Neutral Citation Number: [2010] EWHC 461 (Comm)
Case No: 2009 Folio No. 496
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 16 March 2010 

Before :

JONATHAN HIRST QC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT

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Between :

	THOMAS CREMA	Claimant	
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	CENKOS SECURITIES PLC	Defendant	
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HUGO PAGE QC (instructed by De Cruz Solicitors) for the Claimant
ORLANDO GLEDHILL (instructed by Herbert Smith LLP) for the Defendant

Hearing dates: 1-5 and 8 February 2010

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JUDGMENT

Mr Hirst QC: 

Introduction
In this action, the Claimant (“Mr Crema”), an investment banker, claims £882,000 in fees plus interest against the Defendant stockbroker (“Cenkos”).  In summary, in 2007 Mr Crema was engaged as sub-broker by Cenkos in connection with fundraising for Green Park Ventures Limited (“GPV”).  GPV raised £20 million.  Mr Crema contends that he was instrumental in raising £18 million of this and that he is entitled to be paid an agreed fee of 70% of 7% of the £18 million, amounting to £882,000.  Cenkos disputes whether Mr Crema was instrumental in raising most of the money, but its main contention is that Mr Crema is only entitled to be paid out of the brokerage actually received by Cenkos from GPV and, unfortunately, despite taking the claim to litigation against GPV, nothing was recovered because GPV collapsed into insolvent administration. 
1.	Before outlining the issues between the parties more fully and considering the arguments, I propose first to set out the basic chronology of the dispute.  This is largely uncontroversial.  I will return to the more important disputed issues of fact later in the judgment.
The facts
2.	Cenkos is a stockbroker and corporate finance adviser based in the City of London.  It is a member of the London Stock Exchange and is listed on the AIM market.  It is well known for specialising in capital raising for small and mid-cap companies.  Joe Nally is Head of Natural Resources within the firm.    In February 2007, Mr Nally was introduced to GPV by an existing investor, Willie West. GPV though a subsidiary, V-Fuels Biodiesel Limited (“V-Fuels”) was developing a project in Cambois, near Newcastle for the refining of low quality used cooking and vegetable oils into biodiesel.  Mr West told Mr Nally that GPV had raised some £10 million but was looking for a further investment of £3-4 million.  A substantial part of the money was to be used to purchase the freehold of the factory site in Cambois from which GPV operated its business.  Mr Nally agreed to try and find investors for GPV.
3.	In late April/early May 2007, Mr Nally had identified New City Investment Managers Limited (“NCIM”) as a potential investor.  Mr Nally contends that at that stage it was orally agreed with Steven Davis, Chairman of GPV, and Gary Ward, its Finance Director, that GPV would pay Cenkos a fee of 5% of the amount invested by NCIM but that fee would not be payable until GPV had raised the whole amount required.  In July 2007, NCIM invested £2 million.  In September 2007, GPV told Mr Nally that it actually required a further £18 million.  
4.	On 4 October 2007, Mr Nally met Mr Crema at an industry lunch held at Furama, a restaurant in Chinatown.  Mr Crema had some 20 years experience as an investment banker and had been Senior Vice-President of Investments with Prudential Securities and also with Shearson Lehman Brothers. At the time he described himself as working for Weavering Corporate Finance, but he was in reality free-lance.  He had experience in the “green” or “alternative” energy sector.  There was some discussion between Mr Nally and Mr Crema about the fundraising for GPV.
5.	The next day, 5 October 2007, Mr Crema e-mailed Mr Nally asking whether he could “be of any assistance to you on your biodiesel deal/client”. Mr Nally telephoned Mr Crema and agreed to arrange a meeting with GPV.   There is some dispute about what Mr Crema was told about the fee arrangements between Cenkos and GPV.
6.	Mr Nally telephoned Mr Ward of GPV and obtained his agreement to involve Mr Crema.  He made it clear to Mr Ward that the fee payable by GPV would remain the same and that Mr Crema’s fees would come out of Cenkos’.  He arranged for Mr Crema to meet Mr Ward on 17 October.  Prior to the meeting, Mr Nally forwarded some 30 pages of general promotional materials about V-Fuels prepared by GPV.   The meeting took place at Weavering’s offices and Mr Ward and Mr Simcock, a director of GPV, made a presentation.  Mr Nally was not present. It is clear from Mr Crema’s detailed notes that he obtained a considerable amount of detailed information about GPV’s business and plans.
7.	On 24 October 2007, Mr Crema obtained Mr Nally’s agreement that he could contact five financial investors to discuss investment in GPV and was told that he was free to call them.  In a confirmatory e-mail, Mr Crema thanked Mr Nally for bringing him this opportunity.
8.	On 25 October 2007 an e-mail exchange took place between Mr Crema and Mr Nally.  Mr Crema wrote:
“My interest is growing in V-Fuels.  Assuming the deal has a time window for me to proceed I would like to visit the plant.  In order to dedicate time to this I would ask that you or the company please send me an email confirming fees terms so we are as clear as possible. ...”
	Mr Nally replied twenty-five minutes later:
“Let me know when you would like to visit another guy might go on the same day.  I can confirm that a fee of 5% has been agreed.  I am also hopeful [but] not yet agreed of a warrant will let you know of the progress on that”
9.	Mr Crema did visit the plant on 30 October 2007.  He then contacted a number of potential investors. By mid-November 2007 he had identified Hutton Collins Partners LLP (“Hutton Collins”) and Elettra Sviluppo S.r.l. and Elettra Produzione S.r.l. (jointly “Elettra”), an Italian group of companies owned by Hutton Collins, as potential investors.  On 15 November he secured Mr Nally’s approval that he was free to contact these companies and that they were “assigned to him for fees purposes”.
10.	Mr Crema sent some introductory materials about GPV to Mick Avison of Elettra and authorised him to pass them on to Hugo Varney, a senior representative of Hutton Collins.  After a series of discussions, it became apparent that Hutton Collins/Elettra were interested in investing the full £18 million into GPV.  
11.	Mr Crema had been chasing Mr Nally for clarification about the fees arrangements.  On 19 November 2007, he e-mailed Mr Nally:
“Please let me know if you have made any progress with compliance regarding getting us a clearer fees confirmation letter as discussed last Wednesday.  I have one possibly two parties that are requesting site visits.  Both could move promptly and each would do the entire £15m”
	On 22 November, Mr Crema sent a further reminder “to please forward the discussed fees letter re V-Fuels”.  On 23 November Mr Nally sent the following letter as an e-mail attachment to Mr Crema at Weavering:
“In relation to your proposed participation in the fund raising for V Fuels, pending our agreement with the company, we would pay you 5% of funds raised by yourselves.”
	Mr Crema immediately replied “it looks fine and thank you”.  About 45 minutes later, he sent a longer message introducing Hutton Collins to Mr Nally and concluding:
“Joe, thanks again for sending me the fees commitment letter.  As it is a commitment from you/Cenkos Œpending agreement from the client, I fully trust that V-Fuels is bound to you and hence me” [sic]
12.	On 4 December Mr Crema, and Mr Varney and Mr Avison of Hutton Collins travelled up to Newcastle by train for a site visit.  Mr Crema reported to Mr Nally that they were very positive about V-Fuels and that they would like to do the entire £20 million stake.  
13.	A meeting took place between Mr Crema and Mr Nally at the Stafford Hotel in St James’s in early December 2007.  In their witness statements they put the date as 7 December, but a credit card slip produced by Mr Nally in the course of his evidence suggests that the meeting actually took place on 12 December.  Nothing turns on the exact date.  At this stage it looked quite likely that Mr Crema might be producing half the investment and Cenkos the other half.  There is a good deal of dispute about what was said at the meeting, to which I will return later in this judgment.  It is clear however that there was a discussion about fees, and in particular what would happen if Hutton Collins ended up investing more than £10/12 million of the £18 million investment.  Mr Crema’s evidence was that it was agreed that, if that transpired, he would not be paid the entire 5%.  Mr Nally’s evidence is that they were more specific and that a 70:30 split of the 5% fee (in Mr Crema’s favour) was agreed.  If any broker warrants were obtained, they would be shared 50/50.  Mr Crema also contends that he asked how Cenkos would make actual payment to him and was told that the funds would be paid into a Cenkos escrow account and then the net amounts would be paid to GPV (i.e. after deduction of commission).  Mr Nally disputes this and says that he stated that payment would be “upon a successful completion”.   At the end of the meeting, it is agreed that Mr Nally shook Mr Crema’s hand.  Mr Crema’s evidence is that Mr Nally also said “dictum meum pactum my word is my bond”.  Mr Nally has no recollection of saying this.
14.	On 20 December 2007, Mr Crema indicated that Hutton Collins was interested in a larger transaction with GPV involving the construction of a 25MW green power station costing approximately £30 million.  He said:
“Please start thinking about how we will/can charge V-Fuels for this additional investment etc.  Possibly we can get properly retained post transaction, warrants, listing of course, etc.”  
15.	Hutton Collins undertook a good deal of due diligence work into GPV and by late January 2008, it was becoming reasonably clear that it would be prepared to invest at least £10 million.  On 29 January, Mr Nally attended a meeting with Mr Ward and Mr Davis of GPV and, in the course of it, they telephoned Mr Crema and offered Hutton Collins the opportunity to make the full £18 million investment.  The call was recorded.  It was apparent that GPV was in urgent need of £3 million.  At the end, the transcript records:
J [Nally]:	... then if we’re going to move to a conclusion here, Tom, the whole business of fees, because obviously this is not being done for free.
G [Ward] and S [Davis]: Sorry I misunderstood ...
Everyone laughs
T [Crema] Yep, it would be great to clear this up.
J:	And with your involvement the thought was of 5% all the way through, we will obviously have to cut that in your favour, to the extent that you are incredibly persuasive to Hutton Collins.
T:	Ok.  Well that’s fair enough.  You and I can easily figure that part out.
J:	Well we won’t fall out about it and then if they want to float the company we would wish to do it for them.  We needed to discuss that Tom there, so let’s wait until the Hutton Collins conversation is over if that is the route.  In terms of broker warrant in this deal and a significant premium to the level at which the money goes for the current valuation.
J:	So in principle that’s all ok.  So let’s see whether we can get Hutton Collins on the basis of the conversation we’ve just had then. Tom.
T: 	Ok, alright ...
J:	Yep, let’s proceed and see how you get on with Hutton Collins in the morning.
T:	Good.  The topic of fees Joe, in your comments, I think I heard them but are we all agreed.
G&S:	Yep we are in principle.
...
T:	So we are agreed
J,G&S: Yes.
16.	Mr Crema says that it was shortly after this discussion that a 70/30 split was agreed and that he would be allocated half any broker warrants issued to Cenkos.
17.	Mr Crema passed on the offer to Hutton Collins that it would be permitted to make the full £18 million investment and Mr Varney seemed willing to proceed, but, as it turned out, by 5 February it was having difficulty raising the funds.  Mr Crema suggested that one way round this difficulty was to obtain a bridging loan for Hutton Collins, but nothing seems to have come from that.  However, on 22 February 2007 Elettra Sviluppo Srl did invest £2 million in GPV.  Payment was made direct to GPV and not through any kind of escrow fund from which fees could be deducted.  A copy of the SWIFT confirmation was sent to Mr Crema.
18.	With Mr Crema’s agreement, Mr (Hugo) Varney of Hutton Collins approached his brother, Toby Varney, who worked for a broker called AgFe Management Limited (“AgFe”), one of whose clients was BlueCrest Capital Management Limited (“BlueCrest”), an investment management company.  Materials provided to Hutton Collins were passed on to AgFe.  On 7 February, Mr Varney asked Mr Crema to arrange a meeting with BlueCrest.  That evening Mr Crema had dinner with Mr Davis and Mr Flanagan of GPV and they discussed the possibility of BlueCrest becoming a major investor.  According to Mr Crema, Mr Flanagan asked what he wanted out of it.  Mr Crema replied that “GPV had agreed to pay Cenkos 5% of the new investment plus broker warrants for his services and mine”.  Mr Davis nodded and Mr Flanagan indicated that was fine by him.   “They told me many times that night that they “work on a handshake and that’s the way the Northerners do things”.  We then shook hands specifically saying that they appreciated everything I was doing and my fees would be taken care of.”
19.	The next day (8 February) Mr Crema took Mr Flanagan, Mr Davis and Mr Ward of GPV to BlueCrest’s offices where they met Mr Toby Varney of AgFe and Mr Ian Berry of Bluecrest.  Mr Nally was not present.  It was a difficult meeting.
20.	In March 2008, Mr Davis of GPV asked Mr Nally to provide GPV with an invoice for Cenkos’ fees in the expectation that the final part of the investment was about to be made.  Travers Smith were instructed by Cenkos to prepare a draft agreement and on 11 March 2008, Mr Nally wrote to GPV:
“Dear Sirs
Introduction Service  
Further to our recent conversation I write to confirm details and fees for our introduction service.
Please find attached our Professional Client Agreement which details the terms this service is based on.  Our Introduction Fee for raising £20 million is as follows:
1.	£1 million this is based on the 5% previously agreed.
2.	2% warrant over the company at 30% premium to the issue or completion price.”
The letter attached a draft “Professional Client Agreement – Introductory Service”, in which the “introductory service” was described as introducing GPV to a company seeking investment.
21.	At about the same time, Mr Nally called Mr Crema about how he wanted his fee paid.  Mr Crema stated that he wanted the fee paid to his nominee Mr Peter Grut of Walter Hansen & Co in Geneva.  In evidence, M Crema was invited to explain why he wanted the money paid to a Swiss nominee, but pointedly declined to do so. On 11 March Mr Nally wrote on Cenkos notepaper to Mr Grut.  The letter read:
“Introduction Service
Further to our recent conversation I write to confirm details for the introduction of Electra [sic], Hutton Collins and other parties
Please find attached our Professional Client Agreement which details the terms this service is based on.
Your Introduction Fee for raising the funds is as follows:
1.	A one off payment of £630,000, this is based on 70% of the final commission of 5% of the final commission raised [sic].
2.	1% warrant over the company at 30% premium to the issue or completion price.”
It is unclear whether the Professional Client Agreement was actually sent, but it does not matter.			 
22.	Shortly after this, Mr Davis of GPV informed Mr Nally that he had not broached the question of broker warrants with the investors and he asked Cenkos to agree a 7% fee instead.  Mr Nally telephoned Mr Crema to secure his agreement which was forthcoming.  Mr Crema amended his copy of the letter dated 11 March in handwriting so that the operative part read as follows:
“Your Introduction Fee for raising the funds is as follows:
 1. A one off payment of £630,000 £882,000, this is based on 70% of the final commission of 5% 7% of the final commission raised.
 2. 1% warrant over the company at 30% premium to the issue or completion price.”
In evidence, Mr Crema stated that a replacement letter had been sent by Cenkos.  None has been produced and in my judgment he is mistaken in this recollection.  Cenkos sent an amended letter to GPV.
23.	BlueCrest invested a total of £16 million as follows:
1 April 2008:	£11 million
12 June 2008:	£5 million
Mr Crema has been critical of Mr Nally for Mr Nally being involved with a transaction with another client, Enegi Oil, which was completing at the same time, and he asserted that Mr Nally failed to pay adequate attention to the closing of the GPV transaction.  The reality, however, is that neither Mr Crema nor Mr Nally was kept informed about what was happening with BlueCrest.  The investment did not go through an escrow account.  As a result of this investment Mr Berry and Mr Toby Varney were appointed to the GPV board.  They appear to have taken a hostile view to the payment of any brokerage fees to Cenkos and to have asserted that Cenkos/Mr Crema had not introduced the BlueCrest investment.  Mr Davis of GPV was more willing to pay but by late April it was clear that BlueCrest had prevailed in the argument and that GPV was not prepared to pay any brokerage.
24.	Cenkos retained Herbert Smith to pursue a claim against GPV.  Mr Crema gave a great deal of assistance.  A statutory demand under section 268(1)(a) of the Insolvency Act 1986 was served on V-Fuels on 13 May 2008 and Herbert Smith also wrote to BlueCrest alleging that it had improperly induced V-Fuel’s breach of contract.  O’Melveny & Myers LLP responded on behalf of GPV and V-Fuels asserting that there was no contractual basis for Cenkos to claim the fee.  Ashurst’s responded on behalf of BlueCrest denying liability and asserting that Cenkos did not introduce any BlueCrest entity to V-Fuels or any associated company.   
25.	Mr Crema telephoned Mr Nally in August and said words to the effect that he wanted his money. On 9 September they met again at the Stafford Hotel. Mr Nally says that he understood Mr Crema to be asking for a payment on account.  There is a dispute as to whether Mr Crema was asserting an entitlement to be paid, or whether he was seeking a favour from Cenkos. Mr Nally says that he offered a personal loan to Mr Crema who was under personal financial pressure.  At all events, Mr Nally indicated that Mr Crema would not be paid his fee until Cenkos was paid by GPV. 
26.	On 16 September Mr Crema and Mr Nally attended a lengthy meeting with Herbert Smith and Counsel.  Herbert Smith kept a detailed attendance note which records, inter alia:
“BS enquired what Cenkos were told about TC’s role.  JN explained that with TC’s expertise, they could now access wider and more prestigious investors who would add to the overall reputation of the investment.  As to fees, JN stated that it was clear GPV would pay Cenkos, and that Cenkos would then pay TC.”
Mr Nally is also recorded as conceding that it was a mistake to allow the funds to be transferred directly to GPV.
27.	Proceedings were issued against GPV in the London Mercantile Court on 9 October 2008.  In the Defence served on 4 December 2008,  GPV:
(1)	contended that Cenkos was engaged to introduce investors to GPV (and not to provide any other service) on terms that Cenkos would be paid a fee of 5% of amounts invested by any party introduced directly to it;
(2)	admitted liability for a fee in respect of 5% of the NCIM investment, but denied liability for 7%;
(3)	denied that Elettra was introduced by Cenkos, but admitted an introduction by Weavering for which it was alleged Cenkos could claim no commission. It further contended that because this was only short-term funding, no fee was due.
(4)	asserted that neither Cenkos nor Weavering/Mr Crema introduced Toby Varney, AgFe, Mr Berry or BlueCrest to GPV.
28.	On 5 February 2009, Cenkos applied for summary judgment for the full claim.  The application was supported by witness statements made by Mr Nally and by Mr Ward, the former finance director of GPV, who confirmed the arrangement whereby Mr Crema acted as sub-broker for Cenkos, the introduction by Mr Crema of Hutton Collins/Elettra and the variation of the fee from 5% to 7%.  His evidence was unclear about the introduction of BlueCrest.  As to the arrangement concerning Mr Crema, he stated his understanding that Mr Crema would share in the fee to be paid to Cenkos.  
29.	On 11 February 2009, administrators were appointed to GPV.  It shortly became clear that there would be no assets out of which Cenkos’ fee could be paid.  
30.	On 5 March 2009, Mr Nally and Mr Crema met.  There is a good deal of dispute about what was said at this rather bad-tempered meeting, but it is clear that Mr Crema demanded payment of his fee and Mr Nally refused.
31.	These proceedings were issued on 17 April 2009.
The issues
32.	The parties agreed that the main issues in the action are as follows:
(1)	Is Mr Crema entitled to payment of his fee regardless of whether Cenkos received payment from GPV?
(2)	If not, is Mr Crema entitled to payment of his fee on any of his alternative cases (agreements of 11 March 2008, 23 March 2007, 25 October 2007)?
(3)	Was it expressly agreed between Mr Crema and Cenkos, as pleaded in the Defence, that any payment to Mr Crema would depend on Cenkos receiving payment of its fee?
(4)	Would any other arrangement other than payment to Mr Crema depending on Cenkos have been contrary to usual industry practice between those acting as agent and sub-agent on a fundraising transaction for the party seeking to raise funds and uncommercial in the circumstances?
(5)	If it was not expressly agreed, was there an implied term that any payment to Mr Crema would depend on Cenkos receiving payment of its fee?
(6)	If the effect of any agreement between Cenkos and Mr Crema was that any payment to Mr Crema would depend on Cenkos receiving payment of its fee, was there an implied term of that agreement to the effect that Cenkos would take all the steps that a prudent company in its position could be expected to take to ensure that it and Mr Crema were paid.  Alternatively, did Cenkos owe Mr Crema a duty of care at common law?
(7)	Did Cenkos breach the alleged implied term and/or duty of care in any of the ways pleaded?
(8)	If so, has Mr Crema suffered loss (including loss of a chance) as a result of Cenkos’ failure, and if so what loss?
(9)	Was Cenkos entitled to a fee from GPV in respect of Elettra and BlueCrest investments totalling £18 million under the terms of Cenkos’ agreement with GPV?
(10)	To what extent is Cenkos bound by its averments in the proceedings against GPV?
(11)	In relation to the £16 million investment by BlueCrest is it necessary for Mr Crema to show that he was the effective cause?
(12)	If so, can he show that he was?  (It is admitted that he was the effective cause of the £2 million payment by Elettra.)
(13)	When did Mr Crema first demand the fee he now claims and did he give substantial assistance to Cenkos in its claims against GPV and devote considerable time to assisting Cenkos in recovering its fee prior to asserting the present claim?

The witnesses
33.	The two factual witnesses were Mr Crema and Mr Nally.  I am satisfied that they were both honest witnesses, but I did not find either of them to be entirely reliable.  Both of them genuinely felt strongly about the case: Mr Crema thinks it outrageous that he has not been paid a fee for a job well done.  Mr Nally shares that sense of outrage as regards GPV’s failure to pay the fee and BlueCrest’s incitement of GPV to resist payment, but he strongly believes that as a matter of principle Cenkos is not liable to pay sub-brokerage, when it has not been paid its brokerage.  These strong feelings are entirely understandable, but they have somewhat clouded their recollections.  Both were, I thought, inclined to exaggeration and Mr Crema to a degree of wishful thinking.
34.	The result is that I have paid particular attention to the contemporary documents and the recorded conversations, and to the overall probabilities, following the approach of Robert Goff LJ in Armagas Ltd. v. Mundogas S.A. (The “Ocean Frost”) [1985] 1 Lloyd’s Rep 1 at 57, as approved by the Privy Council in Grace Shipping v. Sharp & Co. [1987] 1 Lloyd’s Rep 207 at 215:
“Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.”

Of course, this is not a fraud case, but Robert Goff LJ’s approach is of much wider application.
35.	I also heard expert evidence from Glenn Cooper, called on behalf of the Claimant, and Adam Hart, called on behalf of the Respondent.  Mr Cooper has had a distinguished career in the City over some 40 years.  He has served as Deputy Chairman and Head of Corporate Finance of Henry Ansbacher and then Managing Director of Altium Capital Limited (formerly Apax Partners) and Chairman of Zeus Capital Limited. Mr Hart has also had a successful career in the City over some 20 years, but not quite as stellar.  He is a qualified chartered accountant.  He has been Managing Director and Head of Corporate Finance at Fairfax I.S. Plc and is currently Chairman of London Bridge Capital.
36.	They were both well qualified to give expert evidence and performed their obligations to the Court impressively and with complete fairness.  It is not perhaps surprising that, save in one respect, there was a broad measure of agreement between them.
The argument and my decision
37.	The list of agreed issues is a useful document, but I will follow a different order and conflate some of the issues: e.g. issues 1-5.  The order I propose to follow is as follows:
(1)	The right to a fee in relation to BlueCrest’s introduction;
(2)	City custom and practice in relation to payment of sub-brokers;
(3)	Whether on the terms of the agreement between Mr Crema and Cenkos, Mr Crema is entitled to be paid his fee irrespective of whether Cenkos has been paid its fee;
(4)	(i)	Assuming Mr Crema is not entitled to be paid until Cenkos received its fee, what duty did Cenkos owe to Mr Crema in relation to its relations with  GPV;
(ii)	Was Cenkos in breach of that duty;
(iii)	Has any breach of duty caused loss to Mr Crema.
BlueCrest
38.	Three issues arise:
(1)	Whether the agreement between Cenkos and GPV and the agreement between Mr Crema and Cenkos required Cenkos/Mr Crema to have been the effective cause of the investment in order to be entitled to commisison.
(2)	Whether it is an abuse of the process for Cenkos to challenge whether Mr Crema was the effective cause of the BlueCrest investment.
(3)	Whether, on the facts Mr Crema/Cenkos were the effective cause of the BlueCrest investment.
39.	As to (1), relying on The County Homesearch Co (Thames & Chilterns) Ltd v. Cowham [2008] EWCA Civ 26 [2008] 1 WLR 909 at §14, Mr Hugo Page QC, leading counsel for Mr Crema, argued that there was no requirement that Mr Crema was the effective cause of the investment.  That requirement only arose where there was a risk of the client having to pay more than one commission.  In my judgment this submission is clearly wrong.  First, it is clear from the written communications between Mr Crema and Cenkos that he was to be paid commission on investments “raised” by him: see in particular the letter dated 23 November 2007 and the letter dated 11 March 2008, amended on 13 March.  I interpret that requirement as meaning that Mr Crema had to be the effective cause of the investment.  Second, as between GPV and Cenkos, Cenkos was not an exclusive or sole broker.  There could have been an alternative introducer.  So I consider that both as between GPV and Cenkos, and between Cenkos and Mr Crema it had to be established that Cenkos and Mr Crema were the effective cause of the investment.
40.	Mr Page secondly argued that it was an abuse of process for Cenkos to dispute that Mr Crema was the effective cause of the investment by BlueCrest given that in the proceedings against GPV it had made exactly the opposite assertion.
41.	Counsel were agreed that the relevant principle was that set out by Lord Bingham in Johnson v. Gore Wood & Co [2000] UKHL 65; [2002] 2 AC 1, 22:
For there is, as Lord Diplock said at the outset of his speech in Hunter v. Chief Constable of the West Midlands Police [1982] A.C. 529 at 536, an
inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power.
42.	In pleading and proving its case against GPV, Cenkos and Herbert Smith were entirely dependent on what they were told by Mr Crema.  They had no other source of information.  GPV disputed Mr Crema’s contention and the point was never decided.  I do not consider that there can be any injustice in requiring Mr Crema to prove that he was the effective cause in this action.  Nor does it bring the administration of justice into disrepute.
43.	The question therefore is whether Mr Crema can establish on the balance of probabilities that he was the effective cause of the investment by BlueCrest.  As Bowstead and Reynolds on Agency states at §7-029, the enquiry is whether the actions of the agent really brought about the relation of buyer and seller, or here company and investor.  Two cases cited by Bowstead are of some assistance.  
44.	First in Gibb v. Bennett (1906) 14 SLT 64, the agent introduced one McCabe as a potential buyer.  McCabe contacted Wallace for finance.  The transaction with McCabe fell through, but Wallace then made a successful bid.  Lord Johnson sitting in the Outer House held that the ultimate transaction with Wallace was not a remote consequence of but was brought about by the agency in a sufficiently direct manner to entitle the pursuer to commission.  The agent was the primary or originating influence.
45.	Second in Coles v. Enoch [1939] 3 All ER 327, the agent retained to sell a shop spoke on the phone to A.  W overheard the conversation and asked A for information.  A deliberately only gave very general information about the location of the premises.  W made his own enquiries and found the shop as a result of his own efforts.  He approached the owner direct and a deal was done.  The Court of Appeal considered that the case was near the line.  The failure to give the address had to be interpreted as a deliberate act falling short of what was essential to bring the agent within the terms under which he would be entitled to commission.  The Plaintiff did not find the tenant of the shop.   
46.	I have had to decide whether Mr Crema was the effective cause of the transaction without the benefit of evidence from Mr Toby Varney and Mr Berry.  Mr Orlando Gledhill, counsel for Cenkos, submitted that Mr Crema was not the effective cause.  He had never heard of AgFe or BlueCrest.  Hugo Varney of Hutton Collins approached AgFe.  Mr Crema did not introduce the GPV opportunity to BlueCrest.  His first contact was after BlueCrest was already aware of the GPV opportunity and thereafter Mr Crema’s very limited involvement between 7 and 22 February was only because he was trying to find back-up funding for Elettra.  His involvement ceased at a time when he still understood that Elettra would be the investor for the whole £18 million.
47.	In my judgment Mr Crema has succeeded in showing that he was the effective cause of the investment by BlueCrest.  He undoubtedly contacted Hutton Collins and was responsible for their introduction to GPV.  With Mr Crema’s prior agreement, Hutton Collins then approached Toby Varney at AgFe.  Hutton Collins would not have done so but for Mr Crema’s introduction.   At Mr Hugo Varney’s request, Mr Crema then arranged a meeting between BlueCrest and GPV.  On 8 February Mr Crema took Mr Flanagan, Mr Davis and Mr Ward of GPV to BlueCrest’s offices where they met Mr Berry and Toby Varney.  This was the first contact between GPV and BlueCrest.  After the meeting, Mr Davis asked Mr Crema to act for GPV in its dealings with BlueCrest.  He sent BlueCrest a volume of due diligence material.  He attended a site meeting with BlueCrest. After that visit, Mr Crema rather dropped out of the picture.  That was not due to failing on Mr Crema’s part; BlueCrest preferred to deal direct with GPV.
48.	On the basis of these facts, Mr Crema can be said to have introduced BlueCrest to GPV and in my judgment Cenkos through Mr Crema can properly claim to have really brought about the investment by BlueCrest, as I think GPV rightly recognised at the dinner with Mr Crema on 7 February. Cenkos and Mr Crema are entitled to commission for that introduction.
Custom and practice in the City as regards payment of sub-broker’s fees
49.	I deal with this issue first because Cenkos contends that it is relevant to the proper construction of the agreement between Mr Crema and Cenkos.
50.	Mr Hart’s evidence was that it was general practice in the City of London that, just as a broker would only be paid on successful receipt of funds from investors in a fund raising, a lead broker will only satisfy the claims of a sub-broker once the lead broker’s fees have been satisfied.  In theory a lead broker and sub-broker could agree that the sub-broker would be paid come what may, but such an agreement would in reality be very unlikely.  He had never come across such an agreement and could imagine no instance where a lead broker would risk being doubly out of pocket in the event of a client not paying fees owed.
51.	In his report, Mr Cooper stated that it was not normal industry practice, where a sub-agent was involved, for the notion of contingency to go so far as to include circumstances where a transaction closes but for some reason the fee is withheld from the agent.  He had never heard of circumstances where a client has failed to pay a fee and there has been a consequent failure to pay a sub-agent’s fee.  Nor had he ever heard of a sub-agent agreeing not to be paid if the agent was not paid.
52.	In cross-examination, Mr Cooper’s views considerably softened.  He accepted:
(1)	Generally a broker will only satisfy the claims of the sub-broker for a share of fees once the fees have been received from the client;
(2)	Generally he could imagine no instance where a lead broker would anticipate paying a sub-broker before it receives its own fees in connection with a fund raising;
(3)	It was also unlikely that a broker would commit to delivery of broker warrants to a sub-broker unless he had received warrants from the client.
He instanced one instance where he had agreed to pay a sub-broker in advance, where he was 100% certain he would recover his fees from the client, but described it as an indulgence on his part.  However, in a normal case, a broker would not take this risk.
53.	Mr Page for Mr Crema submitted on the basis of this evidence that in order to establish an industry practice or usage the test was whether the usage was “invariable, certain and general”.  It must be “notorious, certain and reasonable”: Chitty on Contracts (30th ed.) §13-018.  It must be something more than a trade practice: Cunliffe-Owen v. Teather [1967] 1 WLR 1421, 1438; Anderson v. Commercial Union [1998] SC 197.
54.	In response, Mr Gledhill accepted that he had not established a custom in the sense of an invariable, certain and notorious usage.  That was never his case.  However he had established a general market practice or understanding in the City that a lead broker will not pay a sub-broker’s fee until it has received payment of its fee from its client.
55.	In my judgment, Mr Gledhill was right not to submit that a usage of the kind which would lead to a term being implied had been established: neither expert suggested that there was an invariable practice and the reality is that, as they both accepted, there are few cases in which brokers have failed to collect their commission after a successful fundraising (absent arguments such as whether there was an effective introduction) so the point has never been tested.  I accept, however, on the basis of the expert evidence that there is a general market practice or understanding in the City that a sub-broker is not paid until the broker receives payment from the client. If a broker paid a sub-broker in advance of receipt of his fee, that would be regarded as an indulgence and would be most unlikely to occur unless the broker was certain that he would receive payment from the client fairly shortly.
56.	There remained an issue between counsel whether any such general market practice or understanding would be admissible as part of the factual matrix or background in which the agreement was to be construed.
57.	Mr Page submitted that, once it was conceded that a custom or usage was not established, that was the end of the matter.  A general market practice falling short of a usage was not part of an admissible factual matrix.  He cited Cunliffe-Owen v. Teather [1967] 1 WLR 1421 where Ungoed-Thomas J. had had to determine the construction of share options made in accordance with the usages of the London Stock Exchange.  He said (at p. 1437H-1438C):
Usage may be admitted to explain the language used in a written contract or to add an implied incident to it, provided that if expressed in the written contract it would not make its terms or its tenor insensible or inconsistent (see Palgrave Brown & Son, Ltd. v. Owners of S.S. Turid). “Usage” is apt to be used confusingly in the authorities in two senses, (i) a practice, and (ii) a practice which the court will recognise. “Usage” as a practice which the court will recognise is a mixed question of fact and law. For the practice to amount to such a recognised usage, it must be certain, in the sense that the practice is clearly established; it must be notorious, in the sense that it is so well known in the market in which it is alleged to exist that those who conduct business in that market contract with the usage as an implied term, and it must be reasonable. The burden lies on those alleging usage to establish it, in this case, the defendants. The practice that has to be established consists of a continuity of acts, and those acts have to be established by persons familiar with them, although, as is accepted before me, they may be sufficiently established by such persons without a detailed recital of instances. Practice is not a matter of opinion of even the most highly qualified expert as to what it is desirable that the practice should be. However, evidence of those versed in a market, so it seems to me, may be admissible and valuable in identifying those features of any transaction that attract usage and in discounting other features which for such purpose are merely incidental and if there is conflict of evidence about this it is subject to being resolved like other conflicts of evidence. Arrangements or compromises to the same effect as the alleged usage do not establish usage; they contradict it. They may be the precursors of usage, but usage presupposes that arrangements and compromises are no longer required. It is, in my view, clearly not necessary that a practice should be challenged and enforced before it can become a usage as, otherwise, a practice so obviously universally accepted and acted on as not to be challenged could never be a usage. However, enforcement would be valuable and might be conclusive in establishing usage. What is necessary is that for a practice to be a recognised usage it should be established as a practice having binding effect. (See Tucker v. Linger; Nelson v. Dahl , approved in Brown v. Inland Revenue Comrs.; Lord Forres v. Scottish Flax Co., Ltd.; Sea Steamship Co., Ltd. v. Price Walker & Co., Ltd.; Wilson, Holgate & Co., Ltd. v. Belgian Grain & Produce Co., Ltd.). A party to a contract is bound by usages applicable to it as certain, notorious and reasonable, although not known to him. If the practice, though certain and notorious, is unreasonable it follows that it cannot constitute a usage which the court will enforce as a usage. Nevertheless if a party knows of such a practice and agrees to it, then though unreasonable, he is bound by it (Perry v. Barnett; Blackburn v. Mason ). 
58.	Relying also on §12-129 of Chitty and the cases cited there, Mr Page submitted that Cunliffe-Owen was binding authority that mere trade practice was inadmissible as part of the factual matrix.
59.	In response Mr Gledhill submitted that the Court was permitted to look at market practice, falling short of a usage, as part of the factual matrix background to construing a commercial document.  He submitted that the correct starting point was the speech of Lord Hoffman in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896, 912-913:
I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 3 All ER 237 at 240-242, [1971] 1 WLR 1381 at 1384-1386 and Reardon Smith Line Ltd v. Hansen-Tangen, Hansen-Tangen v. Sanko Steamship Co [1976] 3 All ER 570, [1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of 'legal' interpretation has been discarded. The principles may be summarised as follows:
(1) 	Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) 	The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
...
60.	Mr Gledhill submitted that expert evidence is often needed to supply the Court with relevant background knowledge that was readily available to the parties.  He cited a number of cases where the Court had admitted expert evidence going to market practice, including:
(1)	Kingscroft Insurance Co. v. Nissan Fire & Marine Insurance Co Ltd (No. 2) [1999] Lloyd’s Reps IR 603, 622, where Moore-Bick J. indicated that:
“[a]n expert witness can, indeed should, inform the court of an aspects of the commercial background which have a bearing on the construction of the contract and explain their relevance”.
(2)	Galaxy Energy International Ltd v. Assuranceforeningen Skuld (Ejensidie) (The “Oakwell”) [1999] 1 Lloyd’s Rep 249, 252 where Colman J. (at an interlocutory hearing) and Timothy Walker J. at trial had both admitted expert evidence as to practice.  Timothy Walker J. said:
Both sides produced experts' reports, Mr Justice Colman (so I was told) having ruled at an earlier interlocutory hearing that the evidence of [an expert] was admissible (or at least permissible) for the purposes of establishing the commercial matrix. ...
Insofar as the Plaintiffs were seeking to establish a “trade practice” covering the very point in issue in the proceedings (see paragraph 12(a)(2) of the Re-amended Points of Claim) they failed to do so, and I say no more about that.
In my judgment, it is only in those areas in which there was agreement between the experts as to the market practice for those who conduct litigation in field that the evidence was admissible at all, so as to pass the test of “background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract” (per Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98, [1998] 1 WLR 896 at page 912H of the latter report). There was in fact, substantial agreement between the experts.
	Mr Gledhill submitted that here there was substantial agreement between the experts, but if necessary it was wrong to require both experts to agree before market practice was admissible.
(3)	Lloyd’s TSB Bank plc v. Clarke (Privy Council 29 May 2002 unrep.) where Lord Hoffman said:
The term “sub-participation agreement” is not a legal term of art like “assignment” or “trust”.  It is however a term commonly used in the market and there was before the courts in The Bahamas a good deal of evidence about what it meant.  Such evidence, showing what certain words would have been understood to mean in the relevant trade at the time of the agreement, is in their Lordships’ opinion admissible as part of the background against which the agreement should be construed.
61.	In response, Mr Page submitted that Investors Compensation Scheme was not a case about market practice and in fact turned upon internal construction of the document. Any fact known (actually or constructively) to the parties may be part of the matrix, however an expert opinion is not a fact in itself. A custom is not a fact unless it is notorious etc.   Cenkos had been unable to find any authority showing market practice, which was not “notorious certain and reasonable” being used as an aid to construction or as part of the factual matrix.
62.	In my judgment cases like Cunliffe-Owen are of little assistance on this point.  They were decided at a time when judges adopted a more restrictive approach to the admission of background evidence when construing contracts.  There is also an important difference between a true market usage, which may apply even though one party was ignorant of it, and evidence of background available to both parties.  In construing a contract, the Court is seeking to place itself in the position of the parties, and to do that it needs to have available to it all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.  Where the agreement is between two practitioners in a particular market – as in this case – in my judgment the Court needs to understand any general market practice even though it falls short of being a usage.  That is what the Courts were doing in Kingscroft, Galaxy  and Lloyd’s.  Mr Page is wrong to suggest that in Lloyd’s, which seems to me to be a particularly authoritative example of this approach, Lord Hoffman must have considered that the practice was notorious certain and reasonable.  That is not what he said.
63.	So I would admit evidence of market practice which falls short of a usage as part of the matrix of fact against which the agreement is to be construed.  Here, the experts were ultimately in broad agreement as to the general practice, but I agree with Mr Gledhill that (contrary to Galaxy) it cannot be a pre-requisite of admitting this evidence that both experts are agreed.  It is for the Court to decide whether a general market practice has been established, having considered all the evidence.  That cannot be dependent on whether the experts agree – the evidence of one of them may be incredible or obviously wrong. I would emphasise one further point: whilst I consider that this evidence is admissible, its importance must vary from case to case.  It certainly cannot be determinative of the meaning of the contract.  In many cases it will be no more than a factor in the overall equation that the Court must solve.
Contractual right to payment
64.	After this extensive introduction, I now turn to the crucial issue in the case: whether on the terms of the agreement between Mr Crema and Cenkos, Mr Crema is entitled to be paid his fee irrespective of whether Cenkos has been paid its fee.  
65.	The first written communication between the parties about fees was on 25 October 2007, when in response to Mr Crema’s growing interest in 
V-Fuels and request that fee terms be confirmed, Mr Nally replied:
“I can confirm that a fee of 5% has been agreed.  I am also hopeful [but] not yet agreed of a warrant will let you know of the progress on that”
	Both witnesses confirmed that there had been earlier discussions about fees and I am sure that 5% had been mentioned as had the hope that broker warrants would also be issued, but I am satisfied that the discussions were no more specific than that.  What is clear from Mr Nally’s e-mail is that the 5% that had been agreed was the commission as agreed between Cenkos and GPV.  An agreement about warrants was still to be agreed with GPV.  Implicit from this e-mail is that Mr Crema will share in that 5% to the extent that he succeeded in raising funds.  This was no mere negotiation.  Mr Crema proceeded to contact a number of investors.  At that stage, there was an informal but contractual agreement between Mr Crema and Mr Nally that Mr Crema would be entitled to share in the 5% fee.  The precise split of commission was not agreed and, had it not been resolved, a Court would have had to determine what was reasonable.
66.	During November 2007, Mr Crema was pressing for a clearer fees confirmation.  On 19 November he wrote:
“Please let me know if you have made any progress with compliance regarding getting us a clearer fees confirmation letter as discussed last Wednesday.  I have one possibly two parties that are requesting site visits.  Both could move promptly and each would do the entire £15m”
In my judgment it is clear from this that the “clearer fees confirmation” that Mr Crema was pressing for was as between Cenkos and GPV: hence “getting us”, not me.
67.	There followed an important exchange on 23 November.  First, Mr Nally sent the letter to Mr Crema stating:
“In relation to your proposed participation in the fund raising for V Fuels, pending our agreement with the company, we would pay you 5% of funds raised by yourselves.”
	Mr Crema immediately replied “it looks fine and thank you”.  About 45 minutes later, he sent a longer message introducing Hutton Collins to Mr Nally and concluding:
“Joe, thanks again for sending me the fees commitment letter.  As it is a commitment from you/Cenkos Œpending agreement from the client, I fully trust that V-Fuels is bound to you and hence me” 
68.	The letter, which (contrary to Mr Crema’s evidence) was clearly drafted by Mr Nally rather than Cenkos’ compliance department, is not well written.  It is unclear what is meant by “pending our agreement with the company”.  I think that this was probably a reference to the discussions about broker warrants: i.e. a 5% fee was the present agreement but it might be sweetened with broker warrants.  
69.	Mr Crema thought that the “Œpending” in his second response was probably the result of a computer glitch and that it was meant to read:
“Joe, thanks again for sending me the fees commitment letter.  As it is a commitment from you/Cenkos “pending agreement from the client”, I fully trust that V-Fuels is bound to you and hence me” 
That looks to be correct.  He was unable to offer an explanation why he said “I fully trust that V-Fuels is bound to you and hence me”.  He offered as a possible explanation that he wanted to avoid the problems that did in fact arise in the case.
70.	The next meeting was at the Stafford Hotel on 12 December.  I have already found that there was a discussion about fees, and in particular about what would happen if Hutton Collins ended up investing more than £10/12 million of the £18 million investment.  I did not find either witness’ recollection of this meeting at all reliable.  I think Mr Crema may be right that no exact split was agreed if it turned out that most of the investment came via Hutton Collins, one of Mr Crema’s contacts.  I think it was agreed that if any broker warrants were obtained, they would be shared 50/50: that was an important offer for Mr Crema as it could turn out to be worth a lot of money if V-Fuels prospered.  However, I completely reject Mr Crema’s evidence that he asked how Cenkos would make actual payment to him and was told that the funds would be paid into a Cenkos escrow account and then the net amounts would be paid to GPV (i.e. after deduction of commission).  No such arrangement had been made with GPV and I think it incredible that Mr Nally, a shrewd businessman, would have given any assurance to Mr Crema beyond what he had actually achieved with GPV.  Mr Nally was consistent throughout in making sure that he did not offer Mr Crema more than he had agreed with GPV: see for instance the caution about warrants and the increase in commission from 5% to 7%.   Nor do I accept Mr Crema’s evidence that Mr Nally gave him the unqualified assurance that “if you raise the money you will be paid”.   Mr Nally would not be so incautious.  I think Mr Nally is correct that he stated that payment would be “upon a successful completion”, which of course rather leaves open what is meant by “successful completion” in this context.  At the end of the meeting, Mr Nally shook Mr Crema’s hand.  It does not seem to me to make any difference whether Mr Nally also said “dictum meum pactum my word is my bond”.  Mr Nally has no recollection of saying this (as I accept) but it is a phrase he used from time to time, and I accept that he probably did say it at the end of the meeting.
71.	The next important stage was the telephone conversation on 29 January, where Mr Nally said:
“... with your involvement the thought was of 5% all the way through, we will obviously have to cut that in your favour, to the extent that you are incredibly persuasive to Hutton Collins.”
– which was accepted by Mr Crema.  This discussion reflected what had previously been agreed and was really, as I see it, to make sure that GPV’s senior management were committed.  It was shortly after this discussion that a 70/30 split was agreed plus half any broker warrants.
72.	The final stage occurred in mid-March 2008.  On 11 March, Mr Nally wrote on to Mr Grut as nominee for Mr Crema:
“Introduction Service
Further to our recent conversation I write to confirm details for the introduction of Electra [sic], Hutton Collins and other parties
...
Your Introduction Fee for raising the funds is as follows:
1.	A one off payment of £630,000, this is based on 70% of the final commission of 5% of the final commission raised [sic].
2.	1% warrant over the company at 30% premium to the issue or completion price.”
Shortly afterwards, it became apparent that broker warrants were not going to be provided by GPV and that a 7% commission was on offer instead and on 13 March Mr Nally and Mr Crema agreed by telephone to revise their agreement.  The revised agreement is accurately reflected in Mr Crema’s contemporary amendments to the letter of 11 March:
 “Your Introduction Fee for raising the funds is as follows:
1.	A one off payment of £630,000 £882,000, this is based on 70% of the final commission of 5% 7% of the final commission raised.”
74.	This was the final version of the agreement between the parties.  It did not change thereafter.  The arguments that arose after it had become clear that no payment would be forthcoming from GPV do not assist me in determining what the nature of the arrangement was between Mr Crema and Cenkos. 
75.	Mr Page submitted that under the contract between Mr Crema and Cenkos, Mr Crema was entitled to be paid having obtained the investment for GPV.  It was irrelevant that Cenkos had not been paid by GPV.  There was no term of the contract entitling Cenkos to refuse payment until it was paid.  There were three incontestable facts: 
(1)	No such term is mentioned in the correspondence between the parties or in any contemporaneous document of any sort;
(2)	None of the written fee agreements (25 October 2007; 23 November 2007 or 11 March 2008) mention any such term. Instead the 2007 documents simply promise Mr Crema a success fee of 5%, and the 2008 document agrees a fee for the work actually done;
(3)	Mr Nally does not claim to have agreed any such term with Mr Crema orally. The most he said was that Mr Crema should have deduced what was intended from the wording of some of the emails and that he never complained. 
76.	He further submitted that the rule as to admission of oral evidence to vary a written contract is that:
“although when the parties arrive at a definite written contract the implication or presumption is very strong that such a contract is intended to contain all the terms of their bargain, it is a presumption only, and it is open to either of the parties to allege that there was, in addition to what appears in the written agreement, an antecedent express stipulation not intended by the parties to be excluded, but intended to continue in force with the express written agreement” (Per Lord Russell CJ in Gillespie Bros v Cheney, Eggar & Co [1896] 2 QB 59, 62).
77.	In this case there was no evidence of any oral express stipulation. That should be the end of the argument on this subject.  Nor was there any basis to imply a term, once it was clear that there was no universal usage or custom.
78.	Mr Gledhill submitted to the contrary that the letters of 11 and 13 March 2008 included an express basis for Mr Crema’s fee: “based on 70% of the final commission of [5/7%] of the final commission raised”.  It was not a flat fee.  Mr Crema was getting 70% of Cenkos’ fee and it was clearly envisaged that Cenkos would be passing on part of its fee when it was received.  The nature of the arrangement was confirmed by the agreement in relation to broker warrants, only removed on 13 March.  In practice, these could only be provided by Cenkos when they were received from GPV.  This showed how the agreement was supposed to work.  When general market practice was also considered, it became clear that Mr Crema’s case was wrong.
79.	It seems to me that I must approach this case on the basis that there was a contract in place, albeit informal, between Mr Crema and Cenkos from 25 October 2007.  I think that it is quite telling that, even at that early stage, what Mr Crema was told was the percentage fee that GPV had agreed to pay Cenkos.  The clear implication of the arrangement was that Mr Crema would be sharing in the fee earned by Cenkos.
80.	The letter of 23 November, looked at in isolation, perhaps points more strongly to Cenkos accepting liability to pay Mr Crema in respect of funds raised by him, but I find Mr Crema’s more considered response “I fully trust that V-Fuels is bound to you and hence me” telling.  The e-mail is not well written but, as I read it, Mr Crema was recognising that from his point of view (“hence me”) it was critical that GPV/V-Fuels was bound to Cenkos, otherwise he would not be paid.  If he thought that the arrangement was that he was entitled to be paid whatever happened between GPV and Cenkos, it is difficult to see why he would have raised the point with Mr Nally.
81.	Little in my view can be derived from the meeting at the Stafford Hotel on 12 December.  Mr Nally stated that payment would be “upon a successful completion”, but as I have observed this rather leaves open what is meant by “successful completion” in this context.  Mr Page submitted it simply meant completion of the investment.  Mr Gledhill submitted it meant completion of the investment and payment of the commission to Cenkos.  I prefer Mr Gledhill’s submission, but I do not consider that either way much should be read into what was said at a meeting over drinks in the hotel.  The main purpose of the meeting (and the handshake and promise of “my word is my bond”) was to assure Mr Crema, who felt a bit vulnerable, that he would not be cut out from the deal and that Cenkos would honour its promise which now included half any broker warrants obtained.     
82.	The telephone conversation of 29 January in my view confirms that, as the parties saw it, there was to be a brokerage fund of 5%.  If Mr Crema was successful with Hutton Collins, and therefore produced most of the investment, the 5% would be cut in his favour.  Shortly after that the cut agreed was 70:30.
83.	The letter of 11 March was not well drafted.  The original confirmation was:
“1.	A one off payment of £630,000, this is based on 70% of the final commission of 5% of the final commission raised [sic].
2.	1% warrant over the company at 30% premium to the issue or completion price [sic].
Paragraph 1 duplicates “final commission”.  Mr Page submitted that it was clear that what was meant was: “70% of the final commission of 5% of the final investment raised”.  Mr Gledhill was inclined to agree, and I proceed on that basis.  What is clear, even with this correction, is that the commission payable to Mr Crema was to be calculated on 70% of the “final commission”, which must be Cenkos’ commission.   
84.	In my judgment the sense of this letter, and of the earlier letters and discussions, is that as broker and sub-broker, Cenkos and Mr Crema were in it together.  Any other arrangement would be rather uncommercial, placing the whole risk of non-payment by GPV on Cenkos.  There was an expected fund of brokerage to be received from GPV.  They would share in it 70:30 in relation to investments raised by Mr Crema.  The same was true of the warrants: when they were received by Cenkos they would be shared 50:50. The expectation of the warrants disappeared on 13 March to be replaced by a 7% brokerage fund to be shared 70:30, but nothing changed as to the overall arrangement.
85.	For these reasons I reject Mr Crema’s case that he was entitled to be paid his sub-brokerage whether or not Cenkos received payment from GPV.  In my judgment the contract between Mr Crema and Cenkos entitled him to take a 70% share of the 7% brokerage received from GPV, assuming of course that “his” investors made the expected investments.  He had no independent right to payment of brokerage.  
86.	In reaching this conclusion, I have ignored market practice, but of course it strongly supports my conclusion and suggests that City practice would be that a clear agreement would be needed if (improbably) a sub-broker was to be entitled to payment of commission irrespective of whether the broker received payment of commission.
Breach of duty
87.	Mr Crema’s alternative case is that Cenkos was in breach of duty to him.  The duty is put in contract as an implied term and in tort.
88.	The Amended Particulars of Claim plead the following implied term of the contract between Mr Crema and Cenkos:
“If (which is denied) there was such an agreement [viz. that Cenkos would only pay if it was paid] then it was a term of the agreement between Cenkos and Mr Crema, implied in order to give the same business efficacy or by way of obvious implication, that Cenkos would take all possible alternatively reasonable steps to ensure that it and Mr Crema would be paid and/or act in this regard as a prudent company would act.  Alternatively Cenkos owed Mr Crema a duty of care” 
89.	The following breaches of these duties are pleaded:
“(1)	Failed to procure signature by GPV of a written agreement in Cenkos’ standard form or at all.  Mr Crema will further rely on the provisions of the FSA Conduct of Business para 4.12 and/or Conduct of Business Sourcebook para 8.1 as indications of good industry practice in relation to written agreements;
(2)	Failed to insist that GPV pay its fee on the NCIM investment, which either would have resulted in payment with less being left outstanding in 2008 or would not, in which case Cenkos and Mr Crema would have had early warning of a problem;
(3)	Untruthfully informed Mr Crema that it had an exclusive agreement with GPV;
(4)	Failed to insist on GPV’s paying its fee on the Elettra £2 million in February 2008, prior to the direct involvement of BlueCrest in GPV’s affairs;
(5)	Failed to attend on completion to insist on immediate payment of its fee;
(6)	Failed to insist on payment of the completion sum into escrow, having informed Mr Crema that it would arrange for it to be paid into escrow;
(7)	Allowed or instructed Mr Nally to take charge of a transaction with another client, Enegi Oil, which was completing at the same time, with the result that Mr Nally failed to pay adequate attention to the closing of the GPV transaction.”
90.	Counsel disputed whether there was any such implied term.  Mr Page submitted that, if it was necessary for Cenkos to be paid itself before it had to pay Mr Crema, then it was implicit that Cenkos would (at least) do what a prudent and reasonable firm would do to obtain payment.  He did not point to any authority showing the implication of this or a similar term in sub-brokerage agreements.
91.	In response Mr Gledhill submitted that Mr Page was seeking to impose too high a duty.  Cenkos was not under a duty to Mr Crema to do (or not do) anything to improve its prospects of collecting a fee before Mr Crema was even on the scene and engaged as its sub-agent.  No duty could arise before November 2007 at the earliest.  The highest positive duty that could be implied would be a duty on Cenkos to take reasonable steps in the circumstances to collect payment, once a right to payment had arisen.  There might be a more limited negative duty to take reasonable care not to do anything which might prejudice the collection of any fees that might fall due.
92.	The most recent and authoritative exposition on the process of implication of terms is to be found in the judgment of the Privy Council in Attorney-General of Belize v. Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988 delivered by Lord Hoffman.  He emphasised that:
[16] The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It 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: see Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-913. It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument.
[17]	The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls. 
[18]	In some cases, however, the reasonable addressee would understand the instrument to mean something else. He would consider that the only meaning consistent with the other provisions of the instrument, read against the relevant background, is that something is to happen. The event in question is to affect the rights of the parties. The instrument may not have expressly said so, but this is what it must mean. In such a case, it is said that the court implies a term as to what will happen if the event in question occurs. But the implication of the term is not an addition to the instrument. It only spells out what the instrument means.
93.	Later in his judgment, Lord Hoffman emphasised that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?  After citing a series of well known tests (business efficacy, necessity, obviousness and officious bystander) Lord Hoffman concluded:
[26]	BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282-283 Lord Simon of Glaisdale, giving the advice of the majority of the Board, said that it was “not … necessary to review exhaustively the authorities on the implication of a term in a contract” but that the following conditions ("which may overlap") must be satisfied: 
“(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying' (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract”.
[27]	The Board considers that this list is best regarded, not as 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, or in which they have explained why they did not think that it did so. The Board has already discussed the significance of “necessary to give business efficacy” and “goes without saying”. As for the other formulations, the fact that the proposed implied term would be inequitable or unreasonable, or contradict what the parties have expressly said, or is incapable of clear expression, are all good reasons for saying that a reasonable man would not have understood that to be what the instrument meant. 
94.	In my judgment, Mr Page’s proposed implied term is being used not as a means of spelling out the meaning of the contract between the parties, but of significantly improving its terms from Mr Crema’s perspective and of imposing a much more stringent obligation on Cenkos than it had agreed to expressly.  It is not necessary to make such a wide implication, nor is it at all obvious that it should be implied.  The breaches relied upon are telling as to the nature of the term Mr Page is contending for.  First, the duty relates to steps to be taken by Cenkos in its relationship with GPV before Mr Crema even came onto the scene.  Second it requires Cenkos to procure an agreement with GPV which went well beyond what had been agreed.  Cenkos did not have a so-called exclusive agreement with GPV, that is one which would entitle it to be paid a commission on all investments whether or not Cenkos had introduced the investor – cf. a sole agency agreement with an estate agent.  All it had was a belief that there was no other broker involved at the time.  I doubt that GPV would have been prepared to agree to exclusivity in the sense above.  I should add that I cannot accept Mr Crema’s evidence that he ever received any assurance that Cenkos was exclusive.  Nor did Cenkos have the right to insist on all investments being paid through an escrow account out of which brokerage fees could be taken.  If this had been a more formal fundraising like an IPO, I expect that would have been agreed, but this was a more informal fundraising.  I also reject Mr Crema’s evidence that he was ever told that an escrow account would be set up.  Third the alleged obligation to obtain early payment of GPV’s own fees in relation to NCIM cuts across the agreement that Cenkos had perfectly properly made with GPV, which had a severe cash flow problem, that Cenkos would not insist on payment of its commission until the whole investment had been raised.  
95.	If Mr Crema wanted to insist that there were specific requirements as to the existence and terms of a formal agreement with GPV, including exclusivity and an escrow account, he should have bargained for them at the outset as an express term of the contract.  I do not consider that implication is the right way of achieving that result ex post facto.
96.	It does not follow that no terms are to be implied.  In my judgment the terms that naturally flow from the relationship of the parties and Mr Crema’s dependence on Cenkos are that:
(1)	Cenkos would take all reasonable steps to recover fees due.  What is reasonable may well depend on how the costs of recovery are to be borne.  The duty would not extend to Cenkos financing expensive litigation without Mr Crema paying his share of the costs.
(2)	Cenkos would do nothing to prevent payment of its fees with the result that Mr Crema was deprived of his: cf. Stirling v. Maitland (1864) 5 B&S 840, 852. So Cenkos could not reach agreement with GPV waiving its fees without Mr Crema’s prior agreement.
Neither of these terms assists Mr Crema on the facts of the case.  In particular, Cenkos made vigorous attempts to recover its fees at its own expense.		
97.	There are three further observations I would make before leaving the implied terms case.
98.	First, in my judgment Mr Crema knew many of the things at the time of which he now complains.  Thus he knew that the arrangement between Cenkos and GPV was informal, that there was no formal written agreement between Cenkos and GPV, that Cenkos were not “exclusive” and that there was no arrangement to set up an escrow account. 
99.	Second, I consider that, as a matter of general good business practice, Mr Nally ought at least to have ensured that the fee arrangements between Cenkos and GPV were recorded in writing well before March 2008.  It is also unfortunate that the Professional Client Agreement was inappropriate for the service being provided.  However, even if there had been an implied term requiring Cenkos to have a written agreement with GPV reflecting the actual arrangements agreed (i.e. non-exclusive and no requirement for an escrow account), it would not have made any difference to the recovery of the fees on which payment of Mr Crema’s share depended.  There was never any doubt that GPV was obliged to pay a commission of 5% on investments introduced by Cenkos.  In the light of Mr Ward’s evidence, there was no good faith dispute that the fee was increased to 7%.  The reality is that Mr Berry and Mr Toby Varney were determined to find any excuse not to pay fees to Cenkos – driven, I think, by a belief that the main element of the investment in GPV had not been introduced by Cenkos – and they made a tactical calculation that if they refused all payment GPV would be in a better position to reach an advantageous settlement.  There was no answer to the claim in respect of the NCIM investment but it was not paid.  The defence taken in relation to the Elettra investment was entirely without merit.  
100.	Third, the pleaded case that the provisions of the FSA Conduct of Business para 4.12 and/or Conduct of Business Sourcebook (“COBS”) para 8.1 were evidence of good business practice provoked the Financial Services Authority to seek permission to make written submissions to me.  I allowed the FSA to do so, on the clear understanding that I was making no promise to decide the point.  The debate is as to whether the engagement between Cenkos and GPV was properly to be regarded as constituting “introducing” within Article 33 of Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and, whether if it was, Article 25(2) still applied.  In the light of my other findings, it is not necessary for me to decide these issues, which were always peripheral rather than directly relevant.  I have concluded that it would be undesirable that I should burden this judgment with a decision on these highly contentious and quite complex points.  It would be better to leave the point to be decided in a case where it is directly relevant, rather than to engage in what is a satellite dispute.
101.	In my judgment the tort claim adds nothing to the implied term case.  There is clearly not a free-standing duty in tort: cf. Outram v. Academy Plastics Ltd [2000] IRLR 499 where Tuckey LJ said:
Taking the matter at the highest from the claimants’ point of view, if there is a duty of care in tort it is only coextensive with the contractual duty and, since no contractual duty is, or I think could be, relied on in this case, there is no duty of care in tort either.
	I have found that there is no implied contractual duty which can assist Mr Crema.  There cannot be a wider duty in tort.
Conclusion
102.	Mr Crema’s case against Cenkos fails and the action is dismissed.
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