Grizzly Business Ltd v Stena Drilling Ltd & Anor

An oral agreement for a success fee is enforceable where the parties have agreed the fee’s essential quantum, even though payment dates or a fixed monetary equivalent have not been settled. Whether such an agreement was made is determined on the balance of probabilities by assessing the witnesses, surrounding circumstances and contemporaneous documents. A party’s negotiating advice does not amount to repudiation merely because the other party considers it unwise, particularly where the advice remains an attempt to perform the relevant engagement. The contracting party is identified objectively in the context of the parties’ existing agreement and dealings.

Grizzly Business Limited claimed a success fee from Stena Drilling Limited and Stena Drillmax I Limited. Mr Devine, acting through Grizzly, had assisted Stena in negotiating a charter of the STENA ICEMAX with Shell. He alleged that, during a telephone conversation on 29 November 2011, Mr Welo agreed that Grizzly would receive 0.25% of the charter revenue if the charter was concluded.

Stena denied that agreement. It also contended that Mr Devine had repudiated any agreement by his subsequent conduct and disputed which defendant was liable. The court had to determine whether the oral agreement was made, whether it was repudiated, and whether liability rested with Stena Drilling Limited or Stena Drillmax I Limited.

1. Oral agreement. On the balance of probabilities, Mr Devine and Mr Welo agreed a success fee of 0.25% of the revenue. The court preferred the substance of Mr Devine’s account, supported by the expectation arising from their previous dealings, the fee arrangements on earlier projects, the timing and context of the conversation, Mr Welo’s need for Mr Devine’s assistance, and Mr Devine’s subsequent reference to the agreement. The absence of an immediate confirmatory email did not establish that no agreement had been made.
2. Quantum and enforceability. The parties had agreed the essential amount of the fee. The court rejected the submission that there was merely an unenforceable agreement in principle. An agreement would have been unenforceable if quantum remained unsettled, but that was not the position once 0.25% of revenue had been agreed.
3. No repudiation. Mr Devine’s advice to seek an early letter of intent and postpone detailed drafting did not amount to repudiation. It was advice about how the negotiations should proceed. Mr Welo was entitled to reject it, and did so in part. Mr Devine continued to seek to perform his contractual duties, and the offer sent to Shell substantially used his draft.
4. Liable defendant. Objectively construed, the success fee was agreed on behalf of Stena Drillmax I Limited. The consultancy agreement expressly contemplated that “the Company”—Stena Drillmax I Limited—could agree additional success fees with Grizzly. That contextual feature outweighed the facts that Stena Drilling Limited operated the vessel and paid earlier invoices.
5. Stena Drillmax I Limited was therefore liable to pay the agreed success fee. The claim against Stena Drilling Limited failed to the extent that liability was sought against that company.