The Lorenz Consultancy Ltd. v Fox-Davies Capital Ltd.

This is a claim for £142,774.50 pursuant to an alleged contract between the claimant and the defendant whereby the defendant retained the claimant to find a property for the defendant and the defendant agreed to pay to the claimant a fee for so doing.

The claimant is a well known and highly regarded commercial property adviser based in the West End of London.

The defendant is an independent investment bank which was founded by Mr Daniel Fox-Davies in 2001. It traded successfully from premises in 6 Carmelite Street until the credit crisis in 2008, in which year it made a loss. At that time, the outlook for the defendant appeared bleak and Mr Fox-Davies anticipated it would be in breach of its regulatory capital requirements by the third quarter of 2009.

In March 2009, Mr Kim Richardson, a stock broker at that time employed by Mirabaud Securities LLP, decided he wished to set up his own stock broking and investment banking business. He knew of Mr Fox-Davies and that the defendant was in financial difficulties and so made a proposal to him for the purchase of the defendant. The defendant, as an operating company, had the particular attraction to Mr Richardson that it already held the necessary regulatory approvals which Mr Richardson would otherwise have to secure.

Mr Fox-Davies did not consider Mr Richardson’s proposal ideal but, in light of the financial difficulties then facing the defendant, it appeared to him that he had little alternative but to accept. Accordingly he and Mr Richardson entered into negotiations and instructed their solicitors, respectively Field Fisher Waterhouse LLP and Stephenson Harwood, to begin the preparation of a sale and purchase agreement.

From the outset it was apparent to Mr Richardson that the new business would have to relocate to larger offices and so he approached his old friend, Mr Anthony Lorenz, a director and principal of the claimant, and instructed him to assist in the search for new premises. He also suggested to Mr Fox-Davies that the claimant might assist in the disposal of the defendant’s existing premises in Carmelite Street but, as I shall explain, Mr Fox-Davies made clear that he would not engage the claimant for that purpose until after the completion of the sale and purchase agreement.

The following is an outline of the events that occurred thereafter. The claimant identified and showed to Mr Richardson and Mr Fox-Davies various properties in the West End. One of the properties, 23 Savile Row, was about twice the size of the Carmelite Street premises and both Mr Richardson and Mr Fox-Davies considered it suitable for the proposed expanded business. In about mid May 2009, Mr Richardson instructed Stephenson Harwood to deal with negotiations for a lease on behalf of Jendens Holdings Limited (“Jendens”), the company he proposed to use as the vehicle for the takeover of the defendant.

Negotiations duly took place with the landlord, D2 Private, over the terms of the lease and ultimately it was decided that the defendant, as the proposed operating company should be the tenant. In the meantime discussions were also taking place between Mr Richardson and Mr Fox-Davies and their respective solicitors over the terms of the sale and purchase agreement.

On 10 June 2010, and prior to the closing of the sale and purchase agreement, the landlord’s agent telephoned Mr Lorenz and informed him that if the new lease was not signed immediately, the defendant would lose the premises. Mr Lorenz communicated this news to Mr Richardson who in turn telephoned Mr Fox-Davies and asked him to sign the lease on behalf of the defendant. Mr Fox-Davies’s evidence was that he was prepared to do so only on the basis it would not be released to the landlord until the completion of the sale and purchase agreement. Mr Stephen Laud, a solicitor with Stephenson Harwood, attended at the Carmelite Street premises to obtain Mr Fox Davies’ signature. There is a dispute as to what happened in the course of that meeting. Mr Fox-Davies told me he made clear to Mr Laud the basis on which he was prepared to sign. However, it is evident from correspondence before me that Stephenson Harwood maintain that Mr Fox-Davies gave authority for the lease to be completed. In the event, the lease was completed that evening, after Stephenson Harwood received final instructions to that effect from Mr Richardson.

On 18 June 2009, Mr Fox-Davies informed Mr Richardson by email that he had decided not to proceed with the sale of the defendant. By this time it had become apparent to the defendant that the lease had been completed and that it now had obligations not only in respect of its premises in Carmelite Street but also in respect of the new and much larger premises in Savile Row which it had no need for and could not afford.

The claimant now seeks a fee from the defendant (but not Mr Richardson) for acquiring the Savile Row premises. It was originally represented in this case by its solicitors, Mischon de Reya LLP, but shortly before trial they indicated that Mr Lorenz would be appearing on its behalf and, with my permission, that is what he has done. Mr David Blayney of counsel has appeared on behalf of the defendant.

In its pleading the claimant puts its case a number of ways. First, it contends that the claim arises out of a contract with the defendant whereby the defendant retained the claimant to find property for the defendant in consideration of a commission. It further contends the contract was made orally between the end of March and 9 April 2009 following telephone conversations and meetings between Mr Richardson and Mr Lorenz and that Mr Richardson had authority to enter into the contract on behalf of the defendant.

Second, it contends that if Mr Richardson did not have actual authority to enter into the contract on behalf of the defendant then he had ostensible authority to do so.

Third, it contends that if Mr Richardson did not have actual or ostensible authority to act on behalf of the defendant then his instructions to the claimant were nevertheless ratified by the defendant.

In the course of the trial Mr Lorenz has developed the claimant’s case in the following way. He explained to me that the claimant’s primary case is that there was a contract between the claimant and the defendant which arose out of the conduct of the parties.

The claimant’s secondary case as developed by Mr Lorenz is that Mr Richardson had actual (albeit implied) authority to enter into the contract on behalf of the defendant. Alternatively, Mr Richardson had ostensible authority to enter into the contract on behalf of the defendant. In the further alternative, the defendant was aware that Mr Richardson was purporting to act as its agent and that the claimant believed he was so acting, yet it failed to take any steps to intervene and, to the contrary, induced and encouraged the claimant to make a detrimental change in its position by providing properties for Mr Fox-Davies to inspect and generally assisting in the acquisition of the lease in respect of the Savile Row premises. In the circumstances it is now estopped from disputing that Mr Richardson had authority to act on its behalf and is bound by the terms of instruction that he agreed.

I will address each of these allegations but first must set out in rather more detail the facts as I find them.

On behalf of the claimant, I heard evidence from Mr Richardson, Mr Robert Woodland-Ferrari (an employee of the claimant) and Mr Lorenz. On behalf of the defendant, I heard evidence from Mr Fox-Davies.

Mr Richardson and Mr Fox-Davies each explained to me the background to the proposed sale and purchase agreement. I found them both to be entirely frank and honest witnesses. However, it became apparent during the course of Mr Richardson’s cross examination that he could not recall many of the details of the events and conversations that took place over the crucial period. Mr Fox-Davies, on the other hand, had a very clear and precise recollection of much of what occurred.

The following matters emerged from the evidence. In March 2009, Mr Richardson had ambitious plans for the defendant. He had secured substantial financial backing from a business called Mathon and anticipated hiring about 40 members of staff in addition to the 18 members of staff at that time employed by the defendant. It was inevitable the business would have to be relocated following its acquisition. Moreover, Mr Richardson had a preference for offices in the West End rather than the City.

Mr Richardson’s primary concern was to secure the defendant’s regulatory platform but he recognised the defendant had some good personnel in its area of expertise, namely advising on and undertaking fundraising transactions in the oil, gas and natural resources sectors. Mr Richardson planned to expand the business into areas in which he had particular experience, namely property, resources and technology. As for Mr Fox-Davies, it was far from clear what he would do following the defendant’s acquisition and he was even contemplating the possibility of leaving the business altogether.

Mr Richardson’s initial proposal was to purchase 85% of the defendant’s issued share capital at book value. This would give Mr Richardson control of the defendant but allow Mr Fox-Davies to realise a modest sum and to have a share in the revenues generated by the defendant going forward. Both parties appreciated the proposal was subject to negotiation and, indeed, over the course of the next two months it developed into a proposal for Jendens to acquire the entire issued share capital of the defendant and for Mr Fox-Davies to acquire 15% of the ordinary shares of Jendens, preference shares with a nominal value of £90,000 and unsecured loan stock with nominal value of about £175,000. They each instructed solicitors to act in connection with the proposed transaction.

Against this background, Mr Richardson told Mr Fox-Davies that he had a good friend, Mr Lorenz, to whom he had already spoken about finding suitable new premises in the West End, and that Mr Lorenz would also be able to assist with the disposal of the Carmelite Street premises, the lease of which still had over 12 months to run. Mr Fox-Davies had no objection to Mr Richardson searching for new premises; he was, as he put it, “agnostic” on the matter of property. He took the view that if the proposed deal went through then Mr Richardson would have control of the defendant and the cost of the new premises would be borne by other investors. Mr Fox-Davies was, however, sure, and I accept, that Mr Richardson did not say to him that he was proposing to instruct Mr Lorenz to act on behalf of the defendant in connection with the search for new premises; nor did Mr Fox-Davies give Mr Richardson authority to instruct Mr Lorenz on behalf of the defendant. The defendant had no money and, whilst he still owned it, Mr Fox-Davies was simply not prepared to let it enter into arrangements of this kind with their attendant liabilities. As will be seen, this is entirely consistent with the course Mr Fox-Davies adopted in relation to the instruction of the defendant in connection with the disposal of the Carmelite Street premises.

In the meantime, Mr Richardson had indeed met Mr Lorenz and told him that he was in the process of taking over another company and would need new office space, preferably in the West End.

Accordingly, on 1 April 2009, Mr Woodland-Ferrari sent to Mr Richardson an email referring to the meeting which had taken place between Mr Lorenz and Mr Richardson and attaching a schedule of properties that he believed would be of interest to him. The email continued:

“I confirm that where we are not already retained by the Landlords we would have to act on your behalf to acquire the space and would charge 10% of one years rent and 5% of any premium paid or equivalent of the rent free period or other inducement received on a no success no fee basis.

Obviously we would negotiate the best possible transaction on your behalf.

Please let me know if you require any further information on any of the properties or wish to arrange an inspection.”

On 2 April 2009, Mr Richardson forwarded that email, together with the enclosed property schedule, to Mr Fox-Davies. It was Mr Richardson’s evidence that, in addition to forwarding the email, he discussed the question of fees with Mr Fox-Davies and told him that the claimant would charge fees for finding a property and that a budget of £100,000 had been put aside for this purpose. I accept that this conversation took place but, in light of Mr Fox-Davies’s evidence, I am satisfied that it was never agreed that the defendant would put aside any money for this purpose, nor did it do so.

Separately, on 2 April 2009, Mr Woodland-Ferrari telephoned Mr Fox-Davies, apparently prompted by Mr Richardson, to discuss the disposal, after the completion of the sale and purchase agreement, of the Carmelite Street premises. Subject to completion of the sale and purchase agreement, Mr Fox-Davies was content for the claimant to be instructed in relation to the disposal of the Carmelite Street premises and, on that same day, Mr Fox-Davies asked Ms Moya Wooder, the defendant’s Office Manager, to send a copy of the Carmelite Street lease to Mr Woodland-Ferrari.

In a further email of 2 April 2009, Mr Woodland-Ferrari informed Mr Fox-Davies that he was meeting Mr Richardson the following day, 3 April, to see four properties and provided him with an inspection schedule. It is clear from this email and a further email from Mr Woodland-Ferrari to Mr Fox-Davies dated 3 April 2009 that it was understood that Mr Fox-Davies would also view properties that Mr Woodland-Ferrari had identified. Mr Fox-Davies was happy to do so in light of his potential ongoing role and equity in the defendant. He also had an idea of the defendant’s needs, having run the company for the previous eight years.

On 6 April 2009, Mr Woodland-Ferrari sent to Mr Fox-Davies an email in connection with the proposed disposal of the Carmelite Street premises. It set out full details of the property, the marketing that the claimant would undertake and the fees payable. It also asked for confirmation that the claimant was instructed. On 8 April 2009, Mr Fox-Davies responded that the defendant “should be in a position to give the go-ahead from the 1^st May”. The reason for the delay, Mr Fox-Davies explained, was that he did not intend to commit the defendant by entering into an agreement with the claimant until after the completion of the defendant’s takeover by Mr Richardson.

Over the course of the next few days Mr Fox-Davies inspected a series of properties found by the claimant and which a note prepared by the claimant records that Mr Richardson had “OK’d for him to see”. After viewing a number of properties, Mr Fox-Davies pointed out to Mr Richardson that they were no bigger than the defendant’s existing Carmelite Street premises and that they would not accommodate the expanded business that Mr Richardson was planning. Accordingly the claimant identified a further set of properties of approximately twice the size. One of these was 23 Savile Row and Mr Fox-Davies inspected it on 14 April 2009. After discussion with Mr Fox-Davies, this was the property which Mr Richardson selected.

On 20 April 2009, Mr Woodland-Ferrari sent to Mr Fox-Davies an email indicating that he understood that Mr Richardson had spoken with Mr Lorenz the previous week, in the course of which it had become apparent that the Carmelite Street premises were now being marketed. This led Mr Woodland-Ferrari to enquire as to whether or not Mr Fox-Davies now wanted the claimant to proceed or whether to continue to hold off until May. On the same day, Mr Fox-Davies replied asking the claimant to hold off until the 1 May and the deal with Mr Richardson had closed.

On or about 6 May 2009, it seems that Mr Richardson and Mr Fox-Davies jointly inspected another premises at 77 Grosvenor Street as an alternative to 23 Savile Row.

Nevertheless, the decision to proceed with Savile Row was confirmed. At this stage the identity of the tenant had not been decided, though Jendens was being considered as one of the possibilities.

Early in the morning of 13 May 2009, a meeting took place between Mr Richardson, Mr Lorenz, Mr Woodland-Ferrari and Mr Andre Sobolewski of Mathon in the course of which the identity of the tenant was discussed. Shortly afterwards, they met Ms Deirdre Foley, a director of the landlord, D2 Private, to agree heads of terms. Even at this stage the identity of the proposed tenant was not settled, though it seemed likely that it would be the defendant, subject to the agreement of Mr Fox-Davies.

Mr Richardson then instructed his solicitors, Stephenson Harwood, to deal with the detailed negotiations over the lease. Despite a suggestion in Mr Richardson’s witness statement that these instructions were given on behalf of the defendant, I am satisfied that this was not the case. Mr Fox-Davies was clear that he gave no such instructions and, indeed, did not even see the lease until 10 June 2009. Nor does Mr Richardson’s view correspond with that of Stephenson Harwood, as appears from a letter dated 30 June 2009 to Field Fisher Waterhouse in which they state:

“From early April 2009, DF-D (‘the Seller’) was negotiating with Jendens Holdings Limited (‘the Buyer’) in relation to the Acquisition. You acted for the Seller and we acted for the Buyer.

In mid – May 2009, we were instructed by the Buyer to act on its behalf in entering negotiations with the landlord of the Premises (‘the Landlord’) for the grant of the Lease. We did so, taking our instructions from the Buyer. The intended tenant was F-DCL in the expectation that the Lease would be granted after the Acquisition, at which time the Buyer would own the tenant F-DCL and be able to sign the Lease. DF-D was aware of all this, even to the extent that by 10 June 2009, during the course of the conference call to which Mr Laud was a party, DF-D was discussing with the Mr Richardson matters of detail in relation to the appointment of contractors for the fit out of the Premises.”

In the course of May 2009, Mr Richardson asked Mr Fox-Davies if Ms Wooder would assist in the planning of the fitting out of the Savile Row premises. He agreed and she duly did so, with the assistance of the claimant. These are matters upon which the claimant places particular reliance and so I must relate them in a little detail.

Following an enquiry by Mr Richardson, Mr Woodland-Ferrari suggested that he contact a company called G5 Developments Limited as possible fit out contractors. Mr Richardson passed the name on to Ms Wooder who sent to Mr Woodland-Ferrari an email on 14 May 2009 in the following terms:

“Kim Richardson has forwarded your email to me and asked me to arrange for g5 Developments to meet us on site next Tuesday morning, I imagine about 9.30? Can you put me in touch with whomever I need to make arrangements with at Savile Row please? Kim’s idea is to invite a couple more contractors to meet on site as well (although currently I am unsure whether he wants to stagger them or have them all fetch up at once?).”

Mr Woodland-Ferrari acted promptly on the request by arranging access to the Savile Row premises and a meeting with G5 Developments.

A few days later, on 19 May 2009, Ms Wooder asked Mr Woodland-Ferrari if it would be possible for him to arrange access for the defendant’s IT Manager and herself during the course of the day. Mr Woodland-Ferrari provided the requested assistance.

Ms Wooder sent to Mr Woodland-Ferrari two further emails on 19 May 2009. In the first she asked for his advice as to whether the defendant would be responsible for organising fire drills and industrial cleaners. In the second she asked:

“Incidentally, Kim Richardson seems to think I had a copy of the lease he recently signed? Do you have a copy you can email to me, does it detail such things as the carpeting allowance which Kim thinks is within the lease agreement (and also information how to secure any parking bays)?”

Mr Woodland-Ferrari responded to all these questions.

Then, on 26 May 2009, Ms Wooder sent to Mr Woodland-Ferrari yet further requests. In the first she asked:

“Kim Richardson has asked me to check with you the situation regarding car parking availability. … I will be grateful if you could let me know how and where we can secure any parking bays.”

And in the second she asked:

“Kim mentioned to someone here that there was the option of securing some extra spaces at a building across the road, at reasonable rates, apparently via Derwent Valley, or Derwent plc who are at 25 Savile Row. I called and made enquiries but they seemed to know nothing about such available spaces. Kim told me to check this out with you – had he got the wrong end of the stick?”

Again, Mr Woodland-Ferrari did what he could to assist.

On 10 June 2009, Mr Lorenz received the telephone call from the landlord’s agent to which I have referred in paragraph [9] of this judgment which led, that afternoon, to the attendance by Mr Laud of Stephenson Harwood at the Carmelite Street premises and his meeting with Mr Fox-Davies, in the course of which Mr Fox-Davies signed the lease on behalf of the defendant. Mr Fox-Davies gave evidence before me that he did not intend the lease to be completed and released to the landlord until the completion of the sale and purchase agreement, and that he so informed Mr Laud. He signed the lease to give comfort to the landlord that, following the completion of the acquisition of the defendant by Mr Richardson, the completion of the lease would be a formality. The evidence of Mr Fox-Davies is consistent with an attendance note of events on 10 June 2009 prepared on 24 June 2009 by his solicitors, Field Fisher Waterhouse, who, as I have explained, were acting for him in connection with the sale and purchase agreement but had not been instructed in connection with the lease. That attendance note records the substance of a telephone conversation between Mr Alex Haynes of Stephenson Harwood and a Mr Carlton Durrant of Field Fisher Waterhouse which took place before 11.30 am. According to the attendance note, in the course of the conversation Mr Haynes explained the background to the lease, that it was necessary to move forward as soon as possible but that it would be conditional on the corporate transaction completing. The note also contains a record of a subsequent telephone conversation between Mr Durrant (and another solicitor at Field Fisher Waterhouse) and Mr Fox-Davies in the course of which Mr Fox-Davies said the lease would not be completed until after the completion of the corporate transaction and that the signature page was going to be held by Stephenson Harwood to his order. All of these matters were later set forth in a letter from Field Fisher Waterhouse to Stephenson Harwood dated 24 June 2009.

Stephenson Harwood responded to Field Fisher Waterhouse by letter dated 30 June 2009, vigorously disputing their account of events. In that letter, Stephenson Harwood deny that Mr Haynes told Mr Durrant that the lease was to be conditional on the acquisition completing. They also say that the suggestion that the lease and related documents were signed by Mr Fox-Davies on the basis that they were to be held to his order is plain wrong. They continue that, with Mr Laud in attendance personally and Mr Richardson present by telephone, Mr Fox-Davies signed the lease and said he was happy for it to be completed notwithstanding the corporate acquisition had yet to complete. Further, as for the terms of the lease, Mr Fox-Davies said that if Mr Richardson was happy then so too was he. Moreover, Mr Fox-Davies said Mr Laud had authority to complete the lease.

A hand written attendance note prepared by Mr Laud of his meeting with Mr Fox-Davies is consistent with his firm’s letter. Mr Richardson also gave evidence before me that he told Mr Fox-Davies in a telephone call that day that he should not sign the lease if he had any doubts at all about the deal going through.

I have not heard evidence from any solicitor at Field Fisher Waterhouse or Stephenson Harwood. All I have heard is the evidence of Mr Fox-Davies and Mr Richardson to which I have referred. In these circumstances I cannot hope to resolve precisely what occurred on 10 June. However, in light of the clear and unequivocal evidence of Mr Fox-Davies and its inherent plausibility, I do feel able to make the limited finding that Mr Fox-Davies did intend the signed lease to be held to his order pending the completion of the sale and purchase agreement and that he expressed that intention to Stephenson Harwood.

At about this time, Mr Fox-Davies began to change his mind about the merits of the proposed transaction with Mr Richardson. The economic climate was improving, and with it the defendant’s prospects. In addition, Mr Fox-Davies was uneasy about the introduction of some of the terms of the sale and purchase agreement and about the management Mr Richardson proposed to introduce to the business including, in particular, a Mr Bartlett with whom Mr Fox-Davies evidently had a personality clash. Accordingly, on 18 June 2009, Mr Fox-Davies sent to Mr Richardson an email informing him that he could not complete the sale and purchase agreement on the terms presented.

By email dated 22 June 2009, the claimant sent to Mr Richardson his draft invoice for professional charges in connection with the acquisition of 23 Savile Row. On the same day, Mr Fox-Davies sent an email to Ms Foley indicating that the defendant would not be taking possession of the premises and that he had instructed Mr Lorenz to coordinate with the landlord regarding its disposal.

On 23 June 2009, Mr Lorenz sent to Mr Fox-Davies an email explaining that there were difficulties with the proposed surrender of the lease and suggesting that the preferred route for its disposal might be to try and structure some kind of “off market assignment” to Mr Richardson’s group.

Again, on 23 June 2009, Mr Lorenz sent to Mr Richardson an email expressing his delight that the acquisition of 23 Savile Row had been completed and attaching another copy of the claimant’s draft invoice for professional charges “as agreed”. He also expressed the hope that Mr Richardson could sort out his situation with the defendant and stated that he proposed to send out his official account at the beginning of August. He requested confirmation that that would be acceptable.

The following day, 24 June 2009, Mr Richardson replied stating that the invoices should be addressed to and paid in full by the defendant and not him. He continued:

“I do not owe you any money in respect of the property at 23 Savile Row or otherwise.

As you are well aware, the property was acquired by Fox-Davis [sic] Capital Limited, and not me, and all negotiations in respect of it were undertaken on behalf of that company.

Whether you or Daniel Fox-Davis like it or not, all of the liabilities in respect of the property, including your fees, lie with Fox-Davis Capital Limited and not me or any other person.”

Later that day, Mr Lorenz replied to Mr Richardson in the following terms:

“Kim,

There are very serious inferences here.

The premises were offered to you on a retaining basis and negotiations were handled for you throughout. There was even an intention for Jendens to take the premises.

The fact that Fox-Davis [sic] signed the lease does not mean that they inherit the fee liability which you have… unless of course they contractually agree to do so and do not subsequently default.

You have throughout confirmed that are [sic] fees are covered and not to worry about Fox Davis situation as actual Lessees and thus my astonishment to receive your email with the suggestions therein.”

On 26 June 2009, Mr Fox-Davies informed the claimant that, in light of their relationship to Mr Richardson, the defendant would be using another firm for the disposal of the unwanted lease.

On 15 July 2009, Mr Lorenz sent to Mr Richardson an email in the following terms:

“In accordance with your request, herewith my first draft of what I could write to Fox-Davies Capital.

I make it abundantly clear that our agreement initially was with you personally and we need to maintain your cover on professional charges, notwithstanding the fact that we are happy to ask Fox-Davies to ‘pay the bill’.

Please make whatever amendments you wish to my letter in order to give us the maximum chance of getting payment from Fox-Davies.

I thank you in anticipation of your kind and early response.”

The enclosed draft letter read as follows:

“Dear Mike/Daniel

SIXTH FLOOR, 23 SAVILE ROW, LONDON, W1

I am given to understand that you have assigned your lease which you acquired on the 10 June 2009, thus ridding yourselves of your commitment to occupy the space over the next ten years.

Your original acquisition was of course directly linked to our search for offices, liaison initially with Kim Richardson and then Moya and others in and from your offices, and accordingly The Lorenz Consultancy were certainly be an effective course of your acquisition.

It is unfortunate that you signed a lease for space that you did not eventually want due to the breakdown of the Corporate Acquisition, although we are glad to hear that you have now managed it seems to dispose of this.

We have therefore come to the time when we have to raise our invoice for professional charges, and attached herewith is our invoice based on the terms originally agreed, with a request for 28 days settlement in accordance with our normal terms of business practice.”

No further action was, however, taken by Mr Lorenz at that time. Instead, it seems that Mr Lorenz assisted Mr Richardson to find alternative premises at 11-14 Grafton Street. Mr Lorenz explained to me that he reached an understanding with Mr Richardson that, if he found alternative premises, Mr Richardson would pay to him the original agreed fee of about £140,000 for so doing. This was reflected in an email dated 18 August 2009 sent by Mr Lorenz to Mr Richardson in which he stated:

“Following our various recent telephone conversations we now get to the stage where I need to raise an invoice concerning professional charges with regard to the acquisition of Savile Row, despite the fact that we are prepared to defer pursuing this charge until we have sorted out your new offices, under which circumstances we have agreed that the charge would be paid by you.

Hopefully we will move forward quite quickly with regard to acquiring 11/14 Grafton Street – the main target.

In accordance with our agreement, and having taken legal advice, there is a possibility that either you or Fox Davies Capital Ltd or a mixture of the two are responsible for our professional charges. We are advised that it would be highly unlikely that a judge would determine that neither party is liable.

Accordingly, in accordance with your request, I attach herewith a letter which I have written to Fox Davies Capital asking them to pay the full professional charges Without Prejudice to our right to claim those professional charges against you and/or Fox Davies Capital if they refuse to pay any monies.

Rest assured I don’t want this situation to go to litigation, especially in view of our friendship, but you must appreciate we are running a business and can’t end up doing a huge amount of work for nothing.

I will advise you as soon as I get a reaction from Fox Davies Capital Ltd.”

Two days later, on 20 August 2009, Mr Lorenz sent to the defendant an email requesting payment of the claimant’s original fee in these terms:

“As you are probably aware we introduced the above mentioned premises to you, following offering same to Kim Richardson, who was in course of acquiring Fox Davies Capital Ltd.

It was mutually agreed that Fox Davies would acquire the leasehold interest which they acquired, and have subsequently disposed of, and which is referred to in our account for professional charges, attached hereto.

As you know we were the effective cause of the introduction, and accordingly we request you to pay our professional charges on the basis as agreed and look forward to your early remuneration.”

The attached invoice referred to the following services:

“Taking instructions via Kim Richardson Esq. in April 2009 to search for offices for his Group, which was subsequently in the course of acquiring Fox Davies Capital Ltd, and thus subsequently introducing you to the 6^th Floor of 23 Savile Row, owned by D2 Private, represented by Paul Smith of DTZ and securing an acquisition of a new lease for a term of 10 years from 10 June 2009, inside the Landlord & Tenant Act on space comprising some 8,846 sq.ft, agreed at a rent of £827,678 to include 1 car parking space in consideration of a rent free period inducement equating to 1 year.”

The defendant’s immediate response was that it had not engaged the claimant and it has maintained that position ever since.

At about this time, Mr Lorenz secured the premises in Grafton Street for Mr Richardson. They were about half the size of the Savile Row premises and would ordinarily have commanded a fee of about £70,000. But in light of all that happened and the new arrangement Mr Lorenz had made with Mr Richardson, they agreed a fee of about £100,000.

I have summarised the claimant’s case at the outset of this judgment. In light of the fact that Mr Lorenz has appeared in person, Mr Blayney has taken no pleading point and sought to address every possible way it can be put.

Mr Richardson had actual authority (whether express or implied) to enter into the contract with the claimant on behalf of the defendant as undisclosed principal.

The essence of this allegation is that, in agreeing to the claimant’s terms of business set out in its email of 1 April 2009, Mr Richardson acted on behalf of and with the authority of the defendant, though the existence of the defendant was not known to the claimant.

To make good this allegation, the claimant must establish two key requirements: first, that Mr Richardson had actual authority to bind the defendant; second, that Mr Richardson intended to instruct the claimant on behalf of the defendant.

In my judgment neither of these requirements is satisfied. As I have explained, Mr Fox-Davies was clear that he never gave Mr Richardson authority to enter into an agreement with the claimant on its behalf. The need for larger premises arose from Mr Richardson’s ambitions for the defendant’s business as and when he acquired it, and it was in that context that Mr Richardson and Mr Fox-Davies discussed Mr Richardson’s proposal to instruct his old friend, Mr Lorenz. If Mr Richardson had asked Mr Fox-Davies for permission to act on behalf of the defendant, his request would have been refused, and for good reasons. The defendant had no need for larger premises for its own business and it had no money to pay for them. So also, when Mr Fox-Davies was invited to instruct the claimant to act on its behalf to assist in the disposal of its Carmelite premises, he declined to do so until the completion of the sale and acquisition agreement.

I also reject the suggestion that Mr Richardson intended to instruct the claimant on behalf of the defendant. The claimant’s email of 1 April 2009 was directed to Mr Richardson and its terms are clear. At the time the instruction was given to the claimant by Mr Richardson, he had not acquired the defendant and he had no control over it. I reject Mr Richardson’s suggestion in evidence that he intended to contract on behalf of the defendant because it was going to be the tenant once he had acquired it. At the outset it had not been decided who the tenant would be; indeed there was a real possibility it would be Jendens. The decision to make the defendant the tenant was not made until mid May. Further, as Mr Richardson frankly accepted in the course of his cross examination, he intended to instruct the claimant on the same basis that he instructed Stephenson Harwood in connection with the lease. The work they carried out would in due course benefit whichever entity became the tenant. But they were instructed by Mr Richardson and his company Jendens, as they well understood.

Mr Richardson had actual authority (whether express or implied) to enter into the contract with the claimant on behalf of the defendant as a disclosed and identified principal.

I can deal with this allegation quite shortly. First, the claimant must establish that Mr Richardson had actual authority to bind the defendant, and that he cannot do for the reasons I have given. Second, it must have been evident to the claimant that Mr Richardson was acting on behalf of the defendant. Although there was a suggestion to this effect in Mr Richardson’s witness statement, he corrected it in his evidence in chief.

Mr Richardson had actual authority (whether express or implied) to enter into the contract with the claimant on behalf of the defendant as a disclosed but unidentified principal.

The essence of this allegation is that, in agreeing to the claimant’s terms of business set out in its email of 1 April 2009, it was clear that Mr Richardson was acting as an agent but the identity of the principal, the defendant, was not at that time disclosed.

This allegation again has two key requirements: first, that Mr Richardson had actual authority to bind the defendant; second, that it was evident that Mr Richardson was acting on behalf of another.

For the reasons I have given, the claimant has not established that Mr Richardson had actual authority to bind the defendant.

Was it apparent that Mr Richardson was acting on behalf of another, unidentified, person? I do not think it was. Mr Richardson approached Mr Lorenz as an old friend. It was apparent that Mr Richardson wished to secure new premises for a business he was hoping to establish with the financial support of wealthy backers, and for that purpose he was in the process of taking over another company, whose identity he did not at the outset disclose. Of course, it rapidly became clear that the target was the defendant. But in the meantime, the claimant had sent to Mr Richardson its instruction letter. In these circumstances there was no reason for the claimant to suppose it was being instructed by anyone except Mr Richardson, and particularly not by a company which had not at that time been acquired and might not even be the tenant.

I am confirmed in this conclusion by the email of 1 April 2009 which was directed to Mr Richardson alone and also by the contents of the series of emails detailed in paragraphs [46]-[54] of this judgment which were sent by the claimant to Mr Richardson after the completion of the lease on Savile Row and the collapse of the proposed acquisition. They show quite clearly that Mr Lorenz considered that Mr Richardson was the person who had instructed him and was liable for his fees. In the course of his evidence Mr Lorenz sought to explain away some of these communications as having been written in haste and when he was very anxious about not being paid, and others as a “try on”. Although I found Mr Lorenz to be, for the most part, a straightforward witness who was doing his best to recall events of some two years ago, I have to say I found his explanation for the contents of these communications wholly unpersuasive and I believe he was attempting to construct an explanation for what he recognised to be very revealing statements. I consider it particularly telling that the communications were made over a period of some two months from June to August 2009 and that it was not until 20 August 2009 that the claimant sent a request for payment to the defendant, and even then the attached invoice referred to instructions “via Kim Richardson” to search for offices “for his Group”.

Mr Richardson acted as a disclosed agent for the defendant (whether or not identified), without authority, but that lack of authority was remedied by subsequent ratification by the defendant

In the context of this case, the doctrine of ratification has two important requirements. First, ratification may only occur where an act has purportedly been done on behalf of another person; moreover, that other person is the only person who may ratify.

Second, there must be a manifestation by the person on whose behalf an unauthorised act has been done that he treats the act as authorised. Ratification may be implied from words or conduct but they must be unequivocal and not explicable on another basis.

The claimant contends that Mr Richardson instructed the claimant on behalf of the defendant and that the defendant ratified those instructions by discussing the disposal of the Carmelite Street premises; inspecting various properties, including Savile Row, in the company of Mr Woodland-Ferrari; asking for and receiving assistance to gain access to and select a contractor to fit out the Savile Row premises; and entering into the lease on 10 June 2009.

In my judgment the claimant has failed to establish either of the two requirements I have identified. I have already addressed the first. For the reasons I have given, I do not accept that Mr Richardson was purporting to act on behalf of the defendant (whether as an identified or unidentified principal) when he instructed the claimant.

As for the second, the acts of the defendant upon which the claimant relies do not individually or cumulatively amount to a clear and unequivocal demonstration of an intention to recognise a contract with or the retention of the claimant. In my judgment they are all equally consistent with the claimant having a contract with Mr Richardson and him alone.

In summary, Mr Lorenz invited the defendant to instruct the claimant in connection with the disposal of the Carmelite Street premises, but it declined to do so. Far from suggesting the defendant was adopting the contract with the claimant, it shows the defendant was not prepared to enter into a fee arrangement with the claimant before the completion of the sale and purchase agreement. As for the visits made by Mr Fox-Davies to the premises found by the claimant and the assistance Ms Wooder provided in connection with the proposed fitting out of Savile Row, these are all consistent with Mr Richardson being the claimant’s client and with the defendant taking reasonable steps to assist him while continuing to conduct its own business. Finally, as for the lease, I have found that Mr Fox-Davies intended this to be held to his order. But even if Mr Fox-Davies had intended the lease to be completed and released, I do not believe its signing would have constituted an unequivocal manifestation of an intention to adopt the contract with the claimant. It was ultimately Mr Richardson’s decision as to how the new business would be structured and in all the circumstances of the proposed acquisition, the signing of the lease would not have constituted an unequivocal demonstration of an intention to become the claimant’s client and be liable for its fees.

Mr Richardson had ostensible (but not actual) authority to enter into the contract with the claimant on behalf of the defendant.

To make good this allegation the claimant must show first, that the defendant by its words or conduct represented that Mr Richardson had authority to enter into a contract on its behalf; and second, that the claimant relied on that representation believing that Mr Richardson did indeed have that authority.

I do not accept that the defendant made any such representation. The activities upon which the claimant relies all took place after it had been instructed by Mr Richardson. Further, for the reasons I have given in paragraph [74] of this judgment, I do not believe they amounted to the alleged representation in any event.

Nor do I accept that the claimant relied on the alleged representation. It acted throughout on the basis it had been instructed by and had entered into an agreement with Mr Richardson. He was acquiring the defendant and needed new premises; he instructed his solicitors to negotiate the lease; he attended the meeting with Mr Lorenz and the landlord, D2 Private, to agree heads of terms; and he decided the lease should be in the defendant’s name. Finally, it was to Mr Richardson that the claimant initially sent its account.

The defendant is estopped from denying that Mr Richardson had authority to enter into the contract with the claimant on behalf of the defendant.

However an estoppel argument is put, it seems to me that in the circumstances of this case it must involve at least the following three elements: first, that the claimant believed that Mr Richardson was acting on behalf of the defendant; second, that the defendant in some way caused that belief or, knowing of it and that it might lead the claimant to alter its position to its detriment, did not take steps to notify the claimant that Mr Richardson had no such authority; and third, that the claimant has in fact acted to its detriment in reliance on that belief.

The short answer to the allegation is that I do not accept that the claimant has ever believed that Mr Richardson entered into the contract on behalf of the defendant. But the allegation also suffers from the further defects that I do not consider the defendant has done anything which might have caused such a belief; nor did it ever suspect that the claimant might have such a belief.

Mr Richardson contracted on his own behalf but the defendant subsequently took over his liabilities by novation; alternatively, the defendant separately instructed the claimant.

I can take these two allegations together. The claimant contends that on 1 April 2009, Mr Lorenz was approached by Mr Richardson to source office space for a corporate entity. At that stage Mr Lorenz did not know what that corporate entity was. The following day the claimant’s terms of business were forwarded to the defendant. Thereafter, with knowledge of those terms and the instruction, the defendant acted at all times up to and including the completion of the lease of 23 Savile Row in a manner entirely consistent with the existence of a contract between the claimant and the defendant and, in particular, discussed and viewed properties, had a significant input into the selection of 23 Savile Row, asked for and accepted the assistance of the claimant to begin the process of fitting the premises out, confirmed it would take the lease of the premises and, on 10 June 2009, signed the lease.

Attractively though Mr Lorenz advanced these submissions, I am unable to accept them. They turn the relationship between Mr Richardson and the defendant on its head.

At the outset, Mr Lorenz made no offer to provide services to the defendant. He only supplied the claimant’s terms of business to Mr Richardson. I have no evidence that the claimant was ever informed that those terms had been forwarded to the defendant. Mr Fox-Davies surmised the reason Mr Richardson did forward them was so the defendant would have the claimant’s contact details for the purpose of sending to it the lease of the Carmelite Street premises. Certainly there was no suggestion those terms were ever the subject of any discussion between the claimant and the defendant, and the defendant never communicated any acceptance of them to the claimant. True it is that over the next few days Mr Richardson and Mr Fox-Davies looked at various properties and, after the decision to proceed with the Savile Row premises, Ms Wooder, at the request of Mr Richardson, assisted with the identification of a fitting out contractor and other details, but none of these matters evidence an intention by the defendant to enter into legal relations with the claimant. Nor does the entering by the defendant into the lease itself. To the contrary, and for the reasons I have given in paragraph [74] of this judgment, they are all consistent with Mr Richardson being the contracting party. He was acquiring the defendant, attended the meeting at which the heads of terms were agreed, instructed his own solicitors to negotiate the details of the lease and had the final say over which company would take the lease. I simply do not accept that the claimant ever considered the defendant to be its client, as confirmed by the steps the claimant took to secure payment of its fee by Mr Richardson after the proposed acquisition had collapsed.

In short, the claimant made no offer to the defendant to provide it with services in consideration of a fee; the defendant did not accept any such offer; and the defendant never had or manifested an intention to create legal relations with the claimant. In the circumstances I do not need to address the further argument advanced by the defendant that, if the case had been properly pleaded, it would have been entitled to rely on a defence based upon s.18 of the Estate Agents Act 1979.

Mr Richardson gave instructions on behalf of an entity to be nominated at a future date.

At one point Mr Lorenz seemed to suggest that Mr Richardson instructed the claimant on behalf of an entity to be decided and nominated at a future date.

On this analysis, there can have been no contract until the nomination of the defendant took place in mid May 2009. I consider it wholly unreal to suggest there was no contract until that time. Moreover there is no basis for concluding that, at the point of nomination, Mr Richardson had the defendant’s authority (whether actual or ostensible) to enter into an agreement with the claimant on its behalf or was purporting to act in any way as its agent.

In my judgment Mr Richardson entered into an agreement with the claimant on his own behalf. The claimant had no agreement with the defendant. The claim against the defendant fails.