Strand Hanson Limited v Conduit Pharmaceuticals Limited

Contractual remuneration provisions may protect an adviser against avoidance even where the principal agreement expires rather than being terminated early. Where a clause is drafted in separate limbs, the limbs may be disjunctive and may create liability on different triggering events.

An equivalent transaction is assessed at a high level by reference to similarity or substantially similar economic effect. Liability may arise for a rival transaction completed with another adviser and without services being provided by the original adviser.

For breach of a contractual obligation to deliver shares, causation is complete on the failure to deliver. Damages are assessed by valuing the shares at the appropriate date, doing the best possible on imperfect evidence.

Strand Hanson, a financial adviser, claimed unpaid remuneration under an engagement letter with Conduit. The remuneration comprised a US$2m cash advisory fee and 6.5 million shares in the listed company resulting from a de-SPAC transaction.

The engagement letter concerned a proposed Galmed transaction, but Conduit instead completed a substantially similar transaction with MURF, assisted primarily by another adviser. The principal issues were whether clause 5.6 of the terms protected Strand Hanson despite expiry of the engagement’s 12-month term, whether the MURF transaction was an Equivalent Transaction, and how damages for non-delivery of the shares should be assessed.

1. Construction. The court applied the ordinary contractual construction approach summarised in Cantor Fitzgerald & Co v Yes Bank Limited [2024] EWCA Civ 695. The words had to be read in the context of the agreement as a whole, the relevant factual and commercial background, and the commercial consequences of competing interpretations.
2. Clause 5.6. The clause contained two disjunctive limbs. Limb 1 applied where the appointment was terminated early and an Equivalent Transaction completed during the Tail Period. Limb 2 applied where an agreement was entered into during the term of the appointment, or during a relevant Tail Period, and subsequently resulted in a completed Equivalent Transaction. Limb 2 therefore applied even though the engagement had run to expiry rather than being terminated early.
3. Termination and equivalence. For Limb 1, termination meant an active step bringing the appointment to an end and did not include expiry by effluxion of time. The MURF transaction was an Equivalent Transaction because both transactions sought substantially the same economic result: a NASDAQ listing for Conduit through a reverse takeover at approximately US$650m valuation. No signed Galmed term sheet, transaction with Galmed, or services by Strand Hanson was required.
4. Quantum. The failure to deliver the Carry Shares completed the causal chain. The issue was quantification, not proof on the balance of probabilities of what Strand Hanson would have done with the shares. Applying the compensatory principle in Robinson v Harman (1848) 1 Exch 850 and the approach to uncertain assessment recognised in One-Step (Support) Ltd v Morris-Garner [2019] AC 649, the court assessed the monetary value of the shares at 20 March 2024 on the available evidence.
5. Disposition. Strand Hanson succeeded in recovering the US$2m cash advisory fee and US$5m damages for the non-delivery of the 6.5 million Carry Shares. The parties were invited to agree the consequential order.