Seakom Ltd & Anor v Knowledgepool Group Ltd

Commission under a commercial referral agreement is generally payable only where the referral is the effective cause of the transaction, unless the contract clearly provides otherwise. Contractual definitions must be read in their context and against the commercial purpose of the agreement. Where two constructions are available, the court may prefer the one consistent with business common sense, but commercial considerations cannot override clear language.

An estoppel by convention requires a shared assumption manifested across the parties’ dealings, together with the necessary reliance and unconscionability. Silence or conduct capable of more than one explanation is insufficient.

The claim concerned agreements under which Seakom supplied training-course leads to BTP and later to Knowledgepool. Seakom sought unpaid commission, alleging that a person became a commissionable “Lead” after making any enquiry through Coursemonster, so that all later transactions with that person or organisation attracted commission.

Knowledgepool contended that commission was confined to transactions resulting from a request or enquiry made through Coursemonster. The court also had to determine whether the BTP contract had been transferred from SL to SIL, whether it had been novated to Knowledgepool, whether an estoppel by convention arose, whether post-termination breaches were established, and whether a conditional counterclaim was available.

1. Construction. The natural and contextual meaning of the BTP contract confined commission to transactions resulting from a request or enquiry through Coursemonster. The present tense in the definition of “Lead”, together with the definition of “Introduce” and the contractual context, required a direct causal connection. The KGL contract reached the same result, with its reference to a transaction “generated following a Lead” reinforcing that conclusion.
2. The court applied the contextual approach in Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900. If necessary, Knowledgepool’s construction was preferred as commercially sensible. Seakom’s construction would have given it 40 per cent of profits from managed-services business with little or no connection to Coursemonster. The contra proferentem principle did not assist.
3. Estoppel. The entire-agreement clauses did not prevent an estoppel by convention based on a shared interpretation of the contracts. However, Knowledgepool failed to establish a sufficiently clear shared assumption, mutually manifest conduct, detrimental reliance, or unconscionability.
4. Transfer and novation. BTP waived the requirement for prior written consent to transfer SL’s rights to SIL, and the BTP contract was thereby transferred. The parties’ conduct between September and December 2008, including Knowledgepool’s performance and payment of commissions, the VPS, the audit and the proposed amendment, established novation by conduct to Knowledgepool despite an earlier reservation of rights by Seakom.
5. Seakom did not establish post-termination misuse of the Coursemonster trading style, wrongful holding out or misuse of confidential information. The proposed conditional counterclaim was unnecessary. Any account had to be a full account, including any overpayments.

Judgment was therefore entered on the stated liability findings, with the parties directed to draw up a composite order and seek agreement on costs and further directions.