DMA Resources Limited v Brazilian Nickel Limited

An agreement to discuss remuneration reasonably is not an enforceable agreement to pay a reasonable fee. Where an express contract cannot be established from a conversation, the same conversation cannot ordinarily provide the necessary basis for implying a contract.

In a payment-by-results industry, an introducer’s unjust enrichment claim depends on the introduction being the effective cause of the investment. Mere but-for causation is insufficient. A prior rejection of an opportunity does not prevent a later reintroduction from being effective where the introducer changes the investor’s response from refusal to investment.

Commission is confined to investments actually made and effectively caused by the introduction. Later, separate or remote transactions, including an assignee’s exercise of an option, may fall outside the claim.

DMA, an investment introducer, claimed remuneration from Brazilian Nickel Limited for reintroducing Resource Capital Funds to a nickel mining project in Brazil. The claim was advanced in contract, alternatively in unjust enrichment, in respect of services said to have been provided between November 2020 and March 2021.

The alleged contract arose from a June 2021 conversation in which DMA said Brazilian Nickel agreed to discuss a reasonable fee. The unjust enrichment claim concerned an investment ultimately made by Resource Capital Funds, together with later share options and a convertible loan. The issues were whether there was a contract, whether the introduction was the effective cause of the investments, whether an existing agreement concerning Mitsui excluded the claim, and what commission rate and investment base applied.

1. Contract claim dismissed. No agreement was reached during the June 2021 call. The claimant was seeking agreement to a three-way discussion about remuneration, while the defendant’s representative did not assent. Even if an agreement to be reasonable in discussing a fee had been reached, it would have been an unenforceable agreement to agree, not an agreement to pay a reasonable fee. The reasoning in Willis Management (Isle of Man) Ltd v Cable and Wireless Plc [2005] EWCA Civ 806 was directly analogous. No implied contract could be inferred from the same conversation because the necessity required for implication was absent.

2. Unjust enrichment established. Applying the four-stage approach in Benedetti v Sawiris [2013] UKSC 50, all three disputed elements were satisfied: Brazilian Nickel was enriched, the enrichment was at DMA’s expense, and it was unjust not to pay. In the relevant industry, the value lay in the successful investment rather than time spent, and payment was ordinarily contingent on success.

3. The introduction was the effective cause of the August 2021 investment. Resource Capital Funds had repeatedly rejected the project, but DMA’s convertible-loan proposal and introduction of its credit-fund representative changed that position. The later equity investment had its roots in that introduction. The test was more demanding than but-for causation.

4. The defendant’s agreement with DMA concerning Mitsui did not exclude liability for a separate introduction of Resource Capital Funds concerning a different stage of the project. Barton v Morris [2023] UKSC 3 was therefore inapplicable.

5. Commission was payable only on the equity subscriptions actually made by Resource Capital Funds, totalling US$12,084,678. The unexercised option, the later exercise of the 75p option by TechMet following assignment, and the convertible loan made 18 months later were too remote or were not effectively caused by DMA’s introduction. The court applied the distinction in Nightingale v Parsons [1914] 2 K.B. 621 between an effective cause and a mere causa sine qua non.

6. The appropriate commission rate was 5%. The earlier agreements, concerning multiple investors and a less de-risked project, were more comparable than the later Mitsui agreement, whose lower rate had been negotiated for a different and less risky mandate. Judgment was entered for DMA for US$604,233.90, or the sterling equivalent, plus interest, with consequential matters to be addressed.