Davenport Lyons Wins in Court of Appeal
6 Oct 2011
In a Court of Appeal judgment made today, due to be handed down in detail in the near future, West End law firm Davenport Lyons acted for the Defendant in the important case of London & Leeds Business Centres Limited (‘LLBC’), in its successful defence of a claim brought by estate agent Makram Estafnous for a commission payment of £2 million.
The central issue in the case was whether an agreement which provided for the payment of commission on a sale of a specific real property included any obligation to pay commission on a sale of shares in the company which ultimately owned the property.
The property in question was a commercial mixed use building comprising a parade of shops and four floors of offices located on and around the Edgware Road in London W1.
At the time of the agreement, in 2001, the property had an estimated value of £22 million.
The case also involved questions relating to financial assistance, unlawful distribution and informal return of capital with regard to a third party acquiring or proposing to acquire shares in a company, and it being unlawful for the company or any of its subsidiaries to give financial assistance, directly or indirectly, for the purpose of that acquisition, before or at the same time as the acquisition takes place.
Talking about the implications of the decision for the property industry, Nick Goldstone, litigation partner at Davenport Lyons who acted for LLBC, said: “This case serves as an object lesson for the careful drafting of agency commission agreements relating to the sale of land and of wider commercial contracts.
“In simple terms a contract must cover all possible eventualities and methodologies as regards the proposed transaction. While effective ownership of the subject property passed from one group of owners to another group of owners, and the claimant was involved in introducing the contracting parties, his commission agreement did not cover the mechanics of the transaction that actually took place.
“The claim effectively sought to recover the sales commission from the purchasers but there was no sale of land and the contracting party with the agent was not actively involved in the transaction.”
