Demissie Asafa Demissie v Kefi Gold and Copper PLC

A commission agreement must be construed objectively, by reference to its language, structure and relevant common background. Commercial common sense cannot be used to rewrite a bargain. Where an agreement states that its validity period applies to the agreement as a whole, that period may operate as a long-stop for both the services and the event triggering commission. An obligation to manage relationships to ensure successful financial close requires performance directed towards achieving financial close, rather than merely introducing or enabling a transaction. Commission is earned only if the contractual conditions are satisfied within the agreed period.

The claimant provided investment advisory services to the defendant under a consultancy services agreement concerning debt and equity financing for a mining project in Ethiopia. He claimed commission on prospective debt financing involving development banks. The defendant contended that no commission was due because financial close had not occurred within the agreement’s two-year validity period.

The defendant also counterclaimed repayment of two payments totalling USD 205,000. It alleged that they were advances against commission linked to a proposed equity investment by ANS, which never existed or contributed funds. The central issues were the construction of the agreement and the legal basis for recovering the payments.

1. The claim was dismissed. The consultancy services agreement had a two-year validity period applying to the agreement as a whole. Financial close had not occurred within that period, and the contractual conditions for commission had therefore not been satisfied.
2. The agreement required the claimant to identify suitable debt financing institutions and manage the relevant relationship to ensure successful financial close. The natural meaning of that language required management directed towards achieving financial close. It was not enough merely to introduce financiers, establish a relationship or enable a transaction.
3. The agreement was construed objectively by considering its language as a whole, the commercial context and the quality of its drafting. The court applied the principles summarised in Sara & Hossein Assets Holding v Blacks Outdoor Retail [2023] UKSC 2, drawing on Wood v Capita Insurance Services Ltd [2017] UKSC 24. Commercial common sense could assist interpretation but could not justify rewriting the bargain, consistently with Arnold v Britton [2015] UKSC 36.
4. The 27 September 2019 term sheet did not constitute successful financial close and had no legal consequence sufficient to trigger commission. The court also found that the claimant was not responsible for raising any AFC contribution within the meaning of the agreement.
5. The counterclaim succeeded. The USD 205,000 payments were advances against commission expected from ANS equity subscriptions and were made on the assumption that ANS existed as a legal entity. ANS did not exist, the anticipated subscriptions and commission were never realised, and the payments were recoverable both for failure of basis and as advances to be set off against unearned fees.
6. The claim was dismissed and the counterclaim succeeded in the sums claimed. Interest was left for further agreement or argument.