Finance consultants entitled to their €855,000 commission

A finance consultancy was entitled to €855,000 commission for its part in acquiring investment money for a large property development.

That was the decision of the Court of Appeal in a case involving EMFC Loan Syndications and The Resort Group.

The Group had engaged EMFC to assist it to raise financing of up to €130 million. 

The contract stated that EMFC would be working in conjunction with another company, Investec, to raise the money.

In clause 6 it set out that EMFC would be paid fees unconditionally for its work, a fee for creating an information memorandum, and commission calculated by reference to the amount of lending raised. It contained a “clear market” clause, providing that the Group would not raise any lending in any market without EMFC’s written consent.

Work began and EMFC produced an information memorandum. Tension arose and EMFC suggested that it would suspend work and give Investec a chance to raise the money by itself as it did not believe it could close any deal while Investec was involved.

A telephone conversation followed in which the Group agreed with that approach. It treated EMFC as having repudiated the contract.

When the investment money was raised, EMFC claimed commission of €775,663, and payment for work fees of €70,000. The group denied any liability.

The judge found that EMFC had not repudiated the contract, so it was entitled to €70,000 in work fees, but he rejected its claim for commission on the basis that it had not made a sufficient contribution to obtaining the investment.

The Court of Appeal overturned that decision.

It held that the judge’s analysis was incorrect because, under the terms of the contract, the general principle that an agent was not entitled to commission on a transaction unless the services performed were the effective cause of the transaction did not apply.

The contract contained no express effective cause requirement, when it clearly could have done if that was what the parties had intended.

Further, this was not a typical introducer’s agreement.  EMFC’s appointment was to assist and support, not to bring about execution of the facilities themselves.

Please contact us if you would like more information about the issues raised in this article or any aspect of contract law.

EMFC Loan Syndications LLP v The Resort Group Plc
Court of Appeal (Civil Division)
8 June 2021
[2021] EWCA Civ 844
Baker LJ;
Carr LJ;
Lewis LJ