Regent Associates Ltd v Brazier & Ors

A service agreement must be construed as a whole, but clear wording in a fee clause is not displaced by concepts appearing elsewhere in the agreement. Where a clause provides for a success fee on completion of each disposal during the engagement, the fee may be payable without proof that the purchaser was introduced by the adviser if the agreement contains no such qualification. Specific references to introduced prospective purchasers in clauses dealing with alternative agreements or post-termination transactions do not necessarily qualify the general disposal provision. Commission agreements have no special rule of construction. Any presumption that an agent must be an effective cause applies only where the true agreement is for payment for an introduction or for finding a purchaser.

The respondents were retained to provide corporate finance and strategic advice concerning the proposed sale of shares in Swan Software Group Ltd. The agreement provided for a success fee on completion of each disposal. The shares were later sold to Infor, which had not been introduced by the respondents.

A deputy High Court judge construed the agreement as entitling the respondents to the fee and gave judgment for them. The appellants challenged that construction and sought to amend their notice of appeal to raise a new defence based on an alleged agreement to suspend the service agreement. The central issues were the proper construction of the fee provisions and whether the new defence should be admitted.

1. Appeal and amendment. The appeal was dismissed. Permission was granted to amend the notice of appeal in relation to the reformulated construction argument, but permission was refused for the proposed suspension defence. That defence had not been pleaded, clearly argued, or dealt with at first instance, and it was unfair to introduce it for the first time on appeal.
2. Construction of the agreement. Clause 5, read in the context of the agreement as a whole, entitled the respondents to a success fee on completion of each disposal during the period of engagement. It contained no requirement that the purchaser be a prospective purchaser introduced, or deemed to have been introduced, by the respondents.
3. The references to prospective purchasers in clauses 8 and 11 served different functions. Clause 8 concerned alternative agreements, for which an introduction was relevant. Clause 11 primarily addressed the consequences of termination and qualified the post-termination position. Those provisions did not modify the clear entitlement under clause 5 for disposals completed during the engagement.
4. The commercial nature of the respondents’ obligations supported that construction. Their work extended beyond finding a purchaser and included corporate finance and strategic advice. The possibility that the fee might sometimes operate as a windfall did not justify rewriting the agreement.
5. Mance LJ observed that there was no special principle governing the construction of commission agreements. Where payment is agreed for an introduction or for finding a purchaser, an effective-cause requirement may generally be presumed. The question here remained the true construction of this particular agreement.
6. The appeal was dismissed with costs. The notice of appeal was amended save that ground 12 was not permitted.

• Court of Appeal (Civil Division) [2002] EWCA Civ 999: appeal dismissed with costs. Permission was granted to amend the notice of appeal on the reformulated construction point, but refused for the suspension defence.
• Queen’s Bench Division: Mr Stuart Brown QC, sitting as a deputy High Court judge, construed the service agreement as entitling the respondents to the success fee.