Derek Hodd Ltd v Climate Change Capital Ltd

The claimant sought recovery of a contingency fee under a written engagement dated 13 November 2006 for consultancy work on expense reductions. The court held that a binding contract existed but that the natural construction, on the factual matrix, identified Climate Change Capital Limited (CCC) as the intended counterparty and Zukra Ltd (the consultant’s company) as the supplier. The court rejected the defendant’s submission that the contract was unenforceable under the Business Names Act 1985 because the consultant’s corporate name and address appeared on the reverse of the letter of engagement and were incorporated by reference.

Substantively, the court held that the consultant’s Findings Report did not amount to a Recommendation Report within the terms of the agreement: the Benchmark Report lacked a clear, usable yardstick for air fares, the alleged success criteria were not established, and the report’s costed savings scenarios were speculative and inconsistent with the evidence about booking patterns and travel needs. Because the contractual prerequisites for a contingency fee were not satisfied, the claimant’s claim for the contingency fee failed. Alternative remedies in quantum meruit and unjust enrichment were likewise dismissed.

Background and parties. The claimant (Derek Hodd Ltd) sues as assignee of Zukra Ltd, which had carried on procurement consultancy services under the ERA trading name. The defendant is Climate Change Capital Limited (CCC). The dispute concerns an invoice seeking 50% of projected savings arising from an air travel review carried out under a Letter of Engagement dated 13 November 2006.

Nature of the claim and relief sought. The claimant sought payment of a contingency fee of £125,250 plus VAT (total £142,674.38) invoiced 12 February 2008, together with interest. The claim is founded on the 2006 Agreement (Letter of Engagement and ERA Terms and Conditions) and, if necessary, on restitutionary remedies.

Procedural posture. First instance hearing in the Chancery Division (trial with oral evidence from key witnesses). Preliminary issues were determined about (i) the identity of the contracting parties, (ii) compliance with the Business Names Act 1985, and (iii) whether the consultant’s reports satisfied contractual conditions enabling a contingency fee to be claimed.

Issues framed by the court. (1) Which entity in the CCC group contracted? (2) Whether the Letter of Engagement complied with section 4 of the Business Names Act 1985. (3) Whether the Findings Report constituted a Recommendation Report and met the success criteria in the Terms and Conditions so as to trigger contingency fee payments. (4) If not, whether alternative remedies (day rate, quantum meruit, unjust enrichment) were available.

Reasoning and conclusions. On construction of the contract in light of the factual matrix the court concluded that the parties objectively intended the contracting counterparty to be CCC, not the dormant misnamed entity used in the letter. Alternatively, the court would have rectified the agreement to name CCC. The Business Names Act complaint failed because Zukra’s corporate name and address appeared legibly on the reverse of the letter and the front page expressly incorporated the terms and conditions overleaf.

On the substantive claim the court analysed the Benchmark Report and Findings Report and found them deficient: the benchmark figures were inconsistent and unclear, promised appendices were missing, the success criteria for air travel were not properly defined in the Benchmark Report, and the savings scenarios assumed booking patterns inconsistent with the evidence of business need and actual short‑notice travel. The Findings Report therefore did not meet the contractual definition of a Successful Recommendation Report and did not establish implementable savings which CCC failed to implement. The contractual claim, and alternative restitutionary claims, therefore failed and the action was dismissed.

Wider comment. The court noted the rarity of permitting recovery where a claimant has not satisfied explicit contractual success criteria and emphasised the application of ordinary principles of contractual construction and, if necessary, rectification.

The claim is dismissed. The court held that (1) as a matter of construction the contracting counterparty within the Climate Change Capital group was Climate Change Capital Limited (and, alternatively, the contract could be rectified to that effect); (2) the Business Names Act 1985 requirements were satisfied by information on the reverse of the letter incorporated by reference; but (3) the Findings Report did not qualify as a Recommendation Report under the agreement, the success criteria were not met and the contingency fee was therefore not payable. Alternative claims in quantum meruit and unjust enrichment also failed.