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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> RTA (Business Consultants) Ltd v Bracewell  EWHC 630 (QB) (12 March 2015)
Cite as:  Lloyd's Rep FC 357,  EWHC 630 (QB),  Bus LR 800,  WLR(D) 117
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QUEEN'S BENCH DIVISION
Strand. London. WC2A 2LL
B e f o r e :
(Sitting as a Judge of the High Court)
| RTA (BUSINESS CONSULTANTS) LIMITED
|- and -
William Hibbert (instructed by Smithfield Partners Ltd) for the defendant
Hearing dates: 24,25 and 26 February 2015
Crown Copyright ©
His Honour Judge Richard Seymour Q.C.:
"PM [Mr. Manners] 1/2/10: Vendor is considering selling the cafe and pub. Has meeting with bank manager this afternoon as they may foreclose. PM to CB [which Mr. Manners explained in his cross-examination at the trial meant "call back"] Thu 3/2."
"2. I/We hereby appoint R.T.A. (BUSINESS CONSULTANTS) LTD. agents for the sale of the Property and/or Business and give you the sole selling rights for an irrevocable TWELVE MONTH period from this date subject to my/our option under Clauses 10 and 11 (overleaf). I/we agree that these sole selling rights shall remain in force after that date until terminated by me/us or alternatively by your Company. Termination, by either of us, must be delivered in writing by registered or recorded delivery post and provide 28 days advance notice.
3. I/We agree to pay you a commission of £40,000 plus VAT when a sale or one of the events hereinafter mentioned takes place. I/We understand that I/we will be liable to pay your agreed remuneration in addition to any other costs or charges agreed in each of the following circumstances.
a) If unconditional contracts for the sale of the Business and/or the Property are concluded or exchanged during the period which you have Sole Selling Rights even if the Purchaser was not found by you but by another Agent or by any other person including me/us.
b) If unconditional contracts for the sale of the Business and/or the Property are concluded or exchanged after the termination of the period in which you have Sole Selling Rights but to a Purchaser who was introduced to me/us during that period or with whom we had negotiations about the Business and/or Property during that period.
4. I/We authorise you to accept any ["offers over" written in manuscript above what follows] offer for the said Property and/or Business on my/our behalf in the sum of £940,000 + SAV or such lower figure as I/we instruct you to accept and I/we agree that there is no necessity for you to inform me/us in writing or otherwise of any offers received below the sum of £ - unless you as Agents believe that such action would be in my/our interest.
5. Upon signing this agreement I/we agree to pay to you a registration fee of £9,000 plus VAT. I/we am/are fully aware that these monies are non-refundable and are totally independent from any commission charges payable.
8. IT IS AGREED THE BALANCE OF THE REGISTRATION FEE (£8,000 + VAT) WILL BE PAID IN 8 INSTALMENTS OF £1,000 + VAT BY 22/3/10, 22/4/10, 22/5/10, 22/6/10, 22/7/10, 22/8/10, 22/9/10, 22/10/10.
9. For the purpose of this Agreement I/we accept that if I/we grant a lease of the property then I/we will be deemed to have sold the properly and the commission thereof agreed and stated overleaf will be due and payable. I/We further accept that in ascertaining your entitlement to commission there will be disregard for the fact that I/we might make to any prospective purchaser a private loan of monies and/or that a purchaser might have been known to me/us and negotiated with me/us before the date of this agreement.
10. Notwithstanding the foregoing provisions I/we agree that I/we shall have an option to revoke this agreement at any time within the initial 12 months Agency period and that if I/we shall exercise this option (and I/We agree that I/we will be deemed to have exercised the said option if I/we purport to cancel the said agreement within the said Agency period or if I/we prevent you from selling the said property and/or business) I/we will pay you in return for any work you have carried out on my/our behalf and/or in compensation for your loss of opportunity to earn your commission that I/we would have been obliged to pay you if the said Property and/or Business had been sold and the said commission above mentioned had become payable. I/We understand that I/we will not be entitled to exercise this option at a time when a person/s is expressing an interest or negotiating for the purchase even if such a purchaser is not in an immediate position to sign a contract.
11. If I/we cancel this agreement when a person/s is expressing an interest in the purchase of the said Property and/or Business or if at such time I/we prevent you from selling the Property and/or Business then I/we agree that the said commission shall be payable even if that prospective purchaser is not in an immediate position to purchase merely by virtue of the fact that any Finance arrangements, including the sale of other Property had not been finalised at the date of such cancellation."
"I telephoned you last week to discuss, terminating our attempts to sell the business until the market recovers as your estimated price seems to be unachievable at present.
I am very upset to report that nobody has returned my telephone call, I look forward to hearing from you very soon and ask that you undertake no further sales expenses until you have spoken to me."
"Surprised and disappointed by your last letter, the business has not been sold or leased."
"I am very honoured to have a letter dated 3rd November from you as I note that you are the Chief Executive of RTA. However, once again your company writes to my home address rather than my business address, which is a basic mistake as either your company is incompetent in terms of reading the address that I write from or one part of it does not communicate with the other. Furthermore, I am advised that in writing to me personally rather than my company you are reinforcing my position as a consumer. If you truly believe that the RTA contract is a business contract, in future please use my business address as detailed at the top of this letter."
"This Act applies, subject to subsections (2) to (4) below, to any person in the course of a business (including a business in which he is employed) pursuant to instructions received from another person (in this section referred to as "the client") who wishes to dispose of or acquire an interest in land -
(a) for the purpose of, or with a view to, effecting the introduction to the client of a third person who wishes to acquire or, as the case may be, to dispose of such an interest; and
(b) after such an introduction has been effected in the course of that business, for the purpose of securing the disposal or, as the case may be the acquisition of that interest;
and in this Act the expression "estate agency work" refers to things done as mentioned above to which this Act applies."
"A supervisory authority must effectively monitor the relevant persons for whom it is the supervisory authority and take necessary measures for the purpose of securing compliance by such persons with the requirements of these Regulations."
"(a) a firm; or
(b) sole practitioner
who or whose employees carry out estate agency work within the meaning of section 1 of the Estate Agents Act 1979 (estate agency work) when in the course of carrying out such work."
"(1) The supervisory authorities mentioned in paragraph (2),
(3) or (4) may, in order to fulfil their duties under regulation 24, maintain a register under this regulation.
(3) The OFT may maintain registers of
(b) estate agents.
(5) Where a supervisory authority decides to maintain a register under this regulation, it must take reasonable steps to bring its decision to the attention of those relevant persons in respect of whom the register is to be established.
(6) A supervisory authority may keep a register under this regulation in any form it thinks fit.
"Where a supervisory authority decides to maintain a register under regulation 32 in respect of any description of relevant persons and establishes a register for that purpose, a relevant person of that description may not carry on the business or profession in question for a period of more than six months beginning on the date on which the supervisory authority establishes the register unless he is included in the register."
"42 (1) A designated authority [which, by Regulation 36 included OFT] may impose a penalty of such amount as it considers appropriate on a relevant person who fails to comply with any requirement in regulation ... 33 ...
(2) The designated authority must not impose a penalty under paragraph (1) where there are reasonable grounds for it to be satisfied that the person took all reasonable steps and exercised all due diligence to ensure that the requirement would be complied with.
45(1) A person who fails to comply with any requirement in regulation ... 33 ... is guilty of an offence and liable -
(a) on summary conviction, to a fine not exceeding the statutory maximum;
(b) on conviction on indictment, to imprisonment for a term not exceeding two years, to a fine or to both.
(4) A person is not guilty of an offence under this regulation if he took all reasonable steps and exercised all due diligence to avoid committing the offence.
"The objection, that a contract is immoral or illegal as between the plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say. The principle of public policy is this; ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and the defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would have the advantage of it; for where both are equally in default, potior est conditio defendentis."
A court should not hold that any contract or class of contracts is prohibited by statute unless there is a clear implication, or "necessary inference", as Parke B put it, that the statute so intended. If a contract has as its whole object the doing of the very act which the statute prohibits, it can be argued that you can hardly make sense of a statute which prohibits an act and yet permits to be made a contract to do it; that is a clear implication. But unless you get a clear implication of that sort, I think that a court ought to be very slow to hold that a statute intends to interfere with the rights and remedies given by the ordinary law of contract. Caution in this respect is, I think, especially necessary in these times when so much of commercial life is governed by regulations of one sort or another, which may easily be broken without wicked intent. Persons who deliberately set out to break the law cannot expect to be aided in a court of justice, but it is a different matter when the law is unwittingly broken. To nullify a bargain in such circumstances frequently means that in a case - perhaps of such triviality that no authority would have felt it worth while to prosecute - a seller, because he cannot enforce his civil rights, may forfeit a sum vastly in excess of any penalty that a criminal court would impose; and the sum forfeited will not go into the public purse but into the pockets of someone who is lucky enough to pick up the windfall or astute enough to have contrived to get it. ..."
"It is perfectly settled, that where the contract which the plaintiff seeks to enforce, be it express or implied, is expressly or by implication forbidden by the common or statute law, no court will lend its assistance to give it effect. It is equally clear that a contract is void if prohibited by a statute, though the statute inflicts a penalty only, because such a penalty implies prohibition. ... And it may be safely laid down, notwithstanding some dicta apparently to the contrary, that if the contract be rendered illegal, it can make no difference, in point of law, whether the statute which makes it so has in view the protection of the revenue or any other object. The sole question is, whether the statute means to prohibit the contract?"
"22. However, it does not follow that the courts should be insensitive to the draconian consequences which the ex turpi causa principle can have if it is applied too widely. The starting point in any review of the modern law must be that we are concerned with a principle based on the application of general rules of law and not on fact-based evaluations of the effect of applying them in each individual case. However, the content of the rules must recognise that within the vast and disparate category of cases where a party in some sense founds his claim on an immoral or illegal act there are important differences of principle. The application of the ex turpi causa principle commonly raises three questions: (i) what acts constitute turpitude for the purposes of the defence? (ii) what relationship must the turpitude have to the claim? (iii) on what principles should the turpitude of an agent be attributed to his principal, especially when the principal is a corporation? Each of these questions requires a principled distinction to be made between different kinds of immoral or illegal act and different ways in which they may give rise to claims. For present purposes, we are concerned only with the question what constitutes turpitude for the purposes of the defence. The question what relationship it must have to the claim arises only if that question is answered in favour of Servier, and no question of attribution arises in this case at all.
What is "turpitude"?
23. The paradigm case of an illegal act engaging the defence is a criminal offence. So much so, that much modern judicial analysis deals with the question as if nothing else was relevant. Yet in his famous statement of principle in Holman v. Johnson 1 Cowp 341 Lord Mansfield CJ spoke not only of criminal acts but of "immoral or illegal" ones. What did he mean by this? I think that what he meant is clear from the characteristics of the rule as he described it, and as judges have always applied it. He meant acts which engage the interests of the state or, as we would put it today, the public interest. The illegality defence, where it arises, arises in the public interest, irrespective of the interests or rights of the parties. It is because the public has its own interest in conduct giving rise to the illegality defence that the judge may be bound to take the point of his own motion, contrary to the ordinary principle in adversarial litigation. In some contexts, notably the invalidity of contracts prohibited by law, the ex turpi causa principle can be analysed as part of the substantive law governing the parties' rights. The contract is void, and any right derived from it is non-existent. But in general, although described as a defence, it is in reality a rule of judicial abstention. It means that rather than regulating the consequences of an illegal act (for example by restoring the parties to the status quo ante, in the same way as on the rescission of a contract) the courts withhold judicial remedies, leaving the loss to lie where it falls. This is so even in a contractual context, when the court is invited to determine the financial consequence of a contract's voidness for illegality. The ex turpi causa principle precludes the judge from performing his ordinary adjudicative function in a case where that would lend the authority of the state to the enforcement of an illegal transaction or to the determination of the legal consequences of an illegal act.
24. In Lord Mansfield CJ's day, and for some time thereafter, this rule of abstention was sometimes expressed as a principle protecting the innocence or dignity of the court against defilement. In the notorious "Highwaymen's Case ", Everet v. Williams (1725) (unreported); but noted at (1893) 9 LQR 197, in which the court was invited to take an account between two highwaymen, it not only dismissed the claim as "scandalous and impertinent" but ordered the arrest of the plaintiffs solicitor and fined him. Two centuries later, in Parkinson v. College of Ambulance Ltd.  2 KB 1, 13, Lush J said of a contract to procure an honour, that "no court could try such an action and allow such damages to be awarded with any propriety or decency." Today, the same concept would be expressed in less self-indulgent terms as a principle of consistency. This was the point made by McLachlin J in her much-admired judgment in Hall v. Hebert (1993) 101 DLR (4th) 129, 165:
"to allow recovery in these cases would be to allow recovery for what is illegal. It would put the courts in the position of saying that the same conduct is both legal, in the sense of being capable of rectification by the court, and illegal. It would, in short, introduce an inconsistency in the law. It is particularly important in this context that we bear in mind that the law must aspire to be a unified institution, the parts of which - contract, tort, the criminal law - must be in essential harmony. For the courts to punish conduct with the one hand while rewarding it with the other, would be to 'create an intolerable fissure in the law's conceptually seamless web' ... We thus see that the concern, put at its most fundamental, is with the integrity of the legal system."
25. The ex turpi causa principle is concerned with claims founded on acts which are contrary to the public law of the state and engage the public interest. The paradigm case is, as I have said, a criminal act. In addition, it is concerned with a limited category of acts which, while not necessarily criminal, can conveniently be described as "quasi-criminal" because they engage the public interest in the same way. Leaving aside the rather special case of contracts prohibited by law, which can give rise to no enforceable rights, this additional category of non-criminal acts giving rise to the defence includes cases of dishonesty or corruption, which have always been regarded as engaging the public interest even in the context of purely civil disputes; some anomalous categories of misconduct, such as prostitution, which without being criminal are contrary to public policy and involve criminal liability on the part of secondary parties; and the infringement of statutory rules enacted for the protection of the public interest and attracting civil sanctions of a penal character, such as the competition law considered by Flaux J in Safeway Stores Ltd. v. Twigger  Bus LR 974"
Cancellation of Contracts made in a Consumer's Home or Place of Work etc. Regulations 2008
"The trader must give the consumer a written notice of his right to cancel the contract and such notice must be given at the time the contract is made ..."
"A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given the consumer a notice of the right to cancel and the information required in accordance with this regulation."
"a natural person who in making a contract to which these Regulations apply is acting for purposes which can be regarded as outside his trade or profession."
"14. In its first question, the Cour d'Appel de Paris seeks in substance to ascertain whether a trader who is canvassed for the purpose of concluding an advertising contract concerning the sale of his business must be regarded as a consumer entitled to protection under the directive.
15. It is necessary on this point to refer to Article 2 of the directive. It follows from that provision that the criterion for the application of protection lies in the connection between the transactions which are the subject of the canvassing and the professional activity of the trader: the latter may claim that the directive is applicable only if the transaction in respect of which he is canvassed lies outside his trade or profession. Article 2, which is drafted in general terms, does not make it possible, with regard to acts performed in the context of such a trade or profession, to draw a distinction between normal acts and those which are exceptional in nature.
16. Acts which are preparatory to the sale of a business, such as the conclusion of a contract for the publication of an advertisement in a periodical, are connected with the professional activity of the trader; although such acts may bring the running of the business to an end, they are managerial acts performed for the purpose of satisfying requirements other than the family or personal requirements of the trader."
"In proceedings concerning a contract concluded by a person for a purpose which can be regarded as being outside his trade or profession ..."
"15. As far as the concept of 'consumer' is concerned, the first paragraph of Article 13 of the Convention defines a 'consumer' as a person acting for a purpose which can be regarded as being outside his trade or profession'. According to settled case-law, it follows from the wording and the function of that provision that it affects only a private final consumer, not engaged in trade or professional activities (Shearson Lehman Hutton, paragraphs 20 and 22).
16. It follows from the foregoing that, in order to determine whether a person has the capacity of a consumer, a concept which must be strictly construed, reference must be made to the position of the person concerned in a particular contract, having regard to the nature and aim of that contract, and not to the subjective situation of the person concerned. As the Advocate-General rightly observed in point 38 of his Opinion, the self-same person may be regarded as a consumer in relation to certain transactions and as an economic operator in relation to others.
17. Consequently, only contracts concluded for the purpose of satisfying an individual's own needs in terms of private consumption come under the provisions designed to protect the consumer as the party deemed to be the weaker party economically. The specific protection sought to be afforded by those provisions is unwarranted in the case of contracts for the purpose of trade or professional activity, even if that activity is only planned for the future, since the fact that an activity is in the nature of a future activity does not divest it in any way of its trade or professional character."
"36. In paras 16-18 of the judgment in Benincasa  ECR I-3767, 3795-3796, the court stated in that respect that the concept of "consumer" for the purposes of the first paragraph of article 13 and the first paragraph of article 14 of the Brussels Convention must be strictly construed, reference being made to the position of the person concerned in a particular contract, having regard to the nature and aim of that contract and not to the subjective situation of the person concerned, since the same person may be regarded as a consumer in relation to certain supplies and as an economic operator in relation to others. The court held that only contracts concluded outside and independently of any trade or professional activity or purpose, solely for the purpose of satisfying an individual's own needs in terms of private consumption, are covered by the special rules laid down by the Convention to protect the consumer as the party deemed to be the weaker party. Such protection is unwarranted in the case of contracts for the purpose of trade or professional activity.
37. It follows that the special rules of jurisdiction in articles 13- 15 of the Brussels Convention apply, in principle, only where the contract is concluded between the parties for the purpose of a use other than a trade or professional one of the relevant goods or services.
38. It is in the light of those principles that it is appropriate to examine whether and to what extent a contract such as that at issue in the main proceedings, which relates to activities of a partly professional and partly private nature, may be covered by the special rules of jurisdiction laid down in articles 13-15.
39. In that regard, it is already clearly apparent from the purpose of articles 13-15, namely, properly to protect the person who is presumed to be in a weaker position than the other party to the contract, that the benefit of those provisions cannot, as a matter of principle, be relied on by a person who concludes a contract for a purpose which is partly concerned with his trade or profession and is therefore only partly made outside it. It would be otherwise only if the link between the contract and the trade or profession of the person concerned was so slight as to be marginal and, therefore, had only a negligible role in the context of the supply in respect of which the contract was concluded, considered in its entirety.
40. As the Advocate-General stated in paras 40 and 41 of his opinion, in as much as a contract is entered into for the person's trade or professional purposes, he must be deemed to be on an equal footing with the other party to the contract, so that the special protection reserved by the Brussels Convention for consumers is not justified in such a case.
41. That is in no way altered by the fact that the contract at issue also has a private purpose, and it remains relevant whatever the relationship between the private and professional use of the goods or service concerned, and even though the private use is predominant, as long as the proportion of the professional usage is not negligible.
42. Accordingly, where a contract has a dual purpose, it is not necessary that the purpose of the goods or services for professional purposes be predominant for articles 13-15 of the Convention not to be applicable."
"7. However, it is apparent from the documents before the Court that the national court seeks in substance to ascertain whether a national court hearing a case which falls within the scope of Directive 68/151 is required to interpret its national law in the light of the wording and the purpose of that directive in order to preclude a declaration of nullity of a public limited company on a ground other than those listed in Article 11 of the directive.
8. In order to reply to that question, it should be observed that, as the Court pointed out in its judgment in Case 14/83 Von Colson and Kamann v. Land Nordrhein-Westfalen  ECR 1891, paragraph 26, the Member States' obligation arising under a directive to achieve the result envisaged by the directive and their duty under Article 5 of the Treaty to take all appropriate measures, whether general or particular, to ensure the fulfilment of that obligation, is binding on all the authorities of Member States including, for matters within their jurisdiction, the courts. It follows that, in applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter and thereby comply with the third paragraph of Article 189 of the Treaty."
Unfair Contract Terms
"any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession,"
"(1) An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.
(2) The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term."
"The principles may be summarised as follows.
(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact", but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997j AC 749.
(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Compania Naviera SA v. Salen Rederierna AB  AC 191, 201:
"if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion which flouts business commonsense, it must be made to yield to business commonsense."
"4. The contract was entered into at the Drymen Pottery's premises at a meeting between Mr. Phil Manners of the Claimant and the Defendant and in the presence of Ms Margaret Colvin. At the meeting Mr. Manners stated:
a. he valued the business at £900,000 and stated that it would not be sold for less;
b. the asking price should be £940,000;
c. commission would be approximately 5%;
d. there would be a 1% fee (i.e. £9,000) payable in advance but this would be set off against commission and the fee could be paid at a rate of £1,000 plus VAT per month (unless and until an offer was made).
14. Further or in the alternative, the contract was governed by Scottish law.
a. In making the statements set out in paragraph 6 [sic - it was common ground before me that "4" was meant] (a) and (b) above the Claimant impliedly represented to the Defendant the fact that equivalent business[es] were selling for prices of about £900,000. The Defendant relied on the said representation and was induced thereby to enter into the contract with the Claimant. In fact the representation was false as prices for similar properties were in fact much less than £900,000 and were about £500,000 - £600,000.
b. In the premises
i. the Claimant was negligent in making the representation, which went to an essential matter in the contract;
ii. in consequence the contract was void alternatively the Defendant is entitled to reduction (rescission) of the contract;
iii. alternatively the Claimant made an innocent misrepresentation and the Defendant is entitled to reduction (rescission) of the contract.
c. Further or in the alternative, there was an implied term of the contract that the Claimant would exercise reasonable skill and care in the provision of his services as a selling agent. In placing a sale value of at least £900,000 plus VAT on the property with an asking price of at least £940,000 and/or marketing it at that price (if, which is not admitted, the Claimant in fact carried out any marketing activity at all), the Claimant failed to exercise reasonable skill and care in and about the service it provided. The advice that the property should be marketed at the price suggested and the marketing at that price was a fundamental breach of contract by the Claimant, entitling the Defendant to rescind the contract, which he did by his letter of 8 May 2010."
"2.5 Mr. Manners visited the Defendant at the Drymen Pottery on two occasions, the first occasion being on or about the 1st February 2010 and the second occasion being on the 22nd February 2010, the day when the contract was signed by the Claimant;
2.3 [sic] On the first occasion, the only persons present were Mr. Manners and the Defendant. On the second occasion there was a woman present whom the Defendant identified as his wife. This may be the person referred to as Ms Margaret Colvin in the Amended Defence;
2.5 During the first meeting on the 1st February 2010, Mr. Manners:
(i) confirmed the ownership of the business and that the Defendant was a sole trader;
(ii) ascertained from the Defendant that he was thinking of selling the business within 3 months and that the Defendant was under pressure from his secured lender to sell;
(iii) asked the Defendant what price the Defendant wished to obtain for the business and the Defendant told Mr. Manners that he wanted around £850,000 - £900,000 for the business, broken down as £150,000 - £170,000 for the business stock and goodwill and £700,000 - £750,000 for the property, Drymen Pottery;
(iv) told the Defendant that there would be commission payable in the event of the sale of the business and that an "up front" registration fee would be required but did not discuss how much either of these amounts would be or how they were calculated;
(v) was not provided with any accounts for the business and provided no advice to the Defendant as to the value of the business or the property.
2.6 During the second visit:
(i) the Defendant told Mr. Manners he wanted to put the business on the market;
(ii) the Defendant did not provide Mr. Manners with any annual (or any other) accounts for the business but provided Mr. Manners estimates of the turnover of the cafe and of the public house which were incorporated in the contract;
(iii) the Defendant provided authority to the Claimant through Mr. Manners to accept any offers for the business in excess of £940,000 without any necessity for the Claimant to inform the Defendant of any offers for the business below that price;
(iv) the Defendant again provided no accounts for the business to Mr. Manners;
(v) Mr. Manners and the Defendant agreed that the commission was to be £40,000 and the registration fee was to be £9,000 payable in 8 monthly instalments from the date of the contract;
(vi) the amount of the registration fee was determined by the amount of work which the Claimant would have to do to market the business and the commission was based on the expected sale price of the business;
(vii) Mr. Manners provided the Defendant with the contract and invited him to read it and the Defendant read the contract and then signed the contract."
"8. To the best of my recollection, my first meeting with the Defendant at the Drymen Pottery was with him alone and there were no other parties present when we were discussing matters concerning his intention to market his business for sale. I met him at the Drymen Pottery on the morning of 1 February 2010
9. After initial introductions and general pleasantries, I went through some routine questions with him. I checked that he was the owner of the business and that he was the decision maker and enquired whether he was a sole trader, partner in a business, or director of a limited company. The Defendant confirmed to me that he owned and operated the business as a sole trader and that he was therefore the decision maker.
10. I also asked the Defendant how soon he would be looking to sell the business. I cannot recall his exact response however I believe that he was looking to sell within the next 3 months. We then had a general conversation about how the business was going for the Defendant. During that conversation, the Defendant gave me an indication of his average annual turnover in respect of the different elements of the business and I recall that he also mentioned that he was under some pressure from a secured lender who was looking to enforce its security against the business premises in the near future.
11. During this first meeting, I did not discuss figures in respect of our commission or registration fees with the Defendant. I endeavour not to discuss such matters on first appointments with clients as the purpose of that appointment is purely to gauge their interest in actually selling their business. I of course made the Defendant aware that we do charge commission for our services together with a registration fee which is payable up front. However, I did not indicate any amounts to him at this stage as we did not have any idea at this stage what the asking price for the business would be.
12. I then gave the Defendant a short presentation on the Claimant's business, relating to what we do, how long the company has been in existence, our marketing practices, and the general basis of how our fees are charged as discussed below.
13. I then asked the Defendant to show me around the business premises. I recall that he took me to see the cafe, the kitchen, a gift shop area, the restaurant and the pub which is located on the first floor.
14. Following the tour of the business premises, we then sat down together and discussed his business in depth. The Defendant explained what type of business it was, namely a cafe/restaur ant and pub, and gave me an estimate of his average annual turnover. I do not recall him providing me with detailed trading accounts at that meeting.
15. When discussing the asking price for a business with potential clients, I always explain to them that I would like them to provide me with the price they would wish to obtain if a buyer were to enter the premises tomorrow and ask to purchase the business from them. Once the client has provided me with their estimate of what they think the business and premises is worth I then ask to see their trading accounts and take detailed information as to turnover which is often provided at a second visit. I asked the Defendant to give me his desired sale price for the business, taking into account the personal value of the business to him.
16. I recall that the Defendant said that he would like to obtain £850,000 to £900,000 for the sale of his business, including the business premises.
17. I have never suggested a sale price to the Defendant for his business. ...
19. As previously stated, I do not believe that the Defendant had accounts available at this first meeting. In such circumstances, I will simply ask clients to give me a global figure for the entire business including any property. I asked this of the Defendant and I recall that he said that his preferred global figure would be £850,000 to £900,000. I then asked if he has had a recent valuation of the business property. I cannot recall whether or not the Defendant had received a recent valuation of his property. However, in cases where no such valuation exists, I simply ask the clients to provide me with a rough estimate of their own valuation as they will be more familiar than me with values of properties of their specific nature in the locality. I recall that the Defendant estimated the value of the business premises at approximately £700,000 to £750,000. On that basis, with no trading accounts from which to ask the Defendant to provide a valuation of the business aspect, the valuation of the business element of the global asking price would simply have been ascertained by deducting the Defendant's estimated valuation of the property from the global asking price of £850,000 to £900,000.
20. Once we had discussed the matter of the asking price, I provided the Defendant with some of the Claimant's standard literature and agreed a date by which to telephone him to discuss further. I recall that the Defendant said he was going to meet with his bank manager that afternoon to discuss his business liabilities as he believed that his secured lender was shortly going to seek possession of his business premises. As a result he suggested that I call him back on 3 February 2010. I left the premises, having been therefor at least one hour.
22. I recall that I attended the Drymen Pottery sometime after 4pm on 22 February 2010 as it was my last call of the day and it was dark at the time I arrived. I believe that the Defendant's wife was at the time a dental surgeon in a practice near the Drymen Pottery building.
23. Upon arrival at the Drymen Pottery, I was asked to proceed to the dental surgery to meet the Defendant. I met the Defendant in the waiting area of the dental practice together with his wife where we sat down to discuss the marketing of his business. The Defendant's wife was present throughout this meeting.
24. After general introductions and pleasantries, I asked the Defendant whether he was prepared to put his business on the market. The Defendant confirmed that he was. I then went through some standard details such as the details of the business address, and contact details for the Defendant.
25. I recall that the Defendant did not have a set of accounts to hand at this meeting. If he had, then I would have entered very specific figures in relation to annual turnover in the final agreement and other documents filled in by me at the meeting. However, I note that I only included approximate figures of £150,000 and £250,000 relating to turnover in the final agreement. The figures in respect of turnover for the business were provided verbally by the Defendant after I asked him to confirm the turnover figures as previously discussed at our meeting on 1 February 2010.
26. I then took further information to confirm my previous conversation with the Defendant such as the tenure of the property, the number of staff, opening hours and more in depth information regarding the pub and the restaurant aspects of the business. The additional information regarding the day-to-day aspects of the business were recorded on a Business Information Sheet and Licensed Premises Sheet [copies of which were adduced in evidence at the trial].
27. I then asked the Defendant to confirm the asking price at which he would like his business to be placed on the market. The Defendant confirmed that he wanted the asking price to be set at £900,000.
28. I then handed a copy of the sole agency agreement to the Defendant, once I had filled in the relevant business details.
29. I explained that our commission is added to the sale price and asked The [sic] Defendant if he would be prepared to provide me with a figure above which the Claimant would be authorised to accept offers to purchase the business without seeking his prior approval. The Defendant confirmed that he was willing to do so and stated that the Claimant could accept offers of £940,000 plus the value of any stock without seeking his approval on the basis that this was his desired asking price together with the Claimant's commission exclusive of VAT. That figure was then inserted into clause 4 of the agreement.
30. In relation to the registration fee, I reiterated to the Defendant as per our first meeting that we do require a registration fee payable upfront. There is no set figure for that registration fee and it is not based on any percentage of the sale price. Business Consultants [that is, representatives like Mr. Manners] have some discretion as to the registration fee and I tend to base the registration fee on the approximate value of the amount of work required to market the business, the total value of the business together with other considerations such as affordability to the client.
31. I stated that the registration fee would be £9,000 plus VAT and the Defendant said he would not be able to afford to pay that in one instalment. He offered to pay £1,000 plus VAT immediately and would pay eight further payments of £1,000 plus VAT per month for the next 8 months. I agreed that this was acceptable and the Agreement was amended to reflect that.
32. I do not as a matter of course go through every paragraph of the contract with clients. If they ask me to, I of course will. I do discuss every aspect of the contract which I need to annotate in manuscript, such as the commission and registration fees, however once I have been through those aspects I hand the agreement to the client, and I did so with the Defendant, and state that they should only sign the agreement once they are happy with it. The Defendant read through the contract with his wife present and signed to show his acceptance. The Defendant also initialled every clause which had been completed or amended in manuscript to signify his acceptance. ...
33. The Defendant then wrote out a cheque in the sum of £1,175 in respect of his first instalment of the registration fee and handed the same to me. ...
34. The Defendant did not raise any queries in relation to the other terms of the agreement such as the ability to terminate the agreement and the trigger events for payment of commission. The duration of the second visit was at least one hour though I cannot recall the exact length of time I was present at the Defendant's premises."
"21. I recall that Phil Manners arrived pretty much on time. It was dark and the meeting took place in my partner's dental practice, as we did not want any of the staff who were working to become aware of the proposed sale. Margaret was at the meeting.
22. At the meeting Phil Manners told us once again that the Claimant had buyers waiting to acquire the business and we were informed by him that it could obtain £900,000 for us and that the asking price should be £940,000. I was very pleased not only because the offers which Phil Manners said they could provide were from potential buyers that they already had, but also the asking price exceeded any expectations that I had at the time. I relied on what Phil Manners told me and it was because of what he said that I entered into the contract with the Claimant.
23. We were informed by Phil Manners that the Claimant could organise funding for the potential purchasers and that I could expect the sale to complete by August 2010 which was also good news.
24. It was mentioned at this meeting for the first time that the Claimant would require a 1% arrangement fee which Phil Manners calculated to be £9,000. We considered this to be a lot of money, but Phil Manners confirmed that I could make the payments in instalments of £1,000 per month with the first payment being due that day (22nd February 2010). I considered the position with Margaret and we decided that although it was expensive, if the Claimant had buyers and given the valuation they had put on the business, there was little risk in agreeing to their terms.
25. Phil Manners took some details from me about the business which I think he may have written down. The information which appears in the marketing sheet dated 22nd February 2010 ... appears to reflect that information. It is worth noting that a number of restrictions were placed on the advertising of the business. ...
28. In the event, Phil Manners did not even enter the business premises. He asked me for photos of the business so that they could be used to incorporated [sic] into the sale particulars and/or marketing material. ...
29. Phil Manners produced a contract and made some amendments to it... He asked me to sign it. I wanted some time to consider the terms and asked for a copy. He refused to give me a copy and became upset. In the end I signed the contract and also initialled the amendments as he requested. He did not let me have a copy for my records even though I requested it.
30. Phil Manners also produced an invoice ... I believe he did leave a copy of this invoice with me. I gave him a cheque in the sum of £1175.00 which represented the first instalment of the registration fee ... at the meeting. The cheque was drawn from my account with Bank of Scotland. The meeting concluded shortly thereafter."
"6. I do recall Peter and I met a representative of RTA at my dental practice which is next door to the bar and restaurant. I was present throughout that meeting which I believe took place on 22nd February 2010. The reason the meeting took place in the dental practice was because we did not want the staff to know that the bar and restaurant might be sold. We had to be discreet.
7. I understand that the person we met on 22nd February 2010 is called Phil Manners. Peter and I were interested in learning what price the business could be sold for and what sum RTA valued the business at. Mr. Manners confirmed that RTA had buyers waiting to purchase the business. I understood from Peter that he had been told this prior to the meeting by RTA agents. During the course of the meeting Mr. Manners said that RTA could obtain about £900,000 for the business if it was sold through them. I recall that Peter was also pleased with the news that RTA were confident the sale could be completed by August 2010. It is my recollection that this information was provided by Mr. Manners.
8. Phil Manners was keen to enter into a contract immediately and I recall that he wanted Peter to sign a contract straight away. We learned for the first time at that meeting that RTA would be seeking about £9,000 plus VAT for their services. I remember discussing this with Peter because it seemed like quite a lot of money. In the end we concluded that despite the upfront cost there was little risk as RTA had buyers already interested in purchasing the business.
9. The meeting concluded after Peter had signed the contract and paid a cheque to Mr. Manners for part of what I understand is a registration fee."
Conclusions as to liability