Court Of Appeal Grants Award For Unjust Enrichment Where Contract Did Not Set Out Full Terms For Payment

The Court of Appeal has granted an award for unjust enrichment where a claimant was contractually entitled to receive an introduction fee if a property was sold for a specified price and the property had been sold for less than that price: Philip Barton v Timothy Gwyn-Jones [2019] EWCA Civ 1999.

The court rejected the defendant's argument that the contractual arrangements between the parties were a bar to the appellant's claim for unjust enrichment. While the court accepted that the law of unjust enrichment will not step in to provide a remedy where the relevant risk has been allocated by contract, that principle did not apply on the facts here. Given that the agreement (which had been reached orally) was silent as to what should happen in a situation where the property was sold for less than the specified price, there had been no contractual allocation of risk. Accordingly, the claim for unjust enrichment would not circumvent the contractual terms agreed by the parties.

This decision is an example of the court stepping in to award remuneration to prevent unjust enrichment in circumstances where the parties have not agreed comprehensive terms for payment. Whether a court will do this is highly dependent on the circumstances of each case. This highlights the importance of setting out contractual arrangements as clearly and fully as possible, in order to minimise the risk of uncertainty or dispute.

Ben Phillips, an associate in our dispute resolution team, considers the decision further below.

Background

The claimant, Mr Barton, entered into an oral agreement with Foxpace Limited, which was aiming to sell a property in London. Foxpace agreed to pay Mr Barton £1.2 million if the property was sold for £6.5 million to a purchaser introduced to Foxpace by Mr Barton. The parties did not discuss whether any payment would be due to Mr Barton if the property was sold for less than £6.5 million.

Mr Barton introduced a potential purchaser to Foxpace, who ultimately purchased the property for £6 million. Foxpace then refused to pay the £1.2 million claimed by Mr Barton.

In the High Court, Mr Barton claimed compensation from Foxpace on two alternative grounds. The first ground was that, under the terms of his agreement with Foxpace, he was to receive the £1.2 million payment, irrespective of the price for which the property was sold. The High Court (HHJ Pearce) rejected this argument and held that, under the express terms of the agreement, the payment of...