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Case law: Unclear adviser engagement letter reaches Court of Appeal but adviser loses success fee claim

Companies should ensure that engagement letters with advisers clearly and unambiguously specify the circumstances in which the adviser’s fees, including success fees, are payable – and do not use different words to mean the same thing – or risk ending up in an expensive court battle.

Legal Alert

This update was published in Legal Alert – August 2015

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A company appointed a financial adviser to help it sell a subsidiary. The engagement letter between them said the adviser would receive a success fee if ‘any Sale is consummated’ within one year of the end of the adviser’s engagement.

The parties agreed there had been a ‘Sale’ within the period when the company entered into an agreement to sell the subsidiary to a third party. However, the sale was conditional on government and other approvals. These were given after the end of the year. The company argued that the sale had not been ‘consummated’ within one year, and was not liable to pay the success fee to the adviser.

The Court of Appeal agreed, and said ‘consummation’ was an ordinary word meaning ‘bring to completion’. Simply making an agreement to sell a subsidiary, where completion of the sale was conditional on third party approvals, was not a consummation. The adviser was not therefore entitled to a success fee.

The adviser’s argument that the sale agreement also used the term ‘completion’, so that the word ‘consummation’ must mean something different, was rejected.

Operative date

  • Now


  • Companies and their advisers should ensure that engagement letters between them clearly and unambiguously specify the circumstances in which the adviser’s fees, including success fees, are payable, and avoid using different words that mean the same thing

Case ref: African Minerals Ltd v Renaissance Capital Ltd: Renaissance Capital v African Minerals CA [2015] EWCA Civ 448

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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