Alphier Capital Two LLP v Blyvoor Gold Capital (Pty) Ltd

A success fee under a joint brokerage agreement may depend on the broker’s own actions having helped secure the relevant funding, even where the agreement does not use the expression effective cause. The contractual test is determined by the words the parties chose. It is not necessarily a requirement that the broker’s work be a sine qua non or that the funding was really brought about by it. Work performed indirectly, and work allocated between brokers under a joint mandate, may qualify. A more exacting effective-cause term cannot be implied where it would contradict or add nothing to the express terms.

Alphier Capital Two LLP, formerly Exotix Partners LLP, claimed a US$2.25 million success fee from Blyvoor Gold Capital (Pty) Ltd under a tripartite brokerage agreement. Blyvoor, Exotix and Legacy Hill had jointly pursued approximately US$70 million of funding from Orion Resource Partners (UK) LLP for the redevelopment of a South African mine. Legacy Hill had introduced Orion before the tripartite agreement was made, but Exotix was retained because Blyvoor considered its expertise, financial modelling and back-office resources valuable.

The central issues were the construction of the tripartite agreement, whether an effective-cause requirement arose expressly or by implication, and whether Exotix’s work satisfied the contractual requirements.

1. Construction of the engagement. Under the original engagement, Exotix had to provide all the relevant services, unless a service was clearly unnecessary or modified by agreement. The success fee required an investor introduced by Exotix to proceed to completion.
2. Tripartite agreement. The tripartite agreement preserved Exotix’s obligations to provide the services, modified them where necessary for a joint pursuit of Orion, and replaced the reference to investors introduced by Exotix with an obligation to help place the investments with Orion. Exotix therefore remained obliged to take its own actions which had a real-world effect on securing the funding.
3. Applicable test. The relevant contractual question was whether Exotix’s actions helped to place the investments with Orion. That was a species of effective-cause requirement, but it was not equivalent to asking whether Exotix’s work was a sine qua non or whether the investment was really brought about by its work. The court rejected any more demanding implied requirement.
4. Work did not have to involve direct dealings with Orion. Under a joint mandate, tasks could properly be divided between the brokers, and duplicative or competitive conduct would be commercially inconsistent with the agreement.
5. Application. Exotix’s modelling of the quotation period and Orion’s offer, and its review of the draft term sheet, helped to place the investments. Its occasional dealings with the IDC and the fairness opinion did not. Exotix nevertheless performed all services required by the modified agreement, including jointly pursuing the funding, and was entitled to its fee.
6. The claim succeeded. The parties were asked to agree an order; unresolved interest issues were to be dealt with at a consequentials hearing if necessary.