Barton & Ors v Morris & Anor [2023] UKSC 3 (25 January 2023)
Citation:Barton & Ors v Morris & Anor [2023] UKSC 3 (25 January 2023)
Rule of thumb:Is it a valid contract for an estate agent & a property owner to agree, ‘If this value for the property is met, you keep 25% of the sale, but if it is not, then you are entitled to £0 for your services’?. Yes, these ‘no win no fee’ % commission only contracts are a valid part of the UK commerce system and are perfectly enforceable.
Background facts:This was a landmark in relation to contracting out of common law rights to remuneration under contract, and instead opting for a ‘no win no fee’ ‘bounty payment’ ‘prize fighter’ express pricing term instead. The basic facts of this case were that Morris was selling a multi-million pound luxury house at a certain date in the future, and Morris was just going to accept the highest offer for the house at a certain specified time & date in the future. Morris was looking for an estate agent/ home-seller to get them the highest price for the house at this specified time & date. However, there was a major catch for the estate agent - Morris wanted an estate agent to take this challenge on with a ‘no win no fee’ ‘bounty payment’ system rather, than the standard common law terms for estate agents. Morris’ condition was that he would offer an estate agent the chance to market the sale of the house, and if they got £6.5m from a buyer for it at the final time & date of sale, Morris would give the estate £1.2m from the sale, but if the estate agent got a penny less than £6.5m, then the estate agent would be entitled to £0. Barton, a very high-level estate agent, believed in his house-selling skills & was confident that he could reach the £6.5m price tag from a buyer for the house, so Barton stepped up to the plate and told Morris he would take on this challenge. Morris was impressed with Barton’s house-selling resume, so Morris agreed the oral contract with Barton to market & sell the house with the terms stated. So, it was all the common law terms that applied to the house, except in relation to fees which was, ‘that if Barton was able to get a buyer to pay £6.5 million for the house at the final date of sale, then Morris would send Barton a bounty payment of £1.2m from the sale, and keep the other £5.3m, but any less than £6.5m at this final date of sale, and Barton was owed £0 from the sale’.
Barton marketed the house, but, come the final deadline, he highest bid was for only £6 million! So Barton got an brilliant price, but he did not attain the £6.5m golden benchmark set by Morris. Barton fell short. Morris then refused to pay Barton any fees because the £6.5 million price tag was not met. Barton wanted paid something by Morris – Barton had done an excellent job to help Morris get a great price above the £5.3m expectation & felt disgruntled at being given £0 for this - so the matter went to Court.
Parties argued:Barton argued (i) that it was implied under this term he was entitled to anything Morris got over £5.3 million mark, which was the net amount of money that Morris was looking for with the house sale. Barton further argued (ii) that this was also supported by the unjust enrichment principle – his position was that Morris was basically being unreasonable like a movie protagonist & this was not how business worked in the real world. Morris argued that Barton had clearly agreed to contract out of the common law for fees, with the express term being clear with no implied term, and instead, Barton took the chance of potentially making the £1.2m bounty, but Barton did not fulfil the condition for the fee to be met, so Barton was 100% clearly technically entitled to £0 as per the express term they agreed.
Court held:The Court upheld the arguments of Morris. The Court affirmed that where people have agreed express terms to contract out of the common law related to remuneration clearly then there are no implied terms in the term – the express term is clear and that is what applies. The Court also affirmed that unjust enrichment only applies for payments made in error, and does not apply in these circumstances. The Court affirmed that with these ‘no win no fee’ ‘bounty payment’ express terms then the enforcement of them is strict if they are clearly written – if the number is not met then the person is entitled to £0. ‘Winner takes all’ ‘Bounty payment’ ‘Prize Fighter’ contract terms for payment are strictly enforceable in the UK provided that they are clear.
(Please note that this was a split decision 3-2 from the UKSC. 2 Judges disagreed and did not think that it was clear enough that Barton had contracted out of all his common law rights as this was an oral contract rather than a clear written one – they thought the deal was agreed on the implication that Barton was entitled to keep everything recouped above the £5.3m Morris was looking for – they did not think that this onerous term was agreed sufficiently clearly in the oral contract for Barton to be entitled to £0, and it was not sufficiently clear in their eyes that a penny less than £6.5m & Barton was effectively working pro-bono.)
Ratio-decidendi:
‘If it was a complete statement, then a lesser reward for a sale below £6.5 million could not be implied, because it would be inconsistent with the condition for the reward expressly agreed. Nor could there be a remedy in unjust enrichment, because a nil reward for such a sale was what the parties had agreed… Unjust enrichment mends no-one’s bargain’, Lady Rose at 107
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.