Bradmount Investments Ltd. v Williams De Broe Plc & Ors

The claimant pursued damages for breach of a confidentiality/exclusivity letter dated 16 August 2001 (the "August agreement") and for inducing that breach, and sought £50,000 under a later Heads of Agreement (the December Heads) signed in its favour. The judge held that the claimant failed on all claims. Key legal principles applied were (i) the equitable doctrine of acquiescence/estoppel by conduct, which precluded the claimant from relying on the August agreement after it had knowingly allowed the defendant broker to act and to become contractually engaged by the target company; (ii) the established tests for implying contractual terms (BP Refinery criteria) which precluded implying a term preventing a nominated adviser from giving objective advice; and (iii) ordinary causation and loss principles, including the need to show that the target would have agreed to the claimant's continued participation and that loss would have been suffered.

Material factual findings included that Mr Mountain did not sign the December Heads so the £50,000 claim failed; that the August agreement applied to the Leeds office engagement but Bradmount acquiesced and was estopped from objecting after substantial work and formal engagement; that no implied term could properly be read into the August agreement; and that PM Onboard and Mr Mountain did not know of the August agreement prior to signing the broker engagement, so the inducement claim failed. The court also found, in any event, that the claimant had not established causation or recoverable loss.

This was a first instance trial in the Chancery Division concerning a proposed flotation of PM Onboard Limited (PMO) on AIM. Bradmount, a corporate adviser, alleged that Williams De Broe Plc (WdB) breached a restricted-engagement letter of 16 August 2001 by acting for PMO without written consent; that PMO and its founder Mr Mountain induced that breach; and that Mr Mountain was liable under a December Heads of Agreement for £50,000 if the sellers withdrew from negotiations without good cause.

The principal factual background involved KPMG advising PMO, negotiation of Heads of Agreement between Bradmount and the sellers, approaches to WdB (London and Leeds offices), a pre-marketing exercise by WdB, and subsequent disagreements about the transaction structure which led PMO to proceed without Bradmount.

The court framed and decided the following issues:

• Whether Mr Mountain signed the December Heads of Agreement so as to make clause 12.2 (the £50,000 provision) enforceable;
• Whether the August agreement prevented WdB from acting for PMO and, if so, whether WdB breached it;
• Whether a further term should be implied into the August agreement to prevent WdB from seeking to oust Bradmount;
• Whether PMO and Mr Mountain induced any breach by WdB, including the question when Mr Mountain knew of the August agreement; and
• Whether Bradmount suffered loss causally attributable to any breach or inducement and, if so, its quantum.

The judge found as facts that Mr Mountain did not sign the December Heads and that the August agreement did apply to the Leeds office engagement but that Bradmount, through its conduct and knowledge, had acquiesced in WdB acting and was estopped from relying on the restriction after WdB had undertaken substantial preparatory work and become formally engaged by PMO. The court rejected an implied term to prevent WdB giving independent advice as unnecessary, inconsistent with WdB's role as nominated adviser and contrary to the BP Refinery criteria. On inducement, the court accepted the evidence that Mr Mountain did not know of the August agreement before signing the engagement (he first learnt of it in mid-January 2002), so there was no inducement. Even on alternative assumptions, the judge concluded that Bradmount had not proved causation or that it suffered recoverable loss: the structure and timing of events made it unlikely that PMO would have remained with Bradmount on the claimed terms and expert evidence did not establish a reliable quantum of loss. The judge therefore dismissed all of Bradmount's claims.

Claim dismissed. The court found that Mr Mountain did not sign the December Heads of Agreement so the £50,000 claim failed; that the August agreement did apply but Bradmount had acquiesced and was estopped from objecting to WdB acting and in any event could not show causation or loss; that no term preventing WdB from ousting Bradmount could be implied; and that PMO and Mr Mountain did not induce a breach because they did not know of the restriction when WdB was engaged.