BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales Court of Appeal (Civil Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Regent Associates Ltd v Brazier & Ors [2002] EWCA Civ 999 (17 June 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/999.html Cite as: [2002] EWCA Civ 999 |
[New search] [Printable RTF version] [Help]
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(MR STUART BROWN QC, Sitting as a Deputy High Court Judge)
Royal Courts of Justice Strand London WC2 Monday, 17th June 2002 |
||
B e f o r e :
LORD JUSTICE MANCE
-and-
SIR SWINTON THOMAS
____________________
REGENT ASSOCIATES LTD | ||
- v - | ||
(1) MORNA BRAZIER | ||
(2) PAUL BRAZIER | ||
(3) ANNE HOLMES |
____________________
Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2Ag
Telephone No: 020 7421 4040
Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
appeared on behalf of the Appellant
MR R de LACEY QC and MISS A GREEN (instructed by Bates Wells & Braithwaite, London EC2V 6BB)
appeared on behalf of the Respondent
____________________
Crown Copyright ©
Monday, 17th June 2002
"1. The Directors of Swan Software on behalf of the shareholders of Swan Software agree to retain Regent to provide corporate finance and strategic advice in support of its intention to dispose of some or all of the shares or assets of Swan Software.
2. Regent will maintain and update a list of companies, investor organisations or management groups ("prospective purchasers") of Swan Software and upon request provide an up-to-date list to you. The list of Prospective Purchasers will include the names of senior officers of the Prospective Purchasers who have been approached to effect introductions and for the purposes of this Service Agreement those senior officers are also Prospective Purchasers. All companies and individuals on this list of Prospective Purchasers are deemed to have been introduced to Swan Software by Regent for the purposes of this agreement unless and until agreed otherwise in writing.
3. The above comprises the full extent of the obligations of Regent under this agreement. Any variation to these instructions will be advised to Regent by Swan Software and must be agreed by both parties in writing.
5. On the completion of each and every sale of some or all of the shares or assets of the Swan Software ("Disposal"), Swan Software agrees to pay Regent a corporate finances fee ("Success Fee") of:
5% of the first £1,000,000
4% of the next £1,000,000
3% of the next £1,000,000
2% thereafter
of the Aggregate Consideration of the Disposal subject to a minimum fee of £100,000 per Disposal payable at completion of the Disposal. Your attention is also drawn to the paragraph 11 of this letter concerning Disposals within 2 years of the date of termination of this agreement.
8. If following an introduction of a Prospective Purchaser by Regent to Swan Software no Disposal occurs, but whilst this agreement is in force or within two years from the date of termination an alternative agreement ("Alternative Agreement") for example, frequent, a royalty, licensing, trading, marketing, joint venture, agency, distribution, outsourcing or project management agreement is concluded between a Prospective Purchaser and Swan Software, Swan Software agrees to pay to Regent a Success Fee of 5% of the revenue receivable by Swan Software resulting from the Alternative Agreement for a period of two years, commencing when Swan Software first derives the benefit from such agreement.
11. This agreement may be terminated by either party giving one month's prior notice to be served at any time on or after the end of the second month after this agreement comes into force. However, if Swan Software proceeds with and completes a Disposal or Alternative Agreement at any time within the period of engagement or within two years from the date of termination of this agreement for whatever reason with a Prospective Purchaser, Swan Software will pay to Regent the sums referred to in paragraphs 5 and 8 above and for the avoidance of doubt where the context permits all of the terms of this Agreement will survive any termination.
12. If, this agreement is formally cancelled in writing by Swan Software without a Disposal, Regent will be paid for undertaking this agreement up to the greater of, a maximum of £30,000 calculated on a per diem rate of £1,000 for executive time, or the aggregate of the retainer fees payable pursuant to paragraph 4. This is payable in addition to the sums payable pursuant to paragraphs 5, 8, 10 and 13.
17. References to Swan Software and "Prospective Purchaser" shall, where the context permits, include references to all other companies in the same group of companies as Swan Software and "Prospective Purchaser" respectively; such that if, for example, Swan Software concludes a Disposal of assets to a subsidiary of the Prospective Purchaser the fees referred to in this letter will still be payable."
"22. He [the claimants' director, Mr Rowell] would never have agreed to limiting Regent's entitlement in the way alleged by the Defendants. He has never previously done so (nor have any of his colleagues). His reasoning requires to be explained. The services provided by Regent are set out in the Regent proposal."
"It is important to understand that once an agreement has been entered into there is a real need for mutual trust and co-operation. Without such the venture would be doomed to fail.
23. Mr Rowell asserted that if fees were only payable where there had been an introduction that necessary relationship could not exist. There would be nothing to prevent the client going behind Regent's back and negotiating a disposal 'on the strength of Regent's work' to a third party who might have learnt of the possible opportunity through Regent's work but who had not actually been introduced by Regent.
24. By contrast Mr Rowell accepted that he was willing to consider the post-termination position in a different light and though his company would expect remuneration if a sale occurred (post-termination) that entitlement would only be pressed (? could only be justified) if (and I use a neutral phrase) Regent had played a part in it.
25. He indicated (and his recollection was supported by Mr Stowell) [another director] that the concern raised by Mr Brazier was one directed at the post termination situation. Thus Clause 11 was amended in the way set out below.
26. I am acutely conscious of the fact that in setting out the oral evidence as to this matter in some little detail I need to have strongly in mind the relevance of such."
"28. I am quite satisfied he would not have agreed to any general limitation such as that suggested by the Braziers and certain that he would not, as alleged, have misrepresented the position. This was a reputable business being conducted along its usual lines. There were good reasons for not agreeing to the suggestion, if made, and no special circumstances, such as appertain in some of the twenty-one to a specific limitation on entitlement.
29. By contrast I find the Braziers' recollection unsatisfactory and indeed confused. I have already found that the contract as appears in the bundle was that signed. The Braziers are, in my view, wrong in any contrary assertion (in the event only hesitantly advanced)."
"Of course I still have to construe the contract and in particular Clause 11 but I am quite satisfied that the amendment, whatever it means, was in fact agreed, was faithfully 'copied' into the signed version and was not contradicted by any contrary explanation to the Braziers."
"Why was the contract put on hold? It is common ground it was. The Braziers... may have been disappointed by the sort of figure... mentioned... If they were disappointed it was as to their belief that the company was (or could be) worth substantially more (as proved to be the case). I do not accept they were disappointed with the Claimant. Insofar as they now assert that they were, again their evidence is coloured by subsequent events and their being called upon to pay a fee which they regard as unreasonable. I do not accept, as they now assert, that they expressed any dissatisfaction. Had they done so then I see no reason why they should not have sought to cancel though I recognise there were practical (financial) reasons for not doing so. Put shortly I suspect that in the summer of 1999 they were still not certain whether to sell and even a low information 'guess' was enough to encourage further procrastination."
"35. Clause 5, if it stood alone, is clear. It entitled the Claimant to a fee on a sale of shares (disposal) whether or not Regent played any part (effectively introduced or placed on a list pursuant to Clause 2). That entitlement, as the note warns, may extend to two years post termination.
36. In this regard clause 8 is different. Clause 8 specifies the fee payable in the event of an 'alternative agreement'. Here entitlement is dependent upon the new 'partner' being a 'prospective purchaser' (an actual introduction or on the 'list').
37. Clause 11 in its original form would properly and without argument be construed as a termination clause. After providing for notice it merely repeated the substance of the obligation under Clauses 5 and 8.
38. However the Defendants assert that by the addition of the words 'to a prospective purchaser' it should be read differently so that those words qualify not only Article 8 and post-termination transactions generally but also disposals 'within the period of engagement.'"
"45. I am quite satisfied that, taken as a whole, the contract has the meaning contended for by the Claimant and entitles them to their fee. My reasons are these:-
i) Clause 5 comes first; it is clear and has no limitation.
ii) It accords with good common business sense; the nature of the services offered must be borne in mind. They were extensive and went far beyond mere introduction. The company had to be analysed and then 'positioned'; Regent would conduct negotiations.
iii) Those services could not properly be performed unless there was mutual trust and co-operation; that could not subsist if there was doubt as to whether a success fee was payable according to who effected the first approach.
iv) Clause 8 covers an entirely different situation. Joint ventures may arise independently of the one 'partner' being 'on the market'. In that situation 'introduction' would be an appropriate guide to whether a fee was 'fairly' claimable.
v) Clause 11 is a termination clause. That is how it begins. Mr Parsons argues it is an activating clause but I cannot so regard it. It provides for cancellation. It follows clauses 5 and 8 and merely clarifies (and restricts) the entitlement post termination. Though it would be happier if there were no reference to 'within the period of engagement' those words are mere surplusage and cannot as a matter of good business sense fundamentally alter the nature of the obligation clearly imposed (again as a sound commercial allocation of benefit/liability) by Clause 5.
vi) Mr Parsons pointed to the fact that the fee is described (both in the agreement and elsewhere) as a 'success fee' but this begs the question as to whose success? In my view the success is a sale not a sale introduced by Regent.
vii) I see nothing dramatic or exceptional in the idea of a 'windfall'. Sometimes Regent will have to work hard for their fee but on other occasions they will 'strike lucky'. Their list could be exhaustive and by sheer good fortune include a name but if the name was not there and a sale ensued they would still be entitled. Quite possibly that sale (to a non-named, non-introduced third party) might well have arisen as a direct consequence of their marketing endeavours albeit there had been no direct contact. A fee should be payable, the parties would, I find, objectively have been happy to agree thereto. This is an important matter, construed as I have done, there is no need to embark upon the difficult exercise of determining how the third party came onto the
scene.
46. I understand the Defendants' irritation. They could however have cancelled (and thereby made the commitment less open ended); had they done so then in those circumstances they would not have been liable (though they would have had to pay a not insubstantial cancellation fee). They chose not to and as all parties agree this is an all or nothing case with no scope for quantum meruit. They are now liable, as I find, to pay what must seem to them a grossly inflated fee."
"21. A further reason why the Success Fee is not payable upon the Disposals is that the parties had agreed to suspend the Agreement. That can be the only explanation for the parties agreement that the obligation to pay Regent the retainer fee of £5,000 plus Value added tax should be suspended. As noted above, it was only paid for May 1999."