H&P Advisory Limited v Barrick Gold (Holdings) Limited (formerly Randgold Resources Limited)

A restitutionary quantum meruit requires unjust enrichment analysed through enrichment, transfer at the claimant’s expense, an unjust factor and defences. Mere receipt of services does not itself constitute the unjust factor of free acceptance. The relevant inquiry is whether the parties objectively shared a basis that the services would be remunerated, and that basis subsequently failed.

In investment banking, an indication that an adviser is on the ticket may, in the circumstances of the market, extend to work performed before the indication. A risk-taker is denied recovery only while disappointed; a risk-taker may become entitled to restitution when a non-contractual basis for remuneration is established. Valuation is assessed by the objective value of the enrichment at receipt, but industry practice and the recipient’s own assessment may be relevant evidence.

H&P Advisory claimed remuneration from Randgold, now Barrick Gold (Holdings) Limited, after performing extensive unpaid work in connection with the proposed merger of Barrick and Randgold. It alleged an oral engagement to act as financial adviser for a minimum fee of US$10 million, alternatively a restitutionary quantum meruit, and a separate agreement for reimbursement of expenses.

The court found that no contract for financial advisory services or the claimed fee had been formed. It nevertheless had to determine whether H&P’s work enriched Randgold, whether the enrichment was at H&P’s expense, whether the parties shared a basis for remuneration which failed, whether risk-taking or illegality defeated the claim, and how the enrichment should be valued.

1. No advisory contract. The alleged conversation between Mr Hannam and Mr Shuttleworth did not objectively amount to unequivocal acceptance of an offer. The court assessed the parties’ words and conduct objectively and found that no contract for H&P to act as financial adviser, and no contract for the claimed fee, was formed.

2. Unjust enrichment framework. A non-contractual quantum meruit is analysed through enrichment, enrichment at the claimant’s expense, unjust factor and defences. The questions are signposts to distinct legal requirements and must not be replaced by an unstructured appeal to fairness.

3. Failure of basis. Mere receipt of services does not create liability. The parties must have a shared objective basis on which the recipient’s right to retain the benefit is conditional. Here, Mr Shuttleworth knew, or ought objectively to have known, that H&P reasonably believed it would be appointed and remunerated for its work. His failure to correct that belief established a basis of understanding which failed when H&P was not appointed.

4. The basis extended to services supplied before the conversation. In this market, fees are commonly agreed after work has begun and remunerate the relevant work as a whole. The date on which the basis arose was therefore not an automatic cut-off.

5. Free acceptance and risk-taking. Free acceptance is not a freestanding receipt-based unjust factor. The relevant analysis is failure of basis. H&P had initially been a risk-taker, but became a gratified rather than disappointed risk-taker when the basis for remuneration arose. That risk-taking did not defeat recovery.

6. Enrichment and valuation. H&P conferred a benefit on Randgold, including by preparing board material and supplying modelling information. The objective value of the enrichment was assessed at US$2 million, reflecting Randgold’s own contemporaneous assessment. The experts’ proposed valuations were based on assumptions inconsistent with the facts found.

7. The alleged illegality arising from information supplied by a Barrick employee was not established and, in any event, was not a proportionate basis for denying restitution. The alleged FSMA breaches could not be used to create an additional private-law defence contrary to the statutory scheme limiting rights of action.

8. A separate binding agreement required Randgold to reimburse H&P’s expenses. H&P’s rejection of a later offer of US$2 million plus expenses did not discharge that pre-existing obligation.

Judgment was therefore given for H&P for US$2 million plus expenses, to be agreed.

First-instance decision. No appellate history was stated in the judgment.