England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		25 June 1999

Mr Justice Thomas:

Introduction

On 10 October 1997 Nomura International plc (Nomura) agreed to buy from Brent Walker Group plc (Brent Walker) the betting shop business of the William Hill Organisation Limited (William Hill). The successful sale was achieved as a result of a controlled auction conducted by Close Brothers Corporate Finance Limited (Close Bothers) on behalf of Brent Walker. Under the terms of an arrangement to which it will be necessary to refer in more detail, Close Brother’s fee on successful completion was about £5.3m.

When Close Brothers drew up a list of those who might be interested in participating in the controlled auction, Nomura was not included. Their involvement came about after they had been contacted by the plaintiffs. The plaintiffs claim through these proceedings a reasonable fee from Close Brothers for effecting what they contend was the introduction of Nomura who became the successful bidder; they say the amount of the fee should be about £530,000. The claim is put forward both on the basis of contract and quantum meruit or restitution. Close Brothers have denied the entitlement to a fee contending that there was neither a contract nor circumstances which gave rise to a quantum meruit or claim in restitution. It is necessary first to set out the factual background and set out my findings of fact on those matters that are in dispute before turning to the legal issues that arise.

THE FACTUAL BACKGROUND

The proposal to sell William Hill and the retention of Close Brothers

Under the supervision of a steering committee of creditor banks, the board of Brent Walker had been disposing of Brent Walker’s assets. After the sale of the Pubmaster chain, the only significant asset that Brent Walker held was William Hill. It was obvious in the market that William Hill would be sold by Brent Walker, but the timing and manner of sale was a matter upon which Close Brothers were retained to advise on terms set out in a letter dated 13 May 1997. The terms of the letter provided that they would act as financial adviser in relation to the realisation of Brent Walker’s investment in William Hill; the corporate finance services were:

“........

(b) to assist Brent Walker in drafting a detailed proposal for submission to the Steering Committee of members of the Term Facilities Agreement (“TFA”) and subsequently to all members of the TFA;

(c) to draft a detailed timetable for the implementation of the preferred option(s) and agree this with all parties and their advisers;

(d) to co-operate with Brent Walker in co-ordinating the activities of its other advisers on the development and implementation of the preferred option(s) and to instruct such advisers on behalf of Brent Walker;”

The agreement provided they would be paid a monthly retainer of £50,000 for January and February 1997, a monthly retainer of £100,000 thereafter until the successful completion of the realisation of William Hill and a success fee calculated as follows:

Gross Proceeds	Fee basis
Up to £500 million	0.45% of gross proceeds
	£200,000 of the monthly retainer
	will be offsetable against the
	success fee
Between £500 million-£600 million	0.45% of £500 million
	plus 1% of gross proceeds above
	£500 million
	£200,000 of the monthly retainer
	will be offsetable against the
	success fee
Between £600 million-£750 million	0.45% of £500 million
	plus 1% of £100 million
	plus 1½% of gross proceeds above
	£600 million but capped at £750
	million
	£200,000 of the monthly retainer
	will be offsetable against the
	success fee

Close Brothers were also to be entitled, in addition to their fee, to recover their reasonable out of pocket expenses, including legal and professional fees, incurred in connection with the work.

Close Brothers advised that the best method of disposal was by means of a controlled auction; by this type of sale, potential purchasers are approached and, if interested, are provided on a confidential basis with information relating to the business to be sold. Indicative bids are then sought and from amongst those who provide indicative bids, a second list of final bids is again sought. From amongst those, the preferred bidder is then chosen and a contract negotiated with that person.

Close Brothers identified about forty companies as potential purchasers; they were divided into an A list and a B list and sub-divided into trade buyers and institutional buyers. In order to provide some information to interest these companies, Close Brothers provided what has been described as a “speaking brief” setting out in summary form in a page and a half publicly available information on William Hill.

They also prepared more detailed information in a document entitled “Information Memorandum”. This was a confidential document and only provided to those who were prepared to sign an undertaking of confidence. That document set out detailed financial and other information about the group and invited bids.

The involvement of the plaintiffs

The second plaintiff (Mr Page) was a merchant banker. Between 1991 and 1997, he worked for Brent Walker as managing director of the International Division. At the beginning of 1997, his employment with Brent Walker came to an end and, at about the same time, he entered into a partnership with the first plaintiff (Mr Becerra) and a third individual. Mr Becerra had been a trader in the financial markets and for a time was employed at Goldman Sachs, London. After leaving Goldman Sachs in November 1994 he commenced trading on his own account. The business of the partnership between Mr Becerra and Mr Page involved international corporate finance with a specific focus on North America and Spain; to a large extent it involved ad hoc projects. Their business could be described as “a boutique operation”.

In about April or May 1997, Mr. Page learnt from Mr Dibble, the company secretary of Brent Walker, that William Hill was to be sold by Brent Walker; he and Mr Becerra decided that they would see if they could become involved. Mr Page also learnt from Mr Dibble of the appointment of Close Brothers and that a controlled auction was planned; he discussed the sale with Mr Dibble and they agreed that a trade bidder would be the successful bidder. They were concerned to get the price up and considered that this might be done through an Asian competitor. Mr Page requested permission to contact HSBC Investment Bank; Mr Dibble gave him that permission. Mr Page then contacted them at the end of May. In doing this, he was clearly acting on his own initiative and not at the request of Brent Walker.

Mr Page next approached Mr Leach who was then the Chief Executive of Brent Walker. It would appear from an e-mail from Mr Page to Mr Becerra that he must have done so shortly before 5 June 1997. Mr Page told Mr Leach that he had a few contacts in the Far East who might be interested in Brent Walker; he asked Mr Leach how he should go about getting them involved. Mr Leach told him that he wanted to avoid any confusion in the sale and that he should talk to Close Brothers; his concern was to avoid potential bidders being approached by different people and matters not being generally controlled by Close Brothers. Five days then passed before Mr Page approached Close Brothers.

The organisation of Close Brothers

The head of the corporate finance department of Close Brothers was Mr John Llewellyn-Lloyd. He had joined the corporate finance department of Hill Samuel in 1985. When Close Brothers took over the corporate finance department of Hill Samuel in 1995, he was then head of that department. He became chief executive of Close Brothers. The corporate finance department employed about 55 people; it was closely supervised by Mr Llewellyn-Lloyd.

Decisions whether to take on a client and act in a transaction were, as is common practice in the City, subject to review by an internal committee. Although there were no written lines of authority, I accept the evidence impressively given by Mr Llewellyn-Lloyd that any decision involving reputational risk to Close Brothers or involving the fees it would charge or incur were of such importance that they had to be subject to approval by this committee.

Assisting Mr Llewellyn-Lloyd in advising Brent Walker was Mr Richard Grainger. He was an accountant by profession and had joined Hill Samuel in 1987; he became a director of Hill Samuel Corporate Finance in 1995 and retained a similar position when the business was taken over by Close Brothers. He clearly understood the procedures of Close Brothers to which I have referred.

The telephone conversations between Mr Grainger and Mr Page in June 1997

On about 10 June 1997 Mr Leach telephoned Mr Grainger and told him of his conversation with Mr Page and that Mr Page had some contacts in the Far East who might be interested in making a bid for William Hill.

Shortly thereafter Mr Page telephoned Mr Grainger as Mr Leach had suggested that he speak with him or Mr Llewellyn-Lloyd. It was common ground before me that there were two telephone conversations between Mr Grainger and Mr Page between 10 and 17 June. No note was made of those telephone conversations and, save on two important points, there was a large measure of agreement as to what was said, though there was a difference in recollection as to what was said in which conversation. These conversations are of very substantial importance as they are the foundation of the plaintiffs’ claims in contract, quantum meruit, and restitution.

• Mr Page told Mr Grainger that he had various connections in the Far East and asked him whether he could contact them in relation to the proposed controlled auction of Brent Walker.

• According to Mr Page’s statement, Mr Page also asked in that first conversation whether Close Brothers had considered approaching Nomura; that Mr Grainger had told him that they had not because they did not think they would be interested in William Hill. Mr Page then asked if he could contact Nomura and Mr Grainger assented on the basis that that was the only UK institution that could be contacted by him. In his oral evidence, Mr Page stated that he could not recall whether Nomura was mentioned in the first or second conversation. Mr Grainger accepted that they had spoken about Nomura, but his evidence was that this had happened in the second of the conversations. Mr Grainger’s evidence on this was entirely consistent.

• Although Mr Page was only permitted to contact Nomura in the UK, Mr Grainger imposed no restrictions on the range of contacts that Mr Page could make amongst potential Asian investors.

• Mr Page asked Mr Grainger if he would supply the speaking brief and Mr Grainger agreed.

• Mr Grainger made no express request of Mr Page to do anything.

• Mr Page said nothing about seeking a fee or being paid by Close Brothers; nor was anything said about Mr Page acting for Close Brothers or words to that effect.

• The conversations were informal and low key.

Although that much is common ground, the significant points on which their evidence differed were:

• Mr Grainger’s evidence that in the first conversation he had told Mr Page that he would be “acting off his own bat” in making these approaches or used words to that effect. Mr Page denied that anything of that kind had taken place.

• Mr Page’ evidence that he said to Mr Grainger that he would be working with a partner and may have expressly mentioned Mr Becerra’s name. Mr Grainger had no recollection of any partner being mentioned.

The first of these matters is of central importance, as if that was said it would have made clear to Mr Page that he was acting for his own account and it would be difficult to claim he was entitled to any remuneration from Close Brothers, whether in contract or quantum meruit.

Mr Grainger’s evidence that he told Mr Page that he would be acting off his own bat was set out in his witness statement and he was extensively cross examined about it; I accept his evidence on the point as I do on the point that Nomura was not mentioned in the first telephone conversation. I find that he told Mr Page he would be acting off his own bat in the first conversation and that this was clear it applied to all approaches and would so have been understood by any reasonable person acquainted with doing business in the City. I set out my reasons for making these findings later, as it will be necessary to refer to events I have yet to set out.

The sending of the speaking brief

On 17 June 1997 Mr Grainger sent by fax to Mr Page the speaking brief which Mr Page had requested. The fax cover sheet stated the following:

“Further to our conversation please find attached a brief speaking note relating to William Hill. Good luck in your conversations.

I look forward to hearing from you if you make any progress.”

This is said to be an important document. It was the sole matter on which the plaintiffs relied to establish an express agreement on the part of Close Brothers to appoint them as agents.

The meeting between Mr Becerra and Nomura on 18 June 1997

On 18 June 1997 Mr Becerra arranged to meet Mr Guy Hands of Nomura. Mr Becerra’s evidence was that he knew him well and he had worked with him at Goldman Sachs. He maintained that the value of his relationship with Mr Hands was his ability to arrange a meeting with him and make a proposal to him; that because of their past connection, he knew that Mr Hands would consider seriously something that he took to him.

The meeting with Mr Hands took place over lunch on 25 June 1997. There were two purposes to the meeting - first the sale of William Hill and second the employment which Nomura were considering offering to Mr Becerra. At the lunch Mr Becerra showed Mr Hands the speaking brief and they discussed the nature and the value of the William Hill business, different ways in which a purchase might be structured and future scenarios for the disposal of the business or turning it into a public company. Mr Hands told him that he wanted to check whether or not anyone in Nomura was already dealing with Close Brothers about the transaction and that he would revert to him. Later that afternoon Mr Hands telephoned Mr Becerra and asked him to contact Close Brothers and ask them to add Nomura to their list and arrange for someone from Close Brothers to contact Mr Hands.

Later that same day Mr Page spoke again to Mr Grainger and Mr Grainger agreed to add Nomura to his distribution list.

Thereafter, Nomura and Close Brothers dealt directly with each other. There was no further contact between Close Brothers and Mr Page or Mr Becerra until after the sale to Nomura was concluded.

The activities of Mr Becerra and Mr Page with potential Far East purchasers.

The activity in relation to Nomura did not bring the activities of Mr Page and Mr Becerra to an end. They considered approaching various contacts in the Far East, made approaches and discussed whether they should disclose to Nomura the possibility of one of their Far East contacts being another potential bidder. In an e-mail sent by Mr Page to Mr Becerra on 27 June 1997 Mr Page stated:

“I would not share the Malaysia bidder info with [Mr Hands] yet. We may have to pick one horse to ride before the race. Let’s not prejudge the colours we will be wearing. Yours in racing analogy”.

To this Mr Becerra replied:

“I agree. Let’s just hope that we can ride something. It seems the only leverage we have is YOU as being an insider, sort of. Let’s discuss further after considerable meditation”

In these various approaches and discussions, Mr Becerra and Mr Page made no contact with Close Brothers and did not report to them on any progress they were making or any suggestions they had.

Approaches by Close Brothers to other institutions.

During this period, Close Brothers approached other institutions; on 3 June 1997 they approached ABN-Amro and enquired whether ABN-Amro would be interested in offering the opportunity to potential clients of ABN-Amro Asia. The speaking brief was sent to them. On 26 June 1997, an approach was made to Sanwa Bank Limited, a large Japanese Commercial Bank for the same purpose. It was the evidence of Mr Gowlland of ABN-Amro and Mr Barrett of Sanwa Bank Limited that they did not expect to receive any fee from Close Brothers in the event a potential client made a successful bid for William Hill. They saw the decision of Close Brothers to send them the speaking brief as part of the sale process which would allow them to enter into a fee arrangement with one of their own potential clients.

The auction process and the agreement with Nomura

On 3 July 1997 the information memorandum on William Hill was sent to Nomura. The bidding closed on 9 July 1997. Nomura’s indicative bid was £675m to £700m; the highest indicative bid was £752m; Nomura’s was the fourth highest. On 28 July 1997 final offers were invited from selected bidders including Nomura. On 24 September 1997, the final bids were delivered. Nomura’s offer was to buy William Hill for £700 million; the second highest bid was at that time £646.49m.

Close Brothers selected Nomura as their preferred purchaser and commenced final negotiations with them; one of the results of the negotiations was an additional payment to be made by Nomura to Brent Walker of the cash surplus in William Hill. One of the other bidders learnt of this and was very anxious to make a revised bid; they did so and put in a final bid of £680 million on 8 October 1997.

On 8 October 1997 Close Brothers recommended Nomura’s bid of £700m to the Steering Committee. That recommendation was accepted and on 10 October 1997 Nomura’s bid was accepted and the purchase announced in the press.

Mr Becerra and Mr Page’s contact with Nomura during the bidding process

On 22 August 1997 Mr Hands of Nomura contacted Mr Page and asked him if he would act as a consultant to Nomura in relation to the acquisition of William Hill. Mr Page reported this in an e-mail to Mr Becerra:

“Thanks entirely to your earlier offer to Guy Hands, he called this evening asking if I would be willing to assist them in the William Hill deliberations. I told him that I would, subject to again clearing the conflict issue with Brent Walker and William Hill. I will do so ….”

Mr Page approached Mr Leach to see if there would be any objection to him doing so. Mr Leach told him that there would be no objection provided that he was not present when another bidder was present at Brent Walker’s offices and provided Mr Page did not consider he personally had a conflict. Mr Page did not tell Close Brothers of this offer or raise any issue with them about conflicts.

Mr Page met Nomura to discuss acting as a consultant to them; but he ultimately decided that he would not work for them as conflicts of interest might arise. He thought that he would inevitably be asked for his advice regarding the appropriate price for William Hill; if he gave such advice, it could have been against the interests of Brent Walker and its bankers. He told Nomura and Brent Walker that he decided he should not act as a consultant to Nomura.

Mr Becerra’s attempt to obtain a fee from Nomura in October 1997

After the sale to Nomura had been announced, Mr Becerra tried to contact Mr Hands of Nomura to obtain a fee from them for acting as introducing broker. He was unable to reach Mr Hands on the phone and so on 27 October 1997 he wrote to Mr Hands at Nomura. After referring to the involvement of himself and Mr Page he continued:

“..You will not be surprised that we view our position as that of an introducing broker. At our lunch sometime ago you told me that you had not had a look at William Hill but would like to see if I could arrange the appropriate documentation to be sent to you. Al [Page] then contacted Close Brothers believing that we had identified something that would be of interest to Nomura. Close Brothers admitted that they would not have shown you the transaction as they felt it would not suit your investment criteria. …….

If Al and I were working for you my guess is that we would have received a handsome bonus for sourcing this deal. Accordingly, I believe an introducing fee from Nomura is appropriate. Had we not intervened to convince Close Brothers that it was appropriate to show Nomura the deal, and had we not believed that this was potentially a very good deal for Nomura, then I believe the deal between Nomura and William Hill would never have happened”.

It was the evidence of Mr Becerra and Mr Page that this letter seeking a fee from Nomura was written only after they had attempted to obtain a fee from Mr Grainger and been rebuffed.

The attempt by Mr Page to obtain a fee from Close Brothers in October 1997

It is common ground that on a date between the 10 October 1997 and 27 October 1997 there was a telephone conversation between Mr Page and Mr Grainger in which Mr Page sought a fee. The subject matter of that conversation was not seriously in issue, but its timing was. Mr Grainger put the timing towards the end of October, but Mr Page put it earlier in that month As I have said, it was the evidence of the plaintiffs that they only attempted to obtain a fee from Nomura after they had spoken to Mr Grainger and been rebuffed. It would plainly have been inconsistent with Mr Page and Mr Becerra’s case that they had been retained to act for Close Brothers if they were at the same time seeking a fee from Nomura. However I accept Mr Grainger’s evidence and am satisfied that the first telephone call to Mr Grainger was towards the end of October. The plaintiffs must have decided to approach both Nomura and Close Brothers at about the same time.

In the telephone conversation Mr Page first congratulated Mr Grainger on having achieved the sale to Nomura. He then raised with him the question of Close Brothers paying him and Mr Becerra a fee for the introduction. I accept Mr Grainger’s evidence that this was a low key approach and it was put very much in terms of “could Close Brothers see their way to giving us a fee for our role”. When that was raised, Mr Grainger denied that Mr Page had had any involvement in the introduction of Nomura and stated that he was not authorised to agree a fee without the involvement of a committee; he asserted that Nomura was on their bidding list. Mr Cale, Mr Grainger’s assistant, listened to that conversation on an ecouter.

On 30 October 1997, shortly after the telephone call, Mr Page wrote to Mr Grainger. This was an important letter, as in a paragraph of that letter Mr Page set out his account of the telephone conversations in June.

“Following discussions with John Leach, on 10 June 1997 I telephoned you to ask if my partner, Larry Becerra and I might independently approach various high net worth individuals in the Far East regarding the William Hill opportunity. In the same conversation, I asked you if Nomura was on your list for distribution of the William Hill information package. You said that they were not as, in your opinion, the proposed transaction would not be of interest to Nomura. I then asked if we could contact them on your behalf in order to verify your perception as to their lack of interest. You gave me clearance to do so, specifying that they were the only institution in the UK with whom you were authorising us to contact”.

On 12 November Mr Grainger telephoned Mr Page; Mr Cale again listened to the conversation on an ecouter. Mr Grainger told Mr Page that he had been wrong when he had denied the involvement of Mr Page in the introduction of Nomura; he apologised. He told him, however, that Close Brothers would not pay a fee, as they did not believe he was entitled to a fee. He told him that when he had allowed him to pursue his contacts, it was not on the basis that he was doing so on behalf of Close Brothers, but for himself. He said that City practice required formal agreements for a fee to be paid. Mr Page did not respond in detail and told Mr Grainger that he had just written to Close Brother’s compliance department as he had not received a response; Mr Grainger was annoyed at this, reiterated the points he had made and terminated the call. Mr Page’s letter to the compliance officer at Close Brothers was sent on 12 November, as he had received no response when it was written.

That conversation was followed on 14 November 1997 by a letter from Mr Grainger to Mr Page. It was a hurried letter because Mr Grainger was anxious to send a response as Mr Page’s letter of 12 November had involved the compliance department. Mr Grainger was so anxious to send it that he did not sign it himself. He stated:

“As you confirm in your letter, you never raised with me the possibility of Close Brothers paying you a fee and I never agreed or envisaged any payment. Universal City practice is that all fee arrangements are expressly agreed and documented in advance.”

He did not refer in the letter to the conversation in June or to saying that he had told Mr Page that he would be acting off his own bat.

Subsequent events

After further correspondence it became clear that neither Close Brothers nor Nomura would pay a fee. On 29 January 1998 Mr Becerra and Mr Page commenced these proceedings against Close Brothers.

1. THE CLAIM IN CONTRACT

The principal basis on which the claim made by the plaintiffs was advanced was that there was an agreement between commercial parties in the course of a business whereby the plaintiffs were to approach Nomura on behalf of Close Brothers; in the absence of special circumstances, the provider of services was entitled to be paid. They relied on Miller v Beale (1879) 27 WR 403 and Turner v Reeve (1901) TLR 592.

As the finding of fact that I have made relating to the telephone conversations in June that Mr Grainger told Mr Page that he would be acting off his own bat is very significant in relation to the claim, I will first set out my reasons for accepting his evidence on this point.

(a) Mr Grainger’s statement to Mr Page that he was acting off his own bat

In general, I prefer the evidence of Mr Grainger where it differed to that of Mr Page as Mr Grainger was the more reliable witness. I found Mr Grainger an honest and truthful witness who was doing his best to assist the court. I reject the submission that he was exercising his imagination when he gave evidence that he had told Mr Page in June that he would be acting off his own bat in making the approaches.

I do not consider that his denial, when Mr Page telephoned him in October, that Mr Page had been involved in the introduction of Nomura and his assertion that Nomura was on Close Brothers’ list casts any real doubt on his credibility or the reliability of his recollection. He had been working very hard on a long and detailed transaction; the conversation with Mr Page had been nearly four months earlier. Mr Page had played no part in the transaction after the conversation in June in which he requested that Nomura be added to the distribution list whereas Mr Grainger had been heavily involved throughout the period. In those circumstances, I am not surprised that he had forgotten the involvement of Mr Page and therefore denied his involvement.

I accept as truthful his evidence that he first recalled telling Mr Page that he would be acting off his own bat in early November 1997. Although he did not recall using the phrase “off his own bat” in the telephone conversation, I accept that in the telephone conversation he had with Mr Page on 12 November that he said he had told Mr Page in June that he would be acting for himself. Although it would have been prudent to have referred to that fact in the letter of 14 November 1997 (as Mr Grainger accepted), it was a hurried letter and the omission does not in my view reflect on Mr Grainger’s credibility. His evidence on the telephone conversation was broadly consistent and I do not accept the submission that he improved his evidence during the course of cross-examination.

Mr Grainger’s evidence about the telephone conversation on 12 November was supported by Mr Cale’ evidence. In his evidence in chief, Mr Cale gave a much more detailed account of that conversation than the brief mention in his witness statement; he was in court for most of the time whilst Mr Grainger gave evidence and gave evidence after him. In his evidence in chief, he said that he recalled Mr Grainger stating in the telephone conversation that he had told Mr Page at the time Mr Page sought permission to approach Nomura and Far East buyers that he was acting off his own bat or on his own behalf or words to that effect. Mr Cale was an impressive and reliable witness who gave his evidence in a straight forward and frank way. I accept his evidence about the telephone conversation; I reject as without foundation the submission that he let his imagination get the better of him in the witness box and gave way to the temptation to make his recollection square with that of Mr Grainger. As he sat and heard the evidence of Mr Grainger, this is very close to an allegation that he was dishonest in his evidence, though Mr David Cavender, who appeared for the plaintiffs, never put it that way. I have no doubt that Mr Cale was being honest and truthful and that his recollection was accurate; he was candid in his explanation that his original statement had been longer and had been shortened by Close Brothers’ lawyers. This practice of editing witness statements has developed and , in certain cases, it might form the basis for criticising the lawyers concerned. However, it does not seem to me to be a ground for criticising a witness, even one who had qualified as a solicitor as Mr Cale had; it was understandable that he had heeded the advice of Close Brothers’ lawyers on the contents of his statement.

I also accept as truthful the evidence of Mr Grainger that he thought that Mr Page was working for Brent Walker when he agreed to speak to him in June; this was a point of little weight and therefore it is not surprising that this was not mentioned in the exchanges in October or November 1997.

Criticisms were made of the way in which Mr Grainger dealt with the final bidding process which were said to reflect on his integrity; it was said that he used one bid to ramp up another bid. Although in other circumstances it might be necessary to examine in detail the final bidding process of a controlled auction and what the participants can be told about the bids of the others, it is not necessary for me to do so in this case. Even if Mr Grainger went beyond what was strictly permitted in the final process (about which I do not think it necessary to reach a concluded view), I do not consider that this meant that he was not a truthful witness.

Nor do I consider that there is any substance in any of the other points made in the attack on Mr Grainger’s credibility:

• I do not accept that he was being less than frank about whether the second highest bidder would make a further bid in October; this was a collateral matter on which he was cross-examined. The fact that his recollection was not clear initially clear is hardly surprising.

• I do not find his evidence about the size of Sanwa Bank contradictory; when first asked about it he said that that he did not know how large it was or the size of its client list. When asked again, he confirmed that it was a very large commercial bank, but he did not know whether it had corporate finance clients as opposed to banking clients.

• Nor was his evidence contradictory to that given by way of statement by Mr Barret of Sanwa as to which of them had raised the William Hill transaction; they discussed it over a meal and Mr Grainger’s evidence was that it came out of discussion.

• It was submitted that Mr Grainger’s evidence about the timing of the telephone conversation with Mr Page in October did “not bear scrutiny”, as there was an inconsistency between his statement and his evidence in cross examination as to the time he asked for the papers to be unpacked. I do not consider that there was any real inconsistency, as he related the timing of the phone call and the letter to the unpacking of the boxes. Indeed, as I have set out above, I consider that Mr Grainger was correct about the timing. Quite apart from the fact that I prefer the evidence of Mr Grainger where it differed from that of Mr Page, Mr Grainger’s evidence was supported by the evidence of Mr Cale; it was also much more likely that the letter of 30 October would have been written shortly after the conversation rather than at the greater interval which would have been the case, if Mr Page had been right about the timing .

• Nor is it significant that Mr Grainger had no recollection of Mr Page mentioning his partner in the conversation in June, as I do not accept that Mr Page mentioned him. Mr Page’s evidence on this point was uncertain and there would have been no reason for him to mention Mr Becerra’s name or the fact he had a partner, given the low key approach he was making. Even if I had accepted Mr Page’s evidence on this point, it would not have been a point of significance to the credibility of Mr Grainger.

• It is not the least bit surprising that Mr Grainger made no mention of Mr Page acting on his own account in the fax sent on 17 June 1997 enclosing the speaking brief. It would have been quite unnecessary for him to reiterate that when he had made that clear in the telephone conversation, particularly in circumstances where it is common ground that Mr Page made no mention of expecting a fee.

• I accept Mr Grainger’s evidence that he could not have agreed to employ Mr Page as an agent or agree a fee without having (as a matter of practice within Close Brothers) obtained the authorisation of an internal committee. Although his evidence about the committee structure was not as precise as that of Mr Llewellyn-Lloyd, he knew that he could not enter into any arrangement with them without authorisation. As was clear from the expert evidence (to which I refer below) this was common practice in the City that employing anyone as an agent would have involved a reputational risk. I reject the submission that Mr Grainger was not overly concerned because he would have discounted Nomura as a viable bidder. He knew and appreciated that he could not commit Close Brothers without internal approval.

I do not accept Mr Page’s recollection of the conversations in June was reliable:

• Mr Page’s evidence was that if he had been told that the plaintiffs were acting off their own bat, then the conversation that Mr Becerra had with Mr Hands of Nomura would have been different and he would have asked for a fee for bringing them into the auction. It is clear that Mr Page never asked Close Brothers for a fee; why would they then have asked Nomura for one? Mr Page suggested that there was a difference as Close Brothers was the contracted agent for Brent Walker, but that cannot have made a difference. I simply do not accept that they would have asked for one at that stage.

• Mr Page stated in his letter of 30 October 1997 to Close Brothers that he had asked Mr Grainger if he could contact Nomura “on your behalf”; this was repeated in the letter written by the plaintiff’s solicitors on 20 January 1998. Mr Page accepted in his evidence that these words were not used in the telephone conversation. In my view they were deliberately used by him in the letter of 30 October 1997 in an attempt to improve the claim and give it some veneer of validity.

(b) The actual motivation of the plaintiffs

I have no doubt at all that when Mr Page spoke to Mr Grainger in June 1997, he and Mr Becerra were interested in obtaining permission to contact potential bidders so that they could act in the way best suited to their own pecuniary advantage. At no time did they ever consider or believe that they were acting as agents for Close Brothers or consider they owed them the fiduciary duties of an agent. I am satisfied that their purpose in approaching Close Brothers was to seek permission to contact potential bidders and for no other purpose.

• Mr Page’s initial request to Mr Dibble for permission to speak to HSBC was plainly on his own initiative and not at the request of Brent Walker. The only reason he needed to seek permission was to ensure that there was no conflict arising out of his previous employment and to be able to disclose the information he had obtained about the timing and precise manner of the sale. He would have had no conflict in acting for Close Brothers; he could not explain any in his evidence and I am sure he knew there was none. Thus it is clear from the outset, his primary motivation was to put himself in a position where he and Mr Becerra could act for a potential bidder. Thus Mr Page’s initial involvement makes clear two significant matters. First, he was acting on his own initiative and not at the request of Brent Walker. Second, he had in mind acting for a potential bidder, as he knew that having worked for Brent Walker he would have been perceived as being useful to a potential bidder. The use of his knowledge in this way might have been valuable as a potential bidder might have been wary of purchasing a business from Brent Walker given the litigation and other problems surrounding the group; someone with knowledge of the business would have been able to assist a purchaser with a proper assessment of the William Hill business. Furthermore it would have been in Brent Walker’s interests to permit Mr Page to act in this way as it would encourage a potential bidder’s interest.

• Mr Page took 5 days between 5 and 10 June to contact Mr Grainger; he had ample time to consider carefully his approach. His evidence was that he wanted the first conversation with Mr Grainger to be on his own terms and that he did not want Mr Grainger to cut them out by saying Close Brothers would approach the potential bidders themselves. If he had thought he was going to act for Close Brothers, he would have thought about the terms of the arrangement he wanted and the fee. Mr Page must have known there was no applicable rate or scale of fee for introducing a bidder. If he had for a moment seriously thought that he was going to be paid by Close Brothers, he would have raised the question of the fee, the work to be done by him and the event on which the fee became payable. In my judgment, he knew that if he had done so, he would have been told that such a proposal was out of the question; and that there was a risk that Close Brothers would have said he could not approach anyone and therefore not have any role at all in the sale. That response would have prevented him from being able to act for a potential bidder and obtain a reward from them. Furthermore he knew that if Mr Grainger had himself then acted on the suggestion that Nomura might be interested, he would have had no complaint. On the contrary if he was able to obtain permission from Close Brothers and a copy of their speaking brief, he knew he would be able to approach the bidders in the Far East and Nomura with a degree of credibility. Without permission, he could not do that and, he needed, as he said in his evidence, the speaking brief to be able to initiate a discussion.

• In the first conversation, Mr Page was careful only to seek permission to contact potential bidders in the Far East. That is what he wanted and what he obtained in that conversation. He raised the question of approaching Nomura later. He knew he was not offering to provide a service for Close Brothers, but was seeking to obtain an advantage for himself and Mr Becerra by positioning themselves to act for a potential bidder. The e-mail of 27 June 1997 in which Mr Becerra refers to the only leverage they had as Mr Page being “an insider sort of”, supports the conclusion to which I have come that they were hoping that they would be able to advise a potential bidder

• After they had obtained permission to make the approaches, their exchange of e-mails makes it quite clear that they were seeing what suited them best. Their approaches to Nomura and to a bidder in the Far East resulted in them having, as Mr Page said, two potential bidders who could have sought to retain them. When they contemplated informing Nomura of the identity of the Far Eastern bidder, they were looking at if from the view point of acting for a potential bidder. They could not have contemplated informing Nomura in this way if they were acting for Close Brothers. Mr Page said in his evidence that if they had decided to act for a potential bidder, they would have “released” Close Brothers from the contract with them; but, in my view, if Mr Page had believed that he had a contract with Close Brothers, he could not have acted in this way.

• The plaintiffs did not report their dealings with other potential bidders to Close Brothers after 25 June 1997 and before the close of the bidding. If they had believed that they were acting for Close Brothers, they would have done so.

• When Mr Page was approached by Nomura on 22 August 1997 to act as their consultant, if for a moment he thought that he had been appointed as an agent by Close Brothers, he would have told Nomura he could not consider meeting them without first speaking to Close Brothers. The e-mails exchanged with Mr Becerra on 27 August 1997 show that he was concerned to deal with the conflict of interest with Brent Walker; indeed that is the only conflict he dealt with as he only saw Mr Leach. There is no reference in the e-mails to any conflict with Close Brothers which would clearly have arisen if he had, in truth, been their agent; he never mentioned the offer and his decision to accept to Close Brothers. His evidence was that he was entitled to consider offers from Nomura without evening informing Close Brothers; that he would only have informed Close Brothers if and when he had reached an agreement with Nomura. That evidence was only credible if he had no contract to act as agent for Close Brothers.

• When Mr Becerra met Mr Hands for lunch on 25 June, he not only discussed the disposal of William Hill, but also the job offer he had received from Nomura. Again had he thought that he was acting as agent for Close Brothers he would have made sure that that Close Brothers were apprised of the job offer. I am quite sure that he brought up the subject of William Hill as he thought that there might be something in it for him and Mr Page from Nomura. As he said in his evidence, Mr Hands explained to him over lunch the areas in which he thought Mr Becerra might be of service to Nomura and asked him if he would be interested in meeting some of his colleagues. A few weeks later he had discussions with them, but thereafter matters petered out.

• The plaintiffs sought a fee from Nomura. This was done at very much the same time as they sought a fee from Close Brothers; I do not accept the evidence of the plaintiffs that their decision to claim against Nomura was only made after the rejection of their claim by Close Brothers. They decided to attempt at the same time to get a fee from either. Their evidence was that they had been advised by two senior corporate financiers in the City (one of whom was not named and the other was said by them to be Mr Keith Harris, the Chief Executive of HSBC Investment Bank) that although the primary responsibility for paying a fee lay with Close Brothers, Nomura might also be liable.

• In their letters to Nomura, they gave the impression that they were acting for Nomura alone; they never stated that they were acting for Close Brothers. I accept the submission of Close Brothers that this omission was deliberate as regards the second letter to Nomura on 8 January 1998; that letter bears such a close resemblance to the letter to Close Brothers of 30 October 1997 that I infer that the omission of the reference to their acting as Close Brothers’ agent was deliberate.

(c) No express contract

The plaintiffs’ case that there was an express request that they act as agents rested on the terms of the covering fax of 17 June 1997 enclosing the speaking brief. I am quite satisfied, reading it in its context of the findings of fact I have made in relation to the telephone conversation that Mr Grainger told Mr Page that he was acting off his own bat, that it could not amount to an express request. Mr Caveneder for the plaintiffs could not contend otherwise.

But even if I had not made that finding and nothing had been said as to the capacity in which Mr Page was to act, I am nonetheless also satisfied that the fax could not have amounted to an express request that Mr Page or the plaintiffs act as the agents of Close Brothers. There are simply no words appointing them or asking them to act on Close Brothers’ behalf. No one conversant with the City could possibly have understood the fax in that way.

(d) No implied contract

On the finding of fact that I have made that Mr Grainger stated that Mr Page would be acting off his own bat in approaching potential bidders, it is clear that there was no implicit agreement that they would act as agents for Close Brothers or provide a service or be paid. The use of the expression “off your own bat” would have been understood by a reasonable man doing business in the City to mean that any approach he made would be for his own account and not on behalf of Close Brothers. It was therefore clear objectively that the plaintiffs would be acting for their own account and would have to obtain any remuneration from those they approached. Again Mr Cavender did not seek to contend otherwise.

If I had not made that finding of fact, but had found that all that was said was that they could approach Nomura and persons in the Far East and nothing was said as to whether the plaintiffs were acting on their own account or for Close Brothers, then I would nonetheless have come to the conclusion that there was no implied contract. There are a number of reasons why I would have reached that conclusion. It is convenient that I first refer to the evidence of City practice.

(i) City Practice

It was submitted by Close Brothers that evidence of City practice was not admissible to assist the court with information about the relevant background to the conversations that took place in June. They relied on the decision of Harman J in Hosking v Legal & General (26 March 1997, unreported). In that case it appears that the plaintiff sought to establish a market custom or practice; the expert called on behalf of the plaintiff gave evidence that there was no known market and therefore the judge held that his evidence was irrelevant and inadmissible. The plaintiffs in this case did not seek to establish a market custom or practice and therefore the decision is not in point.

In my view, the evidence called by both parties in this case was admissible to provide the court with assistance about the relevant background. Courts dealing with the business of the City have always been ready to admit evidence of City practice where it is necessary to explain or clarify the background to a transaction; in this case it was useful for the court to have clear evidence specifically dealing with the procedures of merchant banks in relation to the use of intermediaries and the fees payable. It would also seem incongruous that evidence of factual matrix is admissible to construe a written contract in the broad circumstances set out in the speech of Lord Hoffman in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 at 912, yet inadmissible to explain the context of two short telephone conversations.

Expert evidence was given by Mr Glenn Cooper for the plaintiffs. From 1986-1993, he was Deputy Chairman and Head of Corporate Finance of Henry Ansbacher & Co Ltd. Prior to that he had extensive experience with other firms in the City and had worked on his own account. Since 1993 he has been a director of Apex Partners Corporate Finance Ltd. Mr Ben Martin gave evidence for Close Brothers; he had a long and distinguished career in the City, working for Barclays Merchants Bank (subsequently Barclays de Zoete Wedd) for 20 years. Since his retirement in 1994 he has had an association with Rickitt, Mitchell & Partners, an independent finance house based in Manchester. He had extensive experience of corporate finance transactions.

There was a considerable measure of common ground between the experts:

• A merchant bank would not deal with an intermediary without the merchants bank’s internal committee assessing the reputational risk involved in using that intermediary; it would also be usual for that committee to agree the fee payable.

• If a merchant bank was to appoint an intermediary, it would do so in clear and express terms. Although it was Mr Cooper’s evidence that an agreement could be oral, it was his experience that oral agreements were clear and the fee specifically agreed before any one was treated as an intermediary acting on behalf of the bank, save where the parties had had a previous course of dealing.

• If a fee was to be payable to an intermediary, the basis of the fee would invariably be agreed between the parties, save where the parties knew each other well and had dealt with each other before.

• A controlled auction necessitated control over the dissemination of confidential information and the organisation of the elimination of the potential bidders.

They differed over:

• whether it would be usual for an intermediary to be appointed under a written agreement, though Mr Cooper accepted that it was far better that they should be;

• the effect of the merchant bank supplying information to an intermediary and asking the intermediary to report back;

• whether it was for the intermediary to ask for a fee or for the merchant bank to make it clear that the bank was not going to pay a fee.

On each of these points I prefer and accept the evidence of Mr Martin; he was the more impressive witness and had much greater experience in the City of significant transactions of the scale involved in the sale of William Hill. His evidence had greater logical cogency and accorded in my view with generally understood commercial principles. Mr Martin had less experience than Mr Cooper in the use of intermediaries, no doubt because of the different nature and calibre of the merchants banks for which they worked. Intermediaries were used more in the business of Henry Ansbacher & Co Ltd; Mr Martin gave the right explanation for this - they were a different type of house to the larger merchant banks and, as business was harder to obtain, they used intermediaries. Mr Martin also did not have experience of dealing with so called “boutique operators”, though Mr Cooper did. Nonetheless, the practice that was relevant was general City practice and the fact that he had less experience of intermediaries or “boutique operators” is therefore not of significance.

(ii) Even if nothing was said as to the capacity in which the plaintiffs were to act, there was no implied contract

Assuming that nothing was said by Mr Grainger about “acting off his own bat” and that in the telephone conversations, in accordance with Mr Page’s evidence, there was no discussion of the capacity in which the plaintiffs were to act (contrary to the conclusions of fact to which I have come), the reasons why I am satisfied that there was no implied contract that Mr Page or the plaintiffs would act as agents for Close Brothers or provide a service on behalf of Close Brothers can be summarised.

First, it was common ground that Mr Grainger made no express request of Mr Page; I have found that Mr Page was in truth and in fact seeking permission to speak to contacts in the Far East and later Nomura. Mr Grainger granted that permission. No implied contract of the kind contended for by the plaintiffs could arise from such a request by Mr Page.

Second, in my view, it was plainly not implicit in what was said that the plaintiffs would act for the Close Brothers. If a reasonable person acquainted with the practices of the City had heard the conversations (during which, on this assumption, nothing was said about capacity) he would have clearly reached the conclusion that Mr Page was seeking permission to approach potential bidders with the speaking brief so that he could approach them on his own account with some degree of credibility. He was not being asked by Close Brothers to act on their behalf.

Third, a reasonable person acquainted with the practice of the City would have noted that it would have been most unusual for a merchant bank to have appointed a person as an intermediary to act on its behalf without mentioning to the intermediary that the approval of the bank’s internal committee would have to be obtained. The fact that nothing of this kind was mentioned in the conversation is a clear pointer to the fact that the plaintiffs were not being appointed on behalf of the bank.

Fourth, a reasonable person acquainted with the practices of the City would have concluded that it was significant that nothing was said about fees. As Close Brothers and the plaintiffs had never done business before, it would have been obvious that if Mr Page or the plaintiffs were to be appointed agents for Close Brothers, the question of the amount of their fee and the event on which it was payable would have had to have been at least raised, if not agreed. Mr Page never raised these matters. That is a very clear indication that neither he nor any reasonable person could possibly have contemplated he was being appointed an agent.

It was submitted on behalf of the plaintiffs’ that there was no need for them to mention requiring a fee because it was so obvious that it did not need stating; I do not agree. As I set out below, it was common ground that there was no set basis of fee for work done by an intermediary of this type acting for a merchant bank in connection with a transaction. I accept the evidence of Mr Martin that a fee would have to be negotiated. Mr Cooper referred to various scales, but in his report and in his oral evidence, he was very clear in stating that because of the size of the sale of William Hill, the discount to the scales he suggested would have to be negotiated; therefore even on his evidence the fee would still have had to be negotiated.

Therefore the fact that Mr Page did not raise the question of a fee, let alone begin negotiating the amount is again a very strong indication that it was not implicit that they be appointed agents or be paid; it is hard to believe that a person who seriously considered that he was to act in effect as an introductory agent did not raise the question of a fee; it is an obvious matter to be resolved. The Court of Appeal reached a similar conclusion in Nahum v Royal Holloway College ...12 November 1998, unreported). The importance of agreeing a fee in the circumstances of this case was much more significant than in the case of an auctioneer, estate agent or similar professional man, as at least in respect of such professionals there is a scale of fees from which to work; it is also much more significant than in the case of accountants or solicitors where there an hourly rate can be ascertained from comparable firms and then applied.

Nor does s. 15 of the Supply of Goods and Services Act 1982 assist the plaintiffs; that section only applies to provide for a reasonable fee where otherwise there would be an agreement. If Mr Page had wanted a fee for introducing buyers in the Far East or Nomura to be payable in the event one of those approached was the successful bidder, it was up to him to ask for it and negotiate the amount. If he had asked for a fee for doing that , I have no doubt whatsoever that Mr Grainger would have refused; indeed that would have been the reaction of any reasonable person in his position towards these plaintiffs in relation to the sale of William Hill.

Fifth, as there had been no previous dealings between the plaintiffs and Close Brothers, the reasonable person acquainted with the practice of the City would have expected the terms of the agency to have been agreed. None was.

The plaintiffs relied on the evidence of Mr Cooper that the practice of the City would be to look on (1) a merchant bank’s grant of permission to an intermediary to approach a potential bidder in a controlled auction and (2) the provision of information to that intermediary to solicit the interest of a potential bidder, as giving rise to a request that the intermediary act as agent for the merchant bank and be entitled to a fee. Mr Cooper’s evidence was that these two steps alone were sufficient to entitle the intermediary to a fee, though he subsequently added that the position was confirmed by the request to report back on the result.

I reject that evidence. It is contradicted by what happened in this auction as regards the provision of information to Sanwa and ABN Amro. The evidence of both of the officers from these banks was to the effect that although they received the speaking brief and obtained Mr Grainger’s clearance to approach their clients, they looked on this as their being given an opportunity to approach a client and, if the client was interested, obtain an advisory fee from the client. They did not consider themselves as acting for Close Brothers and entitled to a fee from Close Brothers, even though in the case of ABN Amro they had been asked by Close Brothers whether they would be interested in receiving details of the proposed sale, so that they could offer them to their clients. It also seems to me to be contrary to any sensible commercial practice. Indeed Mr Marshall rightly characterised this evidence in his cross examination of Mr Cooper as absurd in so far as Mr Cooper was suggesting that a merchant bank was appointing an intermediary as its agent in circumstances where all that happened was that (1) the intermediary approached a merchant bank known to be acting for a seller in a controlled auction, (2) the bank agreed to the intermediary approaching a potential bidder and (3) the bank provided that intermediary with information which was not subject to any confidentiality undertaking. All the merchant bank would be doing would be trying to keep control over approaches to potential bidders so that multiple approaches were not made and giving the intermediary the opportunity to act for the potential bidder. If Mr Cooper was right, a merchant bank would have no incentive to allow anyone to approach others and give them the chance to earn a fee. They would make the approach themselves having ascertained the name of the potential bidders. On the contrary, by allowing the intermediary to make the approach, the merchant bank was acting ethically and not depriving the intermediary of that opportunity.

Both ABN Amro and Sanwa are substantial banks and therefore the plaintiffs sought to make a distinction between themselves, as “boutique operators”, and larger institutions. However, I do not accept that a distinction can be drawn in principle. If the bank’s grant of permission and the provision of information is sufficient to constitute an agency, it can make no difference what the size of the intermediary is, unless some implication can be drawn to negative agency. In his report, Mr Cooper suggested that in the case of the two banks, they would be seeking to take advantage of their knowledge of the sale of William Hill to demonstrate competence or gain a mandate from an existing client. Exactly the same can be said of the smaller intermediary who would be equally keen to demonstrate competence or gain a mandate from an existing or potential client. Furthermore once it is accepted that an institution would not have expected a fee in such circumstances, it makes it even clearer that if the plaintiffs wanted a fee they should have asked for one. As Mr Martin said, the merchant bank might not know whether the approach was from a boutique or a larger institution and it would be “crazy” for the bank to ask a person who approached them if they were looking for a fee.

There is however, the third factor - Mr Grainger’s request to Mr Page to let him know if he made any progress. It was submitted that the wishing of good luck by Mr Grainger in his fax of 17 June 1997 and his statement in that fax that he looked forward to hearing from Mr Page if he made progress were significant in that these were consistent with authorisation. It was also said to be in accordance with a “convention” or “protocol” that the approach would made through the intermediary as the agent of the merchant bank and be reported back through the intermediary as the agent of the bank. I again accept Mr Martin’s evidence on this. In my view it was an exaggeration to elevate what happened into a “convention” or “protocol”. Mr Grainger’s invitation to Mr Page to let him know if they made any progress was, in my view, little more than common courtesy; Mr Hands’ request to Mr Becerra that he ask that they be put on the circulation list was again the natural and courteous way to respond. It was nothing more than that.

Sixth, there was nothing in the circumstances relating to the initial stages of a controlled auction that gave rise to the implication that the plaintiffs were being appointed agents on behalf of Close Brothers. Mr Martin was right in my view in his description of the initial stages of a controlled auction. By providing publicly available information of the kind contained in the speaking brief to other banks or intermediaries, all a merchant bank would be trying to do would be to disseminate information about the sale to as many potentially interested bidders as possible in an orderly manner. Little at that stage was confidential and the only control related to keeping a record of who was approached, who was provided with the speaking brief and eliciting a response; as far as the merchant bank was concerned the more potential bidders the better, provided the same potential bidder was not approached by more than one person. Thereafter the merchant bank would tightly control the distribution of the confidential information and the actual bidding process; in such an auction, the real control only applied to the confidential information about the business (contained in this case in the information memorandum) and the bidding process.

In this case, Close Brothers were anxious that the fact of the sale be known as widely as possible and nothing confidential was contained in the speaking brief. That is demonstrated by the fact that they allowed Sanwa and ABN Amro to approach their clients and the plaintiffs to have freedom to approach anyone in the Far East. All that Close Brothers were trying to do, when supplying the speaking brief to Mr Page and permitting him to speak to people in the Far East and to Nomura, was to disseminate general information to as many potentially interested bidders as possible in an orderly manner. There was nothing whatsoever in the circumstances that could give rise to the implication that they were appointing Mr Page or the plaintiffs as agents on their behalf.

(e) If there had been a contract, would the contract have been with Close Brothers or Brent Walker?

Close Brothers maintained that if they had entered into a contract with the plaintiffs they would have done so as agents for Brent Walker. I will deal with this point briefly as it does not arise on the findings I have made. If it had arisen, I would have seen no merit in it. If Close Brothers had employed the plaintiffs, they would have done so on their own account; they were charged with selling William Hill and if they had appointed others to help them in the direct process of the sale that was a matter for their account.

(f) If there had been a contract, would the plaintiffs have been entitled to recover.

Close Brothers submitted that if there had been a contract, it would have been with Mr Page alone and the involvement of Mr Becerra would have required further specific approval. Furthermore, any fee payable would only have become payable on the introduction by Mr Page; as Mr Becerra was the only person whose actions could have amounted to an introduction, Mr Page was not entitled to any payment. Again these points do not arise on the clear findings of fact which I have made and I can again deal with them briefly. I see no merit in them as, if there had been a contract, I do not consider that it would have required personal performance by Mr Page. If he had been retained to effect an introduction, then as part of the process of appointing him Close Brothers would have considered his business and his reputation. If they had been satisfied on that, then it was up to him how to do carry out his agency and whom to utilise.

Close Brothers also submitted that in any event for a fee to be payable, Mr Page would have had to establish that his actions were the effective cause of the sale taking place and that he had done more than effect a mere introduction of Nomura to Close Brothers. They relied on Wood v Dantata [1987] 2 EGLR 23 and Nahum v Royal Holloway College. In my view, if this point had arisen, there may have been considerable merit in it. However the argument would have depended on my finding as to the terms of the contract that had been made as to the contingency on which the fee was payable. As I have found that there was no such contract, it is not apposite to examine this point further.

2. THE CLAIM IN QUANTUM MERUIT AND RESTITUTION

(a) The claim based on an express or implied request

It was common ground that, if the plaintiffs provided services to Close Brothers in circumstances where Close Brothers had requested those services or were to be taken to have requested them, and ,if there were no circumstances from which it could be inferred that the services would be rendered gratuitously, then the plaintiffs were entitled to a quantum meruit for those services. Put on this basis the plaintiffs’ claim was a conventional quantum meruit claim and there was no dispute about the applicable principles. The essential point which the plaintiffs had to establish was that there was an express or implicit request that they perform a service for Close Brothers by approaching Nomura or Far Eastern persons on behalf of Close Brothers: see Falke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 at 249 and 252.

For the reasons set out above, I have come to the clear conclusion that there was no express or implicit request for services. No such request could have arisen on the basis of the finding of fact made by me that Mr Grainger told Mr Page that he would be acting off his own bat. Even if nothing had been said about the capacity in which they were to act, no such request could be implied. The plaintiffs were in fact simply seeking permission to approach potential bidders for their own benefit and interest and the telephone conversations would have been understood objectively in that way. Nor for the reasons I have given could the fax sent by Close Brothers on 17 June which attached the speaking brief be understood as a request for services.

There can be cases (such as Sharab v Salfiti (Court of Appeal, 12 December 1996 New Law Transcript 2961219703) where a claim in contract fails because there insufficient certainty or on some other ground, but a claim nonetheless succeeds as a quantum meruit. The circumstances in which Mr Cavender suggested the claim in contract could have failed but the claim for a quantum meruit succeeded, were where the claim in contract failed because there had been no certainty over the remuneration to be paid, or over the capacity in which the plaintiffs were to act or certainty as to the extent or duration of their involvement. Although the fact that there was no certainty over remuneration was one of the reasons why the claim in contract failed, it was not the only one. The claim failed because, in my view, there was no express or implied request made by Mr Grainger to Mr Page to act as agent or render services for Close Brothers. The test in both contract and quantum meruit is the same as regards the request and on my findings the claim fails. I also am quite satisfied that any work they did in contacting potential bidders and the work they did in contacting Nomura, they did for their own purposes and for their own benefit and not for Close Brothers.

If such a request had been made out, I would then have had to consider whether there were special circumstances showing that it was intended that the services should be gratuitous: see Sharab v Salfiti and Goff and Jones: The Law of Restitution 5th edit (1998) at page 18. This would have been a difficult question and I will not express a concluded view. I would have been concerned to hold that in the financial markets where the parties normally make agreements and certainly agree fees for the making of an introduction, it is to be assumed that the plaintiffs intended to be paid. There are all kinds of reasons why a person in the City might make an introduction in the absence of an agreement that he is to act for payment; on most occasions such introductions are made quite gratuitously, possibly on some occasions for long term or short term self interest of the person effecting the introduction.

(b) The general restitutionary claim

The plaintiffs submitted that in the event that I did not find there was an express or implied request, they were nonetheless entitled to reasonable remuneration because their services had been freely accepted by Close Brothers or because Close Brothers had been incontrovertibly benefited by the plaintiffs’ actions. Mr Marshall submitted that there was no such principle entitling them to remuneration, absent a request. Although he accepted that the law of restitution was a developing part of the law of England and Wales, nonetheless he maintained that, if there was no request, there was no legal basis for a restitutionary claim in the circumstances of this case. It is therefore necessary to examine the legal basis on which Mr Cavenender advanced the plaintiffs’ case, under three headings - free acceptance, incontrovertible benefit and self interest.

(i) Free acceptance

Mr Cavender first contended that, as the services of the plaintiffs had been freely accepted by Close Brothers, they were entitled to recompense on that basis. He founded his argument upon a passage in Goff and Jones, at page 18:

“A true request will normally lead to the conclusion that the defendant who requested the services has contractually bound himself to pay for them. But a defendant, who is not contractually bound, may have benefited from services rendered in circumstances in which the court holds him liable to pay for them. Such will be the case if he freely accepts services. In our view, he will be held to have benefited from the services rendered if he, as a reasonable man, should have known that the plaintiff who rendered the services expected to be paid for them, and yet he did not take a reasonable opportunity open to him to reject the proffered services. Moreover, in such a case, he cannot deny that he has been unjustly enriched.

It is said that the recognition of free acceptance, so defined, is in principle objectionable for it erodes the right of a person to determine his own choices; only of he has requested services can he be said to have chosen and gained a benefit. If a principle of free acceptance is recognised, a defendant may be compelled to pay for services which he asserts, honestly, if perversely, are of no benefit to him…… But in these exceptional circumstances, the burden should be on the defendant, who is not the reasonable man immediately to tell the plaintiff that he is perverse, indifferent or he has more important things to do with his money. If he does not do so, he cannot deny that he has gained a benefit”

It was submitted by Mr Cavender that, as the plaintiffs were offering to render a valuable service by introducing potential bidders, then the burden was on Close Brothers to say that they did not want them to do the work or make it clear that they were going to be acting on their own account.

In view of the finding of fact that I have made, this way of putting the claim must fail as it was made clear to Mr Page that he was to act off his own bat.

Had I not made that finding, then it would have been necessary to examine in more detail the legal basis for the claim that a person is entitled to recompense where there has been no request by the other, but that other has accepted a service when he had the choice of accepting or rejecting those services. The principle set out in Goff and Jones has been supported and developed by Professor Birks in his Introduction to the Law of Restitution (see Chapter 8). Professor Birks emphasises the necessity for the defendant in such a case to have had a real choice and full knowledge to make the choice a real one. A cogent argument against free acceptance having any place in the law of restitution is made by Professor Andrew Burrows in an article printed in 104 LQR 576; among the many formidable arguments raised by him is that a person who provides a service in such circumstances takes the risk he will not be paid. I was also referred to helpful articles by Mr Geoffrey Mead in 105 LQR 460 and by Mr Andrew Simester in [1997] LMCLQ 103.

To reach a concluded view on this question would involve an analysis of the many cases cited in the texts and articles to discern whether there was support in the authorities for the principle of free acceptance. Given the conclusions of fact to which I have come, that task is neither appropriate nor necessary.

I will, assume therefore that there is in the law of restitution of England and Wales a principle of free acceptance. Making that assumption, I cannot see how it can assist the plaintiffs in this case. First, the plaintiffs were, in my view, seeking permission to approach others and not offering a service. Professor Birks uses as his example of free acceptance of services the window cleaner whom the householder sees about to start cleaning his windows and allows him to continue. In such a case, just as in the case of the common example of the person who cleans windscreens of cars stationary at traffic lights in central London, it is obvious that the cleaner is rendering a service and expects some recompense for doing what he does. However if Mr Page was offering a service, he should have made that clear; for the reasons I have given he did not make that fact clear. Nor could he have done so. What he wanted was permission to approach potential bidders and then to decide which horse to ride, if I may utilise his racing analogy. As I have already observed, he would not have given any hint that he sought recompense, as he would probably then have then been refused permission to do anything. In such circumstances, there was no offer of services.

Nor was Mr Grainger given a real choice. A real choice could only have been given by Mr Page making clear what he wanted and explaining the full background. Indeed in the absence of making it clear that he expected to be paid, a person in the City would plainly have concluded that he was in it for what he could make of it for himself and was neither offering a service nor expecting to be paid. As Professor Birks observes at p 282:

“It is not enough that the plaintiff had a non gratuitous intent. The defendant must also have known of that intent. Otherwise nothing calls the defendant to ask himself whether he should take steps to reject the benefit; for, as everyone knows, people do accept as gifts some benefits which they would certainly reject if they thought they were expected to pay.”

Thus analysing the case on the basis that there is a principle of free acceptance, the claim would in any event, have, in my view, failed.

However I should add that I see great force, in the context of dealings in the financial markets and the City, in the argument that a person who acts without being requested takes the risk he will not be paid. In a market place where relationships are complex and actions may be motivated by more than one consideration, it is difficult to see why it is unjust that a person who has not made an agreement (though he is quite capable of making one) and not been requested to act should not be left with the risk of not being paid. For example, in the circumstances of this case, it might be said that Nomura had freely accepted Mr Becerra’s services when he started to discuss the idea of Nomura entering the bidding. Mr Hands could have stopped him as soon as he mentioned the subject; by allowing him to explain the opportunity, he was freely accepting the service. It seems to me that in offering his idea without stipulating that he expected to be paid, it is obvious that Mr Becerra took the risk of not being paid, particularly as his motives in approaching the various potential bidders differed. Why should he, or Mr Page, be paid?

Mr Marshall helpfully referred to Brewer Street Investment v Barclays Woollen Co [1954] 1 QB 428, British Steel Corpn v Cleveland Bridge [1984] 1 WLR 504 and Hosking v Legal & General Ventures Ltd (Court of Appeal, 12 February 1999). In the first of these cases, Lord Denning posed the question “On whom in all the circumstances should the risk fall?” Mr Marshall submitted that, as Mr Page had not raised the question of acting for Close Brothers or seeking a fee from them, he was acting at his own risk of not being paid at the end of the day by Close Brothers.

In my view it is useful to look at it in this way. If the plaintiffs had sought an agreement under which they would have acted as agents for Close Brothers to effect an introduction, they ran the risk that they might be excluded altogether; even if permitted to act, they also ran the risk that they would only have been rewarded if the bidder they introduced was the successful bidder. On the other hand, if they retained the freedom to act for any of the bidders, then, if appointed by the bidder, they would have obtained their reward from that bidder. As they chose not to seek an agreement with Close Brothers in such circumstances, they plainly took the risk of any work which they did for Close Brothers (assuming they did any) not being paid for by Close Brothers.

(ii) Incontrovertible benefit

Mr Cavender next submitted that the plaintiffs were entitled to remuneration as they had incontrovertibly benefited Close Brothers. He relied on and adopted as his argument a further passage in Goff and Jones: (p 22)

“At one time English courts did not enquire whether a defendant had been incontrovertibly benefited; he was not deemed to receive a benefit unless he requested or freely accepted the services. But other jurisdictions did consider it critical that he had been incontrovertibly benefited, even though he had not requested the services. …… There is much to be said for the view that a person has been incontrovertibly benefited if a reasonable person would conclude that he had been saved an expense which he would otherwise have incurred or where he has made, in consequence of the plaintiff’s acts, a realisable financial gain.

To accept the principle of incontrovertible benefit will not be to adopt a novel principle. There are a number of decsions which are best explained on this ground, even though the courts may not have adopted in terms that principle. ……..

In the past the principle embodied in Bowen LJ’s well known judgment in Falcke’s case that “liabilities are not to be forced on people behind their backs any more than you can confer a benefit upon a man against his will”, has been regarded as paramount. Free choice must be preserved inviolate. To accept the principle of incontrovertible benefit is to admit a limited, and in our view, desirable exception. The burden will always be on the plaintiff to show that he did not act officiously, that the particular defendant has gained a realisable financial benefit or has been saved an inevitable expense and that it will not be a hardship to the defendant in the circumstances of the case to make restitution.”

Mr Cavender also relied on the fact that in The Manila [1988] 3 All ER 843 Hirst J appears to have accepted the principle, but to have held that there were no findings in the award before the court which supported the obtaining of an incontrovertible benefit.

I see no reason why, in principle, the courts should not award, in limited circumstances, restitution in cases where the actions of a plaintiff have conferred an incontrovertible benefit and where the benefit has been realised (as it was in this case), even in the absence of a request. However, given the findings I have made I do not think it necessary or appropriate to reach a final view on whether this principle forms part of the law of restitution of England and Wales.

In the circumstances of this case, I cannot see how this principle assists the plaintiffs, because the plaintiffs were acting in their own self interest .

(iii) Self interest

On the facts of this case it is clear, in my view, that the plaintiffs were acting in their own self interest; I am quite satisfied that that was their overwhelmingly dominant, if not sole, motivation. There are cases where the mere fact that a person also obtains an incidental benefit for himself will not debar him; for example in Sharab v Salfiti, the fact that the plaintiff was to obtain a benefit by acquiring independently an interest in the joint venture, did not mean that she was not also entitled to payment by the defendants for services rendered to the defendants. In Hink v Lhenen (1974) 52 DLR (3d) 301 the Appellate Division of the Supreme Court of Alberta awarded a quantum meruit to a daughter who had looked after her deceased father. Her claim against the estate for his house on the basis of an oral promise alleged to have been made by her deceased father to leave it to her for looking after him failed. The quantum meruit claim succeeded as the services were rendered in the expectation she be paid, even though it was her evidence that she had also acted out of “a sense of obligation”.

However the general principle is clearly laid down in Ruabon Steamship Co v The London Assurance Co [1900] AC 61 by Lord Halisbury:

“I cannot understand how it can be asserted that it is part of the common law that where one person gets some advantage from the act of another, a right of contribution towards the expense from that act arises.

Rejecting the argument, he continued

“But this is the first time in which it has sought to advance that principle where there is nothing in common between the two persons, except that one person has taken advantage of something that another person has done, there being no contract between them, there being no obligation by which each of them is bound, and the duty to contribute is alleged to arise only on some general principle of justice, that a man ought not to get an advantage unless he pays for it. So that if a man were to cut down a wood which obscured his neighbour’s prospect and gave him a better view, he ought in principle to be compelled to contribute to cutting down the wood.”

As is said in Goff and Jones at page 62, if a defendant was required to make restitution in every case where a plaintiff had conferred the benefit whilst acting in his own self interest, it would open a Pandora’s box of claims. For example, anyone in the plaintiffs’ position introducing a bidder into an auction may be conferring multiple benefits; he may benefit the seller simply by providing another bidder, as a greater number of potential bidders may achieve a higher price. He may of course introduce the highest bidder and confer a more obvious benefit on the seller. As well as benefiting the seller in this way, he will also benefit the auctioneer whose fee or commission is related to the price. He may also benefit the potential bidder, as that person might not otherwise have learnt of the opportunity to participate; if that bidder is successful and a good bargain obtained by the purchaser, then again the benefit to that successful purchaser is more obvious.

In the City the relations are often so complex that the application of this limiting principle in cases of unjust enrichment would in any event require general application and any exceptions carefully refined. As I have come to the conclusion of fact that the plaintiffs were not requested by Close Brothers to perform any service for them and their overwhelmingly dominant motivation was their own self interest, if not their sole motivation, then it is clear that they cannot recover, as Mr Cavender accepted would be the case if I made such a finding. This is not a case where that interest was subservient. It is therefore not necessary or appropriate to consider further whether there are exceptional circumstances in which a person whose acted without a request, but whose own interests were subservient, might be entitled to make a restitutionary claim.

THE QUANTUM OF ANY FEE

(a) Reasonable remuneration

Although I have come to the clear conclusion that the claim fails in every respect in which it was advanced, I will nonetheless set out my findings in relation to the amount to which I would have considered the plaintiffs would have been entitled if they had succeeded in their contention that they were entitled to a reasonable remuneration on the basis of a contract or implied request.

In considering the amount of the remuneration, I have to have regard to all the circumstances, including the practice of the market: see Way v Latilla [1937] 3 All ER 759 and Sharab v Salfiti at p 9-10

If I approached the matter on the basis of time expended and expenses, then as all that the plaintiffs did was to have the idea of approaching Nomura, consider a one and a half page document, make a few phone calls and Mr Becerra have lunch with Mr Hands of Nomura, it would be difficult to see how they could be entitled, even at the most generous hourly rate, to anything more than £5,000 inclusive of the cost of the telephone calls and the lunch.

However as rates of remuneration in this type of transaction are related to ideas and success and not time spent, an approach on an hourly rate basis would plainly not be correct. But what then is to be the basis of the remuneration?

It was common ground between the two experts that there was no scale or set fee. Mr Cooper suggested that a fee of 10% of the merchant banks’ success fee (net of expenses) would be appropriate for a simple introduction or up to 25% (if the intermediary was actively involved in the execution of the transaction thereafter). He made it clear that where the fee paid to the bank was particularly large there would be a discount applied to the intermediary’s fee. He referred to a scale of fees used by Lehman Brothers in the USA as a basis for fees charged by them to a client; he said that the scale had received widespread adoption outside the USA. This scale provided for a fee of 5% of the total consideration applicable to the transaction for the first $1m, with reducing percentages for the next $3m and 1% on the balance. This scale, he said, applied to transactions in the range of £10m - £100m and therefore a discount would have to be applied for transactions over £100m. He considered that the usual practice was to take a percentage of the merchant bank’s fee, but to use the Lehman scale as a check. He therefore considered that as Close Brothers’ total fee was about £5.3m, the fee payable to the plaintiffs should be between £1.3255m and £0.53m. As their involvement was limited, their fee should be based on the lower figure with a discount applied because of the size of the transaction. He said:

“For a simple introduction of high quality, but no real participation beyond that, I would expect to negotiate down from 10%. Now how much, I find that very difficult to answer. Anticipating negotiation is very difficult.”

Mr Martin’s evidence was that fees were a matter of negotiation and there were no applicable standard rates; he had never paid an introductory fee. He accepted that the plaintiffs had effected a skilful introduction of a high quality bidder, but they had done little else. The quantum of a fee depended on the skill of the introduction and the work done. He said he would have started negotiating a fee at £25,000 and not been prepared to pay more than £100,000.

In setting a level of reasonable remuneration in these circumstances, the court is faced with a difficult task.

• Account must be taken of the success element and the fact that the plaintiffs ran the risk of not receiving anything if their introduction did not result in a successful bid. However, they risked little, as the time and expense they spent was very little.

• The remuneration must take into account the fact that the plaintiffs had the idea of interesting Nomura and the claim that access to Mr Hands was valuable. Although I attach considerable weight to the idea, I do not attach much weight to the question of access to Mr Hands, as this suggestion was an exaggerated part of the plaintiffs’ evidence. In any event, Close Brothers could have approached him directly through Mr Llewellyn-Lloyd (who knew him), if they had considered Nomura might be interested.

• The remuneration must also take account of the size of the fee being paid to Close Brothers. I consider it must do so only to a limited extent. That is because the fee payable to Close Brothers contained a high element of contingency. They had to do a great deal of work and their fee was structured on that basis because Brent Walker did not have the resources to pay a fee related to the work done, sale or no sale. Close Brothers therefore had to do a considerable amount of work and take the risk of there being no sale or a sale at a lower price. Close Brothers’ position was quite different to the plaintiffs as, in contradistinction, Close Brothers had to expend a great deal of time and money on the transaction over several months.

• The remuneration must also take account of the fact that the plaintiffs did very little work and were not involved in the transaction after the introduction. I accept Mr Martin’s evidence that in the City, the amount of the work to be done is a significant factor in fixing a fee; it would be repugnant to general commercial practice in the City to hold otherwise.

Doing the best I can, I consider that a reasonable fee would be £75,000. This places a very high value on the idea and the success element as the amount of work done by them was so very little.

It was submitted that I could obtain a cross check by assessing the added value that the introduction of Nomura had by reference to the next lowest bid. It was submitted that by comparison with the next lowest bid, the benefit of having Nomura in was £50m. The benefit to Close Brothers of the further £50m was a further £450,000 added to their fee. Assuming this is right, I have to take into account also the likelihood that Close Brothers’ own presentation of the business and their negotiating skills had some bearing on the price obtained. Allowing for that and giving due credit for the contribution of the plaintiffs, I see no reason to alter my assessment of the fee as £75,000

(b) The value of the services

In considering the alternative restitutionary claim, it was submitted that I should consider the matter by reference to the market value of the services performed at the date they were performed or the date the incontrovertible benefit was conferred. Approaching the question on this basis, I would have come to the same conclusion that their services would be valued at £75,000.

Conclusion

The claim fails on each of the bases on which it was advanced and is dismissed.