Cantor Fitzgerald & Co v Yes Bank Limited

In construing a commercial engagement letter, an adjective placed before a list of related nouns will naturally tend to qualify the whole list unless the wording or context indicates otherwise. The court must read the agreement as a whole, give primary weight to its language, and test rival meanings against the relevant commercial background.

Here, “private” qualified “placement, offering or other sale”. The defined term “Financing” therefore covered private forms of equity financing, not public offers. The contractual treatment of qualified institutional placements, the reference to financing other than a Financing, and references to private placement memoranda and exempt offerings reinforced that construction. A later public offer fell outside the engagement.

Cantor Fitzgerald was engaged by YES Bank under an engagement letter to provide financial advisory, placement and arranging services in connection with a defined “Financing”, in return for a retainer and a percentage of funds raised from specified investors.

After regulatory intervention and a capital injection, YES Bank raised further capital through a follow-on public offer. Investors previously contacted by Cantor participated in that offer. Cantor claimed a percentage fee, while YES Bank argued that the agreement covered only private forms of financing.

Mr Justice Bright accepted YES Bank’s construction and held that the follow-on public offer was outside the definition: [2023] EWHC 745 (Comm). The appeal concerned whether “private” qualified only “placement” or also “offering or other sale”.

Appeal dismissed. Lady Justice Falk gave the leading judgment. Lord Justice Popplewell and Sir Julian Flaux, Chancellor of the High Court, agreed. The Engagement Letter confined “Financing” to private forms of equity financing, so the follow-on public offer did not trigger Cantor’s percentage fee.

1. Contractual interpretation is an objective and iterative exercise. The court considers the ordinary meaning of the language in the context of the agreement as a whole and the relevant factual and commercial background, excluding prior negotiations. Rival constructions are tested against the contract and their commercial consequences. The court reiterated the guidance in Arnold v Britton [2015] UKSC 36, [2015] AC 1619.
2. There is no firm grammatical rule that an adjective before a list qualifies every noun. Nevertheless, absent an indication to the contrary, the natural reading tends to apply it to the whole list. “Private” therefore qualified “placement”, “offering” and “other sale”. The additional words were not rendered ineffective merely because their precise scope was difficult to define. The court applied the approach to redundancy in Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29, [2021] AC 1148.
3. The contractual context strongly supported YES Bank. The agreement treated a qualified institutional placement as an advisory transaction carrying a referral fee, although Cantor could not act as placement agent or arranger. The same regulatory limitation applied to public offers and rights issues, but the agreement made no equivalent provision for them. Clause 5(i) also contemplated equity financing other than a defined Financing. References to private placement memoranda, exempt offerings and the deleted Schedule I footnote provided further support.
4. The court declined to give “private placement” the statutory meaning in section 42 of the Companies Act 2013. Comparison with the statutory categories in section 23(1) did not show that “other sale” meant a rights issue.
5. The factual background was consistent with the private-only construction. A public offer was not a realistic possibility when the agreement was made, and the later change in circumstances did not outweigh the contractual indicators. Evidence of a contract’s genesis and aim may form part of the factual matrix, while prior negotiations and subjective intentions remain inadmissible; that point was not needed to determine the appeal.
6. The alternative Hinduja argument was unnecessary to decide. If it had arisen, the definition of “Investor” excluding Indian-resident entities would have prevented the Indian participant from being covered by the reference to the Hinduja Group. The appeal was dismissed.

• Court of Appeal (Civil Division). The appeal was dismissed unanimously on 24 June 2024: [2024] EWCA Civ 695.
• High Court, Commercial Court. Mr Justice Bright held that “Financing” covered private forms of equity financing and that the follow-on public offer was outside the Engagement Letter: [2023] EWHC 745 (Comm).