Moorgate Capital (Corporate Finance) Ltd v H.I.G. European Capital Partners LLP
| Jurisdiction | England & Wales |
| Judge | Keyser |
| Judgment Date | 11 June 2019 |
| Neutral Citation | [2019] EWHC 1421 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: LM-2018-000175 |
| Date | 11 June 2019 |
[2019] EWHC 1421 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD)
Rolls Building, 7 Rolls Buildings,
Fetter Lane, London, EC2A 1NL
HIS HONOUR JUDGE Keyser Q.C.
sitting as a Judge of the High Court
Case No: LM-2018-000175
Mark Smith (instructed under direct access) for the Claimant
Christopher Bond (instructed by Hogan Lovells International LLP) for the Defendant
Hearing dates: 25, 26, 27, 28 March and 30 April 2019
Written submissions: 5 April 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Keyser Q.C.
JUDGE Keyser QC:
Introduction
The claimant, Moorgate Capital (Corporate Finance) Ltd (“Moorgate”), carries on the business of providing corporate finance and mergers and acquisitions advice. The defendant, H.I.G. European Capital Partners LLP (“HIG”), is a London-based private equity firm and the European affiliate of H.I.G. Capital LLC, a leading global private equity firm based in the United States.
In July and August 2011, two entities affiliated with HIG acquired the entire shareholding in the subsidiaries of Bezier Acquisitions Ltd (I shall simply refer to those subsidiaries as “Bezier”) in a debt and equity transaction.
In these proceedings, Moorgate claims that it is entitled to payment from HIG for valuable services that it provided to HIG in connection with the acquisition of Bezier (“the Bezier Acquisition”), including introducing Bezier as a potential acquisition. The claim is put on alternative grounds. First, Moorgate claims to be entitled to payment pursuant to an oral agreement (“the Fees Agreement”) made on 30 March 2011 between Mr Nicholas Mockett for Moorgate and Mr Paul Canning for HIG, by which, in consideration of the services being provided by Moorgate, HIG promised to pay to Moorgate £1,000,000 in the event that HIG or a subsidiary or affiliate of HIG acquired Bezier. Second, in the alternative, Moorgate claims to be entitled to payment by way of quantum meruit, on the grounds of unjust enrichment, for the valuable services it says it provided to HIG in connection with the Bezier Acquisition.
HIG disputes the claim in its entirety. It denies that there was an oral agreement as alleged by Moorgate and says that, even if anything regarding payment were discussed, it could not amount to an enforceable contract. HIG denies also that Moorgate provided any valuable services in connection with the acquisition of Bezier or anything for which payment was reasonably to be expected.
The various issues to which the claim gives rise are most conveniently considered in the light of an analysis of the facts. I shall therefore set out a detailed narrative, drawn mainly from the documents but also from the witness evidence. Then I shall set out the particular issues that fall for determination. Then I shall say something about the expert evidence in the case. Finally, I shall discuss the specific issues in turn and state my conclusions on them.
I am grateful to Mr Mark Smith, counsel for Moorgate, and Mr Christopher Bond, counsel for HIG, for their helpful written and oral submissions.
Narrative
Moorgate provides advice to both vendors and acquirers in respect of corporate mergers and acquisitions. Unlike investment banks, its services are purely advisory; it does not also provide finance for acquisitions. Moorgate itself was incorporated in May 2010 with a view to handling part of the business of a larger group (“the Moorgate Group”). Mr Mockett has at all material times been the sole director of Moorgate and, at least initially, was the sole shareholder.
Mr Mockett joined the Moorgate Group in 2009 as head of packaging mergers and acquisitions. He had long experience in that field and had for several years specialised exclusively in the packaging and related industries, advising on a large number of major transactions in the sector and establishing an international reputation within it. Before joining the Moorgate Group, he had for nine years been Sector Leader for packaging, paper and printing at PricewaterhouseCoopers Corporate Finance and then for five years a partner at Europa Partners, a boutique investment bank.
In the early 2000s, when Mr Mockett was working at PwC Corporate Finance, he got to know Mr Canning, who was then Investment Director at Gresham Private Equity and had experience of investments across a wide range of business sectors. In 2007 Mr Canning joined HIG as a managing director, partner and, with Mr Matthias Allgaier, co-head of private equity in the UK, positions he held until he left HIG in 2016. The head of HIG's London office was Mr Sami Mnaymneh and Mr Canning reported directly to him. Among the other people working for HIG in London, three may be mentioned: Mr Andrew Steel, a Principal who reported directly to Mr Canning; Mr Andrew Busby, a specialist in distressed debt; and Mr Alex Bayliss, a junior employee who assisted Mr Busby.
Mr Mockett and Mr Canning continued to have business dealings after Mr Canning joined HIG and after Mr Mockett joined the Moorgate Group. Their relationship was at first purely a business one, but in time they began to socialise with each other and became friends, albeit not close friends.
One of Mr Mockett's business acquaintances within the print and packaging sector was Mr David Mitchell, who had held senior positions in various leading companies. In mid-2009 Mr Mitchell was approached with a view to becoming chairman of the Bezier group of companies (“Bezier Group”), which was a leading retail marketing agency. In 2005 Bezier Group had been acquired by MidOcean Partners, a private equity firm, and since then it had made a number of acquisitions of businesses in the same sector. Mr Mockett gave Mr Mitchell his views on Bezier Group, and in due course on 2 November 2009 Mr Mitchell forwarded to him by email a News Release of that date headed “bezier group announces management buy-in led by David Mitchell”:
“Effective from November 5 th 2009 the bezier group is pleased to announce a management buy-in and the completion of a £6.5 million equity injection and financial restructuring. David Mitchell will become chairman of bezier group, Europe's leading retail marketing agency.
…
On the financial side, MidOcean Partners will be backing the new management with further investment in order to support the growth plans of the business. With additional support from RBS and Lloyds TSB the company benefits from a strong balance sheet that will support the ambitions and growth plans of the business. …”
The positive spin in the News Release does not entirely disguise the fact that the “financial restructuring” was a consequence of what a later document produced by HIG calls “a period of operational underperformance in 2009”, which, as the same document observes, was to “culminat[e] in the loss of the Asda contract (c.25% of revenues) in Jan-10”. The banks were naturally concerned about their exposure and appointed Deloitte & Touche (“D&T”; later “Deloitte”) to lead an Independent Business Review (“IBR”). In spring 2010 Bezier Group's management team was preparing a presentation for the purpose of that IBR. By email on 25 April 2010, headed “IBR Presentation”, Mr Mitchell wrote to Mr Mockett:
“Good to see you the other day. Please find attached a PowerPoint I have started drafting for D&T. It will be good to get your help on this and I look forward to hanging out with you in a fortnight.”
On 27 April 2010 Mr Mockett met with Mr Mitchell and Mr Richard Barfield, Bezier Group's Chief Financial Officer, and at their request sent them by email “the standard NDA [non-disclosure agreement] for client-advisor exchanges”. Mr Barfield used that standard form to create a non-disclosure agreement, which he sent to Mr Mockett for his signature and return on 28 April 2010. Presumably Mr Mockett did sign the nondisclosure agreement, because on 6 May 2010 he received from Bezier's management the master version of the IBR Presentation, and he subsequently arranged a meeting on 6 September 2010 to introduce an interested party (for convenience, “X Co”) to the Bezier management. The use of the NDA is one of a number of matters that might tend to suggest that Mr Mockett was acting for the Bezier management. However, Mr Mockett explained that he had made use of a template for a client-advisor relationship for want of anything more appropriate, and he denied that he was retained by or acting for the Bezier management. Although it is clear to me that Mr Mockett was brought in by the management team to facilitate a sale, on balance I accept that there was never an expectation that he would be remunerated on a sell-side basis by Bezier or the management.
Just a few days after that meeting with Mr Mitchell, on 10 September 2010 Mr Mockett received an email from Mr Steel of HIG: “Keen to engage your brain on a potential UK print acquisition for Diam (our French POP portfolio co.).” “Diam” was Diam International SAS, a leading manufacturer of cosmetics display fixtures, which HIG had acquired in 2006. Now, in 2010, HIG was interested in acquiring point-of-sale/point-of-purchase (“POS/POP”) marketing companies in order to complement Diam. (POS/POP marketing is where customers who are on the point of buying products are encouraged to buy other products; a familiar example is the placing of display material near a checkout at a shop. At least in the in-store context, POS and POP appear to refer to much the same thing, the distinction being that POS is used principally of printed...
To continue reading
Request your trial
-
Kinled Investments Ltd v Zopa Group Ltd
...v. United Republic of Tanzania [2009] EWHC 121 (QB), Moorgate Capital (Corporate Finance) Ltd. v. HIG European Capital Partners LLP [2019] EWHC 1421 (Comm) and Premia Marketing Ltd. v. Regis Mutual Management Ltd. [2021] EWHC 2329 (QB)). The earlier cases were decided on their facts, mor......
-
Premia Marketing Ltd v Regis Mutual Management Ltd
...to the market practice.” 62 For Regis, Mr. Jones refers to the decision of H.H. Judge Keyser Q.C. in Moorgate Capital (Corporate Finance) Limited v H.I.G. European Capital Partners LLP [2019] EWHC 1421 (Comm). Mr. Jones summarises the effect of that decision in paragraph 5 of his written c......
-
Sarah Sally Chan Kent (Executrix Of The Estate Of Ruby Jim Sunyou Alias Ruby Kang You Jim (Nee) Wong, Deceased) v Chim Sau Ching And Another
...the same observations made by HH Judge Keyser QC in Moorgate Capital (Corporate Finance) Ltd v H I G European Capital Partners LLP [2019] EWHC 1421 (Comm) at “ ... It is not uncommon in the experience of the courts for witnesses to deceive themselves in what are essentially honest but nonet......