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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> JAS Financial Products LLP v ICAP Plc & Anor [2016] EWHC 591 (Comm) (18 March 2016) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2016/591.html Cite as: [2016] EWHC 591 (Comm) |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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JAS FINANCIAL PRODUCTS LLP |
Claimant |
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- and - |
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(1) ICAP PLC (2) ICAP SECURITIES LIMITED |
Defendants |
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Guy Morpuss QC (instructed by Macfarlanes LLP) for the Defendants
Hearing dates: 12 13 14 and 18 January 2016
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Crown Copyright ©
Mr Justice Knowles :
Introduction
Approach
"The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. Even if certain terms of economic or other significance to the parties have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a pre-condition to a concluded and legally binding agreement."
"On this basis, the ascertainment of the terms of the agreement was a question of fact …. The tribunal took into account the language of the letters … but they also took into account the subsequent conduct of the parties, some of which pointed to employment and some of which did not, and the evidence of both the respondents and Mr. Lovatt for the C.E.G.B. as to what they had understood their respective obligations to be. Ward L.J. said, at p. 1185G that was a mistake. The terms of the contract must be objectively construed. "What they thought they had achieved is of no consequence." Chadwick L.J. likewise said, at p. 1194B, that "the question was not what the parties thought their obligations were." This austere rule would be orthodox doctrine in a case in which the terms of the contract had been reduced to writing. But I do not think that it applies to a case like the present. In a case in which the terms of the contract are based upon conduct and conversations as well as letters, most people would find it very hard to understand why the tribunal should have to disregard the fact that Mr. Lovatt and Mrs. Carmichael both agreed that the C.E.G.B. were under no obligation to provide work and the respondents under no obligation to perform it. It is, I think, pedantic to describe such evidence as mere subjective belief. In the case of a contract which is based partly upon oral exchanges and conduct, a party may have a clear understanding of what was agreed without necessarily being able to remember the precise conversation or action which gave rise to that belief. As the Court of Appeal pointed out, the tribunal did not make any specific findings about what was said at the interviews or on any other occasion. But the terms of the engagement must have been discussed and these conversations must have played a part in forming the views of the parties about what their respective obligations were.
The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done. But when both parties are agreed about what they understood their mutual obligations (or lack of them) to be, it is a strong thing to exclude their evidence from consideration. Evidence of subsequent conduct, which would be inadmissible to construe a purely written contract (see Whitworth Street Estates (Manchester) Ltd. v. James Miller and Partners Ltd. [1970] A.C. 583) may be relevant on similar grounds, namely that it shows what the parties thought they had agreed. It may of course also be admissible for the same purposes as it would be if the contract had been in writing, namely to support an argument that the terms have been varied or enlarged or to found an estoppel."
JAS's position
"Gary [Smith],
I have set out below the terms of the JV between ICAP and JAS Financial Products ("JAS") agreed in the meeting with you, Shaun Miell, Rumit Shah and me on Tuesday, May [1]3[th]. Further to your discussion with Rumit on Wednesday, I am happy to sign whatever additional documents ICAP requires to record this agreement.
1. ICAP and JAS will establish a JV to pursue new lines of business to be agreed. The resulting profit will be split 50/50. JAS and ICAP will each keep all client and trade information confidential. All trades relating to the agreed and new lines of business will be executed in the JV.
2. ICAP and JAS will each continue to work on their existing lines of business outside the JV and retain 100% of the future profit so generated. However, ICAP and JAS may elect to pay market based fees ("Facilitation Fees") to be agreed between them for facilitating each others trades outside the JV.
3. JAS will provide middle office support ("Middle Office Support") between (i) Shaun's business in the front office and (ii) back office controls including tax, legal, accounting, operations and/or any other functions ICAP deems to be relevant to mitigate the risk for the business.
3.1 JAS will assist in obtaining appropriate tax, legal and accounting advice as well as research and facilitate the mitigation of risk in operations and/or other functions as required by ICAP.
3.2 ICAP will provide office space for JAS to facilitate the provision of the Middle Office Support as soon as practical.
3.3 JAS will not, without prior permission from ICAP, enter into trades utilising sensitive market information or technology which JAS will have obtained as a result of the Middle Office Support.
3.4 For the Middle Office Support, ICAP will pay JAS (i) £50 thousand plus Vat monthly and (ii) £2 million of credit for Facilitation Fees ("Facilitation Fee Credits") annually. The Facilitation Fee Credits can be surrendered to ICAP in lieu of cash JAS would otherwise owe to ICAP for ICAP's role in facilitating JAS' trades outside the JV.
3.5 This agreement will be in force for a period of 24 months beginning on June 1, 2008.
I look forward to hearing from you soon.
Best regards
Stuart [Bray]"
Evidence and findings at trial
Conclusion
Other matters