Bradmount Investments Ltd. v Williams De Broe Plc & Ors

A contractual restriction preventing an adviser from acting for a company on a flotation may extend beyond work directly resulting from the introduction, where that is the commercially sensible construction. However, a party with knowledge of the restriction may lose the right to rely on it by acquiescing in the adviser’s work, remaining silent, and causing the adviser to act to its detriment. Acquiescence is an aspect of estoppel by representation and turns on whether reliance has made it unconscionable to assert the breach. A term will not be implied where it is unnecessary, insufficiently obvious, unreasonable, inequitable, or inconsistent with the adviser’s independent duties. A claim for loss also requires proof that the alleged breach caused a real and substantial prospect of the claimed benefit.

Bradmount claimed damages against Williams De Broe Plc for breach of an agreement restricting it from acting for PM Onboard Limited on a proposed flotation without Bradmount’s written consent. It also alleged that Williams De Broe breached an implied obligation not to displace Bradmount, and that PM Onboard and Geoffrey Mountain induced the breach. Bradmount separately claimed £50,000 from Mr Mountain under Heads of Agreement said to govern the proposed transaction.

The dispute concerned the construction and effect of the August agreement, Bradmount’s knowledge of Williams De Broe’s involvement, acquiescence, inducement, implied terms, causation and loss. The court also had to decide whether Mr Mountain had signed the December Heads of Agreement.

1. Claim under the Heads of Agreement. Mr Mountain had not signed the December version of the Heads of Agreement. Bradmount’s claim for £50,000 under clause 12.2 therefore failed.
2. Construction of the August agreement. The restriction on Williams De Broe acting for the company applied to the flotation and any offer for its share capital. It was not confined to work resulting from Bradmount’s introduction. The words “act for” bore their ordinary meaning and included preparatory work and pre-marketing undertaken for PM Onboard.
3. Acquiescence. Bradmount knew that Williams De Broe was working for PM Onboard, helped it with the transaction, knew that its engagement was being agreed, and raised no objection until January 2002. Williams De Broe consequently undertook substantial work and became contractually bound to PM Onboard. The elements of acquiescence were present: conduct inconsistent with the contractual right, knowledge, silence and detrimental reliance. It would be unconscionable for Bradmount to rely on the breach. The right to object could not be revived after the engagement had been signed.
4. Implied term. No term requiring Williams De Broe to co-operate with Bradmount or refrain from displacing it could be implied. The proposed term was unnecessary, not sufficiently obvious, unreasonable and inequitable. It would also conflict with Williams De Broe’s duty as nominated adviser to give objective and independent advice to PM Onboard and potential investors.
5. Inducement and loss. The inducement claim failed because Williams De Broe had not committed an actionable breach. In any event, Mr Mountain had not known of the restriction when he signed the engagement letter. Bradmount also failed to establish that PM Onboard would have accepted its continued involvement, or that the claimed shares, warrants and options could have been realised. Each claim therefore failed.