Crema v Cenkos Securities Plc

JurisdictionEngland & Wales
JudgeJonathan Hirst QC
Judgment Date16 March 2010
Neutral Citation[2010] EWHC 461 (Comm)
Docket NumberCase No: 2009 Folio No. 496
CourtQueen's Bench Division (Commercial Court)
Date16 March 2010

[2010] EWHC 461 (Comm)




Before: Jonathan Hirst QC Sitting as a Deputy Judge of the High Court

Case No: 2009 Folio No. 496

Thomas Crema
Cenkos Securities Plc

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

I direct that, pursuant to CPR PD 39A para 6.1, no official shorthand note shall be taken of the Judgment and that copies of this version as handed down may be treated as authentic.

Jonathan Hirst QC

Mr Hirst QC:



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.


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


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.


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.


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.


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.


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.


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.


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”


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”.


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.


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]


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.


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.


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...

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