Barton v Morris And Another [2023] – The Importance Of Express And Certain Terms
Author: Morgan MacWilliams & Katherine David
Key Contact: Katherine David
Barton and others v Morris and another in place of Gwyn Jones (deceased) [2023] UKSC 3 concerned the correct interpretation of the terms of an oral agreement relating to whether a party could receive remuneration where a property was sold for less than the amount specified in the agreement. A link to the full judgment is here.
The Supreme Court’s decision clarifies when it is appropriate to imply terms into a contract, and the connection between implied terms and claims for unjust enrichment. It demonstrates that parties cannot rely on implied terms and unjust enrichment to save themselves from a bad agreement.
The facts
Mr Barton had previously attempted and failed to purchase a property owned by Foxpace (“Nash House”) twice, incurring costs in the sum of £1.2 million.
After finding a prospective buyer for Nash House, it was agreed between Mr Barton and Foxpace that, should he introduce the buyer to Foxpace and Nash House sold for £6.5 million, Foxpace would pay him £1.2 million.
Mr Barton proceeded to introduce the buyer to Foxpace. However, a potential issue with Nash House relating to the HS2 rail link was discovered and the sale price was consequently re-negotiated and agreed at £6 million instead of £6.5 million.
When Mr Barton requested the payment of £1.2 million, Foxpace argued that the agreement was made solely on the basis that Nash House would sell for £6.5 million, and therefore refused to make payment of the £1.2 million to Mr Barton.
Mr Barton claimed that:
- there was a breach of an implied term for reasonable remuneration of the services; and
- Foxpace had been unjustly enriched as a consequence of the agreement.
High Court Decision
Mr Barton’s claim was rejected in the High Court.
It was held that, although Foxpace had been enriched by the agreement in the sum of £435,000, it was not an unjust enrichment. There was no explicit agreement in relation to Foxpace paying any money to Mr Barton where the sale price was less than £6.5 million. It was held that to imply such a term would infringe the freedom of the parties to define the terms of their agreement and obligations in relation to the same.
Court of Appeal Decision
The Court of Appeal took an alternative view of the dispute and overturned the High Court decision.
The reasoning for the decision was split. On the one hand, it was reasoned that it would be wrong to decide that a claim in unjust enrichment would interfere with the parties’ freedom to define the terms of their agreement, simply because the agreement was silent on what would happen should Nash House be sold for less than the specified price.
On the other hand, it was argued that Mr Barton’s claim should succeed on the basis of an implied term that he should receive remuneration where he introduced Foxpace to a buyer, regardless of the sale price.
However, both reasonings resulted in the same conclusion, overturning the previous decision and awarding Mr Barton £435,000.
Supreme Court Decision
The Supreme Court overturned the Court of Appeal’s decision by a 3-2 majority and upheld the High Court’s decision. It was found that the agreement did not contain an implied term that Mr Barton would be paid a reasonable fee if he introduced a purchaser who paid less than £6.5 million. To infer such a term would contradict the freedom of the parties to define their obligations in relation to their agreement.
In relation to the claim for unjust enrichment, Mr Barton argued that the failed basis was that it was the parties’ common assumption that Nash House would be purchased for £6.5 million. This argument was rejected on the basis that simply failing to provide in the contract for the possibility that Nash House would sell for any less than £6.5 million did not mean that there was a common assumption that it would be sold for that price. It was also held that the claim in unjust enrichment would fail regardless because there was an agreed obligation on Foxpace to pay in a specified circumstance. In the absence of this circumstance (being the sale of Nash House for £6.5 million), there was no obligation on Foxpace to pay Mr Barton.
The significance of Barton v Morris
The case is significant for various reasons. The Supreme Court judgment highlights:
- the “effect of silence” in contracts and the challenges around its interpretation; and
- the importance of express terms in contracts.
The Supreme Court majority held that silence in a contract does not welcome judges to imply terms that they cannot be certain were intended by the parties. However, the split decision also highlights the difficulties silence in a contract presents regarding the uncertainty of its interpretation by the courts.
The above therefore demonstrates the importance of parties using express and certain terms in a contract. Because the court refused to imply a term into the contract, Mr Barton was also unable to claim unjust enrichment. Furthermore, implied terms and unjust enrichment cannot be relied upon to save a party from a bad agreement.
If you would like any more information, or have any potential issues or disputes surrounding a contract, please get in touch with Acuity Law.
