Barton and others v Morris and another in place of Gwyn Jones [2023] UKSC 3

“154 This comes down to a simple question of fact. I accept that either version of events is possible, and neither wouId be illogical. The Respondent’s [Foxpaces’s] argument that the Appellant’s [Mr Barton’s] version is improbable (because Foxpace would be paying a flat percentage regardless of the purchase price) cannot be dismissed out of hand as being commercially ridiculous because there is evidence that Nash House was proving difficult to sell and Foxpace saw some urgency in completing the sale. On the other hand, the Appellant's criticism of the Respondent's argument, on the basis that it would make no sense for the Appellant to enter into an agreement in which he only obtained any fee if the price exceeded £6.5 million, at which point the whole fee became payable, supposes that Mr Barton fully thought through the implications of what he was discussing with Mr Rooke; if Mr Barton was confident that [Western] was a willing purchaser at £6.5 million then, given that Mr Barton had twice been involved on behalf of a buyer in the exchange of contracts for the purchase of Nash House, it is plausible that he simply did not anticipate anything coming to light prior to the exchange of contracts that might have caused [Western] to renegotiate the price, such that the only sale price Mr Barton contemplated was £6.5 million.”

“161 For these reasons, I am satisfied that, following discussions between Mr Barton and Mr Rooke during the period 29 to 31 July 2013, the Appellant and Respondent entered into a contract pursuant to which Foxpace was liable to pay Mr Barton the sum of £1.2 million in the event that Nash House was sold to a purchaser introduced by Mr Barton for the sum of £6.5 million. Since the property was sold for £6 million, the claim based on the contract fails.”

“The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls.”

“If, as Mr Morris asserts, he had been told that it was clear that nothing was payable if the sale price was less than £6.5 million, I would have expected Mr Morris not simply to consider this to be ‘strange’ - it would be bizarre to think that Mr Barton would knowingly have entered into a contract on the terms that Mr Morris claims were repeated to him, since he would obviously open himself up to a small reduction in the sale price that deprived him of any introduction fee at all.”

“In my judgment, it is necessary to imply a term which prevents a vendor, in these circumstances, from playing a dirty trick on the agent with impunity after making use of the services provided by that agent in order to secure the very position and safety of the vendor. It is necessary to imply a term which prevents the vendor from acting unreasonably to the possible gain of the vendor and the loss of the agent. In my judgment, the term proper to be implied in the present circumstances is that the vendors will not deprive the agents of their commission by committing a breach of the contract between the vendors and the purchaser which releases the purchaser from its obligation to pay the purchase price.”

“The life of an agent in commerce is a precarious one. He is like the groom who takes a horse to the water-trough. He may get his principal to the negotiating table but when he gets him there he can do nothing to make him sign, any more than the groom can make a horse drink.”

“Therefore if there had been no contract between these parties, all that the intestate could have recovered on a quantum meruit for the voyage would have been eight pounds; whereas here the defendant contracted to pay thirty guineas provided the mate continued to do his duty as mate during the whole voyage, in which case the latter would have received nearly four times as much as if he were paid for the number of months he served. He stipulated to receive the larger sum ifthe whole duty were performed, and nothing unless the whole of that duty were performed: it was a kind of insurance.”

“And when we recollect how large a price was to be given in the event of the mate continuing on board during the whole voyage instead of the small sum which is usually given per month, it may fairly be considered that the parties themselves understood that if the whole duty were performed, the mate was to receive the whole sum, and that he was not to receive any thing unless he did continue on board during the whole voyage. That seems to me to be the situation in which the mate chose to put himself; and as the condition was not complied with, his representative cannot now recover any thing.”

“The court cannot make any safe assumption as to what [Foxpace] would have agreed to if the possibility of a reduced sale price had been contemplated at the time of negotiating the contract. Foxpace might still have been willing to pay £1.2 million to Mr Barton (on the ground that this would have furthered a relationship between the two which might have been to Foxpace's advantage); it might have agreed to a reduction of the £1.2 million, perhaps pro rata or even by the sum of £500,000 to cushion it from the effect of the reduced sale price; it might only have been willing to offer 7.25% as a reasonable value of the service being proffered; it might even have been unwilling to offer any sum (though I accept that this is unlikely).”

“The court here is simply concerned to establish what the contract is, the parties not having themselves fully stated the terms.”

“In my opinion such obligation should be read into the contract as the nature of the contract itself implicitly requires, no more, no less: a test, in other words, of necessity. … I do not think that this approach involves any innovation as regards the law of contract. The necessity to have regard to the inherent nature of a contract and of the relationship thereby established was stated in this House in Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555.”

“When it implies a term in a contract the court is sometimes laying down a general rule that in all contracts of a certain type - sale of goods, master and servant, landlord and tenant and so on - some provision is to be implied unless the parties have expressly excluded it. In deciding whether or not to lay down such a prima facie rule the court will naturally ask itself whether in the general run of such cases the term in question would be one which it would be reasonable to insert. Sometimes, however, there is no question of laying down any prima facie rule applicable to all cases of a defined type but what the court is being in effect asked to do is to rectify a particular - often a very detailed - contract by inserting in it a term which the parties have not expressed. Here it is not enough for the court to say that the suggested term is a reasonable one the presence of which would make the contract a better or fairer one; it must be able to say that the insertion of the term is necessary to give - as it is put – ‘business efficacy’ to the contract and that if its absence had been pointed out at the time both parties - assuming them to have been reasonable men - would have agreed without hesitation to its insertion.”

“In this connection, it is important to distinguish between two different kinds of implied terms. First, there are those terms which are implied into a particular contract because, on its proper construction, the parties must have intended to include them: see Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988. Such terms are only implied where it is necessary to give business efficacy to the particular contract in question. Second, there are those terms which are implied into a class of contractual relationship, such as that between landlord and tenant or between employer and employee, where the parties may have left a good deal unsaid, but the courts have implied the term as a necessary incident of the relationship concerned, unless the parties have expressly excluded it: see Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555, Liverpool City Council v Irwin [1977] AC 239.”

“The agent is promised a reward in return for an event, and the event has not happened. He runs the risk of disappointment, but if he is not willing to run the risk he should introduce into the express terms of the contract the clause which protects him.”

“The report attributes to Pollock C.B., who tried the case at Assizes, the assertion that if a man places in the hands of several house-agents a house which he is desirous of letting or selling, ‘though the successful agent alone would be entitled to claim commission, the others would clearly be entitled to something for their trouble.’ If the Chief Baron really made this observation, it certainly is not in accordance with the usual result of arrangements made with house agents, and it should be noted that Williams J [in the Court of Appeal in Prickett, at p 305] speaks of ‘the implied understanding that the agent is only to receive a commission if he succeeds in effecting a sale, but, if not, then he is to get nothing.’”

“As to the claim on a quantum meruit, I do not see how this can be justified in the face of the express provision for remuneration which the contract contains. This must necessarily exclude such a claim, unless it can (upon the facts of a particular case) be based upon a contract subsequent to the original contract, and arising from some conduct on the part of the principal.”

“… another in which the parties meant by their words and actions that the agent was engaged on the usual terms, that is to say that a commission became payablenot upon the introduction by Mr Devani of a prospective purchaser toMr Wells, nor upon the exchange of contracts, but rather upon completionof the sale and then from its proceeds, for it was at that time that Newlon actually bought and paid for the property and so became its purchaser.”

“The core concept of 'failure of basis' is that a benefit has been conferred on a joint understanding that the recipient's right to retain it is conditional. If the condition is not fulfilled, the recipient must return the benefit (see Goff & Jones [sc 7th edn, 2007] at 12-01). Whilst failure of basis ranks alongside the unjust factors of mistake, duress and undue influence as a factor negativing consent, it differs in that it is concerned with qualification of consent, as opposed to impaired or vitiated consent (see Burrows The Law of Restitution (3rd edn, 2011)).”

“it may consist of the failure of a state of affairs on which the agreement was premised”: para 106. He held that the receiver had agreed to accept the burden of management of the companies on the basis that he would be entitled to take his remuneration and expenses from the companies' assets. That state of affairs which was fundamental to the agreement had failed to sustain itself: para 114. Lord Toulson went on at para 115: “In the present case there was a total failure of consideration in relation to the receiver's rights over the companies' assets, which was fundamental to the basis on which the receiver was requested by the CPS and agreed to act. I use the expression ‘fundamental to the basis’ because it should not be thought that mere failure of an expectation which motivated a party to enter into a contract may give rise to a restitutionary claim. Most contracts are entered into with intentions or expectations which may not be fulfilled, and the allocation of the risk of their non-fulfilment is a function of the contract. But in the present case the expectation that the receiver would have a legal right to recover his remuneration and expenses was not just a motivating factor. Nobody envisaged that the receiver should provide his services in managing the companies as a volunteer; those services were to be in return for his right to recover his remuneration and expenses from the assets of the companies, such as they might be. The agreement between the CPS and the receiver so provided, and that provision was incorporated into the order of the court.”

“to permit recovery of the tax component would not result in confusion between rights of compensation and restitution, or between enforcing a contract and claiming a right by reason of events which have occurred in relation to a contract”

“21 The second point of principle is whether a restitutionary claim should be allowed to undermine the contract between Oakwood and the claimants, that is to say, the way in which the parties chose to allocate the risks involved in the transaction. The parties arranged the transaction as one in which legally enforceable promises were made only between Oakwood and the claimants, even though the benefit of the contract was to be conferred on Mr and Mrs Costello. The obligation to pay for the claimants' services, and so the risk of non-payment, was contractually confined to Oakwood. If a claim was permitted directly against Mr and Mrs Costello it would shatter that contractual containment. It would also alter the usual consequences of Oakwood's insolvency, which was one of the risks assumed by the claimants in contracting with Oakwood, since a direct claim against Mr and Mrs Costello would improve the claimants' position over Oakwood's other unsecured creditors.”

“All this is important for present purposes, because it means that, as between shipowner and charterer, there is a contractual regime which legislates for the recovery of overpaid hire. It follows that, as a general rule, the law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate. … It follows that, in the present circumstances and indeed in most other similar circumstances, there is no basis for the charterer recovering overpaid hire from the shipowner in restitution on the ground of total failure of consideration.”

“But, quite apart from the fact that the existence of a remedy in restitution in such circumstances must still be regarded as a matter of debate, it is always recognised that serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract.”

“However, where the basis of the consideration is expressly and unconditionally spelt out on the face of a valid and subsisting contract, as here, there is no proper scope for inquiring into an alternative basis that is plainly contrary to the express basis freely agreed between the parties. It is not an inquiry that was carried out in Roxborough or Barnes where the basis that failed was one not at odds with (and indeed in the case of Roxborough expressly reflected in) the relevant contractual provisions.”

“But the natural interpretation of A agreeing to pay B £x if B procures y is that, if B does not procure y, A is under no obligation to pay B anything (be it £x or any other sum). Adding ‘but only if’ emphasises the point but ultimately is surplusage. The parties' silence on the question of A paying something less than £x for B procuring something less than y is objectively unambiguous. A reasonable person would appreciate that A and B had turned their minds to what needed to be done in order to trigger A's contingent payment obligation and that they had expressed their agreement in clear and comprehensive terms. Had the parties intended some smaller sum to be triggered for something other than y, they would have said so. In Barton, therefore, silence did not mean that the risk of someone buying Nash House at less than the target price had not been addressed by the contract; rather, the terms of the contract envisaged that this risk remained with Barton.”

“Risk-taking reasoning, therefore, always relies on a deeper, unstated analysis.”