Kigen (UK) Limited v NOR Capital Limited

Contractual interpretation is a unitary exercise. The court must balance the natural and ordinary meaning of the words against the agreement’s provisions, purpose, known factual background and commercial consequences. Subjective intentions, pre-contractual negotiations and subsequent events are excluded, subject to recognised exceptions. Where a clause contains apparently conflicting provisions, the court should seek a construction giving effect to all of them. A later qualification may modify an apparently broad earlier provision. On the proper construction of a success-fee clause, a minimum fee did not apply where the transaction produced no fee under the operative calculation provisions.

Kigen engaged NOR Capital under an agreement providing for financial advisory services and success fees. Kigen later received USD 20 million from two entities affiliated with SoftBank Group Corp. NOR Capital claimed the contractual minimum success fee of £500,000 under the capital-raising provision. Kigen sought a declaration that no success fee was payable, relying on the provision stating that there was no charge for funding from SoftBank or its affiliates. The central issue was whether that wording prevailed over the later provision imposing a minimum success fee regardless of the funding source.

1. Construction principles. The court applied the unitary approach described in Arnold v Britton, Rainy Sky SA v Kookmin Bank and Wood v Capita Insurance Services Ltd. The relevant words had to be read in their documentary, factual and commercial context. The court was required to balance textual and contextual indications, while disregarding subjective intentions, pre-contractual negotiations, unilateral facts and subsequent events.
2. Apparent inconsistency. The capital-raising clause was capable of two constructions. The words stating “no charge” for SoftBank-affiliated funding conflicted in appearance with the later minimum-fee provision. Applying the approach in Pagnan SpA v Tradax Ocean Transportation SA, the court had to reconcile the provisions where they could fairly operate together. The later provisions qualified the fee calculated under the three bullet points, but did not override the natural meaning of “no charge”.
3. Context and commercial purpose. The agreement, read as a whole, showed that NOR Capital’s principal task was to find and secure external investors. The commercial background showed that SoftBank wished to avoid further investment and introduced NOR Capital for that purpose. It made little commercial sense for Kigen to pay a substantial success fee when the very outcome the engagement sought to avoid had occurred. Clause 3.1.3, which excluded a success fee for a sale to a SoftBank affiliate, reinforced that conclusion.
4. Disposition. The minimum success fee applied only where a fee was payable under the three operative bullet points. Because all funding came from SoftBank-affiliated entities, no fee was payable under those provisions. NOR Capital was therefore entitled to neither the £500,000 minimum nor any success fee under clause 3.1.2. No interest was payable. Consequential orders were to be addressed separately.