£7,500,000, please, for that 15 minute discussion we had 10 years ago…
…and the Claimant almost succeeded in winning, but for a technical point on causation.
In Burgess v Kempson (judgment handed down on 5 September 2023), Mr Burgess and Mr Kempson sat down in Mr Kempson’s kitchen in August 2013, waiting for a neighbour to arrive. Mr Kempson owned 31 acres of agricultural land in West Sussex, which had been promoted for development by certain consultants. Mr Burgess thought he could do better than those consultants, and proposed a deal that would entitle him to 25% of any increase to the value of the land over £250,000 per acre. They agreed on 15%.
Mr Burgess followed up in writing in 2015 (two years later), and there were some vague references in other correspondence before that too. However, the deal itself was done in the kitchen, in a 10-15 minute discussion, in 2013, with no other witnesses.
Nevertheless, the Court found that there had been a binding agreement, on the terms alleged. The two had been in discussions prior to 2013, and Mr Kempson knew that Mr Burgess expected to be remunerated one way or another. Following the 2013 discussion, there were references in writing to the 15%, and Mr Kempson remained silent about those, whereas he would have replied with objections had he not agreed.
The Court also found that the parties intended to be legally bound, despite such significant liabilities having been agreed in a 10-15 minute discussion in the kitchen.
Mr Burgess therefore claimed £7.5m, being 15% of the increase in value (there were issues with quantum too; that increase was not an agreed figure).
What let Mr Burgess down, however, was that although the Court found that Mr Burgess was a cause of the increase in value, he was not an effective cause of the increase in value (other consultants remained involved). The Court found that this was an implied requirement for Mr Burgess to become entitled to payment, and it was not met. He was therefore not entitled to the money.
Mr Burgess alternatively claimed that he was entitled to payment on a quantum meruit basis. The Court found that if he had such an entitlement, he could claim his hours worked at a commercial surveyor rate of £190 per hour. However, aside from Mr Burgess’ poor evidence on time incurred, he was not entitled to a quantum meruit claim because of the existence of a contract (which precludes quantum meruit).
Mr Burgess was, therefore, entitled to nothing at all.
The lesson here is to always document your agreements, and to object clearly if someone suggests that an oral agreement has been reached.
There is a fine line between oral agreements that are intended to be legally binding, and those that are not. This case (a 10 minute discussion in a kitchen, which was held to be binding) should be contrasted with the reported case involving Mike Ashley (owner of Sports Direct), who drank at least 4 pints of beer in the Horse & Groom then promised his investment-banker mate £15m if he could get his share price above £8. In that case the Court found that there was no intention that the agreement would have legal effect, and it was not binding.
Sadly, whether or not the parties have had 4 pints is not the only factor to take into account.
