Home Information Cases Jas Bains v (1) Arunvill Capital Ltd (2) Hollbeach Solutions LLP (2019)

Skip to content. | Skip to navigation

Jas Bains v (1) Arunvill Capital Ltd (2) Hollbeach Solutions LLP (2019)

Summary

On the proper interpretation of a financial consultancy agreement, a material breach by the consultant, consisting of an indication that he would no longer continue to perform the services specified by the contract, could only be remedied by his actually resuming performance. A mere assurance that he would do so was not sufficient to remedy the breach.

Facts

The appellant appealed against the dismissal of his claim against the first respondent (R1) for the payment of contractual remuneration, and against the second respondent (R2) for the payment of agreed compensation.

The appellant was a consultant in the financial services sector and R1 and R2 were, respectively, an investor and a financial services advice company. In 2014, the appellant signed a consultancy agreement with R1 whereby he agreed to structure, implement and manage equity finance strategies for it. The agreement was terminable by either party, either on six months' notice or on the basis of a material breach that was not remedied within 21 days of the service of a written notice. The appellant's claim against R1 arose from the latter's decision to terminate the consultancy agreement on six months' notice without paying the basic contractual remuneration for the six months prior to the termination. It claimed that it was entitled to do so because the appellant had materially breached the agreement by indicating that he would no longer perform his contractual obligations, and had failed to remedy the breach within the specified 21 days. It was common ground that the appellant's entitlement to the disputed remuneration depended on his having remedied the breach. The judge below found that although the appellant had, within the 21 days, given a written assurance that he would discharge his contractual obligations, the breach had not been remedied because he did not actually resume performance within that time. The claim against R2 arose from an agreement (the Hollbeach agreement) whereby R2 engaged the appellant to bring about "some sort of acceptable resolution" in respect of a dispute between itself and a bank. The appellant achieved a partial resolution of the dispute, but R2 refused to pay him the compensation specified in the agreement, arguing that, on a proper construction of the agreement, the appellant was only to be compensated if he achieved a full resolution of the dispute. The judge below agreed.

Held

Remuneration under the consultancy agreement - The judge had been right to conclude that performance of the services specified by the contract was required within the 21-day period in order to remedy the breach. The appellant argued that the only material breach specified in the notice was his indication that he would not perform his contractual obligations in future, and he submitted that that breach was remedied by his assurance that he would in fact perform. However, when R1 had served its notice of material breach, the appellant should have been, but was not, providing the services specified in the agreement. The notice stated that he was in material breach "in particular" by indicating that he would no longer perform his contractual obligations. Therefore, the specified material breach was not limited to that indication. Remedying the breach required the appellant to resume work within the 21-day period, not simply to give an assurance that he would do so. Moreover, his obligation to provide the services specified in the contract was freestanding in the sense that it was not dependent on input or instruction from R1; thus, he was obliged to resume performance of his contractual obligations without waiting for instructions from R1 (see paras 20-24, 27 of judgment).

Compensation under the Hollbeach agreement - The judge held that R2's underlying purpose in entering into the Hollbeach agreement was to buy off the risk of litigation with the bank. He therefore interpreted the phrase "some sort of acceptable resolution" as triggering the payment of compensation only if the appellant brought about a final settlement which removed the risk of litigation. He was right to do so: that was the more natural interpretation of the agreement. The words used in the agreement had to be interpreted in their factual context as known by, or reasonably available to, the parties. In that context, the phrase "some sort of acceptable resolution" was not naturally to be read as referring to a partial resolution. The word "resolution" strongly implied putting an end to the dispute; the word "acceptable" indicated that any resolution had to be accepted by R2; and the phrase as a whole reflected the fact that, when the agreement was entered into, the final shape of an acceptable resolution was uncertain. Although the appellant might expect to be compensated for having brought value to the table in the form of a partial settlement, it made sense that R2 would not pay unless and until its objective of removing the risk of litigation was achieved. Payment was contingent on a resolution of the dispute, and the Hollbeach agreement was intended to incentivise the appellant to facilitate that (paras 34-35, 39-46).

Appeal dismissed

Chancery Division
Fancourt J
Judgment date
5 July 2019
References
LTL 8/7/2019 : [2019] 7 WLUK 63