Mirador International LLC v MF Global UK Ltd

Contractual entitlement to commission depends on the objective meaning of the agreement, read as a whole and in its commercial context. Where a potential customer's introduction remains pending, an account opened and accepted after execution may fall within the agreement even though preparatory steps occurred earlier. The expressions accounts introduced and Customer must be read in context; the former is not necessarily confined to customers first introduced during the appointment. Commercial common sense may support a permissible interpretation, but cannot rewrite the bargain. The appeal was dismissed by a majority.

Mirador claimed commission under an introducing broker agreement with MFG in respect of Dante Lido's trading. Dante Lido was first brought to MFG in August 2003, before Mirador was incorporated and before the agreement was executed. His account was opened on 3 October 2003, the date on which the agreement was signed.

The High Court, in [2011] EWHC 683 (Comm), held that the agreement covered the account and directed an account of sums due. MFG appealed, arguing that the introduction pre-dated both Mirador and the agreement. The central issue was whether the agreement entitled Mirador to commission where the initial introduction occurred before execution but acceptance and account opening occurred afterwards.

The appeal was dismissed by a majority. Lord Justice Lewison and Lord Justice Rix upheld Mirador's entitlement to commission. Lord Justice Moore-Bick dissented and would have allowed the appeal.

1. Objective construction. The court agreed that contractual meaning is determined by asking what a reasonable person with the relevant background knowledge would have understood the agreement to mean. The majority treated the IBA as imprecise and internally inconsistent. It was permissible to prefer a commercially sensible interpretation where the language could bear it. Whether the process was described as construction or implication, the objective task was the same. Lewison LJ referred to Rainy Sky SA v Kookmin Bank [2011] UKSC 50 and Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10.
2. Construction of the IBA. Although Mirador's appointment began on execution, clauses 5 and 8, Schedule A and the deliberate reference to accounts rather than only defined Customers supported a wider reading. Clause 8(c) extended to accounts introduced by the IB's clients or contacts. The definition of Customer was not sufficiently consistent to determine the issue.
3. Application. Lewison LJ regarded the relevant account as coming into existence after the IBA was signed. Rix LJ regarded the earlier introduction as still pending and as taken over by Mirador when the agreement was executed. On either analysis, Dante Lido was accepted and his account opened on 3 October 2003 as part of the contemplated transition. The introduction therefore operated under and for the purposes of the IBA, and commission was payable.
4. Scope. Rix LJ left open the different case in which a customer had already been accepted and an account opened before execution of the IBA; that case might present greater difficulty. Moore-Bick LJ would have confined clause 8(c) to introductions made during Mirador's appointment, relying on the ordinary meaning of the formal written agreement and rejecting the commercial extension adopted by the majority.

The High Court's order directing an account therefore stood.

1. Court of Appeal (Civil Division): In [2012] EWCA Civ 1662, the appeal was dismissed by Lewison and Rix LJJ, with Moore-Bick LJ dissenting.
2. High Court of Justice, Queen's Bench Division, Commercial Court: In [2011] EWHC 683 (Comm), His Honour Judge Mackie Q.C. held that the agreement covered Dante Lido's account and directed an account of sums due.