MSM Consulting Ltd v United Republic of Tanzania

In the present action MSM Consulting Ltd (“MSM”) seeks to recover commission, or alternatively a quantum meruit payment, from the defendant, the United Republic of Tanzania (“Tanzania”), for acting on its behalf in the search for new premises for its High Commission between 2002 and 2004. The commission claimed in the pleadings is £ 105,750 being 1.5% x £ 6,000,000 + VAT at 17.5%. MSM also claims commission on the £ 60,000 paid for furnishings, making its total claim, including VAT, £ 116,325.

MSM was incorporated on 15^th January 2003. It is a company belonging to Ms Miriam Mukasa Oyaka (“Ms Mukasa”), who owns 99 out of its 100 £1 shares and is its only director. She is the daughter of a well respected and well known African diplomat – the late Ambassador Laban Oyaka – a Ugandan who had worked at the Organisation of African Unity and had been based in Dar es Salaam for some years.

The premises which formerly constituted the Tanzanian High Commission were at 43, Hertford Street, London W1. The lease of those premises, which the High Commission had occupied since independence in 1964, was due to expire in June 2004. The premises had not been upgraded for 40 years; were somewhat shabby; and were also too small to house all the staff of the mission.

At the material time the High Commissioner and Tanzania’s representative at the Court of St James was Dr Hassan Omar Gombo Kibelloh (“Mr Kibelloh”), currently Tanzanian Ambassador in Paris; and the Head of Chancery was Mr Rajab Gamaha (“Mr Gamaha”).

Mr Kibelloh was appointed High Commissioner to the United Kingdom in early 2002. Prior to his appointment he had served as Permanent Secretary at the Ministry of Foreign Affairs in Dar es Salaam, where one of his functions was to oversee the acquisition of Chancery premises and residences for overseas missions. Mr Gamaha was appointed Head of Chancery in November 2001 and took over the portfolio, which covered responsibility for all the administrative affairs of the mission, including the premises of the High Commission, in January 2002.

MSM’s accounts for the period 15^th January 2003 to 31^st January 2004 reveal no turnover and a loss consisting of administrative expenses of £ 2,556, financed largely by a loan from Ms Mukasa. The accounts for the following 3 years reveal losses of £ 11,268, £ 15,691 and £ 6,028. Ms Mukasa has a degree in economics; and had worked for a US investment bank and a Russian stockbroking firm. By 2004 she had had some dealings with the Sierra Leone Embassy. She had also looked at some properties for the Rwandan Embassy. She had not, however, been involved in any property negotiations which had come to fruition – notwithstanding the statement in her letter of 19^th November 2002 to the High Commissioner that “Negotiation is one of our main areas of expertise”.

In 2002 Ms Mukasa, whom Mr Kibelloh had first met at a dinner function of the UK/Tanzania Business Council in the summer of 2002 (Footnote: ¹), became aware that the High Commission was looking for new premises. At this stage she was a regular visitor to the High Commission where her usual contact was Mr Simon May, who was the Head of the Tanzanian Trade Centre based in London Bridge. He had introduced her to the Tanzanian Trade & Industry Minister to whom she had given a presentation.

On 5^th August 2002 she wrote to Mr Kibelloh on MSM paper (although it had not then been incorporated) introducing herself and MSM and asking to meet him in order to discuss investment opportunities for foreign investors in Tanzania. On the same day Mr Kibelloh spoke to her on the telephone when she mentioned her background. On the next day she wrote to him indicating that MSM had previewed over 25 properties in London on behalf of US investors in the £ 2- £ 10 million price range for over a year and was working with Gilly Holloway Property Services Ltd. That was the company of Gilly Holloway (“Ms Holloway”), who was and is an experienced property expert with over 20 years experience in the high value end of the property market (Footnote: ²). She indicated that she would like MSM to help the High Commission find suitable premises, which she recommended should be in the £ 3- 6,000,000 range. The postscript to her letter confirmed that Mr Kibelloh’s secretary had fixed an appointment for 12^th August.

The High Commission was not familiar with the practice whereby a prospective purchaser retains an agent to locate a suitable property, using its own database and contacts, and then negotiates the terms of its purchase and acts generally on the buyer’s behalf. Mr Kibelloh and Mr Gamaha had assumed that the High Commission would have to look around and contact possible vendors and their agents, shortlist properties, select one, and then, after the necessary tendering process and budgetary approval (as to which see para 19 below) appoint an agent who would negotiate the terms, carry out the necessary surveys and deal with planning requirements. In 2002 the High Commission felt that it was far away from being in a position to instruct an agent.

On 12^th August 2002 Ms Mukasa came to see Mr Kibelloh by appointment at the High Commission. An agenda that she drew up for the meeting set out 5 specific topics of which the first four related to the attraction of foreign investment into Tanzania and certain possible projects: Biogas Technology, Biological Sewage Treatment Plants, Tyre Recycling and Mining and the fifth was “Embassy property”. She explained the services which MSM could offer. According to her evidence Mr Kibelloh was suitably impressed and asked for MSM’s help in the search for new High Commission premises. Mr Kibelloh’s evidence is that he hesitated to deal with her because he wondered whether she had the necessary expertise; and her offer of help was neither accepted nor declined.

I am satisfied that Mr Kibelloh is correct in this respect. He did not then know Ms Mukasa, although he had met her once before. He did not have the necessary authority from the Ministry of Foreign Affairs and Treasury in Tanzania to engage her. At the same time he did not wish to be slighting or to turn away someone who might turn out to be helpful. I note that Ms Mukasa’s letter of 20^th August 2002, written after and referring to the meeting, does not mention the topic of property, much less suggest any engagement.

On 25^th September 2002 Ms Mukasa wrote to the High Commissioner (Footnote: ³) and, amongst other things, told him that she would like to organise a “Meet & Greet” session for him to meet a number of people including Ms Gilly Holloway.

On 16^th October 2002 a further meeting took place at the High Commission between Ms Mukasa, Mr Kibelloh and Ms Holloway. Ms Mukasa’s evidence about that meeting was as follows. Mr Kibelloh confirmed that he wanted MSM to source new High Commission premises. He said that Tanzania was interested in 15, Knightsbridge but that he had concerns about its suitability as High Commission premises. Mr Kibelloh had visited the property when he had been permanent secretary at the Ministry of Foreign Affairs. He thought the asking price to be high, and was concerned about the size of the building and its high maintenance costs. He asked her to find out as much information about the property as she could and at the same time to see if there were any other better alternatives.

Mr Kibelloh’s evidence was that he may have expressed interest in this property but that Ms Mukasa cannot have understood that he was retaining her as the High Commission’s agent. I accept that Mr Kibelloh said nothing which could reasonably have been understood to amount to a retainer of her or MSM. The meeting was designed to kindle the High Commissioner’s interest in appointing MSM as its agent, and the High Commissioner was interested (and probably expressed interest) in anything Ms Mukasa had to offer.

On 16^th October Ms Mukasa made enquiries about 15 Knightsbridge. She discovered that it was being marketed for about £ 8,000,000, required substantial refurbishment (having previously been used as a bank) and was likely to attract VAT. She advised Mr Kibelloh that the property (which had been on the market for over a year) was far too expensive; and that it was uncertain whether Tanzania would be given the necessary planning permission to use it as an embassy. She expressed concern about the pizza restaurant next door which posed a potential fire hazard unattractive to insurers. Mr Kibelloh agreed that the building was unsuitable and she should look for new premises which should be larger than 43, Hertford Street, and have enough space

Thereafter Ms Mukasa looked at a number of properties with a view to seeing whether they were potentially suitable and made 18 visits to some 9 properties with representatives of the High Commission on 8 separate occasions between November 2002 and September 2003. (Representatives of the High Commission also viewed properties at the invitation of other agents during this period). This included 3 viewings in April and September 2003 of 3 Stratford Place, the property eventually purchased in August 2004. These occasions were as follows:

At some time in early 2003 Ms Mukasa learnt from Mr Kibelloh that the High Commission wished to deal with matters formally and that it would need to send out a formal letter. Some time after the viewings on 11^th March 2003 Mr Gamaha told Ms Mukasa that 16 Stratford Place was the High Commission’s preferred property and that he was very keen for her to arrange for Mr Kibelloh to view it as soon as possible. He asked her to prepare terms and conditions urgently. He made no reference to other agents and this caused her to gain the impression that the invitation letter would be sent to her alone.

On 8^th April 2003 Mr Gamaha on behalf of the High Commissioner wrote to MSM, as the High Commissioner had asked him to do, in the following terms:

“ Re: Tender for Finding a building for the Official Accommodation of the High Commission

You are hereby invited to tender application for finding a building for the official accommodation of the High Commission.

The long term lease of current accommodation expires in the middle of next year. We would be grateful if you could assist us find and purchase a building for the Chancery on the basis of freehold. The size of the building should be between 8,000 and 11,000 square feet and located in a suitable place in Central London. It is an advantage on our part if the building was found soonest to take advantage of budgetary processes at home.

We would appreciate if the tender application could be made as soon as possible.”

The letter of 8^th April 2003 was sent to MSM alone, although, as will become apparent, inquiries were later made of a number of Estate Agents as to the fee that they would charge. Mr Gamaha had been intending to send out similar invitations at the same time to other agents but, on account of pressures of work, did not do so.

Tanzanian law relating to the procurement by public offices of goods and services required the High Commission to go through a tendering process with possible suppliers of services such as an estate agent (Footnote: ⁹). This involved obtaining tenders or quotations from 3 different sources and obtaining approval from the relevant accounting officer – in this case the Permanent Secretary at the Ministry of Foreign Affairs. The High Commission required the approval of the Ministry and of the Treasury to expend money in connection with the acquisition of new premises. The rules also required that any prospective property to be purchased should be viewed by a consulting surveyor from the Ministry of Works to confirm its suitability and by a valuer from the Ministry of Lands. (The team which inspected three properties in September 2003 consisted of a surveyor and a valuer from the relevant Ministries). A satisfactory report on the property contemplated was a pre-requisite of budgetary approval. The High Commission did not have a discretion to override these requirements.

On 23^rd April 2003 Mr Kibelloh and Mr Gamaha visited 3, Stratford Place, 16, Stratford Place, and 128 Park Lane, with Ms Mukasa and Mr Thompson. Mr Kibelloh had received reports from Mr Gamaha of the visits that he and others had paid to various premises before this date. The feedback he had received was that none of the properties other than the three to be visited was suitable. But those three seemed to be more in line with the High Commission’s requirements.

Mr Kibelloh’s evidence was that he was not impressed by 16, Stratford Place because of its poor state of repair; but was impressed by 3 Stratford Place, which was next to the Botswana High Commission, and in excellent condition. According to Mr Thompson Mr Kibelloh was interested in both properties in Stratford Place, although his interest in No 16 may have been simply a polite one. Mr Gamaha’s evidence is that they were impressed with all three. Certainly these three were the best so far. But, 128 Park Lane, although an impressive and well renovated building, came to be rejected because it required extensive work of adaptation. There were also problems about access and security. No 16 was somewhat bigger and grander than No 3. But its state of disrepair was an unattractive feature.

Thereafter Ms Mukasa appeared to Mr Kibelloh to be pressing the case for purchasing 16 Stratford Place, saying that she knew contractors who could do the works very cheaply and could negotiate a substantial price reduction.

Strutt & Parker were the agents for 3 Stratford Place, of which the vendor was the Rolex Watch Company Limited. Ms Mukasa came to be regularly in touch with Mr Calvert of Strutt & Parker about the sale of the property.

On 26^th April 2003 Mr Gamaha spoke to Ms Mukasa at a Tanzanian Union Day reception. Her evidence is that he asked her to respond to the tender invitation and to forward to him MSM’s terms and conditions so that he could forward them to head office in Tanzania and get the ball rolling. His evidence was that she said that she had got the letter of 8^th April and would be responding. I do not think that this apparent difference is any more than a reflection of their different viewpoints. Mr Gamaha had already invited her to make a tender. The likelihood is that Ms Mukasa told him that she would be responding and that he encouraged her to do so, enclosing her terms, so that they could be sent to Tanzania as the procurement process required. Mr Gamaha introduced her to Mr Musa, who worked in the Finance Department, as the person who was helping the High Commission find new embassy premises.

In April and May 2003 Ms Mukasa interviewed representatives of 4 legal firms (Farrer & Co, Withers Worldwide, Skadden Arps and Masons) as potential property lawyers for the High Commission. Her evidence is that she was asked to do this by Mr Kibelloh. He has no recollection of discussing lawyers and certainly did not instruct her to do so on the Commission’s behalf. The likelihood is that Ms Mukasa conducted these interviews, without what could be regarded as instructions to do so, as part of the process of making herself and her company useful to Tanzania with a view to being engaged as agent. She may well have told Mr Kibelloh that she was going to do so and received his approval.

On 6^th May 2003 Ms Mukasa wrote to Mr Gamaha on MSM paper setting out the services that MSM could provide and enclosing (i) further particulars of the 3 properties visited on 23^rd April 2003; (ii) MSM’s standard terms and conditions “…for your consideration and signature should you wish to retain us to undertake the necessary research, pre-viewing, negotiation and acquisition of the proposed Embassy in London” and (iii) a one page document entitled “Embassy Property Costs” with a guide to the fees that the High Commission might want to take into account.

The letter set out the claimed advantages of retaining MSM and invited the signature and return of the enclosed terms together with a cheque for a Registration Fee of £ 1,000 plus VAT.

The 6^th May terms, which Ms Mukasa had drafted, but which are largely derived from Ms Holloway’s terms, provided, inter alia, as follows;

It is not suggested on behalf of MSMthat any binding obligation had arisen prior to the despatch of the letter of 6^th May 2003. That letter is drafted on the basis that Tanzania might wish to retain MSM, not that it had already done so. As is apparent from the previous paragraph, the terms enclosed with that letter (which Mr Kibelloh did not see) called for instructions to be given in writing, and for the signature and return of those terms together with payment of the registration fee. None of that occurred. Ms Mukasa and Mr Gamaha were in telephone contact from time to time in June, July, August and September 2003, keeping in touch on the property question, but nothing said constituted an agreement to MSM’s terms and conditions.

Ms Mukasa knew that the High Commission would need to get budgetary approval from Dar-es-Salaam in order to agree to purchase any property. Her letter of 31^st January 2003 to the High Commissioner refers to the need to wait for confirmation of such a budget. She also knew that the High Commission would need to secure approval from Dar es Salaam for her fees. Her evidence was that she was told by Mr Gamaha that the High Commission was seeking to obtain approval of a budget for the purchase of a property including fees (Footnote: ¹⁰). Mr Gamaha told her that the High Commission was intending to send quotations obtained from estate agents (as to which see para 50 below) to Dar es Salaam for its consideration as part of the process of appointing an agent. At least the first set of MSM’s terms and conditions was sent to Dar es Salaam, as were the quotations of other agents. Whether the subsequent sets were sent is unclear.

On 12^th May 2003 Ms Mukasa met Mr Bruce-Watt, a senior property partner at Pinsent Masons at the latter’s offices, together with Mr George Lubega, who was also a partner and who had met her before. There was a general discussion about opportunities to work together, covering, inter alia, mining and energy. She explained that she was working for the Tanzanian High Commission in connection with its possible relocation and wanted to introduce the High Commission to property lawyers who would be able to advise on the property aspects of the move.

On 15^th August Ms Mukasa sent a fax to Mr Gamaha telling him that the asking price for No 16, Stratford Place was £ 7.5 million but that it could be got for around £ 6.5 or even £ 6 million; and that the refurbishment costs would be around £ 850,000 - £ 1,000,000. For 3 Stratford Place the asking price was £ 6.5 million but they should try for £ 6 million. The refurbishing costs were around £ 250,000 - £ 500,000. She also resent MSM’s terms and conditions and the Embassy Property Costs document (see para 26), probably at the request of Mr Gamaha.

Further visits to properties took place on 2^nd, 8^th and 9^th September 2003. The visits on 2^nd included a visit to 3 Stratford Place by Mr Gamaha and Ambassador Ibrahim from the Ministry of Foreign Affairs. On 9^th September Mr Musa, Mr Gamaha and the surveyor and valuer visited 3 Stratford Place, which it had not been possible to visit the day before. The men from the Ministry recommended 16, Stratford Place, although Ambassador Ibrahim was not keen on it. He recommended No 3.

On 8^th September Ms Mukasa sent Mr Gamaha updated (Footnote: ¹¹) spreadsheets for Nos 3 and 16 Stratford Place. The spreadsheets were one page documents which provided information on contemplated purchase price, fees and costs, and cost of refurbishment. They included a 2.5% MSM fee. In her letter Ms Mukasa said that MSM could not enter any price negotiation with the sellers until the Terms and Conditions had been duly signed and returned, and warned that 3 Stratford Place was about to be put back on the open market. She said that she would like to ask the sellers not to do so but would need to have the signed terms and conditions in order to prove that the High Commission was a serious buyer.

On 13^th September 2003 Ambassador Ibrahim produced a Preliminary Inspection Report for the Ministry of Foreign Affairs. In it he described 128 Park Lane as big and beautiful but very expensive [£ 8.5m] and lacking car parking space; and 16 Stratford Place as an old building requiring major works for a long period. He commended 3 Stratford Place as being suitable in size, well maintained, and recently refurbished by the Rolex Watch Company. He expressed the view that it would be a very good buy (Footnote: ¹²). At the end of his report he expressed the view that if Tanzania got in touch with the owners in Switzerland it might acquire the property at a better price and maybe with the assistance of a loan.

What, as he told me, he had in mind was that personal contact between a high level representative of Tanzania and the Chairman or other shareholder representative of the Rolex company would help to establish a relationship of trust, would indicate that the matter was being dealt with at the highest level, and would mean that Tanzania could buy at a good price. It was not his intention to cut anybody out. He spoke to the Permanent Secretary on the topic and later contacted the Tanzanian Ambassador in Geneva and explained what he had recommended. After further consultation with the Permanent Secretary and others a decision was made not to pursue this idea. Ambassador Ibrahim's evidence is that so far as he was aware no direct contact was ever made with Rolex. Ms Mukasa was later told by Strutt & Parker that some approach had been made and it seems to me likely that that is so. But it is wholly unclear who said what to whom.

Strutt & Parker had been marketing No 3 Stratford Place, which Rolex had used as their London Office (with a watch repair section in the basement), for some 3 years. It had originally been purchased for about £ 10 million. In April 2003 it had had a guide price of £ 6.5 million. By October 2003 that had become £ 6 million.

Mr Goonesena is a solicitor and a partner in the firm of Macrae & Co (now Macrae & Co LLP). He had acted for the Turkish sellers of 15, Knightsbridge, in respect of which the High Commission had shown some interest but made no offer. In late 2002 he got to know Mr Gamaha and asked to be considered in any tender for legal work generated by Tanzania in London including the disposal of 43, Hertford Street and the purchase of new premises.

On 22^nd September 2003 Mr Goonesena attended, by invitation, an interview at the High Commission and gave details of his firm to Mr Gamaha. By this stage, following the conclusion of the Commonwealth Heads of Government Conference, which had much occupied the time of the High Commission staff, and the visit of Ambassador Ibrahim and the team from the two Ministries, the High Commission was applying itself more diligently to the search for a new building. After an exchange of correspondence about terms, and a further meeting, Mr Goonesena was appointed to act on behalf of Tanzania on a number of matters including the acquisition of a new Chancery building and the exit from 43 Hertford Street. His appointment was approved in Dar es Salaam.

On 2^nd October 2003 Mr Goonesena met Mr Gamaha at the High Commission. During the course of this meeting he recommended that the High Commission should retain a firm of commercial real estate agents to handle the acquisition. Mr Goonesena was asked to advise Tanzania in connection with the draft terms from MSM which the High Commission then had, a copy of which was provided to him.

Mr Goonesena checked the records at Companies House and found that MSM had only been incorporated on 15^th January 2003 and had not yet filed trading accounts. He reported this to Mr Gamaha. He advised that there was no mention in the spreadsheets which MSM had supplied relating to 16, Stratford Place and 3 Stratford Place as to whether the buildings were subject to VAT (from which foreign missions are not exempt). He also told Mr Goonesena that MSM's 2.5% commission was way outside what he said was the current market rate of 1% for acting on behalf of the buyer of commercial property.

On 13^th October 2003 Ms Mukasa called Mr Goonesena. She rang to express concern that Mr Goonesena had queried her rate of commission. Mr Goonesena said that it was too high. As appears from his file note she told him that she had been doing work for the last two years and that her fees were intended to reflect this. Mr Goonesena also asked her some questions about planning matters and VAT. It appeared to him from her replies that although she had some knowledge of the former she was not conversant with the VAT regime affecting commercial properties (Footnote: ¹³) and its significance for Tanzania.

On 14^th October 2003 Mr Goonesena telephoned Mr Gamaha to report on his conversation with Ms Mukasa of the previous evening, including his views about Ms Mukasa’s familiarity with VAT and planning. Mr Gamaha asked to be given more detailed VAT Advice (Footnote: ¹⁴). Mr Goonesena impressed upon him again the importance of appointing a firm of commercial estate agents with knowledge of the West End market and the technical competence to negotiate terms on behalf of the High Commission. He took that view because he thought that, without such advice, Tanzania might lack credibility amongst potential vendors and would itself be unable to make an informed judgment as to asking price and offer.

Mr Gamaha told Mr Goonesena that the fee that Ms Mukasa was requesting for her services was regarded as excessive by the authorities in Dar Es Salaam and that the maximum fee that Tanzania was prepared to pay any agent was 1 % of the purchase price. He asked Mr Goonesena to approach other estate agents for quotations, which Mr Kibelloh had asked Mr Gamaha to obtain.

On 15^th October Ms Mukasa spoke with Mr Kibelloh and Mr Gamaha on the telephone and emphasised the importance of having experienced lawyers for a smooth property transaction. They agreed to meet with prospective lawyers including the ones that she had interviewed.

By a letter dated 17^th October 2003 Ms Mukasa sent Mr Kibelloh a copy of a letter to Mr Gamaha (dated 20^th October) and revised Terms and Conditions dated 1^st October 2003. Part of the purpose of submitting the terms, in respect of which Ms Mukasa had taken legal advice, was to maintain that the fee should be 2.5%.

The 1^st October terms included the following:

“1.

DEFINITIONS

1.2

“Aggregate Purchase Price” means final purchase price of property and includes any additional price for carpets, curtains, fixtures, fitting and/or other chattels.

1.3

“Commission Fee” means the fee payable by the Client to MSM for the provision of Services

1.4

“Services” means property Search and Acquisition Services and includes, pre-search, research, search, pre-viewing, reporting, shortlisting, viewing (often on properties not on the open market and sourced from contacts, private sales & property developers), negotiation and acquisition.

1.5

“Client” means any individual, groups of individuals, corporations, trusts and institutions confirming an Engagement

1.6

“Engagement” means a request for the supply of Services from MSM Consulting to any Client made by telephone, fax, email or other communication.

These Terms of Business are between MSM Consulting Limited (“MSM”) and any client confirming an Engagement. By confirming an Engagement the Client expressly agrees to be bound by the terms herein.

2.

FEES

2.1.

Commission Fee

Commission Fee shall be calculated as a percentage of the Aggregate Purchase Price, payable to [MSM] by the Client upon completion of the purchase of a property which we have introduced to the Client or representative of the Client. The Commission Fee is inclusive of all fees and expenses.

The percentage Commission Fee shall be as follows; 2.5. % …. of the Aggregate Purchase Price.

3.

PAYMENT OF COMMISSION FEE

An invoice for the Commission Fee will be served on the Client upon exchange of contracts, and at this point the Client undertakes to put his/her solicitor in funds for the full payment of the Commission Fee which will be paid by the solicitor upon completion or not later that five days thereafter…..

……...

The Client will be liable to pay the Commission Fee if, at any time, the Client completes the purchase of a property which we introduce to the Client or his/her representative and/or which we assisted the Client in viewing and/or negotiating…

……

6

DURATION

The agreement herein commences on the date of the first Engagement ….

7.

ENTIRE AGREEMENT

These Terms of Business set out the entire agreement and understanding between us and the Client and supersede all proposals or prior agreements, whether oral or written, and all other communications between us and the Client. No variation of these Terms of Business shall be effective unless made in writing and signed by or on behalf of each of the parties.”

As is apparent, the 1^st October terms contained two significant features. Firstly, they did not call for signature. They provided for the “Client” to be bound by “confirming an Engagement”. “Engagement” was defined as a request for the supply of “Services”, which were defined as Property Search and Acquisition Services (as defined) from MSM to a “Client”, who in turn was defined as someone “confirming an Engagement”. Secondly, the fee was payable if the Client completed the purchase not only of a property introduced by MSM but also of a property which MSM assisted the Client in viewing or negotiating.

On 22^nd October Mr Gamaha wrote to Mr Goonesena confirming his telephone request to be provided with details of the standard rate in order to be able to respond to the letter from MSM Consulting of 20^th October (see para 26 above) which was attached.

On 21^st and 22^nd October Mr Goonesena contacted various firms of Estate Agents and on 24^th October he sent to Mr Gamaha the quotations he had received. The commission rates quoted included the following:

On 28^th October Mr Gamaha wrote to Ms Mukasa. He told Ms Mukasa that the draft contract received from her had been sent to the High Commissions’ solicitors for advice, as a result of which he raised two points. The first was expressed in these terms:

“(a)

The fee rate of 2.5 % you have quoted is on the high side. The normal rate quoted by most Estate Agents is 1 per cent subject to negotiation. Estate agents provide the service for as low as 0.75 per cent fee rate. In actual fact, we had sought and received quotations from other companies for the same service before contracting (sic) you. Believing that you can provide the service better and in a competitive way, we request you to reconsider the fee rate in order for us to sign the contract as quickly as possible.”

“Contracting” was an obvious mistake for “contacting”.

The second point he made was that the High Commission had been advised that Diplomatic Missions were not exempt from VAT (a fact of which Mr Gamaha had been unaware until advised by Mr Goonesena) and that this should be made clear so that the estimated price of the building was transmitted to Headquarters for the purpose of funding. When Mr Gamaha had spoken to Ms Mukasa about the VAT problem orally she had told him that she was an expert and that the High Commission’s lawyer was not. Mr Gamaha’s realisation that Ms Mukasa was ignorant on an issue which had an important bearing on the price caused him to begin to have doubts as to her competence and expertise.

The letter of 28^th October was plainly not an acceptance but a rejection of the 1^st October terms. As a result no question arises of their having been accepted thereafter by doing anything which those terms purported to specify as amounting to an acceptance of them (Footnote: ¹⁵). It is apparent from the letter that Mr Gamaha was very interested in the prospect of Ms Mukasa’s company becoming Tanzania’s agent.

On 10^th November Ms Mukasa wrote to Mr Gamaha. In her letter she suggested that Estate Agents could not properly be compared with Property Consultants/Searchers such as MSM because, so she said, Estate Agents acted for Vendors and had as their main objective securing the highest price, whereas Property Consultants worked only on behalf of the buyer and could secure reductions in the price which would cover their fee. She also suggested that VAT might be mitigated by having the purchase carried out by a limited company registered for VAT set up by the Embassy. She also said that the Vendor would consider serious offers in the region of £ 5,500,000.

As to fees, she pointed out that the High Commission had had her terms since May 2003:

“and continued to engage us, leading us to believe that our Terms & Conditions were acceptable to the High Commission. In return we were happy to accept instructions and provide you with a good service even going as far as meeting the costs of architects and other property experts in order to give you the best advice possible. We offered this service despite having NEVER received any payment from the High Commission over the last 14 months. Most Property Consultants insist on up-front payment (a retainer) ….”

Nevertheless she said that she would reduce MSM’s fees to 2% plus taxes as a one-off gesture of goodwill.

On 12^th November Ms Mukasa faxed Mr Gamaha to tell him that an offer had just been made on 3 Stratford Place. In the course of the conversation he inquired whether Tanzania could pay the vendors of 3, Stratford Place in instalments. She explained that this method of payment was not usual practice in UK property transactions.

On 24^th December 2003 Ms Mukasa rang Mr Gamaha for an update. He told her that the High Commission was still working on securing the finance required for the transaction and that he was very keen to push things forwards.

On 23^rd January 2004 Mr Gamaha called Ms Mukasa to update her and to inform her that he was now liaising directly with the Permanent Secretary at the Ministry of Foreign Affairs. He told her that he had sent the documents i.e. the quotations from estate agents including her terms and conditions to Dar es Salaam.

On 5^th February Mr Gamaha invited Ms Mukasa to come round to the High Commission for a meeting. The purpose of the meeting was to understand why she was seeking to charge so high a rate and, hopefully, to get her to reduce it to a standard rate. He queried MSM’s commission fee. She said that the High Commission had been aware of MSM’s fees since May 2003 and had continued to seek and accept MSM’s advice and requested extra viewing, leading MSM to believe that the fees were acceptable.

On 6^th February Mr Gamaha wrote to reiterate that “a rate of 2 per cent for your envisaged services is still too high and unacceptable”. He pointed out that the services the High Commission expected to enjoy from MSM “under the proposed contract” were similar to those that could be obtained from Estate Agents for 0.75% or less and proposed a meeting sometime in the next week to reach “a settlement of our differences on the rate”. Mr Gamaha had been instructed by Mr Kibelloh to see whether Ms Mukasa was willing to come down in price and to get her to explain what role she was expecting to play which was so different to that envisaged by firms such as Knight Frank as to justify so significant a difference in fee.

That meeting took place on Thursday 12^th February at 43, Hertford Street. Ms Mukasa had called Mr Gamaha on 11^th February to confirm the meeting for the following afternoon. Mr Gamaha said that he would call with confirmation. She asked whether anyone else would be present apart from him and the High Commissioner; and to be informed if that was not so in order that she could be accompanied by lawyer or colleague. That evening Mr Gamaha had left a message on Ms Mukasa’s voicemail confirming the meeting, which he said was to be informal and an opportunity to come to an agreement about MSM’s fees. Ms Mukasa’s evidence is that a fax was sent by MSM on the morning of 12^th February seeking confirmation that lawyers were not required but no copy of it has been produced.

The meeting was attended by Ms Mukasa, Mr Gamaha and Mr Goonesena. Ms Mukasa was surprised to see Mr Goonesena there and said that she was uncomfortable about proceeding without her own lawyer being present. She also expressed her concern that she had been informed that someone representing the High Commission had gone behind her back and contacted the Rolex family, with a view to purchasing direct from Rolex. (Strutt & Parker had told her that someone representing Tanzania had made an unsuccessful approach to the Rolex family and had been referred back to themselves). According to her evidence Mr Gamaha accepted that, although he was not aware of such an approach, someone may have contacted the Rolex family. According to Mr Gamaha he was, and said that he was, unaware aware of any such approach. Since Ambassador Ibrahim had suggested an approach to the Rolex family it seems to me that Mr Gamaha may well have said that someone might have contacted them.

The discussion then progressed to the subject of her fees. On this topic I regard the evidence of Mr Goonesena, supported by his file note, together with the evidence of Mr Gamaha, as the most reliable account of this meeting, which only lasted about 15 minutes.

Mr Gamaha opened the discussion by explaining to Ms Mukasa that, whilst she had been invited to tender along with other firms, the High Commission was not prepared to entertain a level of 2-2.5% for her fees when all the major firms of real estate agents were quoting 1% or less. Ms Mukasa maintained, robustly, that her rate was normal because she was a property consultant rather than an estate agent and such consultants normally charged 2-3% for identifying properties on behalf of buyers and acting as intermediary with surveyors, lawyers and others from the inception of a transaction through to completion. Mr Goonesena challenged her on this, since, in his view, what she said might be applicable to overseas buyers looking for residential property, but not to the sort of commercial transaction which Tanzania was contemplating. Ms Mukasa said that she would consider lowering her fees to 2% but would not come down any further. This was not acceptable to Mr Gamaha, who made it clear that the High Commission was not prepared to short list MSM unless she was prepared to reduce the proposed commission rate. As a result Ms Mukasa left the meeting having said words to the following effect: “I hope you are successful in finding new premises: good luck to you. 3 Stratford Place is already under offer to another purchaser”. She suggested that steps should be taken to try and secure it.

I am satisfied that Mr Goonesena did not, as Ms Mukasa recalls, say that he had advised the High Commission that it had an obligation to her. Mr Goonesena’s evidence that he had said no such thing (“absolutely untrue”) was convincing, supported by that of Mr Gamaha, and in accordance with the inherent probabilities. MSM and the High Commission had made no contract. Whether there was some quantum meruit obligation was dubious. It seems to me unlikely that Mr Goonesena, an experienced solicitor, would volunteer (twice according to Ms Mukasa) in the course of a meeting designed to negotiate a fee for a possible future contract, that he had advised the High Commission that it had an existing, unspecified obligation – a revelation which, unless authorised, would, itself, be a breach of confidence. I am also satisfied that in effect Ms Mukasa walked out of the meeting in a manner which suggested that she was ceasing to deal with the Commission.

On Mr Gamaha’s instruction Mr Goonesena telephoned Strutt & Parker, who told him that contracts had been sent out in respect of No 3, Stratford Place, and that negotiations with the purchaser, whom they did not identify, were well advanced.

The news that 3, Stratford Place was under offer came as something of a bombshell. (Mr Gamaha had no recollection of Ms Mukasa’s fax of 12^th November which had informed him that an offer had just been made on 3 Stratford Place. He may have not received it, overlooked it or forgotten it. In any event the message would not necessarily indicate that the property was off the market). The news was unwelcome because the lease of 43, Hertford Street was due to expire in 4 months time and the landlord had indicated that he wished to take possession in order to redevelop (Footnote: ¹⁶). As a result Ambassador Ibrahim decided that it would be inappropriate to wait until a new building had been identified before instructing an agent and instructed the High Commission to approach Knight Frank to discuss their terms of appointment. He also told Mr Kibelloh and Mr Goonesena that if no extension of the lease or new property was available the High Commission would have to rent, and impressed on them the need to find somewhere for that purpose.

As is and will become apparent Ms Mukasa’s contact with the High Commission (both Mr Kibelloh and Mr Gamaha) was and remained quite frequent. That this was so is attributable to a number of factors. Firstly, Ms Mukasa is a person of persistence, who had an entrée to the High Commission and was able to pick up the telephone and be put through to Mr Gamaha or Mr Kibelloh. Secondly, the High Commissioner had worked with her father in Dar es Salaam and held him in very high regard. He also regarded it as his function to receive East African nationals or, at any rate, a young entrepreneur in Ms Mukasa’s position, who wished to see him. Thirdly, Ms Mukasa presented herself as someone who could not only help out in relation to property but who could assist in respect of inward investment, particularly in relation to mining, the attraction of which was consistent with Tanzania’s foreign policy of “economic diplomacy”. Lastly, Mr Kibelloh is a man whose approach is to be prepared to listen to those who wish to speak to him.

After the 12^th February meeting a telephone conversation took place between Mr Kibelloh and Ms Mukasa. According to Ms Mukasa Mr Kibelloh telephoned her, on Friday 13^th February, and apologised for the behaviour of Mr Goonesena and Mr Gamaha, implying that they had exceeded their authority. He explained that he wanted MSM to continue to search for properties. He was concerned about the imminent arrival of the President of Tanzania who would be expecting an update on progress in finding a new High Commission. He said that, as 3 Stratford Place, was now under offer, the preferred property to purchase was 16 Stratford Place. He asked her to submit MSM’s terms and conditions.

Mr Kibelloh disputes this account. His recollection is that there was an interval of a few days after 12^th February before they spoke. When they did so he did not apologise for the behaviour of Mr Goonesena and Mr Gamaha since there was no need to do so. Nor did he express keenness on 16 Stratford Place, which would involve major building works. Nor did he say that the President was concerned about progress. The President would not concern himself with such matters, which lay in the domain of the Permanent Secretary. Nor did he implore (as para 15 of the Particulars of Claim had asserted) or ask Ms Mukasa to continue assisting in the search for new premises.

On Tuesday 17^th February Ms Mukasa wrote to Mr Kibelloh referring to “our telephone conversation last Friday 13^th February 2004 in whichyou instructed me to resume negotiations on behalf of the Tanzanian High Commission on short-listed Property Number Two – 16 Stratford Place”. She asked Mr Kibelloh to confirm the High Commission’s interest in purchasing No 16 and to return a signed copy of the enclosed Terms and Conditions of 16^th February 2004 and stated that MSM would resume negotiations immediately on receipt. The enclosed terms were the same as the 1^st October 2003 terms save that the fee was 2% plus Applicable Taxes and not 2.5%, and they had a space for signature under the words “I accept the Standard Terms of Business set out above”.

Mr Kibelloh did not reply to this letter. He did not recall why he did not do so and accepted that it was an oversight not to have done so (Footnote: ¹⁷).

In my judgment the likelihood is that events were as follows. The conversation took place on the Friday 13^th February (as the letter of 17^th February records). Mr Kibelloh telephoned because he had heard that the meeting on 12^th February had been something of a fiasco. He wanted to know from her what had happened, in part out of respect for her father, in part out of simple curiosity, and in part out of a desire to help. It seems to me unlikely that he apologised for the behaviour of Mr Gamaha and Mr Goonesena, since there was nothing that they could be said to have done wrong, although he may have expressed regret at the way the meeting had gone. He did not instruct her to resume negotiations on No 16. But he was sufficiently encouraging to cause her to think that the High Commission was still interested in her services and there was still a realistic possibility of MSM getting the contract.

On 18^th February Ms Mukasa faxed to Mr Kibelloh a request for the return as soon as possible of a signed copy of the terms, which she enclosed, saying that, until then, “we are unable to expend further time to make representations on your behalf in order to stop the seller from going ahead and accepting an offer from another party”.

On Friday 20^th February Ms Mukasa telephoned Mr Kibelloh. According to her this was in response to two voicemail messages from his secretary. He asked her to push on with pursuing Stratford Place. He acknowledged receipt of her terms and conditions and assured her that he would sign them as soon as he was in receipt of funds from Tanzania. Her evidence is that Mr Kibelloh continued to give assurances following the meeting of 12^th February 2004 that Tanzania would pay MSM’s fees.

Mr Kibelloh’s evidence is that, although he could not recall the exact details of the conversation of 20^th February, he did not ask her to continue working for the Commission, nor did he say that he would sign the terms and conditions as soon as he received the funds for the purchase of the Chancery building. Nor did he agree MSM’s terms and conditions.

I accept that Mr Kibelloh neither agreed MSM’s terms nor said that he would sign them as soon as funds were received from Tanzania. For him to have done so would have been to commit Tanzania to a fee rate which was double the market rate, without the necessary internal authority to do so.

On 3^rd March a meeting took place between Ms Mukasa and Mr Kibelloh.

According to Ms Mukasa it took place at the Mayfair offices of Fleming, Family & Partners (“Fleming’s”), because Mr Kibelloh insisted that the meeting be held away from the High Commission. Ms Mukasa had rung Mr Ian Rawlinson, the CEO of Fleming’s, a potential mining investor, to arrange to hold the meeting at their premises. Mr Kibelloh arrived at about 3.0-3.30. She introduced him to Mr Rawlinson for a couple of minutes and he then left.

During the course of the meeting Mr Kibelloh stated that the search for the new High Commission was now urgent as the President, on his recent visit to the UK, had expressed concern about the lack of progress in finding new premises. He said that he would go through the budget costs which MSM had sent in respect of 16 and 3 Stratford Place in order to make a final decision as to property. He asked for her opinion of Knight Frank, saying that he was interested in renting out his property in Tanzania through them. She said that they were a good firm as far as she knew but could not comment on their Tanzanian branch. He said that a friend of his had been badly let down by Knight Frank in Tanzania.

He also asked her for help in making enquiries about whether any banks and/or financial institutions would be willing to loan Tanzania funds to purchase a building. She agreed to do so but advised against this option. She also advised him of the importance of obtaining good property lawyers and said that she would arrange a meeting for him to speak with a property lawyer and go through the details about a mortgage and its implications for diplomatic immunity. He was again extremely apologetic about the meeting of 12^th February and assured her that MSM would be paid. He blamed Mr Goonesena for the mess.

According to Mr Kibelloh the meeting took place at the High Commission and not at Fleming’s (although he did recall a meeting at Fleming’s at which he was introduced to that firm) and was to talk about a number of things not related to the Chancery premises. Ms Mukasa had said that she had someone to introduce at that meeting who was interested in nickel mining in Tanzania. In the event the investor did not show up. There was a conversation for about 30-45 minutes about the potential for investment in mining in Tanzania, after which they left. He did not inform her that the President had expressed concern about the lack of progress; nor did he request her to continue working for the High Commission. She, however, continued to push him regarding 16, Stratford Place insisting that she was in touch with contractors who could do a cheap job. He did not refer to the possibility of Knight Frank renting out his family home in Tanzania; nor ask her opinion about Knight Frank; nor did he have a family friend who had been let down by them. Nor did he ask for her advice on the likelihood of raising funds because there would be no value in doing so. Barclays was the High Commission’s first port of call.

In my judgment the likelihood is that the meeting to which Ms Mukasa refers took place at Fleming’s. There was more than 5 minutes conversation with Mr Rawlinson, in which they discussed Tanzania’s mining potential (in the journal attached to Ms Mukasa’s witness statement the conversation is described as lasting for 20 minutes or so and covering that topic). After he left there was discussion about property. The High Commissioner probably did stress the urgency of progressing the property transaction (which was becoming apparent); and, also, ask for her opinion on Knight Frank and mention his family home in Tanzania (he has one) and the possibility of letting it; and of some difficulty that a friend of his had had with them. It seems to me unlikely that Ms Mukasa has invented these details. There was probably also a discussion about the possibility of the High Commission seeking to borrow from a bank to fund the purchase; and she said that she would make some inquiries. She also said that she would arrange for him to speak with a property lawyer (hence the meeting referred to in the next paragraph). She urged 16 Stratford Place upon him. I note that the spreadsheet sent on 12^th March (see para 87 below) referred only to No 16. I am doubtful as to whether there was any discussion about choosing between No 3 and No 16 at this stage, since it is not clear that No 3 was, or was known to be, back on the market. I do not, however, accept that Mr Kibelloh assured her that MSM would be paid.

On 8^th March Ms Mukasa had a meeting with Mr Bruce Watt about the possibility of his firm working for the High Commission.

On 9^th MarchMs Mukasa and Mr Kibelloh had a telephone conversation in the course of which Mr Kibelloh asked her to fax to him MSM’s latest property budget spreadsheets. According to her he had telephoned to ask her to send this material which was required in order to expedite the funding of the project by the Ministry of Foreign Affairs. According to him she asked if he had received certain information that had been sent to him, and he asked her to send it to him.

On 11^th March Ms Mukasa, Mr Thompson and a property surveyor (Mr Charles Follows (Footnote: ¹⁸)) viewed No 16 Stratford Place (Ms Mukasa having made the arrangements and Mr Paul Davies the vendor being present) to enable them to assess the property and give a rough indication as to the costs and time that refurbishment would involve.

On 12^th March Ms Mukasa faxed a copy of the spreadsheet in respect of 16 Stratford Place (“Budget as promised”) to Mr Kibelloh, following, according to her, a telephone call from him the same day. It included a 2% MSM fee.

On 22^nd March MSM produced a new set of conditions which provided for a fee of 1.5%. These were sent to the High Commission but it is not clear exactly when.

According to Mr Kibelloh Ms Mukasa did call him on or about 9^th and 12^th March to press him about 16, Stratford Place, again telling him about the cheaper construction team she could get to carry out the works. I accept that she told him about the latter. I do not think it is necessary to determine who telephoned whom.

On 5^th April 2004Mr Kibelloh telephoned Ms Mukasa again and, according to her, asked for a copy of MSM’s spreadsheet. This must have been a request for a copy of the spreadsheet in respect of 3 Stratford Place because it was a copy of that spreadsheet which Ms Mukasa faxed to him on that day “as per your telephone conversation with Ms Mukasa this afternoon”. The spreadsheet contained a reference to a fee of 1.5% of the purchase price. Mr Kibelloh’s recollection was that in the course of several calls from Ms Mukasa, there was reference to information that had been sent to the office; he said that he did not recollect it and asked her to send it again. The likelihood is that he did ask for the spreadsheet for No 3, to go with that for No 16.

On 8^th April Ms Mukasa sent another fax to Mr Kibelloh referring to a telephone conversation on 7^th April and referring to two meetings she had suggested – one on 13th April to “go through the budget and property buying process with another expert and to arm you with information before you speak to Dar-es-Salaam. There are a few UK laws and planning details that you should be aware of”. The other was to be on 19^th April to meet “our mining investor”.

Meanwhile the High Commission had received authority from the Permanent Secretary at the Ministry of Foreign Affairs in Dar es Salaam to approach Knight Frank. That firm had a local office there and had previously acted on behalf of the Tanzanian Government on property projects in Tanzania and elsewhere in East Africa. On 19^th February 2004 Mr Goonesena contacted Mr Adrian Wilson, the relevant Knight Frank partner, at Mr Gamaha’s request, and told him that Tanzania wanted to retain Knight Frank subject to agreement on terms. Mr Wilson was invited to an interview at the High Commission, at which he favourably impressed the High Commissioner with his market knowledge and experience. At this time the High Commission did not contemplate that Knight Frank would be able to procure an opportunity for the High Commission to bid for 3 Stratford Place because they believed that it had gone to another purchaser. Knight Frank had been asked to research their own database and come up with other properties.

On 6^th April, following negotiations, and approval from the Ministry of Foreign Affairs in Dar es Salaam, which had been sent the quotes from the various estate agents, terms were agreed for Knight Frank to act. Knight Frank was retained not only to find new High Commission premises but also to deal with the dilapidations liability in respect of 43 Hartford Street and to deal with planning matters, insurance valuation and building and M & E services.

By this time the proposed purchase of 3, Stratford Place had stalled. The prospective purchaser was the Government of the Philippines, which had Knight Frank’s Kensington Office (which concentrates on residential property) as their agents. A survey was done and heads of terms were issued. It was not, however, possible to proceed to an exchange of contracts on account of a pending general election, and in about February/March 2004 the sale went off. The terms eventually agreed with Knight Frank provided for a reduced commission if the building purchased was 3 Stratford Place because of their familiarity with the property.

On 13^th April a meeting took place at the High Commission. Present were Ms Mukasa, Mr Kibelloh, Mr Bruce-Watt, and Mr Thompson. Mr Bruce-Watt regarded this as an opportunity to present Pinsent-Mason’s ability to help the High Commission with the legal aspects of its property transaction and he came to the meeting with a list of property issues. There was discussion about the vacation of Hertford Street, in particular the possibility of obtaining an extension of the lease and the question of dilapidations, and also about the process for acquiring the new premises and fitting them out. The discussion covered 3 Stratford Place and 16 Stratford Place. According to Ms Mukasa the discussion centred on the purchase of 3 Stratford Place. According to Mr Kibelloh No 16 was the reference point of any discussion about new property. According to Mr Bruce Watt and Mr Thomson No 16 was the principal point of discussion. In my judgment No 16 is likely to have been the focus of attention. Attention had swung to No 16, in which Ms Mukasa was seeking to interest the High Commissioner; and Mr Thompson’s expertise was more relevant to that building.

The High Commissioner said that interim funding might be required from Barclays, who were the High Commission’s bankers, and there was discussion about the security that the Bank might require. Mr Bruce-Watt indicated that he would look into the implications that a mortgage would have on the diplomatic immunity of the High Commission.

According to Mr Kibelloh the discussions were rather rambling; Ms Mukasa did most of the talking, as is likely, and he listened politely. He regarded it as a courtesy call in which he agreed to meet two of her associates and listened to what they had to say.

The Points of Claim allege (paras 26(b) and 27) that at this meeting Mr Kibelloh agreed to sign the terms and conditions dated 22^nd March 2004 (which provide for a 1.5% fee) upon receipt of funds from Tanzania and, in the alternative, that Tanzania agreed the 22^nd March 2004 terms and to pay a fee of 1.5% on that date. In the journal attached to Ms Mukasa’s witness statement, Mr Kibelloh is said to have said that he would sign MSM’s conditions (date unspecified) as soon as the decision as to the funds available for the purchase came through; and he assured her that he was aware of the High Commission’s financial obligation to MSM, this conversation being said to have occurred when the other participants had left. In the body of the statement there is no reference to these topics.

I do not accept that Mr Kibelloh gave Ms Mukasa these confirmations, which are denied by Mr Kibelloh (“totally false”). It is not apparent that Mr Kibelloh had ever seen the conditions of 22^nd March.

There was no discussion of the appointment of Knight Frank. Mr Kibelloh’s evidence was that their appointment was no secret and it was superfluous to refer to it. But Ms Mukasa did not then know about it.

On 14^th April a meeting took place between Mr Gamaha, Mr Goonesena and Knight Frank. Knight Frank were instructed to make a tentative offer of £ 4.75 million for 16 Stratford Place. The roof was in poor condition and the interior needed refurbishing and reconfiguring. It would also have been necessary to obtain an extension of the lease of 43 Hertford Street for at least a year in order to allow this work to be carried out. Knight Frank made this offer which was later increased to £ 4.8 million. Knight Frank were also authorised to make an offer to Strutt & Parker if 3 Stratford Place was available, as was thought possible.

On 19^th April 2004 another meeting took place at the High Commission attended by Ms Mukasa, Mr Bruce-Watt, Mr Guillaume Blanc, who was also a partner of Pinsent Masons, and Mr Kibelloh. Mr Blanc was a mining lawyer who had worked on the mineral legislation and mineral taxation system in Tanzania. There was some discussion about 3 Stratford Place, dilapidations on 43 Hertford Street and diplomatic immunity should Tanzania raise a mortgage. After that the discussion turned to the Tanzanian mining sector and a possible codification of its minerals law.

On 22^nd April Mr Kibelloh telephoned Ms Mukasa. He was about to fly to Tanzania. He either called her on his way to the airport (as Ms Mukasa recalls) or when he was at the airport after a message to call her from his secretary (as he recalls). During the conversation she asked him about the involvement of Knight Frank. According to her evidence, after an initial denial, he admitted that Nos 3 and 16 Stratford Place had been inspected by Knight Frank and blamed Mr Gamaha and Ambassador Ibrahim for approaching them. He said that Ambassador Ibrahim had approached Knight Frank with a view to excluding MSM from the transaction and that it was such behaviour which had compelled him i.e. Mr Kibelloh, when Permanent Secretary, to demote Ambassador Ibrahim, who, he said, was trying to undermine him in relation to the property transaction. Ms Mukasa said that she did not wish to become caught up in any political wrangles between him and Ambassador Ibrahim and pointed out that, regardless of who first approached Knight Frank, Tanzania was now in a difficult situation because it would have to pay fees to both Knight Frank and MSM. She said she would be seeking legal advice, Mr Kibelloh assured her that she would be paid and said that he would contact her again when he returned to the UK from Tanzania. According to Ms Mukasa, when he was in Tanzania, Mr Kibelloh left a message on her voice-mail to say that his mother or mother-in-la (“Mama”) had died in which he confirmed that she would be paid.

Mr Kibelloh had little recollection of this conversation other than that he did not acknowledge that the High Commission had any obligation to pay her or assure her that she would be paid. I think he is correct in this. He probably did confirm (even if not immediately) that Knight Frank had been retained and that Ambassador Ibrahim had recommended that. I treat with scepticism Ms Mukasa’s evidence that she was told that Mr Kibelloh had had occasion to demote Ambassador Ibrahim (a matter that was not raised with him in cross-examination). On Mr Kibelloh’s evidence, which I accept, Ambassador Ibrahim was not demoted and, if he had been, it would not have been the Permanent Secretary who had power to do so, but the President.

On 23^rd April, following a previous telephone conversation, Ms Mukasa faxed a letter to Mr Gamaha calling the High Commission’s attention to paragraphs 3 and 5 of the Terms and Conditions of 12^th March. She faxed Mr Kibelloh to the same effect on 6^th May 2004; and to the Ministry of Foreign Affairs on 12^th May together with a journal of events. During the conversation prior to 23^rd April Mr Gamaha had told her that the High Commission had retained Knight Frank and she had made claims which, according to Mr Gamaha, he did not understand. These were probably to the effect that she was continuing to liaise with the High Commissioner, who had misled her and that he had been laying blame on Mr Gamaha and Mr Goonesena for what had happened.

Soon after they were appointed Knight Frank looked to see if the sale of 3 Stratford Place had occurred. When it appeared that it had not, they spoke to their Kensington office who confirmed that it had not gone through. They learnt from Mr Heath of Strutt & Parker that matters were not proceeding as quickly as the vendor would have liked. They informed the High Commission accordingly.

In late April Knight Frank managed to negotiate with Strutt & Parker that contracts would be withdrawn from the Republic of the Philippines and submitted to Tanzania on the basis that Tanzania would exchange contracts at £ 6 million (with a non-refundable 10% deposit payable on exchange) within 10 working days of the agreement of Heads of Terms (during which time Rolex agreed not to enter into negotiations with any other parties) with completion no later than 5 working days from receipt of confirmation from Westminster City Council that the building could be used for diplomatic use. These terms were put forward by Strutt & Parker on 30^th April and accepted by Knight Frank on 5^th May.

On 17^th May Mr Kibelloh asked to meet Ms Mukasa for lunch so as to resolve matters and suggested a meeting away from the High Commission. They agreed to meet on 18^th April. On 17^th May Ms Mukasa also faxed the Permanent Secretary at the Ministry of Foreign Affairs with the material sent on 12^th May.

Mr Kibelloh did not keep the lunch engagement on 18^th. On the same day the Permanent Secretary faxed MSM asking for a copy of the faxed letter of 17^th to be sent to the High Commission and Ms Mukasa delivered the material to the High Commission by hand.

On 4^th June Ms Mukasa wrote on behalf of MSM to Mr Kibelloh claiming £ 82,500 (Footnote: ¹⁹) by way of consulting fee + VAT. On 21^st June 2004 MSM sent the High Commission an invoice for £ 96,937, inclusive of VAT. Copies of both of these documents were also sent to the Ministry of Foreign Affairs. The invoice was resent by her by way of reminder on 15^th and 26^th July and 4^th August.

Exchange of contracts in respect of No 3 Stratford Place occurred on 25^th May 2004 conditional on planning consent to a change of use, which was subsequently granted. Tanzania failed to remit the completion monies in time for completion on the completion date (4^th August 2004). There appears to have been a problem with obtaining a sum of £ 4.2 million which a particular individual at Barclays had agreed to lend (Tanzania was required to put up £ 1.8 million itself) when that individual was regularly on the move between London and South Africa. As a result it became necessary for Tanzania to use its own funds. Rolex’s solicitors served a Notice to Complete. In the event the purchase was completed on 22^nd September 2004.

Ms Mukasa had been showing representatives of Tanzania properties since 2002. That was not necessarily referable to a contract as opposed to an attempt to obtain one. That that was what Ms Mukasa was attempting to do on behalf of MSM appears from the several sets of terms and conditions which she put forward for Tanzania’s acceptance.

MSM does not contend that Tanzania accepted the terms of 6^th May 2003. In my judgment it is correct to do so, given that these terms were not accepted in writing, nor were they returned signed, nor was the registration fee due on acceptance paid. Nor did anything else happen which amounted to an acceptance of the terms. Further the despatch of a new set of terms is difficult to square with acceptance of the earlier ones.

MSM sent its 1^st October 2003 terms to Mr Gamaha on 20^th October 2003. But those terms were rejected eight days later by his letter of 28^th October which made plain that the fee of 2.5% was not acceptable.

Alternatively, MSM submits, on 20^th February 2004 Mr Kibelloh agreed MSM’s terms and conditions of 16^th February 2004, which had been sent on 18^th February 2004 and which provided for a 2% commission. Mr Kibelloh agreed them, it is submitted, when he acknowledged that he had received them and assured her that he would sign them as soon as he was in receipt of funds from Tanzania. Those terms, once accepted, governed all the services which had been performed and were to be performed in connection with the acquisition of No 3 Stratford Place. That 2% was later reduced gratuitously to 1.5% when Ms Mukasa sent the terms and conditions dated 22^nd March 2004.

Further acceptance of MSM’s terms and conditions is, it is submitted, to be found in (a) Mr Kibelloh’s assurance on 3^rd March that she would be paid; (b) Mr Kibelloh’s statement on 13^th April that he was aware of the High Commission’s financial obligations to MSM; and (c) on 22^nd April when Mr Kibelloh again assured her that she would be paid.

As I have already indicated, I do not accept that Mr Kibelloh assured Ms Mukasa on 20^th February that he would sign the MSM terms once he was in receipt of funds from Tanzania. It would be an odd thing for him to have said given the following: (a) in October 2003 Mr Gamaha, at the prompting of Mr Kibelloh had asked Mr Goonesena to obtain quotes from other agents and received a 1% quotation from Knight Frank; (b) on 6^th February 2004 Mr Gamaha had told Ms Mukasa that the rate of 2% for her envisaged services was far too high; (c) Ms Mukasa had refused to reduce them at the meeting of 12^th February and it was apparent that there was a dispute over their amount; (d) on 19^th February Mr Goonesena had, pursuant to instructions from Ambassador Ibrahim, contacted Mr Wilson of Knight Frank with a view to retaining them; (e) Mr Kibelloh had no authority to sign MSM’s terms and could not count on getting such authority from Dar es Salaam. I note, also, that there is no contemporaneous reference to this important assurance in any written communication from MSM. Nor, for the same reasons, do I accept that he assured her that MSM would be paid – a claim that first appears in Ms Mukasa’s statement of 22^nd September 2008. Further, if 2% had effectively been agreed by 20^th February 2004, I find it difficult to understand why in March Ms Mukasa sent subsequently a set of conditions referring to a 1.5% fee.

Even if, contrary to my view, Mr Kibelloh had said that he would sign the terms once he was in receipt of funds from Tanzania I would not have regarded that as an acceptance of the terms then and there but as a statement of an intention to sign when in a position to do so.

The 16^th February 2004 terms specified that they applied between MSM and a client “confirming an Engagement” i.e. a request for the supply of certain services. They included space for the client to sign under the words “I accept the Standard Terms of Business”. No representative of Tanzania signed the terms. That might not be fatal to the creation of a contract, if there was something that amounted to the confirmation of an engagement. But an intimation that the document would be signed if a particular condition was fulfilled does not constitute such a confirmation.

An offeror can waive any requirement as to the form of acceptance if the stipulation as to form is solely for its benefit. But if the stipulation is for the benefit of both parties it must be clear that both parties have waived the stipulation, which may be by conduct: Brogden v Metropolitan Railway Company (1877) AC 2 666,693. In the present case, where the putative contract included a substantial commission, I regard the requirement for a recognisable confirmation by the client of a request for services as a stipulation for the benefit of both parties, which would not have been waived by an indication that the contract would be signed later.

If an offer is not accepted in the stipulated form that does not preclude the Court from finding that the parties have reached agreement in some other way e.g. by conduct. But for there to be such an agreement there must be a course of dealing from which a contract is necessarily to be implied because the conduct in question is only referable to a contract as opposed to a desire to obtain one: Baird Textiles Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274.

I also do not accept that on 3^rd March Mr Kibelloh assured Ms Mukasa that MSM would be paid. If this had been intended as an assurance that MSM would receive a fee of 2%, it would have been an odd assurance to have given, having regard to the matters set out in para 117. Again I note that there is no reference to this confirmation in Ms Mukasa’s journal or in any contemporaneous correspondence. Further what Ms Mukasa was proffering for agreement was a set of terms and conditions which provided for payment in certain circumstances. That makes it less likely that she would simply have been told that MSM “would be paid”. Further such a statement, whilst relevant to any quantum meruit claim, does not appear to me apt to constitute an acceptance of MSM’s terms and conditions since (a) it does not constitute a sufficient confirmation of an Engagement; and (b) does not amount to an acceptance that MSM will be paid in accordance with the terms and not otherwise.

As I have also indicated, I do not accept that on this occasion Mr Kibelloh (a) agreed MSM’s terms of 22^nd March; or (b) agreed that he would sign them on receipt of funds from Tanzania; or (c) assured Ms Mukasa that he was aware of the High Commission’s financial obligations. By now Knight Frank had been instructed, as Mr Kibelloh knew, and it would have been very odd for him to have done any of these things. I accept his denial that he did so. Further the fact that none of items (a) –(c) appears in the body of Ms Mukasa’s statement does not give me confidence in the accuracy of any of them.

I am prepared to accept that Ms Mukasa claimed that MSM was claiming that the High Commission would have to pay its fee. But I do not accept that on 22^nd April Mr Kibelloh assured Ms Mukasa that MSM would be paid (which is the account given in her witness statement: cf the reference in her journal to an acknowledgement that the High Commission had a financial obligation towards her). I note that there is no reference to this assurance in Ms Mukasa’s fax of 23^rd April in which she enclosed the Terms of 12^th March. If Ms Mukasa was so told, I do not regard that statement as an acceptance of MSM’s terms for the reasons explained in paragraph 122 above.

“Effective cause”

If I am wrong in these conclusions, two questions arise:

The terms and conditions dated 1^st October 2003, 16^th February 2004, 12^th March 2004 and 22^nd March 2004 all contain the same relevant provisions:

“3.

……

The Client will be liable to pay the Commission Fee if, at any time, the Client completes the purchase of a property which we introduce to the Client or his/her representative and/or which we assisted the Client in viewing and/or negotiating.

5.

……. The Client’s obligation to pay the Commission Fee does not extinguish on the termination of this agreement if the Client purchases a property which was introduced to the Client by MSM”

MSM submits that it is entitled to its commission because it introduced No 3 Stratford Place to Tanzania’s representatives and also assisted those representatives to view it. Tanzania submits that the words “purchase ... a property which we introduce to the Client” mean, as a matter of construction “purchase a property which we introduce to the Client, which property is purchased as a result of our introduction”; and the words “which we assist the client in viewing and/or negotiating” mean “which we assist the client in viewing or negotiating where the purchase in question has resulted from such viewing or negotiating”. Alternatively Tanzania submits that a term must be implied into the contract that, in order to earn its commission, MSM must have been the effective cause of the purchase.

In Foxtons Ltd v Pelkley Bicknell [2008] EWCA Civ 419 Mrs Bicknell, the vendor, agreed to terms with Foxtons which provided for a commission of 2.25% of “the sale price achieved”, on the basis of sole agency, payable if at any time unconditional contracts were exchanged with “a purchaser introduced by us during the period of our sole agency or with whom we have had negotiations about the property during that period; or with a purchaser introduced by or offering via another agent during that period”. Foxtons showed the house to a Mr Low, who was looking for a house on behalf of his former wife. He initially liked it but then lost interest when his former wife viewed it. The sole agency came to an end and Foxtons and Mrs Bicknell agreed a multiple agency agreement at a rate of 3%. Mrs Bicknell also appointed Hampton’s on a multiple agency basis. Mr and Mrs Low visited the property some months later and Mrs Low purchased it. Mrs Bicknell paid Hampton’s their commission. Foxtons then claimed theirs on the basis that contracts were exchanged with “a purchaser introduced” by them.

Lord Neuberger summarised five propositions established by a number of cases. First, the Court will readily imply a term that the agent is not entitled to commission on a contract unless his services were the effective cause of the transaction being brought about, especially in the context of a residential consumer, unless the provisions of the particular contract or the facts of the case negative it. Secondly, the main reason for the implication of such a term is to minimise the risk of the seller having to pay two commissions. Thirdly, it is not entirely clear whether the test is “an effective cause” or “the effective cause”. Fourthly whether an agent was the effective cause is a question whose resolution turns very much on the facts of any particular case. Fifthly, where the term is implied, the burden is on the agent to establish that he was the effective cause.

Lord Neuberger observed that the expression “a purchaser” in the phrase “a purchaser introduced by us” could mean “a person who at some time in the future becomes a purchaser” regardless of whether his purchase or the interest which gave rise to it owed anything to Foxtons. The second possibility was that it meant “a person who becomes a purchaser as a result of our introduction”. He recognised that the former meaning might well strike many people on first impression as more natural. But he regarded the latter construction as correct for four reasons.

The first was that that interpretation accorded better with the principles to be extracted from the cases, in particular the normal notion that an agent can only recover if he introduces someone who becomes a purchaser as a result of his introduction. Such an interpretation would also make it unlikely that the client would be liable for two commissions.

Secondly, the consequences of the second interpretation would be surprising; since Foxtons would be entitled to commission from a sale made years later if the purchaser had originally been introduced by them, even if that person was wholly uninterested in the property when they introduced him.

Thirdly the former interpretation accorded better with the guidance as to the expression “introduction” given in John D Wood & Co v Dantata [1987] 2 EGLR 23 where Nourse, LJ concluded that the word in the context of the phrase “introduction of a purchaser” could only mean the “introduction of the person who ultimately purchases, not to the property, but to the purchase, or, if you look at it from the vendors angle, to the sale; in either case to the transaction that takes place”.

Fourthly the commission became due once “unconditional contracts are exchanged with a purchaser introduced by us”. The use of the word “purchaser” in this context was intended to indicate that the person concerned must have been introduced by Foxtons in his (eventual) capacity as a purchaser.

Fifthly the terms were Foxtons’ standard terms and the court should lean in favour of a construction which favours the client.

Foxtons v Bicknell was a case of a vendor’s agent. But the reasoning is applicable, mutatis mutandis, to an agent for the purchaser.

There is an important distinction between MSM’s terms and Foxtons’. In the latter case the commission was payable if contracts were exchanged with “a purchaser introduced” by Foxtons. In those circumstances the Court of Appeal was able to hold that Foxtons had to show to put the point in Nourse, LJ’s words, that they introduced the purchaser to the purchase and not merely to the property. In the present case, by contrast, the commission is payable upon the completion of the purchase of “a property which [MSM] have introduced to the client”. What has to have been introduced is the property to the client purchaser not the purchaser to the purchase.

In those circumstances I do not regard it as possible to hold, as a matter of construction, that the words “purchase a property which we introduce to the client” mean “purchase a property which we introduce to the client, which property is purchased as a result of our introduction”. The words underlined would make the relevant introduction that of a purchaser and not of a property. For similar reasons I do not regard it as possible to construe the second phrase in the relevant part of clause 3 so as to mean “which we assisted the Client in viewing and/or negotiating where the purchase in question has resulted from such viewing or negotiating”. To add the underlined words goes beyond interpretation of the words that precede them.

That leaves for consideration whether or not there should be implied a term that in order to earn its commission MSM must be the effective cause of the eventual purchase. In my judgment such a term should be implied.

On one view, once it is established that the words used provide for the commission to be payable if the property purchased has been introduced to the purchaser, it is unnecessary to make the implication sought. To do so would be, it could be said, to imply a term which is inconsistent with the express terms because it would make the introduction of a purchaser the commission earning event when (see above) the words used refer to the introduction of the property. I do not accept this for a number of reasons.

Firstly, the fact that the express terms provide for commission to be payable in the event that the seller contracts to sell to a buyer introduced to the property, does not mean that there can be no implication that the agent must have been the effective cause of the transaction. The fact that the contract does not specify that the agent must have been the effective cause begs the question as to whether such a term should be implied. It does not dictate a negative answer.

Secondly, the implication of an “effective cause” term arises as a result of the nature of the transaction. Where an agent is engaged upon terms that his commission is not payable unless a contract is concluded between his client and a purchaser and the commission is to be a percentage of the price, the nature of the transaction and the requirements of business efficiency will usually (subject to any special terms or other indications in the contract of agency (Footnote: ²⁰)) dictate that the agent should be remunerated if, but not unless, it is his efforts that have brought about the transaction in question: see Article 57 of Bowstead and Reynolds on Agency (18^th Edition) cited in Foxtons. It is for that reason that such a term will very readily be implied. It is true that the High Commission were not consumers buying residential property. But the Court’s readiness to imply such a term is not restricted to such persons.

Thirdly, as Lord Neuberger pointed out in Foxtons, the main reason for implying such a term is to minimise the risk of the client having to pay two commissions, a consideration which applies in the present case.

Fourthly, if no such term is implied, some surprising consequences would, as in Foxtons’ case, follow. Tanzania could find itself having to pay commission years after the event in respect of a property originally introduced by MSM, in which Tanzania had had no interest whatever, but which it later purchased in completely changed circumstances. Moreover it could find itself doing so if all that MSM had done was to assist representatives of Tanzania in viewing a property. This could amount to no more than telephoning to arrange a single visit on a property introduced by another agent or already known to the High Commission.

Fifthly, I see no difficulty in an express term which provides for commission if the client completes the purchase of a property introduced by MSM or which MSM assisted the High Commission in viewing and/or negotiating and an implied term that MSM must have been the effective cause of the completion. MSM could readily be the effective cause of the completion if it introduced the property or if, not having introduced Tanzania to it, it showed its representatives round or assisted in the negotiation of the terms.

Mr Aliker, for MSM, submitted that the provision in clause 5 - that the obligation to pay the commission fee does not extinguish on the termination of the agreement if the client purchases a property which was introduced to the client by MSM - is inconsistent with the implied term relied on. A client could terminate the contract and thereafter purchase a property which MSM had introduced in circumstances where someone else was the effective cause of the purchase. If the agreement contained the implied term alleged the fee would not, in those circumstances, be payable. In that case the supposed entitlement to a commission fee in respect of a property introduced by MSM, notwithstanding termination, would be nugatory.

I do not accept this submission. It assumes the point in issue, namely that the parties intended MSM to be entitled to commission if it had introduced the property even if it was not the effective cause of the purchase.

The provision for termination on one month’s notice coupled with an implication that the agent must be the effective cause of the purchase could work disadvantageously to the agent. He might introduce a property and then find himself unable to be the effective cause of the purchase because the termination of the agreement deprived him of the ability to act on his client’s behalf. It could be argued that that militates against the implication of an effective cause term.

As to that, the fact that there may be cases in which termination has precluded the agent from becoming the effective cause of the purchase does not mean that termination will always have that effect. An agent is not to be deprived of commission on a property which he introduced to the purchaser and of whose purchase he was the effective cause simply on the ground that by the time that the property was purchased the agency had come to an end. Clause 5 makes clear that that is so. Further in many cases it is the discovery of the property that will be the effective cause of its purchase. I note, also, that in Foxtons, the Court was not deterred by the four week termination provision. from construing the agent’s terms in a manner tantamount to requiring the agent to have been the effective cause of the transaction. Further, the trial judge had found that Foxton’s were the effective cause of the sale. Although the Court of Appeal overturned that finding it might well not have done so if the facts had been only slightly different (e.g. because Mrs Low, the eventual purchaser, had been interested in the house produced by Foxton’s from the start and, having initially decided on another property, reverted to it later).

In Egan Lawson Ltd v Standard Life Assurance Co [2001] 1 EGLR 27 the Court of Appeal had to determine whether the appellant or Richard Ellis was the effective cause of the purchase by Standard Life of some commercial property in Chelmsford. In August 1997 Egan Lawson had alerted a property investment manager at a Standard Life office in Edinburgh that the property was about to come on to the market and that there was an opportunity to make a pre-emptive offer. In September 1997 that manager indicated that the property was not of interest. The property was put on the market in mid-October. Various agents tried to interest Standard Life in it. In November a lady at Richard Ellis spoke to her ex husband at Standard Life (who was in the same office in Edinburgh but running a different fund), who referred the matter to his assistant. Standard Life learnt from that lady that the vendor might entertain a bid lower than the asking price. The assistant retrieved the file which had been opened by Standard Life when Egan Lawson introduced the property. Standard Life did some calculations and proposed to purchase the property for £ 11.5 million. An offer of £ 11.5 million was made through Richard Ellis (after the rejection of an earlier offer of £ 11m), and a contract was entered into at that price. The trial judge had held that Mr Lawson’s introduction was the effective cause of the sale.

The Court of Appeal reached the opposite conclusion. In the course of his judgment Mummery, LJ observed that;

“In the case of two estate agents appointed by the vendor …The first in time factor (and the interest that the initial introduction generates) is relevant, it is neither determinative nor paramount in resolving the rival claims to commission. It is necessary to consider the causal link between the instructions and the ultimate transaction”

He came to the conclusion that the introduction of Standard Life to the property by Egan Lawson was not the effective cause of the purchase of the property by Standard Life. This was because after September 1997 Egan Lawson simply dropped out of the picture. The property was then put on the market in October 1998 at £ 12.87 million. 3 firms tried to interest Standard Life in it. Egan Lawson did not reappear on the scene. Standard Life’s interest was activated in November/December 1997 because of the initiative taken by the ex wife of the man at Standard Life, who introduced the property to different personnel together with the information that the vendor would accept a lower offer. That was the effective cause of the purchase.

There is no doubt but that MSM introduced No 3 Stratford Place to the High Commission. Representatives were first shown round in April and then again in September 2003, when Ambassador Ibrahim became particularly interested in it. But the first in time test is not determinative and, in the event, no offer was ever made nor negotiations conducted through MSM in respect of No 3.

Looking at the facts as a whole it seems to me that MSM was not the effective cause of the purchase of No 3 Stratford Place. By 12^th February 2004 that property was under offer to another purchaser. At the meeting on that date Ms Mukasa told Mr Gamaha that that was so and in effect walked out of the meeting. Thereafter, whatever the communications between Mr Kibelloh and Ms Mukasa, no actual steps to progress the purchase of No 3 Stratford Place by way of communication by MSM or Tanzania with Strutt & Parker took place. The purchase came about because Knight Frank, who were instructed on 6^th April, discovered that the sale to the Philippines had stalled, told the High Commission of that and took advantage of the situation. They persuaded the vendors to enter into the arrangements described in para 107 above whereby, in exchange for a deposit and a tight timetable for exchange of contracts the vendors withdrew the contracts from the Philippines. Thereafter heads of terms were concluded very quickly. Strutt & Parker circulated them on 30^th April 2004 and they were agreed on 5^th May. Exchange of contracts occurred on 25^th May, Knight Frank having liaised with Strutt & Parker meanwhile. After that, with the assistance of Knight Frank’s planning department (and their knowledge of the building because of their involvement with the Philippine Government) they secured planning consent to a change of use within a matter of a few months. I have no doubt that Knight Franks’ reputation and efficient action made a significant contribution to the preparedness of Strutt and Parker and the vendors to deal with Tanzania.

It may be that MSM could have achieved a similar result, at any rate if it had galvanised itself, and the High Commission, into action, so as to offer a similar proposal. The fact is it did not. This was in large measure because the High Commission did not progress the purchase of No 3 through MSM but did do so through, and at the prompting of, Knight Frank. In circumstances where MSM did not have a sole agency that is not something of which it can legitimately complain.

Section 18 of the Estate Agents Act 1989 provides as follows:

“Regulation of other aspects of estate agency work

18.

Information to clients of prospective liabilities.

(1)

Subject to subsection (2) below, before any person (in this section referred to as “ the client ” ) enters into a contract with another (in this section referred to as “ the agent ” ) under which the agent will engage in estate agency work on behalf of the client, the agent shall give the client —

(a)

the information specified in subsection (2) below; and

(b)

any additional information which may be prescribed under subsection (4) below.

MSM was engaged in estate agency work as defined in section 1 of the Act.

The regulations made by the Secretary of State under section 18 (4) are the Estate Agents (Provision of Information) Regulations 1991 (1991/859). They provide, inter alia, as follows:

“Time of giving information

The Schedule provides, so far as material, as follows:

“EXPLANATION OF CERTAIN TERMS

  (a) Sole selling rights

"SOLE SELLING RIGHTS

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, in each of the following circumstances—

  if unconditional contracts for the sale of the property are exchanged in the period during which we have sole selling rights, even if the purchaser was not found by us but by another agent or by any other person, including yourself;

  if unconditional contracts for the sale of the property are exchanged after the expiry of the period during which we have sole selling rights but to a purchaser who was introduced to you during that period or with whom we had negotiations about the property during that period."

  (b) Sole agency

"SOLE AGENCY

You will be liable to pay remuneration to us, in addition to any other costs or charges agreed, if at any time unconditional contracts for the sale of the property are exchanged-

with a purchaser introduced by us during the period of our sole agency or with whom we had negotiations about the property during that period; or

with a purchaser introduced by another agent during that period."

Alleged breaches – amount of commission

Tanzania contends that there was a failure to give particulars before the contract of the amount of the commission because three different rates were put forward at different times (2.5%, 2.0% and 1.5%) and it is not clear which one was the contractual rate. I do not regard this as a valid point. If, contrary to my view, there was an agreement on MSM’s terms there would have been agreement on a specific set of terms such that it would not be open to Tanzania to say that the section 18 had not been complied with. If, as I hold, there was no such agreement, the question does not arise.

None of the MSM terms use the expression “sole selling rights” or “sole agency”. However Mr Clifford, for Tanzania, contends that the provisions of clauses 3 and 5 of MSM’s terms referred to in para 126 above are the purchaser’s agent’s equivalent of “sole selling rights”. By virtue of regulation 5 (2) those terms had to be explained but were not.

The effect of clauses 3 and 5 was that Tanzania was liable to pay the fee if at any time, even after termination of the agreement, it completed the purchase of a property which MSM introduced to Tanzania. Such an obligation has some similarity in effect to the explanations of “sole selling rights” and “sole agency” contained in the Schedule. These explanations indicate that remuneration is payable if unconditional contracts for the sale of the property are exchanged (a), in the case of sole selling rights, during the period of the agreement even if the purchaser was not found by the agent; or (b), in the case of sole selling rights or a sole agency after the expiry of the agreement, with a purchaser who was introduced, or with whom the agent had negotiations, during the contractual period. Under the MSM terms commission is payable even if the property was not found by the agent (e.g. if MSM only assisted in viewing and/or negotiating) and, after the expiry in respect of a property introduced by MSM.

There are, of course, dissimilarities. MSM was acting as a purchaser’s agent. It did not have any, let alone sole, selling rights, nor was commission payable “even if the purchaser was not found by us”. Tanzania was to be the purchaser and it was not to be “found” by anyone. Nor was MSM a sole agent in the sense that Tanzania agreed not to instruct any other agent. MSM was only entitled to commission if there was a completed sale.

I am prepared to assume that clauses 3 and 5 have, for the purposes of the Regulation, a similar purport or effect to the wording used to explain the expressions “sole selling rights” and “sole agency”. There is, however, a fundamental objection to the application of regulation 5 (1) and (2). The regulation is addressed to a situation in which three not very clear pieces of legal jargon (“sole selling rights”, “sole agency rights” and “ready, willing and able to purchase”) or some other term with a similar purport or effect are used. The Regulation requires such terms to be explained in the manner specified in the Schedule with such alterations as may be necessary to ensure that the explanation is not misleading.

It is not, in my judgment, legitimate to compare, not the terms specified in the Regulation (or some other term with a similar effect), but the explanation of the terms given in the Schedule, with the wording of the MSM contract, in order to conclude that because of the similarity of the explanation to the MSM wording there is a duty of further explanation. Such an interpretation is apt to lead to the absurd result that the explanation which requires to be given of the offending wording is to repeat the wording itself.

If the MSM terms and conditions had used the expression “sole agency” or “sole dealing rights” or “sole acquisition rights” it might have been necessary to explain that that meant that Tanzania would be liable to pay a fee if unconditional contracts were exchanged at any time in respect of a property introduced by MSM during the period of the agreement. But, when the contract says that in terms (as clauses 3 and 5 do) it does not seem to me necessary to produce a further explanation which, in order not to be misleading would have to repeat the clauses.

If I am wrong on that I would, nevertheless, have declined to refuse to enforce the agreement or to reduce the amount recoverable. If the terms were accepted there is no reason why they should not be enforced in full. What they say is not unclear.

On the footing that there was no contract MSM advances a quantum meruit claim with the following elements:

I should say at the start that I regard the rate of £ 250 put forward as far too high. Ms Mukasa has a degree in economics but no surveying or valuing qualifications and, at the time, limited experience of estate agency work. MSM was only formed in January 2003 and had scarcely any overheads. Knight Frank had a professional framework agreement with the Office of Government Commerce which specified an agreed time charge rate for dealing with matters on behalf of the UK Government. These rates were as follows:

In Countrywide Communications Limited v ICL Pathway Ltd [1996] C No 2446 Mr Nicholas Strauss, Q.C., considered the authorities bearing on the question of whether or not a claim can successfully be made for work done in anticipation of a contract which does not materialise. Having considered William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932; a number of academic writings; Jenning and Chapman Ltd v Woodman Matthews & Co [1952] 2 TLR 406; Brewer Street Investments Ltd v Barclay Wool & Co Ltd [1954] 1 QB 428; British Steel Corporation v Cleveland Bridge and Engineering [1984] 1 AER 504; Regalian Plc v London Docklands Development Corporation [1995] Ch 212 ; Marston Construction C Ltd v Kigass Ltd [1989] 15 Con L..116, he concluded:

“I have found it impossible to formulate a clear general principle which satisfactorily governs the different factual situations which have arisen, let alone those which could easily arise in other cases. Perhaps, in the absence of any recognition in English law of a general duty of good faith in contractual negotiations, this is not surprising. Much of the difficulty is caused by attempting to categorise as an unjust enrichment of the defendant, for which an action in restitution is available, what is really a loss unfairly sustained by the plaintiff. There is a lot to be said for a broad principle enabling either to be recompensed, but no such principle is clearly established in English Law. Undoubtedly the court may impose an obligation to pay for benefits resulting from services performed in the course of a contract which is expected to, but does not, come into existence. This is so, even though, in all cases, the defendant is ex hypothesi free to withdraw from the proposed contract, whether the negotiations were expressly made “subject to contract” or not. Undoubtedly, such an obligation will be imposed only if justice requires it or, which comes to much the same thing, if it would be unconscionable for the plaintiff not to be recompensed.

Beyond that, I do not think that it is possible to go further than to say that, in deciding whether to impose an obligation and if so its extent, the court will take into account and give appropriate weight to a number of considerations which can be identified in the authorities. The first is whether the services were of a kind which would normally be given free of charge. Secondly, the terms in which the request to perform the services was made may be important in establishing the extent of the risk (if any) which the plaintiffs may fairly be said to have taken that such services would in the end be unrecompensed. What may be important here is whether the parties are simply negotiating, expressly or impliedly “subject to contract”, or whether one party has given some kind of assurance or indication that he will not withdraw, or that he will not withdraw except in certain circumstances. Thirdly, the nature of the benefit which has resulted to the defendants is important, and in particular whether such benefit is real (either “realised” or “realisable”) or a fiction, in the sense of Traynor CJ’s dictum (Footnote: ²²). Plainly, a court will at least be more inclined to impose an obligation to pay for a real benefit, since otherwise the abortive negotiations will leave the defendant with a windfall and the plaintiff out of pocket. However, the judgment of Denning L.J. in the Brewer Street case suggests that the performance of services requested may of itself suffice amount to a benefit or enrichment. Fourthly what may often be decisive are the circumstances in which the anticipated contract does not materialise and in particular whether they can be said to involve “fault” on the part of the defendant, or (perhaps of more relevance) to be outside the scope of the risk undertaken by the plaintiff at the outset. I agree with the view of Rattee J. that the law should be flexible in this area, and the weight to be given to each of the factors may vary from case to case.”

I regard this as a helpful analysis of the authorities from which I also derive the following propositions:

Certain features of the present case are of significance for the purpose of determining whether an obligation of payment should be imposed in respect of any of the 3 heads of claim – “Miscellaneous”; “Research” & “Chores”. I consider first the period up to 12^th February 2004.

Firstly, MSM was not incorporated until 15^th January 2003 and cannot recover in respect of any period prior to that date. This eliminates the claim for research on properties 10, 11 and 12 of the list making £ 3,525 (including VAT) together with the first item of costs incurred (£ 85.60 for copies of brochures).

Secondly, and more importantly, what Ms Mukasa was doing on behalf of MSM was done in the hope that MSM would be awarded a contract which it might or might not receive. The 6^th May 2003 terms were never accepted and revised ones were sent. The 2.5% fee contained in the revised terms of 1^st October 2003 was swiftly rejected. The sentence in the letter of 28^th October 2003 – “Believing that you can provide the service better and in a competitive way, we request you to reconsider the fee rate in order for us to sign the contract as quickly as possible” – suggested that a reduced rate would be likely to secure the contract, and, insofar as it did so, was inappropriately drafted (Footnote: ²³). But, even so, any contract was dependent on an acceptable reduced rate. Ms Mukasa offered to reduce MSM’s fee to 2%, which was, itself, double what Tanzania had said was the normal rate, and what Knight Frank eventually quoted (Footnote: ²⁴). The fact that it was still too high for the High Commission was apparent from Mr Gamaha’s communications with Ms Mukasa in early February and led to the meeting of 12^th February 2004 at which an impasse was reached. MSM was not entitled to assume that it would get the contract. It was trying, through the activities of Ms Mukasa to commend itself to the High Commission so as to secure that it did. But it was at risk of failing in that endeavour.

Thirdly, I do not regard the work carried out, so far as the same was known to the High Commission, as the sort of work for which Tanzania should be expected to pay if no contract materialised. MSM was looking around for a property which Tanzania might wish to buy, in the hope that, having shown Tanzania’s representative round several properties, Tanzania would contract with MSM to become its agent for the purpose of securing the one it wanted. I do not regard it as unconscionable for Tanzania, upon the failure of negotiations on 12^th February 2004, not to make payment to MSM for the work done in seeking to interest it in appointing MSM as agent. Further, it is not at all clear to me that Tanzania was made aware of the extent of the hours of research said to have been worked in relation to 15 properties (181 hours in all up to May 2004); much less that MSM was proposing to charge for them if no contract was agreed, and at the rate of £ 250 an hour. The evidence given in support of the quantum meruit claim for £ 57,156.95 consisted of little more than the presentation of the figures attached to the Points of Claim. Ms Mukasa was not cross examined on them; but there is no evidence that Tanzania was told the extent of the hours that she was clocking up, nor of any proposed charging rate. It is also impossible to check the hours submitted from any time sheet. By way of example 60 hours is claimed in respect of 3, Stratford Place for research which is summarised on a single page which includes details of 3 viewings, which themselves are claimed for separately.

Fourthly, the work that was done was in anticipation of a contract which, if it had materialised, would have entitled MSM to remuneration only if MSM had been the effective cause of the purchase; and MSM was not. That is not conclusive against recovery. A person may do work far beyond what could be regarded as work preliminary to a contract for which he ought justly to be compensated if the contract goes off even though, if the contract had been made, it would have provided for him to be paid for his work only in particular circumstances (e.g. if some result is achieved) which in the event would not have arisen. But it is a factor.

Fifthly, it does not seem to me that the failure to agree a contract arose because of either side’s “fault”. The parties simply could not agree a price.

Sixthly, Ms Mukasa’s evidence does not suggest that up until 12^th February 2004 she received any assurance of payment.

Seventhly, the benefit that the High Commission had received by then, was limited. It had been shown round a number of properties, of which 3 were possible candidates for purchase, including No 3 Stratford Place, which was attractive to it. But No 3 was lost to it, albeit temporarily.

Taking all these matters into account, it does not seem to me that the Court should oblige Tanzania to pay for Ms Mukasa’s services on the basis of what occurred up to 12^th February 2004.

I address the position after 12^th February 2004 separately because it is in that period that Ms Mukasa claims that she was given assurances (of a general character) that a contract would be signed and that payment would be made.

MSM’s claim for “Chores” in respect of the period 13^th February 2004 to 19^th April 2004 is for £ 3,451.56 (11.75 hours) covering 6 items namely:

I am not persuaded that justice demands that Tanzania should be required to compensate MSM for any of these hours. What was done does not, as it seems to me, constitute the sort of activity for which Tanzania ought to have expected to pay. It did not go plainly outside the sort of work that could be expected to be done gratuitously by someone in Ms Mukasa’s position seeking, after No 3 had become unavailable, to retain the interest of the High Commission in No 16, and to encourage it to enter into a contract with MSM on the basis that that should be the property aimed at. Nor was the benefit of the work to Tanzania such that it would be unjustly enriched if it did not make payment.

As to specifics, on 18^th February Ms Mukasa again asked for the return of the signed terms failing which she said she would be unable to expend further time to make representations to stop the seller of No 16 from accepting an offer from another party. This letter is a recognition that MSM was not yet retained and her refusal to expend further time is consistent with an appreciation that MSM was not being remunerated for the time she spent. I have rejected her evidence that on 20^th February she was assured by Mr Kibelloh that he would sign MSM’s terms as soon as he was in receipt of funds from Tanzania and that on 3^rd March she was assured that MSM would be paid. I accept that on 3^rd March there was some discussion about property in the course of which she said that she would arrange for the High Commissioner to see a property lawyer. But there is no evidence that the arrangement was made on the footing that the High Commission was expected to pay for the lawyer (or for MSM briefing him). Mr Bruce-Watt understood that the meeting was for the purpose of him presenting Pinsent Masons’ capabilities to the High Commissioner; not on the footing that he would be charging for it. I see no reason why the High Commissioner should have thought anything different or have expected that Tanzania would have to pay Ms Mukasa for her time briefing him on 8^th March. Nor does the discussion on 3^rd March appear to me to go beyond continuing activity intended to generate interest in appointing MSM as agent, so as to constitute something for which payment would have to be made.

In respect of 11^th March MSM claims for two hours of Ms Mukasa’s time accompanying Mr Thompson, the architect, and Mr Follows, the surveyor to view 16 Stratford Place in order to give a rough estimate in relation to the cost and time of refurbishment. There is, however, nothing to indicate that the High Commission ought to have realised that it would be expected to pay MSM for Ms Mukasa’s time spent on 11^th March and 13^th April or for Mr Thompson and Mr Fellows, whom it could reasonably have regarded as being in a similar position to that of Mr Bruce-Watt.

As to the claim in respect of 8^th April, the papers before me reveal that on 5^th April MSM faxed to Mr Kibelloh a one page budget for No 3 Stratford Place which produced a total figure for Purchase and Refurbishment Costs of £ 6,156,275. This did little more than specify a purchase price of £ 6,000,000, MSM’s fees of 1.5%, Lawyers/Solicitors’ Fees of 0.5% and a detailed property survey of £ 5,000 and Local Authority searches, together with VAT on all the fees. The costs were said to be a guide only and to require checking with the companies concerned. There was no suggestion that any part of the fees was already due. On 8^th April Ms Mukasa sent Mr Kibelloh a fax, referring to catching up with him the day before and to two meetings scheduled for 13^th (Property) and 19^th April (Mining).

The meeting on 19^th April was intended principally to discuss mining matters, with, as Mr Bruce-Watt recalled, some catching up on property (he recalled nothing new being discussed on that front). MSM is not entitled to be remunerated for its attempts to interest Tanzania in various mining related matters nor for the catch up conversation on property.

What is of significance is that on 6^th April Tanzania had already retained Knight Frank. In those circumstances there was little point, from Ms Mukasa’s point of view, in discussing either No 3 or No 16 Stratford Place on 13^th April. It would have been better if Mr Kibelloh had revealed that Knight Frank had already been instructed. Mr Kibelloh understood that this was another courtesy call in which Ms Mukasa was introducing Mr Bruce-Watt as one of her associates. They had a discussion, predominantly about No 16. I do not regard it as appropriate to oblige Tanzania to pay for this meeting.

The hours claimed in respect of “Chores” after 18^th April 2004 are 7.25 hours drafting and faxing invoices or letters of claim. The claim for them cannot stand on its own.

The claim for £ 1,200 and £ 2,500 which is contained in the miscellaneous costs claim of £ 3,988.20 (part of £ 4,004/60) is for Mr Thompson and Mr Follows’ services. They are the amounts of bills rendered to MSM in respect of advice, visits to Nos 3 and 16, and meeting with the High Commissioner between 2003 and 2004. For the reasons already stated (para 185) I do not regard these bills as something for which the High Commission ought to pay. The remaining costs are miscellaneous couriering, copying and stationery changes which are part and parcel of MSM’s attempt to be appointed and are not chargeable to Tanzania.

For these reasons in my judgment the claim fails.