Xtellus Capital PArtners Inc v DL Invest Group PM SA

In identifying a contracting party, the court may consider objective extrinsic evidence, including pre-contract negotiations, where the contractual description is unclear. Apparent authority requires a representation by the company, reliance, and no circumstances requiring reasonable inquiry which the contractor failed to investigate. Where the company has held out an agent as authorised, there is no general duty to verify the agent’s authority.

Ambiguous commercial terms may be construed by reference to business common sense, but common sense cannot be used to override clear language or determine whether language is ambiguous. A post-termination fee clause covering financing by group entities and potential investors may apply where the relevant entity and lender fall within the commercially understood scope of the agreement.

Xtellus was engaged to assist DL Invest Group in raising debt finance under a written mandate governed by English law. The mandate provided for a success fee, including where financing was completed within 18 months after termination.

The defendant argued that it was not the contracting party, that Dominik Leszczyński lacked authority to bind it, that the financing fell outside the mandate, and that Xtellus had not done sufficient work to earn the fee. The court determined the identity of the contracting party, apparent authority and ratification, the construction of the mandate, and Xtellus’s entitlement to payment.

1. Contracting party. Applying Hamid v Francis Bradshaw [2013] EWCA Civ 470, the court treated the words identifying the counterparty as the starting point, but also considered admissible extrinsic evidence, including the parties’ negotiations and contemporaneous documents. Objectively, the presentations, email signatures, negotiations and conduct showed that “DL Invest Group” referred to the defendant, not CCI. The defendant was therefore the contracting party.
2. Apparent authority. The requirements identified in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 were satisfied. The defendant represented, through its email format, legal representative, mandate documents and corporate presentation, that Dominik Leszczyński had authority to bind it. Xtellus was entitled to rely on those representations. The general principle that a contractor must investigate where a reasonable person would do so, discussed in Philipp v Barclays Bank plc [2023] UKSC 25, East Asia Company Ltd v PT Satria [2019] UKPC 30 and Law Debenture Trust Corp v Ukraine [2023] UKSC 11, did not impose a general inquiry duty where the company had held the agent out as authorised. The defendant was bound.
3. Ratification. Alternatively, the defendant clearly ratified the mandate through the conduct of its officers and proxy, its participation in the financing negotiations, its attempt to remove Xtellus from the transaction, and the termination notice.
4. Construction and payment. Applying Rainy Sky v Kookmin Bank [2011] UKSC 50 and Arnold v Britton [2015] UKSC 36, “Macquarie Capital” included Macquarie Euro Limited. Clause 6.3 was also construed to include financing completed by a group company, including Psary Invest II sp. z o.o. The relevant financing was therefore within the mandate.
5. Entitlement. The mandate imposed no minimum hours or output threshold. Xtellus had provided advisory, arranging and financing services of the kind contemplated. Judgment was entered for the claimant in the sum claimed, with interest and ancillary matters to be agreed.

First-instance judgment of the High Court (Circuit Commercial Court). No earlier decision in the same proceedings is stated.