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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Openwork Ltd v Forte [2018] EWCA Civ 783 (18 April 2018) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2018/783.html Cite as: [2018] EWCA Civ 783 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
Mr Leslie Blohm QC (sitting as a Judge of the High Court)
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE SIMON
and
LORD JUSTICE NEWEY
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Openwork Limited |
Respondent Claimant |
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- and – |
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Alessandro Forte |
Appellant Defendant |
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Mr Stefan Ramel (instructed by DAC Beachcroft) for the Respondent
Hearing date: 7 March 2018
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Crown Copyright ©
Lord Justice Simon:
Introduction
The background
The material contractual terms
Appendix 3 – Sterling – investment plans
Base commission rates
High Allocation and No Exit Penalty Bonds
3.5% single premium initial commission and 0.4% trail fee
or
5.5% single premium initial commission and no trail
…
Commission clawbacks:
- No exit penalty bond – where funds are withdrawn within 3 years of the most recent investment, a percentage of the initial commission will be debited to your Commission Account. The amount of initial commission clawed back relates to the amount invested, length of time invested and amount withdrawn.
The first issue
… where the contract provides that a party shall be entitled to a part or a proportion of a specified whole, then the issue is, naturally and properly, whether the nature of that whole and proportion can be identified. In the present case there are three factors that are stated to be relevant …
I therefore conclude that, in the normal run of events, commission would be clawed back on a reducing basis over time, reducing on a straight-line basis from the full commission at the date of investment to zero at three years.
Their Lordships consider that, in modern times, the Courts are readier to find an obligation which can be enforced, even though apparent certainty may be lacking as regards some terms such as the price, provided that some means or standard by which that term can be fixed can be found.
Lord Wilberforce referred in this context to WN Hillas & Co Ltd v. Arcos Ltd (1932) 147 LT 503.
Discussion on issue 1
But it is clear that the parties both intended to make a contract and thought they had done so. Business men often record the most important agreements in crude and summary fashion: modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the Court to construe such documents fairly and broadly, without being too astute or subtle in finding defects, but, on the contrary, the Court should seek to apply the old maxim of English law, 'verba ita sunt intelligenda ut res magis valeat quam pereat.' [words are to be understood such that the subject matter may be more effective than wasted]. That maxim, however, does not mean that the Court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the Court as matter of machinery where the contractual intention is clear but the contract is silent on some detail. Thus, in contracts for future performance over a period, the parties may neither be able nor desire to specify many matters of detail, but leave them to be adjusted in the working out of the contract. Save for the legal implication I have mentioned, such contracts might well be incomplete or uncertain: with that implication in reserve they are neither incomplete nor uncertain. As obvious illustrations I may refer to such matters as prices or times of delivery in contracts for the sale of goods, or times for loading or discharging in a contract of sea carriage. Furthermore, even if the construction of the words used may be difficult, that is not a reason for holding them too ambiguous or uncertain to be enforced, if the fair meaning of the parties can be extracted.
Later, he added this:
Such matters may require, as the performance of the contract proceeds, some consultation and even concessions between the sellers and the buyers, but there is no uncertainty involved because, if there eventually emerge differences between the parties, the standard of what is reasonable can, in the last resort, be applied by the law, which thus by ascertaining exact dates makes precise what the parties in the contract have deliberately left undefined. Hence in view of this legal machinery id certum est quod certum reddi potest … [that is sufficiently certain which is made certain]
The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words, considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. But I think that it is found in this case. My reason for so thinking is not only based on the actual vagueness and unintelligibility of the words used, but is confirmed by the startling diversity of explanations, tendered by those who think there was a bargain, of what the bargain was. I do not think it would be right to hold the appellants to any particular version. It was all left too vague. There are many cases in the books of what are called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable the court to give it a practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the parties, that the promises and performances to be rendered by each party are reasonably certain.
64. The role of the court in a commercial dispute is to give legal effect to what the parties have agreed, not to throw its hands in the air and refuse to do so because the parties have not made its task easy. To hold that a clause is too uncertain to be enforceable is a last resort or, as Lord Denning MR once put it, 'a counsel of despair': see Nea Agrex SA v Baltic Shipping Co Ltd [1976] 1 QB 933, 943.
65. This point has often been made but, given its importance, I will quote four clear and authoritative statements of it.
In Petromec Inc v Petroleo Brasileiro SA Petrobas [2005] EWCA Civ 891, [2006] 1 Lloyd's Rep 161, at para 121, Longmore LJ noted:
It would be a strong thing to declare unenforceable a clause into which the parties have deliberately and expressly entered ... To decide that [the clause] has 'no legal content' to use Lord Ackner's phrase [in Walford v Miles [1992] 2 AC 128 at 138G] would be for the law deliberately to defeat the reasonable expectations of honest men …
In Whitecap Leisure Ltd v John H Rundall Ltd [2008] EWCA Civ 429, [2008] 2 Lloyd's Rep 216, at para 21, Moore-Bick LJ said:
The conclusion that a contractual provision is so uncertain that it is incapable of being given a meaning of any kind is one which the courts have always been reluctant to accept, since they recognise that the very fact it was included demonstrates that the parties intended it to have some effect.
And in Durham Tees Valley Airport v Bmibaby [2010] EWCA Civ 485, [2011] 1 Lloyd's Rep 68, at para 88, Toulson LJ observed:
Where parties intend to create a contractual obligation, the court will try to give it legal effect. The court will only hold that the contract, or some part of it, is void for uncertainty if it is legally or practically impossible to give to the agreement (or that part of it) any sensible content (citing Scammel v Dicker [2005] EWCA Civ 404, para 30, Rix LJ)
A provision in a contract will only be void for uncertainty if the court cannot reach a conclusion as to what was in the parties' minds or where it is not safe for the court to prefer one possible meaning to other equally possible meanings,
while bearing in mind that what is in the parties' mind is a legal construct and not an enquiry into subjective intent.
77. I therefore conclude that, in the normal run of events, commission would be clawed back on a reducing basis over time, reducing on a straight-line basis from the full commission at the date of the investment to zero at three years. Given that the claimed clawback is made by Openwork, it seems to me that the burden is on Openwork to prove its entitlement. To the extent that matters are uncertain, I should, all things being equal, err on Mr Forte's side.
78. However, where the assessment becomes a matter of arithmetic, this approach will not have any material effect. I have had regard to the dates of investments, and those dates and investments and withdrawals I have taken from a helpful note handed up to me by Mr Brown during closing. Applying my approach to the encashments that were carried out by Mrs Betterman and Mrs Sytner, I come to the view that Openwork was entitled to clawback the following commission.
79. Mrs Sytner invested £4 million on 13 September 2012. She withdrew £350,000 (or 8.75% of £4 million) on 8 November 2010 – or 61 days later. She withdrew the balance of £3,650,000 (or 91.25% of £4 million) on 5 April 2013 – or 204 days later. The commission paid to Mr Forte was £271,511.27. The commission repayable can, therefore, be clawed back in two slices. The first is calculated by taking 8.75% of the commission, dividing it by 1,095 (being three years in days) and multiplying by 1,034 (being 1,095 less 61 days). The clawback here amounts to £22,433.77. The second is taken by taking 91.25% of the commission, dividing it by 1,095 and multiplying it by 791, resulting in a figure of £178,971.17.
80. As for Mrs Betterman, she invested £4,600,000 on 3rd October 2011 and made three withdrawals: £200,035 (or 4.34%) on 29 September 2012 – that is 362 days; £80,035 on 8 February 2013 – that is 494 days; and the balance of £4,319,936 on 12 June 2013 – that is 618 days. On commission of £313,107, the three slices of clawback, applying the same mechanism, amount to: £9,096.46, £3,007.39 and £130,773.41.
81. The total clawback in respect of Mrs Sytner's withdrawals, therefore, amounts to £201,404.94, as against the £205,671.42 claimed, and in respect of Mrs Betterman, amounts to £142,887.18, as against the £158,054.25 claimed. The total due is, therefore, £344,292.12, as against the £363,725.67 sought.
The second issue
Mr Forte put Openwork to proof that it had repaid the money paid by way of commission to it by Sterling in respect of these bonds. Having heard Mr Hallatt, I am satisfied that this money was paid, although his knowledge of it was a passing one.
A … In terms of the way the mechanism works … we received an overall payment from Zurich or they will demand one of us, within which you will have a lot of transactions, of which this would have been one. So it wouldn't be that we would send them a payment for this express clawback; it would be part of the overall calculation where they would have clawed it back from us amongst many transactions. (109)
Later he said:
A. In terms of the number of transactions, I think that [a document which showed an individual payment of clawback to Zurich] would be quite difficult, but in terms of the file, I know that it has been checked and I know it was applied correctly … We actually have a payments team (114).
And after some further cross-examination:
A … The fee accounts have to go through a reconciliation process, so records have to match, client records match, agent records match. They are reconciled back in terms of the transactions that we then put through on fee accounts, the margin that Openwork takes, it is all checked back to ensure it is correct … (118)
Q. So do I understand correctly that Openwork is asking the court to take away in excess of £400,000 from my client's earnings based on your bare, unsubstantiated assertion that clawback was duly applied, is that right?
A. Yes. (119)
The application to admit fresh evidence
The trial is not a dress rehearsal. It is the first and last night of the show.
Conclusion
Lord Justice Newey
Lady Justice Arden