Stonard v Green Shoots Capital UK Ltd

A contractual remuneration schedule cannot be incorporated where the document said to contain the relevant terms did not exist when the contract was made. Where the parties instead agree a fee-sharing arrangement orally, that arrangement governs until a valid schedule is created, without retrospective effect. A commission entitlement covering management and performance fees is not reduced on termination merely because the written contract refers to ongoing servicing, where no further servicing is required to earn the underlying fee. If no price is agreed for contractual services, reasonable remuneration is assessed objectively by reference to market value, while negotiations may be considered as evidence of value.

The claimant provided consultancy and investment-introduction services to the defendant, an investment advisory company. The parties entered into a partly written and partly oral consultancy agreement under which the claimant was to receive remuneration for successful introductions to investment managers.

The trial concerned a preliminary issue about the basis of remuneration. The claimant relied on an orally agreed 70:30 split in her favour. The defendant relied on a later-produced Retrocession Schedule, discretionary remuneration terms and an alleged restriction on payment after termination.

1. Retrocession Schedule. The parties were not bound by the Retrocession Schedule referred to in paragraphs 1 and 7.1 of the Agreement. The wording contemplated an existing document available on request, but no applicable schedule existed until August 2019. The court considered, without deciding, that future terms might in principle be incorporated if produced under a sufficiently certain contractual mechanism. That was not what the parties objectively agreed here.
2. Oral remuneration agreement. The parties agreed orally that the claimant would receive 70% of fees paid or payable to the defendant by investment managers on successful introductions, with the defendant retaining 30% for regulatory and other costs. The agreement applied to management and performance fees and was not limited to a minimum first-year payment or made discretionary after one year.
3. Post-termination entitlement. The claimant’s accrued fee rights were not lost on termination. Paragraph 7.3(c) could not justify withholding fees where the investment manager’s payment did not depend on further servicing or advisory work. The defendant’s discretion to assess servicing had to be exercised reasonably and could not be used to reject an accrued entitlement that required no further service.
4. Quantum meruit alternative. If no sufficiently certain oral agreement had existed, the contract for services would have carried an implied term requiring reasonable remuneration. That remuneration would be assessed objectively by reference to market value, while the parties’ discussions and expert evidence could be considered as evidence of value. The judge provisionally assessed the alternative market value at a 60:40 split in the claimant’s favour.
5. The parties were invited to agree an order reflecting the rulings. Consequential matters were reserved for further determination if agreement could not be reached.