Home Information Cases (1) Montreux Capital Management (UK) Ltd (2) MCM UK (Group) Holdings Ltd (3) Montreux Group (Holdings) Ltd v (1) John Godden (2) Wentworth Hall Consultancy Ltd (3) Ian Morley (2018)

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(1) Montreux Capital Management (UK) Ltd (2) MCM UK (Group) Holdings Ltd (3) Montreux Group (Holdings) Ltd v (1) John Godden (2) Wentworth Hall Consultancy Ltd (3) Ian Morley (2018)

Summary

The court did not grant summary judgment in a dispute over the terms of a settlement agreement where it was at least arguable that a deal carried out by the defendant did not qualify as such under the agreement and where the objective meaning of the words in the agreement supported that view.


Facts

The claimant companies (C) applied for summary judgment in a dispute over a settlement agreement with the first defendant (G).

G had been employed by C, who were a fund advisory business specialising in identifying underperforming assets for funds to purchase. G left C in 2016 and the parties entered into a settlement agreement. C had been involved in the proposed acquisition of a residential care group (P) for which outside investment was required. His role was to pursue the project with two potential investors (X and Y). After his departure, G discussed the project with C and established his own investment company with their apparent knowledge and consent. It was agreed between the parties that C had intended G to be free to continue to pursue the project, working with X and/or Y and that C had stopped pursuing the project. Clause 3.3 of the settlement agreement provided that in the event of either or both of the deals completing in any way, G undertook to give notice in writing to C of the details of any deal at least five business days prior to completion. Clause 3.4 provided that G agreed to pay a fee of 1% of the gross value of any such deal at completion. Disputes arose over the interpretation of cl.3.3 and cl.3.4. "Deals" was defined in the settlement agreement as covering deal 1 with X and deal 2 with Y and all matters related to those two deals. G and his investment company did not manage to obtain agreement from X or Y to invest in P and instead P was acquired by a subsidiary of G's investment. C also sought early disclosure of certain information relating to the value of P's acquisition.

C submitted that P's acquisition was deal 1 within the meaning of the settlement agreement such that G had been required to give to C notice of completion of the acquisition five days prior to completion and that G was obliged to pay a fee of 1% of the gross value of the acquisition. G contended that the meaning of "deals" was restricted to transactions involving X or Y and that as neither of them was involved in P's acquisition, the clauses had not been triggered.

Held

Objective meaning of the settlement agreement - The court's task was to ascertain the objective meaning of the words used in the settlement agreement and what a reasonable person with all relevant background knowledge would have understood them to have meant. C's interpretation required the court to ignore the references to X and Y in the definition of "deals". It was at least arguable that a reasonable person with all the background knowledge would have understood the parties to have meant that the definition of "deals" required the involvement of X in deal 1 and Y in deal 2. The names of X and Y in the definition of deals could not simply be ignored. The correct interpretation of the settlement agreement as a whole first required that: a transaction should fall within the definition of "deal"; that a transaction that was not a "deal" could not be made such by the language in the clauses; that the defendants' interpretation was more consistent with business common sense; that C's interest was in the two investors in which it had invested time and money, and it wished to protect that investment by ensuring that it received some payment should deals with those investors eventuate; and that the identity of the investors was relevant. G's position was not fanciful and there was a real prospect of the trial court concluding that the involvement of X or Y was required to trigger the obligations under the clauses. Summary judgment was refused (see paras 43-51 of judgment).

Disclosure Order - The claimants had sought an order that G disclose to C the gross value of the acquisition and/or give disclosure of documents relevant to it in order to encourage settlement. G had indicated in court the maximum value for the acquisition. That amount was marginally less than the value that was being discussed when C was still leading on the deal and it was not appropriate in all the circumstances to make the disclosure order sought. If the matter could not be settled, then disclosure would follow in the usual way. C had had all the indication they needed should they wish to try to settle the proceedings (para.54).

Application refused

Chancery Division
David Stone
Judgment date
21 March 2018
References
[2018] EWHC 495 (Ch)