Alegro Capital Llp v Allproperty Media PTE Ltd

Contractual language must first be given its natural and ordinary meaning. Commercial common sense and factual background cannot be used to override clear wording. They become relevant only where the language is ambiguous or its ordinary meaning would flout business common sense. A company is legally distinct from its shareholders, and a contractual reference to capital provided “to the Company” does not ordinarily include money paid to shareholders for their own benefit. The words “directly or indirectly” qualify the manner in which investors are introduced where their position in the clause indicates that construction. Evidence of negotiations cannot ordinarily be used to establish contractual meaning, although it may be relevant for other purposes such as rectification or estoppel.

The claimant, a corporate finance adviser, claimed a success fee under an engagement letter with the defendant. The agreement provided for a fee calculated by reference to capital provided to the defendant by investors introduced by the claimant, directly or indirectly.

An investor subscribed for newly issued shares in the defendant and also purchased existing shares from its shareholders. The claimant had not introduced the investor, but the investor was within the class identified in the agreement. The claimant had already obtained summary judgment for a fee calculated on the capital paid to the defendant. The trial concerned whether the additional sum paid to shareholders also formed part of the “Capital Raised”.

1. Construction of the engagement letter. The relevant provision was clear and unambiguous when read as a whole. “The Company” meant the defendant company, not its shareholders. The success fee was therefore calculated only on capital provided to, and transferred to or for the benefit of, the defendant.
2. The words “directly or indirectly” qualified the introduction of investors, rather than the provision of capital. Their position in the sentence supported that construction. The claimant was entitled to the fee on the capital subscribed for newly issued shares because the investor fell within the contractual definition, even though the claimant had not materially caused the investment.
3. The ordinary meaning did not flout business common sense. The fact that the purchase of existing shares may have facilitated the investment did not make the purchase price capital provided to the defendant. The shareholders received that money for their own benefit.
4. The court reiterated the approach in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, ICS v West Bromwich Building Society [1998] 1 WLR 896, BMA Special Opportunities Hub Fund v African Minerals Finance [2013] EWCA Civ 416 and Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101. Commercial common sense is not an overriding criterion, and strong evidence is required before concluding that something has gone wrong with the language.
5. Evidence of the parties’ negotiations did not assist the claimant. It could not be used to establish what the contract meant, and the claimant sought no rectification. The claimant failed to establish any entitlement to a fee based on the sums paid to the shareholders. The claim for the balance was dismissed.

The judgment records that Master Leslie granted summary judgment on 6 March 2013 for £316,708 plus interest, representing 3.5% of the capital paid directly to the defendant. That decision was not appealed. The present judgment determined the remaining claim at first instance.