble over the various drafts of the Written Agreement because they sensibly wanted to ensure that it fully and properly recorded the terms of their proposed contract; to use the Claimant’s own phrase, they wanted to make sure that “it tied everything up”. None of those involved in the negotiations, including the Claimant, suggested in their evidence that the Written Agreement was anything other than a complete record of the contract between the parties, and I find that it was the complete record both parties intended it to be.[30]Whilst the finding that the Written Agreement was a complete record of the contract between the parties is enough to dispose of Issue 2 in the Defendants’ favour, I should, out of deference to the careful submissions made by both Counsel on this point, deal with the other two questions set out at Paragraph 28 above.[31]As to the question of the consistency between the alleged collateral agreement and the Written Agreement, I find that Clause 9 of the Written Agreement was plainly inconsistent with the alleged collateral agreement. Whilst I accept Mr Aldridge’s submission that Clause 9 is principally concerned with termination, it is clear that the Clause also expressly provided for a fixed term of 1 year, starting on 1st August 2000 and expiring on 1st August 2001. In my judgment, this is contrary to the alleged collateral agreement, that the obligation to pay commission started in February 1999. On the evidence, I can find no reason why the earlier collateral agreement that has been alleged by the Claimant should or could prevail over the later Written Agreement, so that this is a further reason why I find that the Claimant is unable to rely upon the alleged collateral agreement.[32]Of course I accept that there can be circumstances where, once a Court has concluded (contrary to my ruling in this case) that the written document is not a complete record of the contract, it may be possible to find a collateral agreement which is inconsistent with the written document. The best-known example of this is City of Westminster Properties (1934) Ltd v Mudd where, during negotiations, a tenant objected to a particular covenant of the proposed lease, and the landlords assured him that they would not enforce it against him. When, some time later, the landlords sought to forfeit the lease for breach of that very covenant, Harman J held the oral assurance amounted to a collateral contract from which the landlords would not be permitted to resile. But such a situation is, in my judgment, far removed from the facts of the present case.[33]Finally on Issue 2, I record my firm conclusion that there was in any event no binding collateral agreement between the parties that the obligation to pay commission was to be backdated to February 1999. The high-water mark of this argument was Dr Critchlow’s letter of 6th April 2000 which, by reference to Paragraph 13 of the then draft, stated “Delete ‘original commencement date’ and substitute ‘1st February 1999’.” Mr Darling’s reply of 10th May 2000 said “Para 13 – Agreed”. This sort of material is, of course, wholly inadmissible in construing the Written Agreement itself, either as part of the factual background (see Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 at page 913 where he confirms that “the law excludes from the admissible background the previous negotiations of the parties”) or “to add to or subtract from, or in any manner to vary or qualify the written contract” : Goss v Lord Nugent (1833) 5B & Ad 58 cited at Paragraph 12-096 of Chitty, supra. But it is admissible evidence to support the existence of the alleged collateral agreement.[34]However, whilst I consider that the negotiation documents are admissible on this point, in this case they fall far short of demonstrating a binding agreement in law to the effect that the entitlement to commission would be backdated to February 1999. The exchange noted in Paragraph 33 above took place in the middle of lengthy negotiations relating to the Written Agreement: there were letters and discussions both before and after that exchange. The exchange of correspondence in April and May 2000 does not record a final agreement between the parties, nor one which either side could possibly have regarded as binding. It was simply a staging post in the negotiations, no more and no less. It was, of course, not included in the Written Agreement. I should also add that, on this point, I agree with Mr Nawbatt’s submission that there was, and could have been, no consideration for any such agreement. Another way of putting the same point is that the parties did not intend that their correspondence of 6th April and 10th May 2000 would or could create legal relations between them.[35]It seems to me that any other conclusion on the unremarkable facts of this case would give rise to a situation where every party who reached a concluded agreement against the usual background of commercial give and take could later endeavour to reactivate a particular point which he had earlier conceded in negotiation on the basis that, at one stage or another in the negotiation process, that point had apparently been accepted by the other side. Such an approach would gravely undermine the central importance, in English contract law, of the written record of the matters which had finally been agreed by the parties and I reject it.[36]As Mr Nawbatt correctly pointed out on behalf of the Defendants, the parties’ respective positions on various important matters changed during negotiations. There were at least four different statements of the proposed commission arrangements, and three different notice periods were postulated for termination purposes. At earlier stages on the negotiations, the parties had apparently agreed terms which were different to those set out in the Written Agreement. No-one suggests that those matters were agreed in anything other than the terms in which they were eventually set out in the Written Agreement, and in my judgment the exchange in April/May 2000 about the effective start date of the agreement is in precisely the same category.[37]There is one final point to be made on Issue 2. During his cross-examination, the Claimant said that the reference in the Written Agreement to the operable year being from 1.8.00 to 1.8.01 was yet another “error” and that Clause 9 “should have been backdated to February 1999”. That may be the Claimant’s view now, but in the absence of any pleaded claim for rectification, it neatly encapsulates the Claimant’s difficulty in this action: he is having to try and rely on something which did not form any part of the Written Agreement (and which is in fact contradicted by the Written Agreement) because, years later, it is expedient for him to do so. For the reasons which I have given, he cannot do so.[38]Accordingly, in my judgment, there was no binding agreement between the parties to the effect that the commission payable to the Claimant would be backdated to February 1999. Thus, both of the two separate ways in which the Claimant seeks to recover commission for the period between December 1998 or February 1999 and 1st August 2000 fail in their entirety. The Claimant was not entitled to any commission whatsoever prior to 1st August 2000. Issue 3 : On what basis was the Claimant to be paid between August 2001 (when the initial fixed term of the Written Agreement expired) and the eventual termination by notice in May 2003?[39]As set out in Paragraphs 11 to 13 above, it is clear that, as the initial fixed term of 1 year drew to an end, the Defendants wanted to reduce their overheads generally, and the retainer paid to the Claimant in particular. The Defendants’ proposal was to reduce the retainer in stages, whilst increasing the Claimant’s commission; the Claimant, on the other hand, was prepared to sacrifice his commission, at least up to the value of his retainer, provided that his retainer continued to be paid at £5,737.50 per month. The evidence adduced by both sides before me did agree on one thing: that, as Mr Darling put it, a continuation of the payment arrangements under the Written Agreement was “not an option”. Mr Bradley gave the same evidence. However, it is the Claimant’s case in these proceedings that this is precisely what did happen, and that, in consequence, he is entitled to commission, as well as his retainer, for the period between August 2001 and May 2003. The Defendants’ case is that Mr Bradley and the Claimant agreed at a meeting in August 2001 that the Claimant would be paid a retainer from then on, but would not be entitled to commission.[40]In deciding this issue, I am hampered by the lack of any contemporaneous note of the discussion between Mr Bradley and the Claimant in August 2001. It is right to say, however, that such contemporaneous documentation as there is supports the Defendants’ case as to the existence of the oral agreement in August 2001 because:(a) The Claimant’s invoices from September 2001 onwards were limited to his monthly retainer and did not include commission, even when the Claimant became aware that the Defendants had been awarded a contract as a result of what he claimed to be his original introduction, such as the contract with Pfizer in September 2001.(b) The Claimant did not raise any claim for commission until after the 6 month termination notice had been sent to him on 6th December 2002.(c) As soon as the Claimant made his belated claim for commission, the Defendants sent the email of 5th March 2003, which expressly asserted the August 2001 agreement that commission would not be paid.[41]More importantly, I have concluded from the oral evidence that I heard that there was an agreement between Mr Bradley and the Defendants that, from 1st August 2001 onwards, there would be no entitlement to commission on the part of the Claimant. Mr Bradley was clear and unswerving in his recollection to that effect. The Claimant’s recollection, on this as on other matters, was much less comprehensive, and I am therefore bound to prefer Mr Bradley’s evidence. In addition, I find that the Claimant’s conduct, once the existence of the agreement had been asserted in March 2003, was not inconsistent with there having been such an agreement. Twice, he did not deny the existence of the oral agreement with Mr Bradley in August 2001; he simply said (correctly) that there was no evidence of such an agreement.[42]In any event, I regard it as wholly improbable that the Defendants would have allowed the status quo to continue for the period after 1st August 2001 given their concerns about cash flow and overheads, and the evidence that such a course of action was “not an option”. Furthermore, the agreement asserted by Mr Bradley was very close to the proposal originally made by the Claimant to waive his commission up to the amount of his retainer; in a sense, the only difference between the Claimant’s proposal and the eventual agreement was the waiver of any commission beyond the amount of the retainer.[43]Mr Aldridge’s best case on Issue 3 was perhaps his argument that the various versions of the proposed agreement in 2003 and Mr Trendell’s letter of 6th June 2003 dealt with (and certainly did not deny) a pre-existing entitlement to commission. But I accept Mr Bradley’s explanation that the reference in the drafts to commission which “may or may not have been earned” was intended to move the relationship between the parties forwards without further argument, and was not any sort of admission. Furthermore since, on any view, the Claimant had an entitlement to commission (albeit one which arose only under the Written Agreement) it was sensible for the proposed drafts to deal with the accrued commission. I also accept Mr Trendell’s explanation of his letter of 6th June, which was based, after all, on what the Claimant had wrongly declared was his agreement with Mr Bradley in June 2001. Thus I do not consider that either the draft proposals or the letter of 6th June 2001 were in any way inconsistent with the oral agreement of August 2001 between the parties.[44]Accordingly, for all these reasons I am satisfied that there was an oral agreement in August 2001 between Mr Bradley and the Claimant, to the effect that the Claimant would continue to be paid his retainer but with no commission on introductions after 1st August 2001. Issue 4 :In relation to each period in which a commission agreement was in force, did the Claimant perform services as a result of which fees became due to the Defendants? If so, what has become due?[45]As a result of my findings on Issues 1, 2 and 3, the Claimant’s entitlement to commission is limited to the commission due pursuant to the Written Agreement, and is thus restricted to the period from 1st August 200 to 1st August 2001. Any claim for commission that arose either before or after this period must therefore fail. Before looking at the individual claims in detail, I should make a number of general findings about the nature of the services being provided by the Claimant.[46]In the construction and engineering industry, introductions of the kind being made by the Claimant in this case can be a very important source of work for a company providing a wide range of professional services such as the Defendants. That work may not follow for weeks, months or even years after the initial contact has been made, and others may also be involved in ultimately securing that work, but neither of these factors should lessen the importance of the original introduction. By the same token, an introduction can only be made once; after the consultant has introduced the Defendants to a prospective employer, his job is to maintain the original contact to see if and when a specific business opportunity might arise. Since there may be a lengthy delay between the introduction and any consequential contract, the maintenance of the contact is an important part of the consultant’s job.[47]In this case, pursuant to the Written Agreement, the Claimant was entitled to commission “as a direct consequence” of his general promotion of the Defendants although, as the individual claims make clear, what would generally trigger a specific entitlement to commission would be either an introduction or the facilitation of an introduction “of new clients and business opportunities both in the United Kingdom and abroad”. Mr Nawbatt invited me to give particular emphasis to the word “direct” and he compared it with an earlier draft of the agreement which referred to both “direct or indirect consequences”. However, I cannot have regard to previous negotiations in order to construe the Written Agreement for the reasons set out by Lord Hoffman in Investors Compensation Scheme Ltd (supra). Moreover, I consider that, in this case, demonstrating “a direct consequence” means simply showing a sufficient connection between the Claimant’s act and the ultimate transaction. I therefore accept Mr Aldridge’s submissions on that point, which were based on Paragraph 31-142 of Chitty (supra) and the cases cited at footnote 835. I respectfully agree with the view set out there by the learned editors that the agent “need not… be the immediate cause of the transaction” provided a sufficient connection can be shown.[48]I now turn to consider the five separate claims for commission made by the Claimant in these proceedings, to analyse whether (and if so, when) the Claimant performed any relevant services, which would trigger an entitlement to commission.

Pfizer

[49]The first (and principal) contract between Pfizer and the Defendants was let in September 2001 and was for an engineering review of their stores and how they operated: Mr Bradley said that it involved a “benchmarking” process. He made plain that this contract was a one-off which would not be repeated because the relevant personnel had now left the Defendants. The Claimant claims 5% commission on the fees earned by the Defendants on this contract because of his introduction of the Defendants to Miranda Kavanagh of Pfizer in April – June 1999. The Defendants say that the contract with Pfizer was not the direct consequence of the Claimant’s introduction, arguing that the work was secured by the Defendants’ own Mr Messenger of their Birmingham office.[50]On the evidence before me, I find that the first contract with Pfizer was the direct consequence of the Claimant’s introduction of Pfizer to the Defendants in April – June 1999. In particular, I am bound to have regard to the unchallenged evidence on this point of Mr Rich, a procurement manager with Pfizer’s manufacturing division, which was to the effect that the Claimant’s introduction in 1999 had led to the contract; that, but for the introduction, the Defendants would not have been considered for the job. He summarised the position in Paragraph 4 of his Statement:
“I confirm that I was made aware of High-Point Rendel as a result of Mr Grosvenor’s introduction. Following this introduction High-Point Rendel tendered for and won commission from Pfizer.”
[51]However, both parties are expressly agreed that, unless the Claimant was successful on either Issue 1 or Issue 2 above, he would not be entitled to commission on these fees because the relevant services were performed by the Claimant prior to 1st August 2000. Thus, as a result of my conclusion that the Claimant fails on both Issues 1 and 2 above, he is not entitled to commission on the fees paid to the Defendants by Pfizer under the engineering services review contract.[52]The second contract between the Defendants and Pfizer was a smaller project management contract, entered into in March 2003, with a Mr Buckland of Pfizer’s Research and Development division. There was no direct evidence before me from Mr Buckland and the Claimant’s evidence about him was limited to the fact that, sometime in 2002, he sat next to Mr Buckland at a golf dinner. The Claimant could not recall what they discussed. Accordingly, there is no evidence that the Claimant had any part to play in the award to the Defendants of this second contract, let alone evidence that would allow me to find that it was the “direct consequence” of the Claimant’s services.[53]As to timing, Mr Aldridge’s Closing Submissions linked this claim directly back to the Claimant’s introduction in April – June 1999, and he conceded that if the Claimant lost on Issues 1 and 2 (as he has done) then this claim would automatically fail. For the avoidance of doubt, it seems clear that, if the Claimant had argued that the second Pfizer contact arose out of his work in the latter part of 2001 or 2002, then his failure on Issue 3 would also prohibit any recovery of commission on this second contract with Pfizer.[54]For these reasons, I find that the Claimant has no entitlement to any commission on the fees paid to the Defendants pursuant to either of the two contracts with Pfizer.

Bouygues Travaux Publique

[55]The contract between Bouygues Travaux Publique (“BTP”) and the Defendants was let in the summer of 2002, and was for design and consultancy services in respect of a particular kind of tunnel, known as an immersed tube tunnel, to be built at Portsmouth Harbour. I was told by Mr Bradley that the Defendants were, for this rare technology, the number one consultant/designer in the world and that, because BTP were one of only two contractors world-wide who carried out the relevant tunnelling works, the two companies had worked together chasing this work around the world. The key individuals were Philippe Desrousseaux of BTP, and Vardaman Jones, a Director of the Defendants, who had known each other since at least February 2000: in a memo to the Claimant dated 25.2.00, Mr Jones described Monsieur Desrousseaux as “a contact” of his.[56]It was the Claimant’s case that he had met and introduced the representatives of Bouygues UK to the Defendants in late 1999/early 2000. The only reference to BTP in the Claimant’s Statement was in Paragraph 27 where he stated :
“At a later meeting Philippe Desrousseaux, the business development manager (civil works department) of BTP … visited HPR’s offices to discuss other projects.”
In his oral evidence, the Claimant indicated that this meeting took place in May 2000 and he had attended it, and he referred to some handwritten documents in the bundle; the Defendants disputed that the Claimant attended any such meeting. Unlike the Pfizer position, there was no evidence of any kind from BTP.[57]It seems to me that, even if the Claimant had attended the meeting in May 2000, it could not justify a finding that there was a sufficient connection between the events in late 1999 and 2000 involving the Claimant, and the award of the Portsmouth Harbour contract in 2002. I am quite satisfied, on the evidence I heard, that the Defendants were awarded that contract because of their undoubted technical experience in immersed tube tunnelling, and because of the pre-existing links between Mr Jones and Monsieur Desrousseaux, and between BTP and the Defendants generally. I therefore find that the contract with BTP was not a direct consequence of the Claimant’s work in late 1999/early 2000.[58]In any event, both parties are again agreed that, unless the Claimant was successful on either Issue or Issue 2 above, he would not in any event be entitled to commission on these fees because the relevant services were performed by the Claimant prior to 1st August 2000. Accordingly, the Claimant’s failure on those Issues means that there is a further reason why he is not entitled to commission on the fees paid to the Defendants by BTP.

Burges Salmon

[59]In his Closing Submissions, Mr Nawbatt, on behalf of the Defendants accepted that the Claimant introduced Burges Salmon, and that this introduction occurred during the period covered by the Written Agreement. On the evidence, I regard this concession as entirely appropriate. A liability in the sum of £1,085.63 is therefore admitted by the Defendants, although this is subject to the argument that, since the bulk of the fees were paid to the Defendants by Burges Salmon after 31st July 2001, the oral agreement between the Claimant and Mr Bradley of August 2001 would have the effect of reducing this amount to just £189.25.[60]I reject that argument. It is quite clear that the agreement between Mr Bradley and the Claimant in August 2001 was intended to cover their future relationship – “the way forward”, as Mr Bradley described it – and was in no way retrospective. Thus the fact that the Claimant had an entitlement to commission on the fees paid by Burges Salmon was unaffected by the oral agreement, even if the bulk of those fees were still to be paid: the important timing was that the entitlement had already been triggered by 31st July 2001. Therefore I find that the Defendants are liable to the Claimant in the admitted sum of £1,085.63 in respect of the fees paid by Burges Salmon.

S J Berwin

[61]Here, the only dispute between the parties is the effective date of the Claimant’s introduction. It is agreed that the Claimant first made contact with Nick Carnell, then a Partner in S J Berwin, in March 1999, which was during a time when the Claimant was not entitled to commission on introductions (see my findings on Issues 1 and 2 above). Although neither of the Claimant’s Statements dealt expressly with the point, it seems clear from the documents that the Claimant maintained his contact with Mr Carnell and his colleagues which included a function at S J Berwin’s offices in September 2000. The contract between S J Berwin and the Defendants materialised after that.[62]If, pursuant to the terms of the Written Agreement, the Claimant was only entitled to commission on introductions, then it would appear that the introduction of S J Berwin was made in March 1999, at a time when the Claimant was not entitled to commission. However, it is plain from Clause 4 of the Written Agreement that the Claimant is also entitled to commission on all fees earned as a result of his general promotion of the Defendants’ business, which would cover the further work in September 2000, at a time when he was entitled to commission pursuant to the Written Agreement. The sum due is agreed at £165.95.

National Audit Office (“NAO”)

[63]The Claimant alleged in his oral evidence (the point is not made in either of his two Statements) that, in the summer of 2001, he was responsible for getting the Defendants on the NAO PFI/PPP Panel and that, in consequence, the Defendants won the contract for the Network Rail Study, for which the Defendants were paid £16,451 in fees. The Defendants say that the NAO was a long-standing client of theirs, and that, in particular, the Network Rail Study was actually carried out by Vantagepoint, a subsidiary company of the Defendants, who were already on the NAO PFI/PPP Panel.[64]On the evidence before me, I am unable to find that the Claimant had any significant part to play in the award to the Defendants or to Vantagepoint of the Network Rail Study contract, and there is no evidence whatsoever that such a contract was the “direct consequence” of the Claimant’s work in getting the Defendants’ onto the NAO PFI/PPP Panel. Accordingly, the Claimant’s claim for commission in respect of the work done for NAO must fail. Summary[65]For the reasons set out above, the Claimant’s claims in respect of Burges Salmon (£1,085.63) and S J Berwin (£165.95) succeed. The claims in respect of Pfizer, BTP and NAO fail. Issue 5: What effect (if any) did the termination of the Claimant’s contract have on his entitlement to commission?[66]This issue arises in this way. The defendants say that, following the termination of the contract between the parties in May 2003, the Claimant had no further entitlement to be paid commission. Therefore, it is said, on those contracts, which are the subject of the claim, where the Defendants had not received fees until after May 2003, the Claimant is not entitled to commission on such fees. Both Counsel made detailed submissions on this issue before it became apparent that the only contracts actually affected by the point were the second Pfizer contract and a very small part of the BTP contract, which are both the subject of claims for commission that, for the reasons given above, I have already dismissed. However, given the potential relevance of this issue to the Claimant’s claim for a Declaration (Issue 6), I should deal with this point of principle, even though it has no direct effect on the quantum of the Claimant’s claim.[67]Whether or not commission is payable after termination of the Written Agreement is a matter of construction of the contract itself, as a number of authorities cited to me make clear (see, for example, Peterson J in Levy v Goldhill [1917] 2Ch 297 at page 303). However, the Written Agreement in this case contains little that really assists on this point, and it is agreed by both parties that there is no express provision that entitles the Claimant to be paid commission following its termination. For this reason, Mr Aldridge seeks to put his case by reference to the various implied terms set out in his Closing Submissions.[68]The first implied term contended for by the Claimant is to the effect that the Claimant would be entitled to commission based on fees which were due to the Defendants before the termination of the Written Agreement, even if such fees were not received by the Defendants until after that termination. I consider that such a term goes without saying; it would be implied to give the contract business efficacy; it would be a nonsense if the late payment by a third party of fees which were due to the Defendants at the time of termination could somehow deprive the Claimant of the commission that would be otherwise due. To that extent, therefore, it seems to me that the first implied term contended for by the Claimant meets the test of necessity set out in Liverpool City Council v Irwin [1977] AC 239 at 254 and 262, and repeated in Tai Hing v Liu Chong Hing Bank [1986] AC 80 at 104.[69]The other implied terms contended for by the Claimant go to an alleged entitlement to commission on fees which might become due to the Defendants after termination, either as a direct consequence of the Claimant’s services or in respect of repeat business. In my judgment, these terms cannot be implied into the Written Agreement. There are three reasons for this conclusion.[70]Firstly, such terms do not meet the test of necessary implication noted in Paragraph 68 above. It cannot be said that the absence of a term entitling the Claimant to commission on fees which are not due at the time of termination and which may not become due for months or even years after termination, renders the Written Agreement “inefficacious, futile and absurd”. The burden is on the Claimant to demonstrate that such a term is necessary in law, and he has not done so.[71]The second reason for my conclusion is based on the broad principle discernible from the many authorities that were cited to me on the subject of commission payable after termination These included Bilbee v Hasse and Co (1889) 5 TLR 677; Levy v Goldhill [1917] 2 Ch 297; Cramb v Goodwin (1919) 35 TLR 477; Crocker Horlock Ltd v B Land and Co Ltd [1949] 1 All ER 526; and Sellers v London Counties Newspapers [1951] 1 KB 784. At first sight, these authorities were difficulty to rationalise because in some the Claimant was successful in his post-termination claim and, in others, he was not. The position is further complicated by Sellers where Evershed MR delivered a penetrating, but dissenting, judgment rejecting post-termination commission claim.[72]However, due in no small part to the helpful submissions of both Counsel, I have concluded that the authorities can, after all, be sensibly explained and rationalised. In those cases where the Claimant was an independent contractor, and not an employee, and was therefore wholly dependent on the commission earned, such as Bilbee and Levy, the Courts were ready to find an entitlement to post-termination commission. In cases where the Claimant was an employee, such as Cramb, no such entitlement was found. This position was summarised by Evershed MR in Sellers at page 795 as follows :
“In my judgment, therefore, the authorities support and are consistent only with the view which I have already indicated, namely, that, in the case of a contract of service between master and servant, all right on the servant’s part to remuneration by commission or otherwise will cease with termination of his service unless by the terms of his contract provision to the contrary is clearly made.”
As to the majority decision in favour of the claimant in Sellers, that is, I think, explicable on the facts of that particular case; the claimant there was an employee, his entitlement to commission was triggered by the appearance of the advertisements, which he had obtained for the Defendants in one of their newspapers. To deprive the claimant of such a clear-cut entitlement was plainly unjust, as the judgments of Singleton LJ and Birkett LJ make plain.[73]Accordingly, as both Counsel have emphasised, the approach discernible from these cases means that the existence or otherwise of a right to post-termination commission in this case may turn on whether I find that the Claimant was an independent contractor or a part-time employee. Clause 8 of the Written Agreement describes him as an independent contractor but the labels which the parties find it convenient to use for their own purposes are of no real assistance in deciding what, in substance, was the nature of the Claimant’s status. Having regard to all the facts, and in particular the fact that, under the Written Agreement the Claimant’s entitlement to a monthly retainer was fixed and unchanging and was in return for a minimum of 3 days’ work a week whilst his entitlement to commission was uncertain and variable, I have concluded that, for this purpose, the Claimant was more akin to a part-time employee than an independent contractor. On the authorities, therefore, that is a second reason why the right to commission does not survive termination.[74]Thirdly, on this point, I take the view that the express provisions of the Written Agreement are inconsistent with the implied terms alleged. In particular I consider that the fact that the Written Agreement was for a fixed period (unlike the contracts in Bilbee and Levy, which were for an indefinite period) and had a 6 month termination period (which would make at least some allowance for the possible delay between introductions made during the fixed period of one year and the award to the Defendants of a contract in consequence of such introductions), both indicate that the parties intended that termination on notice would bring an effective end to the relationship between them.[75]Accordingly, for these reasons, I accept the implied term outlined in Paragraph 68 above but reject the implied terms contended for by the Claimant, and outlined in Paragraph 69 above. Issue 6 : Is the Claimant entitled to a Declaration in respect of any future entitlement to commission on repeat business?[76]Mr Aldridge made plain in his Closing Submissions that the claim for a Declaration would only get off the ground if I found the implied term outlined in Paragraph 69 above in respect of repeat business. Since I have not found such a term, it follows that, on the Claimant’s own case, there can be no entitlement to a Declaration.[77]In any event, I do not consider that this is a case where I should exercise my discretion in favour of granting a Declaration in respect of possible events in the future. I have found that the Claimant’s only entitlement to commission was pursuant to the Written Agreement for the period from 1st August 200 to 1st August 2001, and that there were only two contracts (Burges Salmon and S J Berwin) where such an entitlement had in fact been triggered. In those very limited circumstances, I do not believe that any Declaration as to future claims could be justified in any event.

Conclusions

[78]There will be Judgment for the Claimant in the sum of £1,251.58 (being the total commission due in respect of Burges Salmon and S J Berwin), together with VAT and interest to be calculated and agreed by the parties. All other claims are dismissed. I will hear the parties on costs when this Judgment is formally handed down. H H J Coulson QC July, 2004.