Eurofi Limited v CMB Packaging International NV & Ors

A consultancy success fee calculated by reference to the value of grants offered per project is ordinarily measured by the benefit received by the client, not funds allocated to consortium partners who did not retain the consultant. Ambiguity about the grant, its recipient or the scope of the project is resolved by the commercial background. A client is not taken to have agreed to pay a percentage of funds in which it had no interest or right unless the contract clearly provides for that result. A clause addressing when a contingent fee becomes due may not determine its amount, but may support measuring success by money received by the client.

Eurofi provided consultancy services to CMB in obtaining European Commission research and development funding for a consortium project. CMB accepted liability for a contingent success fee but disputed whether the fee was calculated on its own share of the grant or the entire grant paid to the coordinating partner, the Danish Technological Institute, for distribution among the participants.

HHJ Playford QC, sitting as a High Court judge in the Queen’s Bench Division Administrative Court, held that the fee was based on CMB’s share and entered judgment for Eurofi for the balance due. Eurofi appealed, arguing that there was one project and one grant, so the fee should be calculated on the whole amount. The central issue was the proper construction of the contingency-fee provision.

Tuckey LJ delivered the first judgment. Hale LJ and Waller LJ agreed.

1. Disposition. The appeal was dismissed. The appellant was ordered to pay the respondents’ costs, assessed at £21,183.
2. Commercial context. The consultancy agreement provided for a percentage fee by reference to grants offered per project. Eurofi had been retained by CMB alone, although the relevant grant application concerned a consortium. The European Commission paid the grant to the coordinating partner, which distributed the participants’ defined shares. CMB’s share was £340,633.65 from a total payment of £1,137,406.50.
3. Construction. The relevant wording was ambiguous as to whether the fee referred to the whole grant or its value to CMB. It was also ambiguous as to the person to whom the grant had to be offered and whether the project meant the whole consortium project or CMB’s participation in it. Those ambiguities were resolved by commercial reality. A consultant would ordinarily expect remuneration by reference to the benefit received by the client. It made no commercial sense for CMB to pay a fee calculated on benefits received by parties which had not retained Eurofi, in which CMB had no interest or right, and which were irrevocably allocated to those parties.
4. Standard terms. Clause 2(b) did not resolve the ambiguity about the amount of the fee because the relevant wording dealt principally with when the fee became payable. It nevertheless reinforced the conclusion that success under an agreement of this kind was measured by the money received by the client.
5. Result. The judge below had reached the correct conclusion. Eurofi was entitled to calculate its fee on CMB’s share of the grant only.

• Court of Appeal (Civil Division): On 9 July 2002, the court dismissed Eurofi’s appeal and ordered it to pay costs of £21,183. The judgment is reported at [2002] EWCA Civ 1109.
• Queen’s Bench Division, Administrative Court: HHJ Playford QC, sitting as a High Court judge, held that the contingency fee was payable on CMB’s share of the grant and gave judgment for Eurofi for £7,374.61.