This is a claim for unpaid commission and damages. The First Claimant (“Acer”) is a company incorporated in St Kitts and Nevis in 2009. The Second Claimant (“Quantum”) was incorporated in the United Kingdom in 2010. Matthew Welsh and Paul Hilton, who had been colleagues at UBS, set up the Claimants as the corporate vehicles for their business. That business, broadly, is the distribution of financial products to independent financial advisers (“IFAs”). The Defendant (“Mansion”) was set up in 2007. Mansion’s business is setting up and selling funds. Its first fund was the Mansion Student Accommodation Fund (“MSAF”).

In his opening, Mr Cullen QC, for the Claimants, helpfully explained what the issues in this case are. There are nine main issues, and some sub-issues.

Did the parties reach an agreement in the terms of the draft agency agreement, or on terms described as ‘the ad hoc agreement’?

Who was the party to any such agreement with Mansion? Quantum or Acer?

If what was agreed was the ‘ad hoc agreement’

was Mansion entitled to terminate it without notice, or only on reasonable notice, and if the latter, what notice was reasonable in all the circumstances?

was there an implied term that there would be no entitlement to commission on termination?

Did the parties agree (on the terms of the agency agreement or otherwise) that there would be an entitlement to override commission of 0.2% on funds placed via Global Wealth Management Solutions (“GWMS”)?

Did the Claimants effect an introduction for purpose of that override commission?

Did the Claimants repudiate the agreement?

Were terms implied in the agreement that the Claimants should not market competing property funds, and that they owed a duty of good faith to Mansion?

Did the Claimants specifically agree on 11 December 2011 not to market the Blackmore Fund?

Did the Claimants breach those terms?

Was any such breach a repudiation of the agreement?

If the Claimants did repudiate the contract, what effect, if any, did that have on their entitlement to initial and trail commission?

What, if any, amount of commission or damages is payable?

What, if any, trail commission is payable in relation to two IFAs, Incisive Wealth (“IW”) and Thompson Cavendish (“TC”)?

This judgment is in five sections:

the evidence in outline

my decisions on the disputed issues of fact

the law

my decisions on the disputed issues of law

my conclusions.

In this section of the judgment, for the reasons given below, and unless indicated otherwise, I accept the evidence of Matthew Welsh and Paul Hilton. In particular where their evidence conflicts with that of Adam Davis, I accept theirs, again for the reasons given below. In the next section of this judgment, I make more detailed findings on the important disputed issues of fact.

Matthew Welsh started his career as an IFA and then joined UBS Wealth Management (“UBS”). Paul Hilton had joined his team at UBS in 2007. They had built up a network of IFAs, which is a way of getting access to people who have funds to invest. They had relationships with distributors of funds to offshore IFAs. In 2009 they began to discuss setting up their own business. In December 2009 they met Adam Davis of Mansion. They were interested in introducing funds and other products to IFAs. In Matthew Welsh’s view, there are many funds, but few which are worth marketing. They are all looking for distributors. Matthew Welsh describes distribution as “the Holy Grail” for fund groups. It is much easier to gather information about, and assess the viability of, funds now than it was in 2010/11.

Matthew Welsh and Paul Hilton set up Acer on 8 October 2009. As I have said, it is an offshore company registered in Nevis and St Kitts. This was done in order to gain international exposure. At that stage, he and Paul Hilton thought that some of their distribution would be through offshore IFAs or companies with links to such IFAs. They also set up a company registered in the United Kingdom to market funds to IFAs in the United Kingdom. They incorporated Quantum on 11 February 2010. Both companies were set up while Matthew Welsh was still working for UBS. They moved to their current office in September 2011.

A good deal of the preparatory work was done while Matthew Welsh still worked for UBS. He had a meeting at UBS’s offices, during working hours, with Adam Davis. He agreed that had UBS found out about this, he would have been dismissed immediately.

Matthew Welsh first encountered Mansion when he worked for UBS. He was told by Omni Group, an IFA with which he had contact in his work for UBS, about an early version of the MSAF. It was a closed-ended fund. That meant that investors had to invest for a fixed period, such as 7-10 years. The fund had a single property in it. The fund now is open-ended, and owns several properties. It has 6-8 different share classes, and what Matthew Welsh describes as “liquidity on a monthly basis”. Matthew Welsh’s view was that this fund would be of no interest to UBS. But he arranged, via Omni Group, to meet Adam Davis of Mansion in order to discuss whether his company would be interested in it.

Matthew Welsh and Paul Hilton first met Adam Davis at Omni Group’s offices in London. MSAF had by then been launched. It was domiciled in Guernsey. It was open-ended and invested in a number of different properties. The minimum investment was £10,000. It had one share class and an initial charge of 5% depending on the commission taken by the IFA. It had raised £9m after two and a half months of marketing, Adam Davis said. Matthew Welsh’s view was that it seemed to have reached a plateau. £5m of the investment was from Coral, another student accommodation fund. The rest had been invested by private investors. Adam Davis said in cross examination that Mansion wanted to build the fund to between £250 and £500m. He added that they had in fact eventually raised about £340m.

In paragraph 2 of his second witness statement, Adam Davis referred to Mansion’s arrangements with “numerous agents”. He was asked about Mansion’s internal distribution team. It was small (6 at its strongest, 4 at the material time). He thought for a long time before answering a question about how many external distributor partners Mansion had. They had active agents in place with one company, Horizon, for the United Kingdom. Horizon had two principals, five employees and three distributors. They also had two overseas relationships. One of those was “actively contracted”, with a UK-based distributor, Bond Offshore. The other relationship was with a company, an individual, based in Eastern Europe, Nigel Noncavic. Bond Offshore had a number of sub-distributors. He could not be precise about how many. He accepted that this was a fairly small distribution network. Mansion was not making great headway, in Matthew Welsh’s view, although Matthew Welsh accepted that at that stage MSAF had only been in existence for a very short time.

Mansion wanted to find further ways of distributing the MSAF via IFAs in order to expand. It needed more funds to buy more properties. Adam Davis agreed that this was so in cross examination. That would enable Mansion to sell the redeveloped properties at a profit to the MSAF, and to make money from managing the properties. Mansion was now more interested in attracting retail clients to an open MSAF than in attracting rich individuals to a closed fund. Adam Davis agreed that Mansion was keen to get other distributors.

Matthew Welsh thought he could interest overseas distributors in MSAF. He had in mind GWMS and MSS. GWMS is very large distributor to overseas IFAs, and has a network of IFAs based in the United Kingdom. MSS are a property business. Adam Davis said he would have to think about commissions to incentivise them. Matthew Welsh said he would find out how much interest there was in MSAF.

Matthew Welsh then had discussions with GWMS and MSS. A director of GWMS, Lorraine Reddaway, was a friend of his. She stayed with his family in late December 2009. He mentioned MSAF to her. Because of the success of Brandeaux, she thought that ‘son of’ might be interesting. She told him the shape the fund would need in order to sell. It needed share classes for 3 currencies, with an initial charge and an exit penalty charge for each currency version of the fund. All versions should pay commission. Investors would not invest without those changes, she said. Matthew Welsh and Paul Hilton then had several meetings with Adam Davis to explain what changes were needed to make MSAF attractive to offshore distributors and to IFAs. MSAF was not marketable in overseas markets, and Adam Davis acknowledged that changes were necessary in order to ensure growth. In his first witness statement Adam Davis asserted that it was not true that Paul Hilton and Matthew Welsh had given such advice, but in cross examination accepted that they had. His evidence, however, was that Mansion already knew this from discussions with David Von Niebel at Bond Offshore.

According to the Claimants, it was agreed that Mansion would have a direct relationship with GWMS, rather than a sub-distribution agreement with the Claimants. The Claimants would negotiate a separate override agreement with Mansion.

They also talked to Adam Davis about how they would be paid in the light of the fact that they distributed to IFAs and to other distributors, who would want to have their own terms with Mansion. Mansion’s standard distributor terms were 1.5% initial commission and 0.5% trail commission. They took the view that they could achieve Mansion’s standard terms for distributor introduced business (i.e. GWMS) and 3% plus 0.5% for their own IFA-introduced business. Matthew Welsh’s evidence was that Adam Davis seemed supportive, as he was judged by results. Adam Davis eventually accepted in cross examination, after some fencing, that the Claimants would expect to be paid for the introduction of a distributor. He agreed in cross examination that as a result of his initial discussions with Matthew Welsh and Paul Hilton, they were expecting him to go away and think about the terms of payment for introductions made by them to Mansion. They wanted something different from Mansion’s standard terms, because they would be providing a different service, that is, introductions to other distributors.

Matthew Welsh accepted that he had no deal in place when he made the introduction to GWMS. He said he had an agreement in principle with Adam Davis that he would find a way to remunerate the Claimants, but they had no set of numbers. Adam Davis did not agree the figures, but was generally supportive. Perhaps it was naive, but they took great comfort from that support. He accepted that they should have got it in writing at the outset. As he put it in paragraph 39 of his witness statement “This introduction was made very much in good faith as we had yet to agree commission terms with [Mansion]”.

Matthew Welsh said that Adam Davis did not make it clear in their initial discussions that he (Adam Davis) did not have authority to agree terms other than the standard terms. Adam Davis disagreed with this. Both Matthew Welsh and Paul Hilton were asked about this in cross examination and both said that Adam Davis gave them impression that, as sales director, he had the authority to agree terms.

At the outset of the discussion, Matthew Welsh checked with Adam Davis if Mansion could have an agreement with an overseas company, particularly one based in St Kitts and Nevis. In his view, Mansion was dealing with Quantum as a known sub-distributor of Acer.

There is a dispute about whether the Claimants introduced Mansion to GWMS or not. I deal with this further, below. Matthew Welsh explained that the introduction was indirect, because distributors are touchy about who sits between them and their paymaster. Adam Davis was aware of that sensitivity. It was suggested to Matthew Welsh that he did not even know GWMS’s managing director, David Parker, as he had failed to recognise him when they met. Matthew Welsh said that forgetting what people look like is an occupational hazard in sales; but that he had met David Parker in Prague in 2006. What he did, he said, was subtly to use his relationship with Lorraine Reddaway to get Mansion and GWMS engaged. Matthew Welsh had asked Adam Davis if the Claimants’ involvement had been mentioned to David Parker, and Adam Davis replied that it had been referred to as “an introduction by one of Lorraine’s mates”. David Parker did not know that the Claimants were involved and would be paid.

Matthew Welsh said that Adam Davis asked whether, if Mansion did re-structure, GWMS would bring volume. Matthew Welsh knew that GWMS had “huge distribution ability”. He fed back to Lorraine Reddaway that Mansion were receptive to the idea of re-structuring the MSAF, and asked, if they did, whether GWMS would be keen to go.

Mansion’s case is that it was not introduced to GMWS by the Claimants. After failing to answer the first question about this, Adam Davis eventually accepted in cross examination that he had not been aware of GMWS. Matthew Welsh described the idea that Adam Davis approached David Parker directly without the Claimants’ help as “ridiculous”. Matthew Welsh “facilitated” a ’phone call between Adam Davis and David Parker. Lorraine Reddaway had explained to David Parker the restructure of this potential fund. She then told Matthew Welsh that David Parker was expecting Adam Davis’s ’phone call. Matthew Welsh could not remember if he gave Adam Davis David Parker’s number or not. Adam Davis was looking at GWMS’s website. It looked exciting. He might have got the number from that.

Matthew Welsh told Lorraine Reddaway about the impending changes to the MSAF to see if she was still interested. She said she would speak to her managing director.

She then rang Matthew Welsh to tell him to tell Adam Davis to ring her managing director. Adam Davis seemed very pleased. Distributors can be wary of being introduced to a product provider via another distributor, as it can affect the money they make. To avoid this, Matthew Welsh put Mansion directly in touch with GWMS. GWMS’s managing director might not have known about Acer. So it was important for GWMS and Mansion to negotiate a separate deal. It was understood that Matthew Welsh and Paul Hilton would receive an attractive commission for introducing GWMS. Terms had not been agreed, but they were under the impression that it would be 1.5% plus 0.5%. Adam Davis was pleased with the introduction.

When Matthew Welsh introduced GWMS, he asked Adam Davis about exclusive distribution overseas. He said it would not be possible. He asked if Matthew Welsh would work exclusively for Mansion and Matthew Welsh replied, “Of course not”.

Matthew Welsh’s evidence was that the intention was that because MSAF was on off-shore fund, the non-exclusive agency agreement would be between Acer and Mansion. Adam Davis said that was fine. There was never any discussion about managing the relationship after any introduction. Mansion would do it. Standard industry practice is for the fund to do that. Adam Davis’ evidence, on the other hand, was that Mansion expects its distributors to nurture relationships in order to ensure that money stays invested in the Mansion’s funds.

Matthew Welsh’s evidence was that the commission paid to distributors came from Mansion’s group profits, whereas the commission paid to IFAs was part of the operating expenses of running the fund. The profits came from development gains (buying, doing up and selling the properties to the fund) and from rental income. Matthew Welsh asked what would happen to trail commission if Mansion were sold. Adam Davis said, according to Matthew Welsh, that the trail would have to be taken into account by any buyer as a continuing liability. MSAF might get so successful that it no longer needed an IFA network. The trail would continue for as long as the asset stayed in the fund.

Matthew Welsh asked Adam Davis to agree terms with the Claimants before they agreed with GWMS. They felt exposed because they had already introduced GWMS to Mansion. They were trusting that they would be paid which wasn’t very smart. They never thought that GWMS would be 90% of Mansion’s business. Adam Davis led them to believe they would get more override commission than, in the event, they did.

In Spring 2010, according to Matthew Welsh, Mansion restructured the MSAF along the lines suggested by Matthew Welsh and Paul Hilton. Matthew Welsh conceded that it was fairer to say that Mansion decided to restructure the fund once Mansion had met GWMS and tested their ability. There were negotiations between Mansion and GWMS about the terms of their relationship.

GWMS would have done a distribution deal with Mansion. But “It was always understood that we would be paid an override on all business derived from GWMS” because Mansion would not have had the introduction but for Matthew Welsh. They initially asked for 1.5% plus 0.5%.

In early May 2010, Matthew Welsh went to Manchester to make a presentation to Shankar Ramanathan and to Adam Davis. The heading of the presentation (tab 11) suggests that it was on behalf of Quantum, but the document also referred to Acer. They knew that Mansion’s view on distribution was 1.5% plus 0.5%, but they asked for that on top to reflect the fact that they had made the introduction. The presentation says that MSAF will be their main focus out of 2 to 3 funds they will be actively promoting. Adam Davis rang shortly after the presentation to say that Shankar Ramanathan was not prepared to pay anything for GWMS as he did not value the introduction and would have come across GWMS at some point anyway.

Matthew Welsh was angry at this. By then Paul Hilton had left UBS. Adam Davis was still negotiating Mansion’s contract with GWMS. There was then an internal email from Adam Davis to Shankar Ramanathan at 11.52 on 21 May. He said he was worried that Matthew Welsh could damage their relationship with GWMS and that he proposed 0.75% override and that they approach GWMS if they wanted more. Shankar Ramanathan eventually agreed an override of 0.2%. Adam Davis then emailed Matthew Welsh at 15.42 the same day. The email said that the Claimants would be paid a consultancy fee of 0.2% on all business written, capped at £50m. The email acknowledged that the Claimants had introduced GWMS, but said that that had produced no investment yet; “We accept that there has been an introduction to Global...We ...have managed ourselves to successfully negotiate a sales channel from your introduction and would not require any further input from yourselves”. The email concluded, “If you are happy....I have an agreement drawn up for you to sign immediately”.

There followed protracted negotiations. Drafts were exchanged, marked up, and commented on. An internal Mansion email in June sets out commission rates (1.5% initial commission plus 0.5% trail commission, and 0.2% override on all business produced by GWMS and others). Neither this document, nor the commission schedule in the successive drafts of the agreement, refers to any cap. Paul Hilton mainly dealt with negotiations. Eventually, at a meeting before 31 October 2011, Adam Davis indicated that he was happy with the terms suggested by Paul Hilton. Adam Davis denied that. Paul Hilton sent an email on 31 October 2011, asking Adam Davis to confirm he was happy with the attached draft which they had discussed, so that it could be signed off at both ends. Paul Hilton chased to get the signed version.

The view of the Claimants was that they had an agreement, and it just needed to be signed. Adam Davis denied this. Paul Hilton had a meeting on 11 January with Adam Davis. He again failed to produce a signed copy of the agreement, on the basis that there would be changes to it. There was a meeting at the Lansdowne Club on 20 January between Adam Davis, Matthew Welsh and Paul Hilton. Adam Davis again failed to bring the signed agreement. Mansion’s proposed UK-regulated fund was discussed. Clients would be able to switch without penalty, and whereas IFAs would get no initial commission for switches, trail commission would continue. Adam Davis spoke about reducing commission rates. The Claimants did not agree at that meeting to reduced commission rates. Blackmore was not discussed. Adam Davis promised to send a copy of the signed agreement and his proposed changes to it. He did not do so. On 3 February 2011, Kelly Bowsher sent an email to Paul Hilton in which she referred to “agreed changes” and said that she would “provide an updated agency agreement to reflect the agreed changes.”

There is a dispute about whether the Claimants are entitled to commission in respect of two IFAs they introduced to Mansion, TC and IW. I say more about this below.

There is also a dispute about the marketing by the Claimants of the Blackmore fund. I set out my findings on that dispute, to the extent that such findings are necessary, below.

There are two preliminary points. The first is that, in resolving the factual disputes in this case, I have taken into account both the commercial context of this dispute, and the contemporaneous documents, both of which, in my judgment, cast light on the inherent probability (or otherwise) of the parties’ factual positions. The second is that I have also taken into account the way in which the parties’ witnesses gave their evidence, and, in particular, how they reacted to questions which sought to probe their evidence on the disputed issues.

The commercial context is that, as Adam Davis conceded in cross examination, MSAF was, at the stage when Omni introduced him to Matthew Welsh and Paul Hilton, a new entity. Adam Davis was as keen as a person could be to find ways of marketing the fund, and, thus, of increasing its assets, and his own figures. He accepted (albeit with some reluctance) that Matthew Welsh and Paul Hilton would be expecting to be paid for introducing business to the fund. In other words, though he sought to suggest initially that some companies would do some work for free, he did not believe that this was the Claimants’ position. That this is so is supported by the email he sent to Matthew Welsh and Paul Hilton on 21 May 2010.

The context also includes three features which are illustrated by the standard terms of Mansion’s agency agreement. The first, accepted more than once by Adam Davis in cross examination, is that that agreement does not stipulate that agents must work exclusively for Mansion. As he said in cross examination, “I think we accept that all distributors may distribute other funds.” Mansion does not expect this exclusivity of them, and it follows that they do not owe a duty of loyalty to Mansion which some types of fiduciary agent owe to their principals. The second is that the agreement does not provide for entitlements to trail commission to cease on termination of the agreement. The third is that the agreement imposes no obligation on an agent to do anything once he has procured business for Mansion. I deduce from those two last features that the entitlement to initial commission and to trail commission is earned for the introduction of business alone. I reject Adam Davis’s attempt, in his third witness statement, to suggest that it was the expectation of either party that an agent would, or should, engage in elaborate relationship nurturing once an introduction had been made, and that it is on that that any entitlement to trail commission depended.

Mansion called one witness, Adam Davis. A very late application was made to adduce, as hearsay evidence, the witness statement of Shankar Ramanathan, Mansion’s CEO. When I asked Mr Pipe about the background to this application, he told me on instructions that Shankar Ramanathan had a “longstanding” commitment in the USA which he had been unable to get out of. I warned Mr Pipe, when I allowed that application, that I was minded to infer that this showed that Shankar Ramanathan had deliberately sought to avoid being cross examined, by acquiescing in the listing of the trial for a period when he knew he would not be in the United Kingdom. Nothing has displaced that inference. This means that I am not prepared to give Shankar Ramanathan’s evidence any weight, and where it conflicts with live evidence given by the Claimants, I have preferred the Claimants’ evidence.

Mansion also made very late applications to supplement the evidence of Adam Davis with material which could and should have been in his first witness statement. I also allowed those applications. The material in them was likely to be touched on in cross examination in any event, and not to have allowed them to be relied on would have produced an artificial situation.

I did not allow an application to adduce, as hearsay evidence, a witness statement from Paul Wildes. This, too, was produced at a very late stage. No satisfactory explanation was given for the fact that Mansion had not approached Paul Wildes for a witness statement at much earlier stage. Paul Wildes, too, it appeared, was not in the United Kingdom for the period of the trial. The adducing of that statement in evidence would have caused real prejudice to the Claimants, as it was inherently ambiguous, and there would have been no opportunity to cross examine him.

Matthew Welsh, Paul Hilton and Adam Davis are all, clearly, intelligent men. They are very commercially aware, and experienced in negotiation and selling. There were times in the evidence of Matthew Welsh, to some extent, but most conspicuously and persistently, in the evidence of Adam Davis, when that evidence was wordy and its thread was difficult to follow.

An example from the evidence of Matthew Welsh was when he was asked about the lie he admitted telling when he was asked by Adam Davis whether he was marketing the Blackmore fund. His responses included, “Strictly speaking it depends on how you define marketing”. He was generally uneasy and markedly hesitant in all the answers he gave to questions about which entities the Blackmore fund had been marketed to.

An example in the evidence of Adam Davis was his initial attempts to deny what must have been obvious, which is that Matthew Welsh and Paul Hilton were not going to make introductions for free. There are many more. Throughout his cross examination he was difficult and obstructive. He tried to suggest that paragraph 38 of his first witness statement was consistent with evidence that GWMS had first been mentioned at the meeting in December 2009. He tried to explain how paragraph 11 of his first witness statement was accurate, in the light of his evidence in cross examination that Matthew Welsh had suggested that MSAF needed to be restructured in order to make it marketable. When pressed on this he said, “I coverit off by saying it’s not true”. He persistently refused to agree reasonable inferences from primary facts when these were suggested to him. There were many aspects of Mansion’s case at trial for which he could provide little support. Examples were the absence of any references to the ad hoc agreement in his first statement (which I say more about below), his attempts to explain away the emails of 21 May and his suggestion that a counterparty receiving a draft agreement from him or an agreement signed by him in his capacity as sales director could not reasonably assume that he had authority (however derived) to propose, or to make, such an agreement. A further example is his exchange with Mr Cullen QC on pages 72-75 and page 77 of the transcript of the hearing on 14 July 2014. Yet another is Adam Davis’s unwillingness to accept that the draft contract sent in June 2011 was an offer from Mansion. There are many more such instances.

The tendencies to which I have just referred were not, in my judgment, because either witness did not understand the questions he was being asked, but, rather, because he was unwilling to face up to, and to give, an answer which might reflect badly on him, or on his case. Matthew Welsh’s tendency to do this was most evident in relation to inessential parts of the Claimants’ case. But Adam Davis’s tendency to do this was most marked in relation to the crucial parts of Mansion’s case. Paul Hilton, on the other hand, gave most of his evidence in a forthright and robust way. He conceded, on the whole, what he thought it was right to concede, and rejected the points with which he disagreed.

Both Matthew Welsh, and to a lesser extent, Paul Hilton, were cross examined at length on issues which were peripheral to the issues in this case, when those are analysed. For reasons which I give below, the contract in this case, whether, as I find, it was on the terms of the 31 October draft, or (Mansion’s case) the ‘ad hoc agreement’, did not impose any duty on the Claimants to act exclusively for Mansion, and did not, therefore, create a relationship of trust and confidence similar to employment or partnership. There was no express or impliedterm which interfered with Acer’s right to market other funds. Nor did the Claimants ever agree to such a term. In the light of that analysis, the emphasis put by Mansion in its case, and in the cross examination of Matthew Welsh and Paul Hilton, on the marketing of the Blackmore fund is misplaced.

Mansion had no contractual right to demand that the Claimants cease to market the Blackmore fund. It follows that marketing the Blackmore fund was not a breach of that contract, still less a repudiatory breach.

Mr Pipe sought to show that both were dishonest because they had taken steps, about which they had not told their employer, UBS, to set up their new business while they were employed by UBS, in UBS’s time, and, on occasions, in UBS’s offices. I have not seen their contracts of employment, but am prepared to assume that this would have been a breach of those contracts, although I am not in a position on the evidence to say whether or not the new business was business which would have competed with UBS. But I am not prepared to infer from any such breaches that Matthew Welsh and Paul Hilton are, in general, dishonest men, as was suggested, and that, it follows, that their evidence as a whole is dishonest. It was revealing that when cross examined about this, Adam Davis said that he did not think that they were being dishonest (he was present at those meetings) though it did make him feel uncomfortable. Of course, if Matthew Welsh and Paul Hilton were, at that stage, engaged in a dishonest conspiracy, so was he, at least to an extent. This is no doubt why, when asked if this was his assessment of their activities, he replied, in effect, that his opinion was irrelevant.

Mr Pipe also sought to show that Matthew Welsh was dishonest because he told a lie to Adam Davis in a telephone conversation on 13 February 2012, when Adam Davis asked him if he had been marketing the Blackmore fund, and he said he had not. Matthew Welsh accepted that this statement was untrue. He regretted having made it, and he also regretted having, when he later recorded his position in writing, as Adam Davis had asked him to, given a partial account (that the Blackmore fund had not been marketed to any new IFAs). Matthew Welsh explained that he had hoped the issue would go away. It was repeatedly suggested that he had told lies; but he had only, he said, been asked a direct question once, and had only lied once. He was tired of the whole issue.

Adam Davis was asked about this in cross examination. He was asked if he denied that the Claimants had introduced GWMS to Mansion. He said that he was not aware of any involvement. He suggested that GWMS would have been as visible on search engines at the relevant time as they are now. These people were not hard to find. He was asked if he searched and found David Parker, the CEO of GWMS in October 2009. He gave no clear answer. He could not recall when it was. In the end he accepted that it was not in October 2009. It was possible that the Claimants had mentioned GWMS at the 9 December meeting. But he did not call David Parker then. He agreed that it was likely that he called David Parker between the meeting on 22 January and his meeting with GWMS on 4 February. He was asked if this was a coincidence. After some fencing, he said that the Claimants “may have” had some involvement.

He accepted that he had called Matthew Welsh and said that Shankar Ramanathan did not value the introduction because Mansion would have come across GWMS anyway. He had difficulty explaining how that form of words was consistent with a view that there had been no introduction. He then had to explain two emails in which he had, first to Shankar Ramanathan, and then to the Claimants, used the word ‘introduction’ several times to describe the service for which the Claimants were claiming override commission. His answer suggested that he did know that Matthew Welsh had connections with GWMS.

In the first email of 21 May, he told Shankar Ramanathan that Matthew Welsh was extremely disgruntled because Mansion were not prepared to pay for “the Global...introduction...”. Adam Davis proposed to Shankar Ramanathan that override commission of 0.75% be paid. He expressed a fear that the Claimants could put “the fear of god” into GWMS and that “we could lose what could become some of our most successful relationships”. This might not work, but it could “reflect badly” on Mansion as a business.

In the second email of 21 May, he offered 0.2% override commission subject to a cap of £100,000. That was a fair deal and a true reflection of reward for effort. In response to the point that “You would not have met these guys without our introduction”, he said, “we feel that at this stage, the introduction hasn’t produced any investment and as yet is completely devoid of any output whatsoever. We accept that there has been an introduction....” He used that word again further down the email.

Try as he did, Adam Davis was not able, in my judgment, to explain how these emails were consistent with any view, held by him, that the Claimants either did not introduce GWMS to Mansion, or might not have done so. My conclusion is that he knew very well that the Claimants had made such an introduction. That was why he emailed Shankar Ramanathan to relay Matthew Welsh’s consternation at the suggestion that there should be no override commission, and why he suggested to Shankar Ramanathan that 0.75% should be paid. Nor was he able to explain why, if he had, in reality, got David Parker’s details from Google, he did not say that in the second email, in which he was seeking to justify paying the Claimants a good deal less override commission than they had expected. It was suggested in cross examination that his attempts to deny that the Claimants had introduced GWMS were “thoroughly dishonest”. I will not record his answer here. It is on page 51 of the transcript of the hearing of 24 July 2014. I found it difficult to unravel.

In his third witness statement, made after the trial began, the evidence of Adam Davis was that the ad hoc agreement was made at the meeting of 22 January 2010. He could not explain why that was not mentioned in the relevant paragraph of his first witness statement, which dealt with that meeting. Nor could he explain why the ad hoc agreement was not referred to in his solicitors’letter of 30 March 2012. In that letter, it was accepted that there was a contract between Acer and Mansion and that the best evidence of its terms was a draft agency agreement referred to in Paul Hilton’s email of 22 March 2012 to Adam Davis. He could not explain why there was no internal email asking for the terms of the ad hoc agreement to be recorded on Mansion’s system. He was asked why what, on hisevidence, are the terms of the ad hoc agreement, agreed on 22 January, were set out (as if for the first time) in his second email of 21 May 2010. He could not explain that, either. Nor could he explain why no draft agreement was sent to the Claimants until 13 April 2010. He was asked why, if there was an ad hoc agreement as he contended, he had apparently accepted, in his email of 2 March 2012, a liability to pay override commission up to 20 February 2012. He could give no coherent explanation.

Quite apart from my general reservations about Adam Davis as a witness, I am unable to accept his evidence on this point. It is, on any reasonable view, inconsistent with one document which must have been created on his instructions, and with a second document which, despite his efforts to disown it in cross examination, I consider must also have been read carefully, and approved, by him, before it was sent. My conclusion is that this evidence is untrue, and was produced, at the last minute, to plug an otherwise visible hole in Mansion’s case.

Mansion does not dispute that there was a contract between it and the Claimants. Mr Pipe made that clear on the first day of the trial, and it is what his instructing solicitors accepted in their first letter to the Claimants. In the light of the decision of the Court of Appeal in Trentham Limited v Archital Luxfer Limited [1993] 1 Ll L R 25, that is a realistic concession. The key factual issue in this respect is whether, as Paul Hilton said in his evidence, Adam Davis told him on about 31 October 2011 that he was happy with the draft agency contract, or not.

The starting point is the draft agreement which Adam Davis sent out in June 2011. He accepted that this draft was entirely based on Mansion’s standard terms, with the sole exception of the provision for override commission in the commission schedule. The suggestion he made throughout his cross examination was that he did not have authority to negotiate, or agree, any terms other than Mansion’s standard terms. I do not find it credible that he would have sent out this draft, which provided for override commission (and omitted any cap on that) if he required, and did not have, authority (whether from Shankar Ramanathan, and/or from Mansion’s board) to do so. Adam Davis was asked specifically about this. I am not entirely sure that I understood all his answers on this point. He baulked at the suggestion that if it was reasonable to assume that he had authority on behalf of Mansion to put this draft forward, it would also be reasonable to assume that he had authority to make an agreement. But I think that he did accept that it would have been reasonable to make the former of those two assumptions.

Adam Davis was asked about the meeting referred to in Paul Hilton’s email of 31 October. His evidence was that he could not remember what was said at that meeting. He said that he could not remember his response at the meeting. He could not remember if he was happy with the draft, or if he agreed it. He could not remember the content of the meeting. He could not recall the conversation. He was asked, then, if Paul Hilton could remember the meeting, whether that was not the only evidence of what happened at the meeting. His response was that his evidence that he could not recall what was said at the meeting is also evidence. He could not recall specifically what his reaction was. He could not remember what he said, or whether he went to Mansion’s board.

The email of 31 October attached a draft agreement, and said that the draft contained the changes discussed at that meeting. It continued, “Please let me know if all is good with you so we can get this signed off at both ends”. Adam Davis did not reply to this email, or, indeed, to any of Paul Hilton’s subsequent emails, in which he asked for updates about getting the agreement signed off. I conclude, on the balance of probabilities, that if Adam Davis had not agreed the draft at the meeting referred to in the 31 October email, he would have said so immediately. The fact that he cannot remember what was said at the meeting increases, in my judgment, the probability that Paul Hilton’s evidence about the agreement is correct. I cannot give any credence to the suggestion made by Adam Davis in his evidence that the agreement was still being negotiated during this period. There is no contemporaneous document which bears that out. Moreover that suggestion is inconsistent with another facet of his evidence, which was that he could not agree, and would not have agreed, any terms other than Mansion’s standard terms.

In re-examination Mr Pipe drew Adam Davis’s attention to the final page of the draft which has an attestation page. The suggestion was that neither party intended to be bound unless the draft was formally signed. This was an ingenious attempt to rescue Mansion’s case. In my judgment, the signing of the agreement was an inessential formality. Were it otherwise, Mansion could escape the consequences of making an agreement by (as happened here) simply never signing it. I reject that suggestion.

I should say more here about a further suggestion, repeated several times by Adam Davis in his evidence, that he had no authority to agree anything other than Mansion’s standard terms. Whether or not this was so, and he was able to point to no document which established this, is irrelevant. The contemporaneous documents are consistent with the impression which Matthew Welsh and Paul Hilton had, which was that there was no relevant constraint on Adam Davis’s authority to make the agreement which he did make, when he made it. Their evidence, which I accept, is that he had communicated none to them. But even if he had told them that there were limits on his authority in general terms, there is nothing in the documents to show that he told them that he did not have authority to agree what he had agreed, on my finding, at the meeting referred to in this email. Had he not had such specific authority, he would have replied immediately, and said, “I cannot sign this, I need the approval of Shankar Ramanathan, or of the board.” He did not do this at any stage.

To test his position, Mr Cullen QC asked Adam Davis whether GWMS were entitled to assume, when Adam Davis, as Mansion’s sales director, signed the agreement between them and Mansion, that he had authority to sign it on behalf of Mansion. His answer was that they could assume that, or they could assume the opposite. This was a preposterous answer. It is all the more preposterous when set against Adam Davis’s own assumption, his “modus operandi”. This, he explained, was that although he knew all major decisions in Mansion required board approval, he carried out without question all the instructions he was given by Shankar Ramanathan, without checking that those were, indeed, approved by the board.

I therefore conclude that terms were agreed between Paul Hilton and Adam Davis at the meeting referred to in the email of 31 October. The terms were those of the draft attached to that email. I also find that there was no reason for Matthew Welsh or Paul Hilton to doubt Adam Davis’s authority to make this agreement. Finally, on this topic, I find that it is probable that he had actual authority to make this agreement. He did not deny having gone to the board (if that was indeed necessary). I infer from this failure of recollection that he did, indeed, go to the board, and did get itsapproval. But whether or not he did that, I find, in any event, that he had ostensible authority to agree those terms, and that, therefore, whether or not they were put before the board and approved, they bound Mansion.

If it were necessary to do so (and I do not consider that it is) I would also hold that, in the light of Adam Davis’s failure, after November 2011, to indicate any dissent from the terms of the draft attached to Paul Hilton’s email of 31 October 2011, Mansion are estopped from denying that there was a contract between them and Acer on those terms.

My conclusion on this issue therefore is that the contract between the parties was finally agreed at the meeting referred to in the Paul Hilton’s email to Adam Davis of 31 October 2011, and that its terms were those contained in the draft attached to that email. Because, as Adam Davis accepted, it was both parties’ expectation that the Claimants would be paid for introducing GWMS, and for introducing other business, and because they did in fact introduce GWMS and other business to Mansion, the terms about the override commission in the agreement related back to that introduction, and I reject any argument that payment of override commission is not due because it is a payment for past consideration.

It is not insignificant, in my judgment, that the commission schedule in the draft agreement which first came from Mansion in June 2011 does not refer to a cap. There is no cap in any of the subsequent versions of the travelling draft. Adam Davis was asked if he had read these, and he prevaricated about this. I do not find it credible that the person who was representing Mansion in the negotiations with the Claimants would not have read each draft carefully, whether it came from Mansion or from the Claimants, to ensure that it went no further than what had been agreed. Nor do I find it credible that, if Adam Davis had really considered that a cap had been agreed, he would not have protested immediately, each and every time he saw that it was missing from the commission schedule.

I note that Adam Davis’s s internal email of 3 June 2010 about the special deals sheet does not refer to a cap on override commission. Nor is it insignificant that a sum which exceeds the supposed cap (some £139,000) was paid to the Claimants in respect of override commission before the agreement was terminated. In this connection, Adam Davis said in cross examination that every single payment Mansion made was “ultimately escalated all the way to the CEO, he signs off all the agents’ invoices, and the finance director”. This, if true, means that every single payment of override commission to Acer which was made over the supposed cap was authorised by Shankar Ramanathan. Adam Davis accepted that he could easily have calculated how much override commission had been paid by 20 February 2012. But he could not explain why, in his email of 2 March 2012, he accepted a liability to pay override commission to 20 February 2012, in circumstances where, on his case, the cap had already been exceeded. Finally, it seems that the documents attached to Mansion’s solicitors’ letter of 10 December 2013 did not refer to any cap on override commission. Asked about this, Adam Davis said that the solicitors had not realised that the cap was in place. He did not think he had seen the letter before it went out; it “had been handed over to Kelly Bowsher, who had an in-depth working knowledge of all invoices and the accounts team”.

Adam Davis said that Mansion has a “very manual system” with, sometimes, 2000 trades a month. An “admin error” was made by “someone within the funds administration team”. But Mansion’s case about the cap requires me to accept that many significant mistakes or omissions affecting the supposed cap were made by it. Two, the failure to spot its omission from successive versions of the travelling draft, and the authorising of payments above the cap by Shankar Ramanathan, were made more than once. I find it distinctly more probable that, as Matthew Welsh said, he ‘pushed back’ about the cap, and Mansion decided not to insist on it, perhaps because of a fear that the cap did not adequately reflect the intangible risk, said by Adam Davis to have motivated the agreement of the override commission in the first place, that (if not properly paid for the GWMS introduction), the Claimants would somehow upset Mansion’s burgeoning relationship with GWMS.

I note in this context that Shankar Ramanathan had already moved from a position in which he said he placed no value at all on the GWMS introduction, to one where he placed a potential value of £100,000 on it. Contrary to Adam Davis’s protestations in cross examination, I do not find it at all improbable that in the commercial position Shankar Ramanathan was in, and when, as he must have done, Adam Davis told him that Matthew Welsh had not accepted Mansion’s offer (which at that stage included the cap), and that Matthew Welsh was very unhappy with it, Shankar Ramanathan moved further on this issue, by deciding to drop the cap completely. Had he not dropped the cap, the commercial risk which he was said to fear would not have been closed off.

It was suggested by Mr Pipe in cross examination that Matthew Welsh knew that the cap had been omitted from the draft by mistake. This suggestion, when made, was based only on the email of 13 June 2010 from Matthew Welsh to Paul Hilton. In this email Matthew Welsh said, “Also, probably an oversight on their part, but good to see that they have forgotten about the £100k cap....!”. This email was sent after Adam Davis had sent a draft agreement to Paul Hilton on 11 June 2010. This suggestion was then supplemented by Adam Davis’s third witness statement, made after the trial had begun. He there stated that he had always said that it is not true that he agreed to drop the cap, and that “I did not have authority to do so anyway”. He went on to state, not that the cap had been omitted from the draft agreement by mistake, but that the payments of override commission once the cap had been exceeded had been made by mistake. For the same reasons as I have found that Adam Davis agreed the draft at the meeting referred to in the 31 October email, I reject the suggestion that the cap was omitted from the June 2011 draft (or from subsequent drafts) by mistake.

This analysis is supported by the fact that on 3 June 2010, Adam Davis sent Mark Stubbs an email asking for the override commission to be added to the special deals sheet, with no reference to any cap. The timing of this email is suggestive, as, as was put to Adam Davis in cross examination, GWMS did not start producing business until November. So is the timing of the email sending the first draft with a bespoke commission schedule, to which I have already referred.

In his opening note, Mr Cullen QC described this as an arid issue. I agree. Mansion’s solicitors wrote to the Acer on 30 March 2012. They headed that letter “Agreement between (1) Mansion Group Limited and (2) Acer Investment Management Ltd”. They said it appeared to be common ground that Mansion and Acer had made an agreement. Adam Davis could not remember if he approved the letter, but he said that it would have had to have been approved by Shankar Ramanathan. Adam Davis had no idea why it was an issue in this litigation. He agreed that Paul Hilton had sent him an email on 2 February 2010 giving details of Acer and bank account information. He would have understood from that that he was dealing with Acer. Quantum’s name was inserted in an early draft of the agreement, possibly by Mark Stubbs of Mansion. He agreed that the invoices were all from Acer, and that commission statements were always addressed to Acer. He agreed that in the draft agreement sent by Paul Hilton on 1 November 2010, Acer had been substituted for Quantum. Acer featured in all subsequent drafts.

He agreed that the identity of the contractor did not really made a difference to him personally. There were many documents with Quantum’s name, such as emails. But he agreed that, after the first change to the draft agreement, all the invoicing and contractual documents were in Acer’s name. He was asked to look at Matthew Welsh’s reply to Kelly Bowsher’s email of 1 August 2011, which he had forwarded to Matthew Welsh on 3 August 2011. She asked whether she should use Quantum or Acer in her list. Matthew Welsh, “Acer pls Adam. Quantum distributes on behalf of Acer but the Mansion agreement should be with Acer”. Adam Davis was asked if any doubt in his minddisappeared then. He did not really answer the question. But I find that there can be no doubt but that the agreement was between Mansion and Acer.

T C and IW were IFAs on Acer’s register. TC asked Mansion if they could be moved from Acer to another distributor. IW set up its own distribution business. Adam Davis conceded that if Mansion’s standard agency terms applied, Mansion was not entitled to deprive Acer of trail commission in respect of TC or IW. Given my views about the terms of the underlying contract, that concession disposes of the dispute about the trail commission in respect of TC and IW.

Adam Davis suggested that the position would have been otherwise under the ad hoc agreement because “...there isn’t the complexity in the detail to the ad hoc agreement”. But he accepted (subject to checking that the payment was made in response to an invoice, which was, in due course, produced) that Mansion paid trail commission for IW up to the end of 2011, after IW had ceased to be one of the Claimants’ IFAs. Unless this is another mistake, which Adam Davis did suggest, that payment indicates a view by Mansion that trail commission was due, despite the change in distributor, and, even if the relevant agreement was the ad hoc agreement. I reject any suggestion that in the email of 26 January 2012, Matthew Welsh agreed that the Claimants should no longer be entitled to trail commission in this situation, or that he agreed to waive the Claimants’ rights in that regard. If, contrary to my primary finding, the contract was the ad hoc agreement, then the Claimants were entitled to continuing payments of trail commission in respect of TC and IW.

In outline, the Blackmore fund is similar to the MSAF, but invests in hotels rather than in student accommodation. Under the terms of the agreement, Acer was not in any way prevented from marketing other funds. Indeed, Adam Davis agreed in cross examination that “Yes, I think we accept that all distributors may distribute other funds... There’s not an exclusivity in our agreements”. He agreed that none of the drafts of the agreement had any such stipulation. This approach would apply to the ad hoc agreement, if, contrary to my primary finding, it was the agreement between the parties.

Matthew Welsh was introduced to Blackmore by Mark Shortland of MSS in early autumn 2011. He and Paul Hilton met Phil Bowman, Blackmore’s sales director. He suggested that they would be wise not to mention that they were marketing Blackmore to Mansion as “...there’s a bit of history you need to be aware of”. The Claimants were told that Paul Wildes, who had a senior role at Blackmore, had also been the first chairman of Mansion. He had tried to dismiss Shankar Ramanathan and Adam Davis for poor performance. The Claimants signed a distribution agreement with Blackmore in early November 2011. Its terms were very good.

For reasons which I do not need to resolve, it is clear that Mansion, or perhaps, Adam Davis, did not want Acer to market the Blackmore fund. According to Adam Davis, Paul Wildes had left Mansion in contentious circumstances in 2010. There was a settlement agreement. It is likely that Shankar Ramanathan supported the decision of the majority shareholder that Paul Wildes should leave. But Adam Davis denied that there was any personal animosity between him and Shankar Ramanathan and Paul Wildes. He said that two directors of Blackmore had an association with another property-themed fund, Sterling Mortimer, and many of its funds had ended in “an unsavoury position.” They had a very poor reputation in the market. He was uneasy about the Claimants marketing MSAF alongside Blackmore for that reason, and because it was a competing fund.

According to Adam Davis, Shankar Ramanathan was told by somebody (possibly an associate of Paul Wildes) that the Claimants were considering marketing Blackmore. Shankar Ramanathan then told Adam Davis this. In late November or early December, Adam Davis texted Matthew Welsh about this, asking him if he knew Paul Wildes. Matthew Welsh replied that he did not but that he did know Phil Bowman. Adam Davis agreed in cross examination that he had not asked Matthew Welsh if he was marketing Blackmore. Adam Davis was then told by Shankar Ramanathan that the Claimants were marketing Blackmore. He rang Matthew Welsh on 5 or 6 December about this.

There is a dispute about what happened in that call. It is common ground that there was an exchange of views. Adam Davis said that Mansion did not want the Claimants to market the Blackmore fund. Adam Davis’s evidence in cross examination differed from his first witness statement. In cross examination he said that Matthew Welsh had denied marketing the fund, whereas in his statement, he said that Matthew Welsh had assured him that he would not market it with immediate effect (thus implying that he had been marketing it). I conclude that Adam Davis’s recollection of this conversation is unreliable, and that Matthew Welsh’s recollection of it is to be preferred. His recollection is that no direct question was put to him and that he was arguing that marketing Blackmore was not a problem, and that he did not promise not to market it.

Adam Davis’s recollection is also difficult to square with the suggestion, made in Shankar Ramanathan’s witness statement, that Paul Hilton had rung him to say that the Claimants would not sell Blackmore again. In the course of the call, Adam Davis made clear that if the Claimants were marketing the Blackmore fund, Mansion would not be able to work with them. That suggestion of Shankar Ramanathan’s, itself, is difficult to square with further evidence from Adam Davis. He was asked whether he remembered conversations on 8 December 2011, described by Paul Hilton in paragraphs 39 and 40 of his witness statement. He had no independent recollection of those. He had to accept that if Paul Hilton was right about those conversations, it was inconceivable that Shankar Ramanathan’s evidence about the conversation he had had with Paul Hilton was correct. I therefore accept Paul Hilton’s evidence, which is that he spoke to Shankar Ramanathan, who told him that while he would prefer the Claimants not to market Blackmore he did not have an issue if they did, and that he did not want to terminate the agreement between the Claimants and Mansion, and that he then called Adam Davis to tell him that. Adam Davis was very angry. Adam Davis called back later that day to say that he had spoken to Shankar Ramanathan and that he “categorically” did not want the Claimants to market Blackmore.

On 8 December 2011, Adam Davis sent Matthew Welsh an email. He copied in Shankar Ramanathan. He stated what he described as a clear policy that Mansion would not work with any distributor which carried funds which competed with, or were similar to, MSAF. He then said, “Whilst I appreciate that you are completely free to market funds that you believe are appropriate, Mansion would not continue working with ANY distributor that marketed a fund [which was property-themed or Guernsey-regulated]. Should you wish to choose other partners you are free to do so, but it would mean an end to our relationship”. Blackmore was not referred to, nor was any association with Sterling Mortimer. This email, too, is inconsistent with the suggestion, either, that Matthew Welsh had assured Adam Davis that he would not market Blackmore, still less, with an agreement that he would not do so. As Adam Davis acknowledged when asked about this, “.....it’s very clear that there was no exclusivity in our agreement....We didn’t have an exclusivity clause and there wasn’t the suggestion of one being produced”.

Later, on 13 February 2012, Adam Davis rang Matthew Welsh. There was a dispute about whether he told Matthew Welsh that Shankar Ramanathan was listening in, or not. Having heard Adam Davis being cross examined about this, I find that he did not tell Matthew Welsh this. Matthew Welsh was asked whether he was marketing the Blackmore fund, and he replied, “No”. Adam Davis asked him to confirm this in writing. On 16 February 2012, Matthew Welsh emailed Adam Davis. He said, among other things, “...[a]lso, as discussed, I can confirm that we have not marketed Blackmore to any new IFAs since our conversation in November”. I find that Adam Davis understood this email to mean that the Claimants had continued to market the Blackmore fund to existing IFAs between November and February (transcript, 15 July 2014, pages 43-49).

On any view, there is a sum in respect of commission which is due and has not been paid. Adam Davis was asked about this in cross examination. He tried to suggest initially that the fact that Acer had breached the agreement was a reason not to pay the sum, but when asked why this was a reason not to pay, he said that perhaps it was not. When pressed, he had to say that he was not clear why the sums had not been paid, and that they were not in dispute. I asked counsel to address this point in their submissions, having indicated that I was minded to give judgment for the sum, if it could be agreed, or for damages to be assessed, if not. In the event, at the end of the hearing, I ordered Mansion to pay £10,000 on account of this aspect of the Claimants’ claim.

I heard submissions on a number of legal issues. On the findings of fact which I have made, the following issues of law or mixed issues of fact and law arise:

were there implied terms in the agreement that

the Claimants should not market competing property funds, or

they owed a duty of good faith to Mansion?

Did the Claimants repudiate the contract?

If the Claimants did repudiate the contract what effect, if any, did that have on their entitlement to initial and trail commission?

My finding that the contract was not the ad hoc agreement, but was instead the terms attached to the 31 October 2011 email means that I do not need to decide the issues set out at paragraph 2(3), above. But I should make clear that had I found that the ad hoc agreement was the contract, I would have reached the same conclusions about its terms as I have reached about the terms of the agreement embodied in 31 October draft. In brief, I would have found, applying the Belize test (see further, below), that there was an implied term in the ad hoc agreement that it was terminable on reasonable notice and that, in the circumstances, a reasonable period of notice would have been that provided for in Mansion’s standard terms.

In all the circumstances of this relationship, I hold that the term which Mr Pipe argued was implied in the ad hoc agreement do not meet the test in the Belize case, that is, a term preventing Acer from marketing competing property funds. In his oral submissions, Mr Pipe wisely abandoned any argument that, if the October 2011 draft contained the terms of the agreement, there was an implied term that the Claimants would not market competing property funds. Neither party would reasonably have understood that agreement, read against the relevant background, to have had that meaning or effect. The conclusion can be no different, in my judgment, if the relevant contract was the ad hoc agreement. On Lord Hoffmann’s approach, the position is a fortiori, precisely because its written terms would have been sparse indeed, and because the relevant commercial background is exactly the same.

Since I have found that the Claimants did not at any stage agree not to market the Blackmore fund, the issues I refer to in paragraph 2(6)(c) and (d), above, do not arise, and I say no more about them.

Mr Cullen QC and Mr Pipe agreed that the leading authority on the implication of contractual terms is Attorney General of Belize and Belize Telecom Limited [2009] UKPC 10; [2009] 1 WLR 1988. The issue in that case was whether a term should be implied in the articles of association of a company which had been set up by a government to take over the operations of a publicly-owned telecommunications monopoly. The articles conferred rights on different classes of shareholder to appoint directors. One such class was the person who held both the special share, and 37.5% of the C shares. The Defendant had fallen into that class, and, as such, had appointed two directors. It had then ceased to hold 37.5% of the C shares. The articles made no express provision for removal of those two directors. The issue was whether a term should be implied into the articles that those two directors should vacate office in the events which had happened. The Privy Council, reversing the Court of Appeal of Belize, and restoring the decision of Conteh CJ, held that such a term should be implied.

Lord Hoffmann, giving the judgment of the Board, said, at paragraphs 16-17, that the court has no power to improve on the instrument which it is called on to construe. It cannot introduce terms to make it fairer and more reasonable. It is concerned, rather, to see what the instrument means. That is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed. The issue of implication usually arises when the instrument does not provide for what is to happen when some event occurs. The most usual inference is that nothing is to happen, because if the parties had intended that, they would have said so. “Otherwise the express provisions of the instrument are to continue to operate undisturbed”.

In some circumstances, however, as Lord Hoffmann pointed out (at paragraph 18) the reasonable addressee would understand the instrument to mean something else, because that is the only meaning consistent with the other provisions of the instrument, read against the background. There is only one question: this is “what the instrument, read as a whole against the relevant background, would reasonably be understood to mean.” (paragraph 21). That is a question of construction.

Lord Hoffman went on to consider the various tests which have been suggested in the authorities. This list, he said, “is best regarded not as a series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means...” (paragraph 27).

I hope I do not do Mr Pipe’s argument an injustice if I say that, as I understood it, it appeared to be that because the agreement described Acer as an agent, it followed that Acer had a relationship of trust and confidence, or of utmost loyalty, with Mansion. Mr Cullen QC took me to some passages in the nineteenth edition of Bowstead on Agency (paragraphs 1-001, paragraphs 6-36-37) which show that the position is different. The paradigm case of a fiduciary agent is a person whose principal has expressly, or by implication, consented to the agent’s acting on his behalf so as to affect his relations with third parties. As I understand it, that is not the position here. There are many different types of relationship which are labelled ‘agency’, but the label does not determine the incidents of the relationship. It is necessary to see in each case exactly what type of relationship exists between an agent and his ‘principal’ (for want of a better word). A critical factor in defining any relationship is the terms of any contract between the parties.

In Bristol and West Building Society v Mothew[1998] Ch 1, a solicitor acted for the buyers of a house, and for the lender. He negligently told the lender that the buyers were not borrowing from any other source. They eventually defaulted, and when the lender enforced his security, the house was sold at a loss. The lender brought a claim against the solicitor. The Court of Appeal held, among other things, that the solicitor’s conduct in giving the wrong information was a breach of duty, but was neither dishonest nor intentional. It was unconnected with the fact that he was also acting for the purchasers.

Otton LJ and Staughton LJ agreed with the analysis of Millett LJ (as he then was). He said (at page 18) that a fiduciary is someone who had undertaken to act for another in a particular matter in circumstances which give rise to a relationship of trust and confidence. His distinguishing obligation is one of loyalty. “The principal is entitled to the single-minded loyalty of his fiduciary.” That core liability has several facets. Those include four features. The fiduciary must act in good faith. He must not make a profit from his trust. He must not put himself in a position where his duty and his interest may conflict. He may not act for his, or a third party’s benefit without the informed consent of his principal. Breach of the double employment rule is automatically a breach of fiduciary duty. But in a case where the principal knows about any double employment when he engages the agent, the principal cannot complain about it.

Other cases show that even where a fiduciary relationship is established, care is necessary. In Henderson v Merrett Syndicates Limited [1995] 2 AC 145, Lord Browne Wilkinson said,

Kelly v Cooper is a decision of the Privy Council about the duties owed by an estate agent. The agent in that case was instructed by the owners of adjacent houses (Caliban and Vertigo). The agent showed both to a prospective purchaser whose offer to buy Vertigo was accepted. The purchaser then offered to buy Caliban. The agent did not tell Caliban’s owner about the accepted offer on Vertigo (which might have had the effect of increasing the price the Caliban’s owner could have got for Caliban). The sale went through, and Caliban’s owner refused to pay the agent’s commission on the sale, relying on an alleged breach its fiduciary duties by the agent.

The Board’s reasoning (see pages 213H-214B, per Lord Browne-Wilkinson) was that, first, agency is a contract made between principal and agent. Second, like every other contract, the rights and duties of principal and agent depend on the terms of the contract between them, whether those terms are express, or implied. So it is not possible to say that all agents owe the same duties to their principals, as it is always necessary to consider the terms of any contract.

Lord Browne-Wilkinson then said that where a principal instructs an agent to sell something on his behalf, and he knows that the agent acts and intends to act for other principals selling the same sort of thing, the terms to be implied in the contract must be different from the terms which are implied where an agent is not carrying on a general agency business. An estate agent does have express authority to negotiate on behalf of his principal. But it is the business of estate agents to act for more than one principal. It is inevitable that that may give rise to conflicts of interest. But estate agents must be free to act in this way, or they will be unable to do their business. Nor can it be suggested that estate agents are bound to disclose to one principal confidential information got from another. A term must therefore be implied in such contracts that estate agents are entitled to act for competing principals and bound to keep each principal’s information confidential. The fiduciary relationship (if any) must accommodate itself to the nature of the contract.

Mr Pipe relied on the decision of Leggatt J in Yam Seng Pte Limited v International Trade Corporation Limited [2013] EWHC 111 for the proposition it was an implied term of the agreement that the parties would deal with each other in good faith. This was the foundation for a submission that the admitted lie which Matthew Welsh told about marketing Blackmore was a repudiation of the contract, and entitled Mansion to terminate it without notice.

At paragraph 121 of his judgment Leggatt J referred to the general reluctance of courts in England and Wales to recognise a general obligation of this kind. At paragraph 137, he said that as a matter of construction “it is hard to envisage any contract which would not be reasonably understood as requiring honesty in its performance.” At paragraph 141, he said that what good faith requires is sensitive to context. “In any situation it is dishonest to deceive another person by making a statement of fact intending that person to rely on it while knowing the statement to be untrue”. At paragraph 142 he dealt with obligations to disclose information “in performance of the contract”. Some “relational” contracts may require high degree of co-operation based on mutual trust and confidence. These include joint ventures and long-term distributorships.

At paragraph 143, he described the contract in that case. It was a distributorship which required the parties to co-operate, as one side needed to plan production based on anticipated demand, and the other was spending money on marketing. The requirements of good faith depend on context, and are objective; they depend on what would be regarded as commercially unacceptable by reasonable and honest people. They arise as a matter of contractual construction (see, further,paragraphs 147-150). Such a requirement is consistent with a view that the parties’ reasonable expectations must be protected.

The Judge held that a duty of “honesty in the provision of information” was implied in that contract. It is instructive that the breach of this implied term which the Judge found in that case (judgment, paragraphs 170-171), and which he held to be a repudiatory breach was a deliberate lie about a key aspect of the contractual relationship, that is, a lie about the domestic retail price of products (part of the subject matter of the contract), in Singapore, which was one of the territories covered by the parties’ contract.

Mr Pipe relied on Leggatt J’s summary at paragraph 86 of the case to which I have just referred. A breach is repudiatory if goes to the root of the contract, or is such as to deprive the innocent party of substantially the whole benefit of the contract. I do not think that Mr Cullen QC disagreed with this formulation. It is the first type of repudiation, and not the second, for which Mr Pipe contended.

Mr Cullen QC referred me to Explora Group plc v Hesco Bastion Limited [2005] EWCA Civ 646. It is clear from that decision, in my judgment, that an accepted repudiation of a contract does not affect an entitlement to the future payment of commission which has not accrued due, but which has already been earned under the contract before the date of the repudiation. I record that Mr Pipe said that he wanted to keep this point open should the case go further, but did not understand him to have submitted that I could depart from that approach.

I do not accept the submissions that this agreement gave rise, either, to fiduciary obligations on Acer’s part, or to a “relational contract”. Those submissions are not grounded in the commercial reality of the relationship between the parties, or in the express terms which I have held that they agreed.

As Mr Cullen QC put it in his oral submissions, “My clients were salesmen selling the funds. What is important and what the Defendant’s own terms and conditions provide for, is that they should act in good faith as regards the people they are selling to. There simply isn’t this sort of to-ing and fro-ing of information exchange. It’s not of a relational character.....It is simply not that sort of agreement. It is nothing like an employer and employee agreement....My clients were just selling. The idea that this was some relationship where the utmost honesty was required at all times is, with respect, just humbug.”

That is reinforced by the fact that neither side saw this as an exclusive relationship. The sorts of obligations and commitments that would be expected in a relational contract are absent. It was not a long-term relationship: either party could end it by giving a relatively short period of notice. Neither party was required to spend significant sums in reliance on the continuation of the relationship. In the circumstances of that relationship, defined by the terms of the agreement, set in its commercial context, there is no scope for the implication of a term of good faith. The terms of agreement, in its context, make it impossible for me to hold that Acer owed any relevant fiduciary duties to Mansion. Or to put it another way, if I am wrong that Acer was not a fiduciary, the express and implied terms of the agreement excluded any relevant fiduciary duties.

I have not been persuaded that this lie could possibly be a repudiation of the agreement. The lie was about a subject which was not even peripheral to the agreement. It was a lie about activities which, under the agreement, the Claimants were perfectly entitled to carry out. Whether or not the Claimants were marketing the Blackmore fund was none of Mansion’s business. It was not entitled to make demands about it. Whether Matthew Welsh was wise to tell this lie, which he now regrets, is neither here nor there. The agreement was not a moral code which required the Claimants to tell the truth to Mansion at all times, no matter how irrelevant to their actual contractual obligations the question might be.

I also reject Mr Pipe’s submission that, in the circumstances, this lie was a fraudulent attempt to obtain a pecuniary advantage (that is, the continuation of the agreement) by deception. The lie was very soon corrected (albeit not as wholeheartedly as it could have been). Mansion in any event knew that the Claimants were marketing Blackmore.

This means that if I am wrong about the implication of a requirement of good faith, there was no breach of any such requirement. As I read his judgment, Leggatt J’s approach in Yang Sem is that dishonesty which does not relate to the performance of the contract cannot be a breach of that implied term.

I have 7 relevant conclusions.

The terms of contract between the parties were agreed by Adam Davis and Paul Hilton at the meeting referred to in the 31 October email. They were embodied in the draft attached to that email.

Acer, not Quantum, was the relevant party to that agreement.

The Claimants introduced GWMS to Mansion.

The Claimants are entitled to override commission for that introduction, at the rate of 0.2% of the value of all business placed by GWMS with Mansion. That sum is not subject to any cap.

The Claimants did not repudiate the agreement. It follows that Mansion could only terminate the agreement on giving the appropriate contractual notice, in accordance with clauses 15 and 19 of the agreement.

Mansion did not do so, and that failure is a breach of the agreement.

Acer continues to be entitled to trail commission in respect of TC and IW.

It became clear during the hearing that Mansion have not given proper disclosure of the figures which would enable me to decide what Mansion should pay Acer in order to give effect to those conclusions. There was some discussion at the hearing about what should happen in the light of that. I will deal with this question initially by written submissions, but acknowledge that a further hearing may well be necessary to resolve it.

Finally, I must thank both counsel for their very helpful submissions.