African Minerals Ltd v Renaissance Capital Ltd

In a contractual fee clause, consummated ordinarily means completed. For a sale, the relevant interest must be transferred pursuant to the sale agreement. Agreement of the main terms, or execution of a definitive agreement, is insufficient unless the contract expressly makes that the trigger. A specially defined contractual “Completion” does not require “consummated” to mean an earlier event. The retained wording of an earlier engagement agreement may confirm the construction. A tail-period fee is therefore not earned where the sale remains subject to unsatisfied conditions when the contractual period expires.

Renaissance claimed a fee from African Minerals under an amended financial-adviser engagement letter concerning the Shandong Transaction. The original engagement was amended after its term expired, including by providing for a fee if any Sale was consummated within one year after termination. African Minerals terminated the amended agreement effective 13 September 2010. Although transaction documents had been signed by 13 September 2011, conditions precedent remained unsatisfied; the transaction completed on 2 April 2012.

Field J held that consummation occurred when the terms, or main terms, of the sale were agreed and awarded Renaissance $29,907,000. African Minerals appealed, arguing that consummation required completion. Renaissance cross-appealed for a higher fee.

Appeal and cross-appeal. The Court of Appeal, in the judgment of Sir Stanley Burnton agreed by Lady Justice Sharp and Lord Justice Elias, allowed African Minerals’ appeal, set aside paragraph 1(a) of the order below and dismissed Renaissance’s cross-appeal.

1. Meaning of “consummated”. The word was an ordinary English word and not a legal term of art. The relevant question was what had to be consummated: here, the Sale. Its natural meaning was completion, namely transfer of the relevant interest pursuant to an agreement for the Sale. It did not occur when the parties merely agreed the sale, agreed its main terms or entered into a definitive agreement.
2. Contractual context. The parties had used “agreement” and “definitive agreement” elsewhere in the engagement documents. They could have made agreement the fee trigger but had not done so. The fact that “Completion” had a special contractual definition did not require “consummated” to describe an earlier event. The argument based on avoiding synonyms therefore did not determine the construction. The proposed “main terms” test also introduced unacceptable uncertainty into a substantial fee trigger.
3. Earlier agreement. The amended agreement altered, but did not replace, the original engagement. It retained the same wording concerning a Sale being consummated, and incorporated the original terms. The original agreement distinguished between a definitive agreement with an introduced purchaser, which had to result in a Sale, and a Sale to an unconnected purchaser, which had to be completed. That context confirmed that consummation involved completion and more than agreement.
4. Application. The Shandong Transaction had not been completed within the one-year period. Its contractual documents remained subject to unsatisfied conditions precedent. Renaissance therefore acquired no fee entitlement under the amended agreement. It was unnecessary to determine the alternative argument concerning the existence of a binding agreement or Renaissance’s cross-appeal.

• Court of Appeal (Civil Division): In [2015] EWCA Civ 448, African Minerals’ appeal was allowed, Renaissance’s cross-appeal was dismissed and paragraph 1(a) of the order below was set aside.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Field J held that Renaissance was entitled to $29,907,000 plus interest because the Sale had been consummated when its terms or main terms were agreed.