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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Eurofi Ltd v Teletech UK Ltd [2000] EWCA Civ 245 (31 July 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/245.html
Cite as: [2000] EWCA Civ 245
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Case No: CHANF/2000/6273/A3
CHANF /1999/0360 /A3
CHANF /2000/6356/ A3
CHANF /2000/6360 /A3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
Mr. Jules Sher Q.C.
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: Monday 31 July 2000
LORD JUSTICE PETER GIBSON
LORD JUSTICE CHADWICK
and
LORD JUSTICE BUXTON
EUROFI LTD. |
Appellant | |
- and - |
||
TELETECH UK LTD. |
Respondent |
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - -
Mr. Selwyn Bloch Q.C. and Mr. Raoul Downey (instructed by Messrs Alan Ashley & Co. of London W1 for the Appellant)
Mr. Murray Rosen Q.C. and Mr. Charles Samek (instructed by Messrs Herbert Smith of London EC2 for the Respondent)
As Approved by the Court
Crown Copyright ©
PETER GIBSON L.J.:
1 The Claimant, Eurofi Ltd. ("Eurofi"), appeals from part of the order of Mr. Jules Sher Q.C. , sitting as a deputy High Court Judge, on 9 October 1998. By that order the judge ordered the Defendant, TeleTech UK Ltd. ("TeleTech"), to pay to Eurofi £199,162.50 by way of commission referable to an offer of Regional Selective Assistance ("RSA") made to TeleTech. The judge refused to award any further sum by way of commission referable to other financial incentives offered to TeleTech. It is against that refusal that Eurofi appeals. TeleTech seeks permission to cross-appeal out of time against the sum which it has been ordered to pay.
2 Eurofi carries on business offering independent specialist advice and consultancy services to companies in relation to the obtaining of grants and other financial assistance from public authorities in the European Union. It has considerable experience in obtaining such public sector grants and assistance. TeleTech is the subsidiary of an American public company concerned in the business of providing call centres containing a number of manned telephones. Many companies contract out services such as customer communications which are not within their core competency. TeleTech's holding company provides those services in call centres in the U.S.A., Australia and New Zealand. The services cover a wide range. In May 1996 TeleTech had established a relatively small call centre operation in Reigate, but it wanted to establish what would be its first major European call centre and its European headquarters.
3 In May 1996, Mr. Michael Tarte-Booth, Vice-President of TeleTech, contacted Mr. Thomas Talbot, one of Eurofi's consultants. A meeting was arranged between Mr. Louis Carroll, who was responsible for the whole of the TeleTech group's activities outside the U.S.A., Mr. Tarte-Booth and Mr. Talbot on 24 May 1996. TeleTech provided Mr. Talbot with a note of the details which TeleTech wanted to discuss with him. In the note headed "TeleTech-Eurofi Brief", the intended role of Eurofi was described like this:
"Euro-Fi's role is to advise TeleTech on the preferred location from the perspective of local, regional, national and supra-national investment incentives.
Additionally Euro-Fi are to build any business cases appropriate to securing the operational incentive package associated with our chosen location and work actively with TeleTech through all negotiations to secure the best incentive portfolio."
4 At the meeting on 24 May Mr. Talbot discussed Eurofi's fee structure, identifying the alternatives of a fee based on time spent or a contingency fee based upon a percentage of the grant obtained. Mr. Tarte-Booth and Mr. Carroll confirmed that they wished to retain Eurofi on the basis of a contingency fee. Mr. Carroll asked Mr. Talbot what he required in order to commence working for TeleTech. Mr. Talbot said that Eurofi needed a commitment fee of £5,000 and that he would send them a contract to sign.
5 On 4 June 1996 Mr. Talbot sent to Mr. Tarte-Booth the letter, which is the crucial document in this case. He said this:
"Further to our recent meeting and my letter of even date, I have pleasure in confirming our formal quotation for our grants consultancy services:
TERMS OF REFERENCE
Eurofi Limited to review the capital expenditure plans and programmes for potential investment within Europe by TeleTech.
Eurofi to identify the opportunities to apply for and negotiate financial incentives to support the above. Eurofi to provide all necessary assistance in the preparation of applications and negotiating documents in pursuit of the above.
Eurofi to provide all necessary advice and assistance in the negotiation of the applications submitted above.
I confirm that Eurofi Limited will require a commitment fee of £5,000 plus expenses and VAT to generally assist in the preparation of applications and in the negotiation of financial incentives broadly as described above. .... In addition to the commitment fee, the following fees would be invoiced:-
In respect of grants:-
- Fees equivalent to 7.5% of the value of grants offered per project up to a value of grants of £100K would be invoiced on the date of the relevant authority signifying its intention to award such grants.
- In addition to the above, fees equivalent to 5% of the value of grants offered per project in excess of £100K and up to £2M would be invoiced on the date of the relevant authority signifying its intention to award such grants.
- In addition to the above, fees equivalent to 4% of the value of grants offered per project in excess of £2M and up to £3M would be invoiced on the date of the relevant authority signifying its intention to award such grants.
- In addition to the above, fees equivalent to 3% of the value of grants offered per project in excess of £3M and up to £4M would be invoiced on the date of the relevant authority signifying its intention to award such grants.
- In addition to the above, fees equivalent to 2.5% of the value of grants offered per project in excess of £4M would be invoiced on the date of the relevant authority signifying its intention to award such grants.
Invoices are payable within twenty-one days of the tax point and will be subject to VAT.
It is agreed that in view of the disproportionate time and effort required by both TeleTech International Pty Ltd and Eurofi Ltd, that Eurofi is not obliged to prepare and pursue grant applications for individual projects where the grant opportunity is deemed likely by Eurofi to be less than £50K.
We would be grateful if you would indicate your agreement to our providing to you the services set out above, subject to the above Terms and the attached Standard Terms and Conditions, by executing and returning to us the enclosed copy of this letter and one signed copy of the Standard Terms and Conditions."
6 At the foot of a copy of the letter Mr. Tarte-Booth on 6 June 1996 signed TeleTech's confirmation of the acceptance of the offer to provide the services mentioned in the letter. He also signed a copy of Eurofi's Standard Terms and Conditions. They contained the following provisions (so far as material):
"1 Services
(a) The Company shall provide to the Client services described in the Letter ("the Consultancy Services").
(b) All services supplied by the Company to the Client are supplied subject to these terms and conditions and these terms and conditions shall be the sole terms and conditions of any supply of services by the Company to the Client. Terms and conditions put forward by the Client shall not be binding on the Company.
(c) For the purposes of these terms and conditions, "the Agreement" means the agreement constituted by the Letter and this Schedule.
(d) For the purposes of this Agreement, "the Project" means the project as identified in the Letter and as amended or altered by the Client (with or without the consent of the Company), including, without limitation, any change in the location or scope of the project.
2 Fees and Expenses
(a) In consideration for the Consultancy Services the Company shall be entitled to charge fees as specified in the Letter and this Schedule, these fees being exclusive of VAT.
(b) In the event of such fees (or any part thereof) being wholly or partly dependent upon any contingency (including but not limited to the Client obtaining grant, loan or equity monies) in respect of any Project, the Client shall be deemed to have appointed the Company to provide the Consultancy Services in respect of the Project on an exclusive basis. For the avoidance of doubt, the Company's entitlement to charge fees under the Agreement shall not be affected or diminished in the event of the Client preventing the Company from performing the Consultancy Services. Where the payment of such fees (or any part thereof) is contingent upon the Client obtaining grant, loan or equity monies, the contingency shall be deemed to be satisfied when the relevant authority has signified its approval in writing to the payment of such monies to the Client.
....
(e) Where fees are payable on a contingency basis in the event that:
(i) the Client elects not to proceed (either indefinitely or a period exceeding three months) with any Project relative to the contingency or any other matter the pursuit of which is necessary to satisfy the contingency (including without limitation an application for grant or other monies); or
(ii) the Client elects to proceed with the Project or any other such matter referred to in (i) above, on terms materially different to those either identified in or existing at the date of the Letter; or
(iii) the Client takes any other action or omits to take any action or makes any statement which renders the satisfaction of the contingency impossible or causes the contingency to be not satisfied including without limitation the refusal of any application for payment of grant monies because of any act or omission on the part of the Client after the date of the Letter, or because of a statement by the Client that it will proceed with any Project relative to the contingency notwithstanding the refusal of any application for payment of grant monies; or
(iv) any Circumstance of Force Majeure .... arises, being a circumstance outside the reasonable control of either the Company or the Client which renders the satisfaction of the contingency impossible or causes the contingency to be not satisfied (including without limitation the refusal of any application of grant monies because of a change in government policy after the date of the Letter);
the Company shall be entitled in lieu of such contingency fees, to charge fees to the Client based upon time spent by the Company's personnel since the commencement of the Agreement at the Company's then current charging rates applicable to such personnel.
....
7 Liability
....
(b) The Company shall not be responsible for the outcome of any application made by the Client with the advice or assistance of the Company to any Government Department or Agency either in the UK or elsewhere for grants, loans or other financial support.
....
11 Miscellaneous
(a) The Letter and this Schedule constitute the entire agreement between the parties in respect of the subject matter thereof and supersede all proposals oral or written and any other communications between them relating thereto. In the event of a conflict between the terms of the Letter and this Schedule, the terms of the Letter shall prevail."
7 Eurofi then set about preparing a document to be used for an application for RSA, setting out TeleTech's need and justification for financial assistance and recording TeleTech's preference for locating in Scotland. In November 1996 TeleTech was invited to tender for a contract to provide a call centre for the Association of Train Companies ("ATOC"). It decided to locate the ATOC facility in an existing building at the Hamilton International Technology Park ("Hamilton Park"). This was a project which at that time it pursued in addition to its project for its own flagship call centre.
8 A governmental agency called Locate in Scotland ("LIS") was the body to which applications for financial assistance were directed. LIS appears to have had the role of encouraging investment in projects in Scotland which created new jobs and of coordinating applications for assistance from governmental and other public bodies. On 12 November 1996 the application document for the Hamilton Park project was submitted to LIS. On 26 November LIS gave TeleTech an indication of the support package which would be offered if TeleTech located its facility in Hamilton Park. The financial benefits were summarised like this:
"Source |
Description |
Value |
Rates free period |
EZ
[Enterprise Zone] benefit |
£1,620,000 |
Rental concession |
Rental
at £4.30 per sq. ft until first rent review (April 2000) rather than
£5/sq.ft |
£77,000 |
Rent Holiday |
Extension
of rent free period |
£295,625 |
Car parking |
Provision
of access to 200 additional spaces without cost to Teletech. |
£250,000 |
Electricity up-grade |
Provision of access to up-graded supply to the site at estimated saving to Teletech of: |
£35,000 |
Mainstream training support |
£1,500 per eligible recruit (100% of agreed costs). Estimated @ 30% of recruits: |
£213,750 |
Pre-recruitment training |
Estimated Saving to Teletech of: |
£100,000 |
*Regional Selective Assistance |
£2,400,000 | |
*Additional training support |
£1,295 per eligible recruits (50% support). Estimated at 70% of recruits: |
£430,587 |
Total Value of Support Package |
£5,421,962 | |
|
9 In the letter LIS said that there was scope to adjust the RSA package
upwards in lieu of the additional training support. Further negotiations
resulted in the elimination of the additional training support and the increase
in the figure for RSA from £2,400,000 to £2,950,000.
10 On 23 December 1996 the Scottish Office wrote a letter to Mr. Tarte-Booth,
enclosing its formal offer of RSA. Thereby TeleTech was informed that the
Secretary of State for Scotland was prepared to pay TeleTech a grant not
exceeding £2,950,000 under s. 7 Industrial Development Act 1982 to aid the
Hamilton Park project. That offer was made subject to a number of conditions.
Thus no payment of grant was to be made until TeleTech had satisfied the
Secretary of State that a lease of at least 10 years at an annual rent of at
least £200,000 had been signed, and the offer was further conditional on
TeleTech's parent company approving the project, agreeing to provide the
necessary financial support and guaranteeing the repayment of any sum becoming
repayable. The grant was to be payable in three instalments, each of which was
dependent on expenditure having been made by TeleTech in an amount in excess of
that instalment and the creation of a specified minimum number of jobs. It was
provided that the Secretary of State might reduce the final instalment if the
total amount defrayed by TeleTech was less than the total which had been
estimated. There were further provisions for withholding and repayment of
grant in specified events, for example if in the opinion of the Secretary of
State there was unsatisfactory progress or a substantial change in the nature
or scale of the project, or if financial assistance towards the project had
been received or was likely to be received from any public authority in
addition to any assistance previously disclosed to the Secretary of State. The
offer was open for acceptance until 31 March 1997.
11 The judge regarded the offer by the Scottish Office as the ultimate aim
and target of all that Eurofi was striving for since its appointment, and said
that this was the very grant offer which was in the mind of both sides from
first to last and plumb within the words of the contract as the trigger event
upon which the contingency fee became payable. He rejected out of hand an
argument by TeleTech that the offer, being conditional, did not come within the
contract. The judge considered, but also rejected, an argument based on the
last sentence of clause (2)(b) of the standard terms, that it is only when the
authority indicates in writing its approval to the payment of monies that the
contingency fee becomes due.
12 On 23 December 1996 Eurofi sent TeleTech an invoice claiming commission in
respect of the RSA grant of £2,950,000 alone. At that time no formal
offer of other financial incentives had yet been made to TeleTech.
13 On 9 January 1997 TeleTech began to explore Eurofi's fees and ways of
mitigating them. In a fax that day to Mr. Talbot, Mr. Tasker, TeleTech's
commercial director, asked whether Eurofi's fee would be reduced if TeleTech
spent less than had been budgeted for. He said that the increased RSA in lieu
of additional training support had benefited Eurofi (which implied, as the
judge noted, that commission was not payable on additional training support)
and he asked whether Eurofi could do something for TeleTech by way of reduction
of its fee. Mr. Talbot responded the same day, asserting that Eurofi's fees
became due once the irrevocable letter from the Scottish Office had been issued
and that there could be no exception to that. The judge noted that Mr. Talbot
said nothing about the effect of commuting the additional training support into
increased RSA. The judge referred to the oral evidence of Mr. Harris, the
chairman and chief executive of Eurofi, that he did not believe that the
commission to which Eurofi was entitled was limited to the RSA grant, but
rejected it, expressing himself as satisfied that at that time Eurofi did not
think that it was entitled to a fee in respect of financial incentives other
than the RSA grant.
14 There were acrimonious exchanges between TeleTech and Eurofi in early 1997
which ended with Eurofi commencing proceedings on 21 February, claiming payment
of the sum of £165,087.50 shown in the invoice.
15 In the meantime on 15 January 1997 TeleTech heard that it had not obtained
the ATOC contract. It decided not to accept the Hamilton Park offer from the
Scottish Office, but put to LIS an addendum to its original application. The
addendum related to a site at Cardonald Park in Glasgow. On 1 April 1998 the
Scottish Office wrote to Mr. Tasker, enclosing a formal offer of RSA in respect
of Cardonald Park. This was for a grant not exceeding £3,900,000. Again
the offer was made subject to a number of conditions. Again the grant was to
be paid by instalments linked to previous expenditure by TeleTech and the
creation of a specified number of jobs. Again there were provisions for
withholding and repayment of grant.
16 On 7 April 1998 LIS from an American office wrote to TeleTech's American
parent. In it reference was made to a letter of intent dated 22 December. The
writer continued:
"I have amended the letter to reflect our discussions and changing
circumstances to set forth the primary terms and conditions of the agreement
between TeleTech UK Limited .... and Locate in Scotland .... regarding
TeleTech's commitment for a Call Center project in Cardonald Park, Glasgow,
Scotland.
As the lead Scottish investment agency, Locate in Scotland, working with our
partners, has agreed with TeleTech the incentives referred to herein, subject
to all necessary internal and external approvals being in place.
The following is our understanding of the primary terms and conditions:
1. Description of the Project. The Project consists of the development and
ownership by TeleTech of a Call Center that will provide a variety of
telecommunications services to TeleTech clients at a site in Cardonald Park,
Glasgow, Scotland. The Parties anticipate that the Project will create 500
full- time equivalent jobs in Glasgow over a three-year period.
2. Financial Support to be provided in Scotland for the Project. Subject to
the terms and conditions set forth in this Letter of Agreement, Locate in
Scotland will recommend the following incentives to be provided by the
applicable governmental entities (the "Project Incentives"). The payment of
the support is subject to the terms and conditions set out in the Regional
Selective Assistance offer and the terms and conditions associated with the
training grant, fit out and car parking provision agreement(s) with Glasgow
Development Agency ["GDA"] and the licence agreement with Glasgow City Council.
Project Incentives |
Amount of Incentives (£m) | |
Regional Selective Assistance ("RSA") (from the Scottish Office Education and Industry Department) |
£3,900 | |
Rent Free Accommodation at Centenary House (from Glasgow City Council) |
£0.240 | |
Direct
Training Support |
£0.245 | |
Training
Assistance to Eligible Trainees Under the National Training Scheme (assumes
TeleTech employs 150 people eligible for support under national training
programs) |
£0.300 | |
Centenary House "Fit Out" to Create a Temporary Facility (from GDA) |
£0.250 | |
Car Parking Facility (from GDA) |
£0.050 | |
Total |
£4,985 |
" |
17 10 other numbered paragraphs followed, not all consistent with each
other.
18 A covering letter of the same date explained the condition "subject to all
necessary internal and external approvals being in place" as being "to allow
for the process all of our organisations are currently involved in". It also
referred to the fact that so far as RSA was concerned, all approvals were in
place and the official offer letter had been issued.
19 In consequence of the Cardonald Park offer, Eurofi amended its pleadings
to claim a declaration that it was entitled to be paid a contingency fee based
upon any offer of grant (including any of the financial incentives referred to
as "project incentives" in the letter of 7 April 1998) for the Cardonald Park
call centre.
20 The judge said that of the six "project incentives" the RSA had been
offered. He commented that the rent-free accommodation had already been taken
up by TeleTech under documentation executed by the Glasgow City Council,
TeleTech had had the benefit of the Fit Out costs from the GDA and TeleTech had
also secured the benefit of the car parking facilities from the GDA. The judge
said of those incentives:
" .... no money was paid out (or offered) to TeleTech. In each case an
economic benefit in kind was acquired, but nothing in the sense of an outright
grant of monies was offered or made. I have carefully considered the nature of
a grant within the meaning of the letter contract and the standard terms. I
bear in mind that these documents are Eurofi's drafted documents and there must
come a point at which, if there is ambiguity in its documents they will be
construed contra proferentem. I think in any event, untrammelled by any such
rule, that I would naturally have preferred a meaning for the word "grant"
which would exclude benefits in kind of the nature considered above. Taking
the contra proferentem rule into account, I have little hesitation in so
restricting the ambit of the word. It seems to me that if it was going to have
a wider impact as contended for by [counsel for Eurofi], this was indeed a case
in which it was incumbent upon Eurofi to spell the details out with
considerable precision."
21 The judge then referred to direct training support and training assistance
to eligible trainees. He said:
"These benefits may involve payment of money to defray cost of training. The
evidence was exiguous in the extreme, but I shall assume that they do involve
money payments. The benefits are, however, in a different case from RSA. Mr.
Tasker told me that these benefits in respect of training are available from
the GDA to any company irrespective of whether it is an inward investor.
Anybody employing eligible people in the city of Glasgow would be in a position
to claim these training incentives under the schemes in existence and
established for the purpose of assisting special categories of persons such as
those who have been unemployed for over six months. In this respect the
benefit is rather more like the rate free period to which anyone locating in an
enterprise zone would automatically become entitled under existing legislation.
It is something which does not require any special negotiation. It is there
for the asking.
Moreover, as Mr. Harris told me, in order to obtain the benefit TeleTech would
have to institute the necessary training programmes. If it does not do the
training it will not get the training costs defrayed. In my judgment, this is
another area in which, as a matter of construction, I prefer a meaning for the
word "grant" in the contract which is akin to an outright capital grant like
the RSA, but does not encompass incentives such as those concerning training
provided by the GDA."
22 The judge therefore rejected Eurofi's claim in respect of the financial
incentives other than RSA, saying that he did so as a matter of construction of
the letter of 4 June 1996 and the attached standard terms, without being
influenced by his finding that neither side thought the additional financial
incentives were eligible for Eurofi's fees.
23 The judge then went on to consider whether Eurofi was entitled to fees in
respect of the Scottish Office's offer in relation to Cardonald Park. The
judge accepted Eurofi's submission that it was entitled to the fees in respect
of Hamilton park plus the amount by which the fees in respect of Cardonald Park
exceeded those fees. The judge concluded his judgment by saying that he found
it difficult to imagine that there was likely to be any further liability under
the agreement. He noted that the offer in respect of Cardonald Park had not
been accepted by the time of trial, but said that from the evidence it seemed
quite likely that Cardonald Park would mark the end of the project encompassing
the first major call centre TeleTech was establishing in Europe. The judge
accordingly gave judgment for Eurofi in the sum of £199,162.50 and
interest.
24 The judge's view on what would happen at Cardonald Park in the event has
not proved true. TeleTech did not accept the Cardonald Park offer. It sought
RSA for a new call centre at 225 Bath Street, Glasgow. On 30 September 1999
the Scottish Executive (the successor of the Scottish Office) offered TeleTech
a grant of £2,850,000 by way of RSA. That offer was accepted by TeleTech
on 27 October.
25 I shall start with the application by TeleTech for leave to cross-appeal
against the order of the judge. It seeks a reduction in the amount which it
was ordered to pay. Instead of £199,162.50 plus interest, it asks the
court to substitute £160,387.50 plus interest. That is the figure
appropriate to the grant offered and accepted in respect of Bath Street. It
has produced a number of additional documents which it claims to be all the
documents relevant to this point.
26 Mr. Murray Rosen Q.C. for TeleTech submitted that on the judge's own
reasoning whereby the Cardonald Park project was treated as the same project as
the Hamilton Park project, the Bath Street project should likewise be treated
as the same as the earlier two projects, and the fees to which Eurofi is
entitled should be those measured by the RSA for the Bath Street project. The
basis for that submission was that the earlier offers by the Scottish Office
had not been accepted by TeleTech whereas the offer in respect of Bath Street
had been accepted and finality had been achieved.
27 I confess that I think that, as a matter of construction of the letter of
4 June 1996 and Eurofi's standard terms, there is much to be said for the view
that as the fees were dependent upon a contingency, that contingency was only
satisfied as provided in the last sentence of clause 2(b) of the standard
terms. But that view was specifically rejected by the judge and TeleTech took
the decision not to appeal against it. The logic of Mr. Rosen's argument must
be that the judge could not properly have ordered the payment of any money by
way of commission at a time when the Hamilton Park offer had not been taken up
and the Cardonald Park offer had not yet been accepted. The point taken
belatedly and opportunistically now is that a lower offer has been received and
accepted and that therefore Eurofi's commission should be reduced.
28 Mr. Selwyn Bloch Q.C. for Eurofi opposed the application. He pointed out
that not only is the application made substantially out of time but it is
dependent upon the exercise of discretion by this court to receive evidence
which was not before the judge and upon which no court has found the relevant
facts. TeleTech's case depends on the alleged similarity between the Bath
Street project and the previous two projects, and that has yet to be
established. He further reminded the court that the judge was not asked to
decide the issue now raised that TeleTech's liability to Eurofi fell to be
reduced by reason of a subsequent lower offer of RSA being accepted by
TeleTech.
29 In my judgment it would not be right for this court to entertain this new
point at this late stage. TeleTech should have sought to challenge, within the
permissible time, the whole basis of the judge's decision on the ground that it
was premature. It did not. It is inappropriate for this court as a court of
review to be asked to determine the point of construction as applicable to
facts which have not been established by any lower court and when that point
only emerged clearly after it had been suggested by this court in the course of
the argument before us. It was for these reasons that at the hearing I for my
part refused the application.
30 I come now to Eurofi's appeal. Mr. Bloch submitted that the judge was
wrong to exclude the financial incentives other than RSA as being relevant to
the commission which Eurofi earned. He argued that the letter of 4 June 1996
unambiguously equated "grants" with "financial incentives", pointing to the
phrases "our grant consultancy services", the inclusion in the reference terms
of Eurofi identifying "the opportunities to apply for and negotiate financial
incentives", and the reference to "the negotiation of financial incentives".
He also referred to the TeleTech - Eurofi brief with its similar reference to
Eurofi advising on the preferred location from the perspective of "local,
regional, national and supra-national investment incentives". He said that
given that Eurofi was instructed on behalf of TeleTech in relation to the grant
of all financial incentives and not only RSA and that all such incentives were
linked so that the parties were concerned to achieve a total incentive package
for TeleTech, it did not make sense to limit Eurofi's fees to RSA. He
criticised the judge for construing "grants" as applicable only to cash
payments and as not extending to benefits in kind, and he pointed out, and it
is not disputed by Mr. Rosen, that direct training support in the sum of
£245,000 was paid by the GDA by way of a cash payment. I would add that
no point is taken on the fact that this payment was made after the judgment
pursuant to a written offer from the GDA on 26 February 1999. He also
submitted that the judge was wrong to conclude that the direct training support
did not require any special negotiation and was there for the asking like rates
relief in an enterprise zone.
31 Mr. Rosen submitted that the judge was right for the reasons which he
gave.
32 The question before us is a short point of construction of the letter of 4
June 1996 and Eurofi's standard terms. This falls for determination against
the background of facts known to the parties at the time. Subsequent events
and documents are of no assistance, except perhaps as illustrations of what
might have been expected to occur. Because the agreement related to the
obtaining of financial assistance from public bodies, one might have expected
some attention to have been given to the statutory powers and duties under
which the incentives were provided. But counsel on both sides were taken by
surprise by this court's request to see the statutory material.
33 So far as RSA is concerned, there is of course no dispute that it is a
grant. S. 7(3) Industrial Development Act 1982 specifically authorised the
provision of financial assistance by making grants. The ordinary meaning of
"grant" is "a gift or assignment of money by government or public authority out
of public funds to a private or individual or commercial enterprise deemed to
be beneficial to the public interest" (GTE Sylvania Canada Ltd. v R
[1974] 1 FCR 726 at p. 736 per Cattanach J. in the Federal Court of Canada).
Eurofi's standard terms support the view that grant has that ordinary meaning
of an award of money: see the references in clause 2(b) to "grant, loan or
equity monies", in clause 2(e)(i) to "grant or other monies", in clause
2(e)(iii) and (iv) to "grant monies" and in clause 7(b) to "grants, loans or
other financial support."
34 Of the five other financial incentives listed in the letter of 7 April
1998, training assistance to eligible trainees appears never to have been the
subject of an offer, unless the letter itself can be taken to be the act of a
relevant authority signifying its intention to award such a grant (within the
meaning of the letter of 4 June 1996), a point to which I will come later. The
rent-free accommodation, the fit-out of Centenary House and the car parking
facility were, Mr. Bloch accepts, not offers of payment of monies to TeleTech,
but offers of the provision of benefits on which LIS has placed a value. On
what basis that value has been placed is unclear. Unless there is something in
the letter of 4 June 1996 or the standard terms which indicates that the
provision of such benefits is to be treated as grants, I cannot see that
"grants" in the letter can be construed as extending to them.
35 In my judgment the letter does not equate all incentives with grants. I
of course accept that Eurofi was engaged to obtain incentives which included
but were not confined to RSA, but it does not follow that Eurofi chose and
TeleTech agreed to give Eurofi commission on the basis that the commission was
a percentage of all the incentives which TeleTech secured through Eurofi's
advice and assistance. The advantage of measuring commission by reference to
grants alone (if the term is given its ordinary meaning of grants of money) is
certainty and the avoidance of dispute. It would make practical sense for
Eurofi to limit its commission claim to a percentage of any monetary awards,
that percentage taking account of the fact that benefits in kind might also be
achieved but the valuation of which might be open to dispute. Whether that is
what Eurofi did, I do not know. All that I am saying is that it is not
contrary to commercial common sense to find a provision for fees limited to a
percentage of monetary grants. On any footing RSA was the most important and
largest incentive or "core funding" (as Mr. Talbot described it) which an
applicant would seek to obtain. I therefore agree with the judge on the
necessity for a grant to be of a sum of money. If there were any doubt, it
would have to be resolved against Eurofi under the contra proferentem rule of
construction.
36 I respectfully disagree with the judge in relation to direct training
support. When we asked counsel for assistance on the statutory basis for this,
Mr. Rosen referred us to the Enterprise and New Towns (Scotland) Act 1990. The
GDA was established as a Local Enterprise Company under that Act. It exercises
the functions of Scottish Enterprise in the Glasgow area and as such it made
arrangements under s. 2(3) and (4) of that Act to assist persons to train.
Such arrangements by s. 2(4)(c) included provision for the making of payment by
way of grant to persons who provide facilities in pursuance of the
arrangements. On the basis that direct training support is such a grant, it is
hard to see why it should not be a grant within the meaning of the letter of 4
June 1996. It appears to have been paid in much the same way as RSA was paid,
that is to say after acceptance of an offer and after expenditure by the
grantee which is reimbursed. There was clear evidence before the judge that
direct training support had to be applied for. Mr. Tasker accepted that a
business case had to be put in for it. Further it is clear that it might be
commuted to RSA if the Scottish Office agreed. In my judgment in those
circumstances there is no reason why it should not be within the scope of
"grants" as referred to in the letter of 4 June 1996.
37 Mr. Bloch argued that the letter of 7 April 1998 constituted an offer of
all the incentives referred to therein and that on that date "the relevant
authority" signified its intention to award such grants. He said that LIS was
that authority acting on behalf of the Scottish Office, Glasgow City Council
and the GDA. He pointed to the fact that the letter was intended to set forth
an agreement, and that LIS expressed itself as "working with our partners" in
agreeing with TeleTech the incentives referred to therein. But the letter
contains no clear statement that it was authorised by, for example, the GDA to
bind it and it is to be noted that the agreement was subject to "the necessary
internal and external approvals being in place", and that must mean that save
where the approvals had already been obtained (as in the case of the Scottish
Office having made the RSA offer) LIS was not purporting to agree the
incentives. Further in the numbered paragraph 2, LIS was only to "recommend"
the provision of incentives by the applicable governmental entities. In my
judgment therefore it is plain that the letter cannot be regarded as itself
being the signifying by a relevant authority of its intention to award a
grant.
38 I would therefore allow this appeal only to the extent of increasing the
award to Eurofi by the fees referable to the £245,000 direct training
support. Subject to that I would dismiss the appeal.
Chadwick LJ :
39 I agree that this appeal should be allowed; but only to the limited extent
indicated by Lord Justice Peter Gibson. It is only because we are differing
from the judge below that I add some observations of my own to the reasons
which Lord Justice Peter Gibson has given.
40 The terms upon which the appellant, Eurofi Ltd, was engaged are contained
in the letter dated 4 June 1996 and in the appellant's Standard Terms and
Conditions referred to in that letter. That is made clear by the penultimate
paragraph of the letter itself, to which Lord Justice Peter Gibson has
referred:
We would be grateful if you would indicate your agreement to our providing to
you the services set out above, subject to the above Terms and the attached
Standard Terms and Conditions, by executing and returning to us the enclosed
copy of this letter and one signed copy of the Standard Terms and
Conditions.
The respondent complied with that request. The letter of 4 June 1996 was
countersigned on its behalf by Mr Tarte-Booth on 6 June 1996, a copy of the
Standard Terms and Conditions was signed by Mr Tarte-Booth on the same date,
and both documents were returned to the appellant.
41 Condition 2(a) of the Standard Terms and Conditions provided that, in
consideration for the consultancy services described in the letter of 4 June
1996, the appellant should be entitled to charge fees "as specified in the
Letter and this Schedule". In that context, "the Letter" is the letter of 4
June 1996 and "this Schedule" is the document containing the Standard Terms and
Conditions which was attached to, and referred to in, that letter. Condition
2(b) is directed to the case in which the fees specified in the letter are
dependent upon a contingency. It contains the following provision:
Where the payment of such fees (or any part thereof) is contingent upon the
Client obtaining grant, loan or equity monies, the contingency shall be deemed
to be satisfied when the relevant authority has signified its approval in
writing to the payment of such monies to the Client.
42 Condition 2(e) addresses the position where, through some action by the
client, it becomes impossible for the contingency to be satisfied; that is to
say, where the client takes some action as a result of which the relevant
authority does not signify its approval to the payment of the grant or other
monies which the appellant was engaged to obtain on the client's behalf.
Sub-paragraph (iii) of that condition makes it clear that the parties had in
mind that satisfaction of the contingency - by approval to payment - would
normally follow an application for payment:
. . . in the event that . . . (iii) the Client takes any other action, or omits
to take any action, or makes any statement, which renders the contingency
impossible or causes the contingency to be not satisfied (including without
limitation the refusal of any application for payment of grant monies because
of any act or omission on the part of the Client after the date of the Letter,
or because of a statement by the Client that it will proceed with any Project
relative to the contingency notwithstanding the refusal of any application for
payment of grant monies);
In such a case the appellant company is entitled to charge, in lieu of
contingency fees, fees based upon time spent on the project.
43 It is, I think, reasonable to assume that the Standard Terms and Conditions
- and, in particular, the provisions in condition 2 - were drawn with the
Industrial Development Act 1982 in mind. In any event, that Act clearly forms
an important part of the background against which the Standard Terms and
Conditions and the letter of 4 June 1996 must be construed. The Act provided
the statutory basis upon which regional development grants (Part II) and
selective financial assistance (Part III) would be sought from and provided by
the United Kingdom government in relation to projects in assisted areas.
"Assisted areas" are defined in section 7(6). They are Northern Ireland and any
area within Great Britain designated as a development area or an intermediate
area under section 1 of the Act. Section 7(1) enables the Secretary of State to
provide financial assistance for the purposes set out in section 7(2) where, in
his opinion, the financial assistance is likely to provide, maintain or
safeguard employment in any part of the assisted areas and the undertakings for
which the assistance is provided are or will be wholly or mainly in the
assisted areas. Section 7(3) is in these terms, so far as material:
. . . financial assistance under this section may be given on any terms or
conditions, and by any description of investment or lending or guarantee, or by
making grants, and may, in particular, be -
(a) investment by acquisition of loan or share capital in any company . . .
,
(b) investment by the acquisition of any undertaking or of any assets,
(c) a loan, whether secured or unsecured, and whether or not carrying interest,
or interest at a commercial rate,
(d) any form of insurance or guarantee to meet any contingency, . .
44 It can be seen, therefore, that "financial assistance" is a much wider
concept than "grant". The making of a grant is one way - but by no means the
only way - of providing financial assistance under the Act. This, of course, is
recognised in the language of condition 2(b) of the Standard Terms and
Conditions, which refers to the client obtaining "grant, loan or equity
monies".
45 Further, as is made clear in section 7(3) of the 1982 Act, financial
assistance may be given "on any terms or conditions". It is, as it seems to me,
almost inevitable that, if a grant or loan is made subject to some condition,
then the monies will not be approved for payment until the condition is
satisfied. That supposition is borne out by each of the two letters from the
Scottish Office which are relied on by the appellant in the present case - that
is to say, the letter dated 23 December 1996 (in relation to Hamilton
International Business Park) and the letter dated 1 April 1998 (in relation to
Cardonald Park) - and by the letter from the Scottish Executive dated 30
September 1999 (in relation to 225 Bath Street) on which the respondent seeks
to rely. In each case (i) the offer of a grant is subject to "preconditions" -
which include a guarantee of financial support by the respondent's parent
company, (ii) the grant is payable by instalments - such that each instalment
is payable only when the respondent has made a specified commitment by way of
expenditure on fixed assets, (iii) each instalment must be claimed, and the
claim must be accompanied by specified information and (iv) the Secretary of
State is entitled to withhold payment if he is of opinion that unsatisfactory
progress has been made towards the completion of the project.
46 In my view it is reasonably clear that the effect of the provision in
condition 2(b) of the Standard Terms and Conditions - to which I have referred
- is not satisfied unless and until there is approval by the relevant authority
to payment of whatever instalment of grant or loan monies has actually been
approved. That is the reason why condition 2(e) makes provision for what is to
happen if, through some act or omission by the client, the stage of "approval
to payment" is not reached. For my part, I would not regard the provision in
condition 2(b) as satisfied on the issue of any of the formal offer letters to
which I have referred. But the position, in the present case, is that the
letter of 4 June 1996 refers to fees being invoiced: "In respect of grants . .
. on the date of the relevant authority signifying its intention to award such
grants". And, condition 11(a) of the Standard Terms and Conditions requires
that: "In the event of a conflict between the terms of the Letter and the terms
of this Schedule, the terms of the Letter shall prevail". The question,
therefore, is whether there is a conflict between the terms of the letter of 4
June 1996 and the terms of condition 2(b) of the Standard Terms and Conditions.
47 The judge addressed this point at paragraphs 41 to 45 of his written
judgment. He reached the conclusion (i) that the terms of the letter were clear
- the contingency was satisfied on issue of the formal offer letter (see
paragraph 41 of the judgment), (ii) the provision in condition 2(b) of the
Standard Terms and Conditions, properly construed, was to the same effect - the
formal offer letter was a document in which the relevant authority signified
its approval to the payment of a grant (see paragraphs 42 and 43 of the
judgement), and (iii) if the provision in condition 2(b) was inconsistent with
the letter of 4 June 1996, then that provision must be rejected as required by
condition 11(a) (see paragraphs 44 and 45 of the judgment).
48 Lord Justice Peter Gibson has indicated his doubts whether the judge's
conclusion was correct on that point. I share those doubts. But it is
unnecessary to resolve the point because it is not the subject of any appeal by
the respondent. If the respondent's contentions on this point, advanced below,
were well founded, they would have been a complete defence to the appellant's
claims as they stood when this matter was before the judge. Put shortly, the
claims would have been premature, because the contingency had not been
satisfied. Claims for payment could, no doubt, have been made under condition
2(e) of the Standard Terms and Conditions; but those were not the claims made
in the action. Nevertheless, for reasons which, no doubt, were well considered
at the time, the respondent decided not to appeal the judge's decision on the
point.
49 The point became material, on the hearing of the appellant's appeal, only
because the respondent sought leave to cross-appeal, so as to rely on the offer
letter of 30 September 1999 (225 Bath Street). That letter had not been issued
when the matter was before the judge. He assumed that finality had been reached
on the basis of the offer letter dated 1 April 1998 (Cardonald Park). The
decision to cross-appeal was, no doubt, prompted by the fact that the amount of
financial assistance - and, in particular, the amount of regional selective
assistance ("RSA") - offered in September 1999 was significantly less than that
offered in April 1998. But, in my view, it is beyond argument that the
cross-appeal could succeed only on the basis of a successful challenge to the
judge's decision on the inter-relation of condition 2(b) of the Standard Terms
and Conditions and the contingency as expressed in the letter of 4 June 1996.
That was a challenge which the respondent had decided not to mount. It was not
until the point emerged during the course of argument on the hearing of the
application for permission to cross-appeal that Mr Rosen QC, leading counsel
for the respondent, sought to resile from that decision. His attempt to do so
may fairly be described, in the phrase used by Lord Justice Peter Gibson, as
"opportunistic". It should not be allowed to succeed. It would be unfair to the
appellant if this Court were now to entertain a point which the appellant had
every reason to think had been abandoned; and it would be inappropriate for
this Court to attempt to reach a conclusion as to the practical effect of the
point (if made good) in relation to facts which have not been the subject of
any investigation before the judge. It was for those reasons that I took the
view that the application for permission to cross-appeal out of time should be
refused.
50 The point does not arise on the appeal itself because, as we were informed,
the respondent has actually received payment of the Direct Training Support
(£245,000) offered in the letter from Locate in Scotland dated 7 April
1998; and there has been no formal offer of training assistance under the
National Training Scheme (£300,000) referred to in that letter. So, if the
correct test is "approved for payment", it is satisfied in relation to the
Direct Training Support; and, if the correct test is notification by the
relevant authority of "intention to award", it is not satisfied in relation to
assistance under the National Training Scheme.
51 The financial incentives - or financial support or financial assistance
(however they may be described) - other than RSA listed in the letter of 7
April 1998, to which Lord Justice Peter Gibson has referred, are from two
sources: (i) assistance from Glasgow City Council in the form of rent free
accommodation and car parking facilities; and (ii) assistance from Glasgow
Development Agency in the form of Direct Training Support and "fitting out" of
Centenary House and the car park adjoining Laidlaw Street. For the reasons
given by Lord Justice Peter Gibson, I have no doubt that the assistance from
the Glasgow City Council - in the form of rent free accommodation and car
parking - does not fall within the meaning which should be given to the word
"grants" in the letter of 4 June 1996.
52 We have been told that Glasgow Development Agency is a body exercising
delegated functions under section 19(1) of the Enterprise and New Towns
(Scotland) Act 1990. The functions are those of Scottish Enterprise. Section
2(3) of the Act requires Scottish Enterprise to "make arrangements for the
purpose of - (a) assisting persons to train so that they may obtain and retain
employment suitable for their ages and capacities". Section 2(4)(c) provides
that arrangements under section 2(3) may include the making of payments "by way
of grant or loan or otherwise" to persons who provide facilities in pursuance
of the arrangements.
53 I have already expressed the view that "financial assistance", in the
context of assistance from public sector sources, is a much wider concept than
"grant". The point is reinforced by section 2(4)(c) of the 1990 Act, which
refers to payments "by way of grant or loan or otherwise". For a more complete
list of the many and diverse ways in which financial assistance may be provided
by a public sector source, reference may be made to section 8(1) of the Act. In
my view, the use of the word "grants" in the letter of 4 June 1996 should be
taken as deliberately restrictive; there is no reason to think that the parties
intended that "grants" should bear the wider meaning of "financial incentives"
or "financial assistance". If they had so intended, they could have been
expected to say so.
54 That being so, there is no basis for construing the word "grants" to
include money laid out by Glasgow Development Agency in improving land or
buildings owned by Glasgow City Council for use by the respondent. But the
position is otherwise in relation to Direct Training Support. The evidence is
less than complete, but it seems reasonably clear that Direct Training Support
is provided by reimbursing to the employer the cost (or part of the cost) which
the employer has incurred in training its employees - either "in house" or
through external trainers. On that basis the payments appear to fall squarely
within section 2(4)(c) of the 1990 Act; so that the only question is whether
the payments are made by way of grant "or otherwise" - there being no
suggestion that they are made by way of loan. I can see no reason why the
payments should not aptly be described as being made by way of grant. It is, to
my mind, no answer to say, if it be the case, that the grant is mandatory
rather than discretionary.
55 Given the context in which the word "grants" is used in the letter of 4
June 1996, I think it perverse to deny that a payment which, within the meaning
of the statutory authority under which it is made, is aptly described as being
made by way of grant is not a "grant" for the purposes of that letter.
56 For those reasons, as well as for the reasons given by Lord Justice Peter
Gibson, with which I agree, I would allow the appeal to the extent indicated.
Buxton L.J.:
57 I agree with both judgments. Although we are differing from the judge
below there is nothing that I wish to add.
Order: Appeal allowed in part. No order as to costs.
(Order does not form part of approved judgment.)