Blacklion Law LLP v Amira Nature Foods Ltd & Anor

The Court of Appeal dismissed the appeal against HHJ Paul Matthews. The court upheld the judge's construction of the Avatar Retainer: the phrase "subject to the completion of the Matter by 31 May 2017" related to the period of work covered by the fixed fee rather than rendering entitlement conditional on completion by that date. The fixed fee of £300,000 remained due as a debt because neither cash nor freely saleable shares were delivered.

The court accepted that an implied term was available to give business efficacy to the Avatar Retainer that the company would do what was reasonably necessary to enable sale of the issued shares, and found Amira in breach by refusing to co‑operate in releasing the shares. Clause 35 of Blacklion's Terms of Business (contractual interest) applied to unpaid fees and supported an award of contractual interest.

The court also upheld the judge's finding that Mr Chanana, as Amira's controlling mind, knowingly procured the company's breach and was therefore liable in tort for procuring breach of contract. The court refused to allow late points on appeal about pleading defects and requirements derived from Said v Butt where those matters were not taken at trial or would have required a different trial process.

Background and parties: Blacklion Law LLP (claimant/respondent) was instructed by Amira Nature Foods Ltd (first appellant) under a general retainer and a bespoke "Avatar Retainer". The second appellant was Mr Karan Chanana, Amira's chairman and controlling mind. Blacklion claimed a fixed fee of £300,000 under the Avatar Retainer, contractual interest and, alternatively, damages; it also alleged Mr Chanana procured Amira's breach.

Procedural posture: Appeal from HHJ Paul Matthews sitting in the Business and Property Courts: [2022] EWHC 1500 (Ch). The judge had held Blacklion entitled to a fixed fee of £300,000 as a debt, contractual interest at 1.5% per month under clause 35 of its Terms of Business, and held Mr Chanana liable in tort for procuring Amira's breach. The judge had earlier excluded certain evidence of Mr Chanana: see [2022] EWHC 2370 (Ch).

Nature of the claim and remedies sought: The claimant sought the Fixed Fee as a debt (or alternatively damages or specific performance), contractual interest, and damages against Mr Chanana for procuring breach.

Issues framed:

• Construction of the Avatar Retainer and whether the fixed fee was conditional on completion of Project Avatar by 31 May 2017.
• Whether an implied term should be read into the retainer requiring Amira to take reasonable steps to enable sale of the shares issued to satisfy the fee.
• Whether Amira had paid the fee by issuing restricted shares and, if so, whether the company had failed to enable their sale.
• Whether contractual interest under clause 35 applied.
• Whether Mr Chanana could be held liable for procuring Amira's breach, and whether requirements from Said v Butt and OBG Ltd v Allan were pleaded or could be raised on appeal.
• Admissibility of foreign law evidence and the judge's exclusion of certain evidence from Mr Chanana.

Court's reasoning: The Court of Appeal agreed that the retainer’s wording was ambiguous but that the construction adopted by HHJ Matthews best accorded with business common sense: the Fixed Fee covered work up to 31 May 2017 and was payable unless paid in cash or by freely saleable shares. The court held that neither payment method had been satisfied: cash was not paid and the shares remained restricted and unsaleable without Amira's cooperation.

The court accepted the judge's implication of a term that Amira would do what was reasonably necessary to enable the shares to be sold, noting that the transfer agent in practice required an opinion from issuer's counsel and that Amira refused to co‑operate. The judge was entitled to treat the SEC web page and the transfer agent's email as evidence of the agent's practice and to proceed without foreign law expert evidence where the parties had treated the matter as not turning on detailed US law at trial.

On the tort claim, the court accepted that a director may in principle be liable for procuring a company's breach. Although the pleadings did not use the formula from Said v Butt, the judge had sufficient material to determine the factual issues; the late attempt to rely on pleading deficiencies on appeal was rejected as prejudicial and too late. The judge's exclusion of some of Mr Chanana's evidence was within his discretion.

Appeal dismissed. The Court of Appeal affirmed HHJ Paul Matthews’ conclusions that the Avatar Retainer entitled Blacklion to a fixed fee of £300,000 payable as a debt (neither cash nor freely saleable shares were provided), that clause 35 entitled Blacklion to contractual interest, and that Mr Chanana knowingly procured Amira’s breach and was liable in tort. The court rejected late challenges to pleading and evidential matters and upheld the judge's exercise of discretion on admissibility and procedural issues.

Appeal from the High Court: His Honour Judge Paul Matthews (sitting as a Judge of the High Court) [2022] EWHC 1500 (Ch). The judge had earlier given a related ruling excluding certain evidence by the second defendant: [2022] EWHC 2370 (Ch). The Court of Appeal gave judgment at [2023] EWCA Civ 663 on 15 June 2023, dismissing the appeal.