Cantor Fitzgerald & Co v YES Bank Limited

In construing a professionally drafted commercial contract, the court must ascertain the objective meaning of the words in their contractual and factual context. An adjective preceding a series of nouns will ordinarily qualify each noun unless the wording or context indicates otherwise. Here, “private” qualified placement, offering and other sale, so the defined financing excluded a public offering.

Where parties agree that remuneration depends on a specified contingency, the court will not imply a term requiring payment for effort or causation where that would alter the agreed allocation of risk. Nor will unjust enrichment provide an alternative route to payment if the contract defines the circumstances in which payment is due and the claim would override that allocation.

Cantor Fitzgerald & Co was engaged by YES Bank Limited under an English-law engagement letter to assist in raising capital. Cantor’s remuneration included 2% of proceeds from a defined “Financing” involving listed Investors.

YES Bank later underwent regulatory intervention, reconstruction and a capital infusion led by the State Bank of India. It subsequently raised further capital through a public further offering, in which three listed Investors participated. Cantor claimed fees on the basis that the offering fell within “private placement, offering or other sale of equity instruments”.

The central issues were whether the definition included a public offering, whether Cantor had alternative contractual or restitutionary entitlement, and whether interest was payable on a late-paid retainer.

1. Construction. The claim for fees based on the express terms of the engagement letter failed. Applying the ordinary meaning of the words, “private” qualified each of “placement”, “offering” and “other sale”. The word “other” connected the three nouns rather than differentiating the final one. The contractual context and the surrounding circumstances supported that reading. In December 2019 a public offering was not a viable route for a bank facing an existential financial crisis, whereas private capital-raising routes remained within the parties’ contemplation. The July 2020 further public offering was therefore outside the definition of “Financing”.
2. The engagement letter provided for payment upon the occurrence of a specified contingency, not by reference to time spent, introductions made or causal contribution. Cantor had accepted an all-or-nothing bargain. Its efforts and introductions did not justify reopening that bargain.
3. The alternative implied-term case failed. The proposed term was neither necessary to give the contract business efficacy nor obvious. It was also inconsistent with the express allocation of risk in clause 3(b). The stringent test for implication could not be satisfied with hindsight or merely because the proposed term appeared fair.
4. The unjust-enrichment claim also failed. Where a contract specifies the circumstances giving rise to an obligation to pay, it excludes an obligation to pay in their absence where restitution would impermissibly override the contractual allocation of risk. The reasoning in Dargamo Holdings Ltd v Avonwick Holdings Ltd and Barton v Morris was applied.
5. YES Bank’s additional contractual defences were rejected. Provision of services was not a condition precedent, no effective-cause requirement was expressed or implied, and clause 6 was inconsistent with the argument that the engagement had run its course. The relevant Hinduja entity fell within “Investor” through the completed Schedule I.
6. Cantor was awarded US$21,195.08 interest on the late-paid retainer. Its fee claim otherwise failed, and the costs order was reserved for submissions.