Summary

A contract for a property purchase was not void or voidable despite the vendors' agreement to pay the acquisition agent a fee without the buyer's knowledge. The agent's relationship to the buyer was not such as to engage the law on bribery and secret commissions, so the agreement could not constitute a promise of a bribe or secret commission.

Facts

The buyer in a property transaction appealed against a decision that he had been in breach of contract after he decided not to proceed with the purchase, where the judge found that the sale contract was enforceable despite the vendors' promise of a payment, without the buyer's knowledge, to the "acquisition agent" (O) arranging the transaction.

The vendors had sought to sell the property for around £5 million. They were approached by O, who falsely claimed to represent a buyer. In April 2015, the vendors agreed in principle to pay O a fee for bringing the sale about. Later in April, O approached the appellant buyer. In May, after O falsely claimed that the buyer would not pay him a fee and threatened that he would otherwise abort the transaction, the vendors agreed that, upon sale, O would receive a fee of £75,000. In June, the buyer signed the purchase contract and a transfer form. He told his solicitors that O had authority to give them instructions regarding the purchase. The parties exchanged contracts in August for a price of £5 million. The buyer pulled out. The vendors later sold the property for a lower price than the buyer had agreed and claimed the difference in price plus the costs of a bridging loan they had needed. The buyer argued that the contract was void or voidable because the vendors' agreement to pay O a fee constituted a promise of a bribe or secret commission to O acting as the buyer's agent. The judge held that O had been acting in a purely "ministerial" role in relation to the transaction and that his relationship with the buyer was not one which engaged the law of bribery and secret commissions.

Held

Was the relationship between O and the buyer such that O was incapable of being bribed? For the law of bribery and secret commissions to be engaged, there had to be a relationship of trust and confidence between the recipient of the benefit and the principal which put the recipient in a real position of potential conflict between his interest and his duty. That depended on the nature of the individual's duties and and which of those duties was engaged in the precise circumstances under consideration. Although the relationship of principal and agent was a fiduciary one, not every person described as an "agent" was the subject of fiduciary duties, and a person described as an agent could owe fiduciary duties in relation to some activities and not others, Novoship (UK) Ltd v Mikhaylyuk [2012] EWHC 3586 (Comm) and New Zealand Netherlands Society "Oranje" v Kuys [1973] 1 W.L.R. 1126 applied, Boardman v Phipps [1967] 2 A.C. 46, Bristol & West Building Society v Mothew (t/a Stapley & Co) [1998] Ch. 1, Reading v Attorney General [1949] 2 K.B. 232 and McWilliam v Norton Finance (UK) Ltd (In Liquidation) [2015] EWCA Civ 186 followed. The judge had not decided in abstract that those who acted in a "ministerial" role did not attract the law of bribery and secret commissions. On the contrary, he had considered all the relevant facts of the relationship between O and the buyer in relation to the relevant transaction in a very detailed way, made findings, applied the law and reached an evaluative judgment about the obligations and duties attaching to the actual relationship in relation to the actual transaction. The judge had been right to concentrate on the actual state of affairs between O and the buyer rather than what the vendors believed the circumstances to be, or how O had presented his role to them: their understanding as to his role was irrelevant. He had been entitled to find that O had been nobody's agent at the outset and that when the buyer came on the scene in April he had been offered a pre-packaged deal, leading to no other relationship between them at that time than that of salesman and recipient of information. Had the relationship matured thereafter into a fiduciary relationship, O or the vendors should have disclosed the promise of the fee to the buyer at that stage. However, on the evidence, the judge had been entitled to conclude that the relationship had not matured in that way (see paras 39-51 of judgment).

Appeal dismissed