Acer Investment Management Ltd & Ors v Mansion Group Ltd (2014)


In accordance with the express terms of an agency agreement, a company which distributed financial products to independent financial advisers was entitled to override commission at a rate of 0.2 per cent of the value of all business placed by a large distributor with an organisation engaged in setting up and selling property funds, the company having introduced the distributor to that organisation.


The claimants (C and Q) brought proceedings for unpaid commission and damages against the defendant (M).

M had been incorporated in 2007. Its business involved setting up and selling property funds. C and Q had been established in 2009 and 2010 respectively as corporate vehicles for a business involved in the distribution of financial products to independent financial advisers. In 2009, M and C had met to discuss C's interest in introducing property funds and other products to independent financial advisers. C thought that it could interest overseas distributors in one of M's funds, including one very large distributor (G). During protracted negotiations between the parties, an officer of C and Q emailed M, referring to a meeting that they had all attended, asking M to confirm that it was happy with the attached draft agency agreement which they had discussed at the meeting. That agreement set out commission rates of 1.5 per cent initial commission plus 0.5 per cent trail commission, and 0.2 per cent override on all business produced by G and others. M subsequently terminated the agreement without notice. The court was required to determine various issues in relation to the parties' agreement, including: whether they had reached an agreement in the terms of the draft agency agreement, or on terms agreed on a more ad hoc basis; whether C or Q was the party to any such agreement with M; whether the parties had agreed that there would be an entitlement to override commission on funds placed via G, and if so whether C and/or Q had effected an introduction between M and G for the purposes of that commission; whether C and/or Q had repudiated the agreement by marketing a competing property fund; and what, if any, trail commission was payable in relation to two other independent financial advisers which had been introduced to M.


(1) The terms of the contract between the parties had been agreed at the meeting referred to in the email, and those terms were embodied in the draft attached to that email. C, rather than Q, was the relevant party to that agreement. C had had no reason to doubt the authority of M's officer to enter the agreement; it was probable that he had had actual authority to do so, but in any event he had had ostensible authority to agree to those terms. On the basis of those agreed terms, it was both parties' expectation that C would be paid for introducing business to M. M's evidence in support of an ad hoc agreement was untrue and had been produced at the last minute to plug an otherwise visible hole in its case. Further, C and Q had in fact introduced G to M. Accordingly, the agreed terms about the override commission related back to that introduction, and so C was entitled to override commission for that introduction at a rate of 0.2 per cent of the value of all business placed by G with M. That sum was not subject to any cap. C had not repudiated the agreement: M had had no contractual right to demand that C and Q cease marketing the competing property fund, and so the fact that they had marketed the fund did not constitute a breach of contract, still less a repudiatory breach. It followed that M could only terminate the agreement on giving the appropriate contractual notice in accordance with the agreement. M had not done so, and that failure constituted a breach of the agreement in respect of which C was entitled to damages. C also continued to be entitled to trail commission in respect of the other two independent financial advisers which it had introduced to M (see paras 47, 56, 64, 66, 75, 113 of judgment). (2) The agreement did not give rise either to fiduciary obligations on C's part or to a "relational contract"; neither suggestion was grounded in the commercial reality of the parties' relationship, nor in the express terms which had been agreed. Neither party saw the relationship as an exclusive one, and the sorts of obligations and commitments that would be expected in a relational contract were absent: it was a long-term relationship which either party could end by giving relatively short notice, and neither party was required to spend significant sums in reliance on the continuation of the relationship. There was no scope for the implication of a term of good faith on C's part. The agreement's terms made it impossible to conclude that C owed any relevant fiduciary duties to M, and even if it was a fiduciary, the express and implied terms of the agreement excluded any relevant fiduciary duties. Even if there was a requirement of good faith, C and Q had not committed a repudiatory breach of that requirement (paras 107, 109, 112).

Judgment for claimants