Quantum Advisory Ltd v Quantum Actuarial LLP
| Jurisdiction | England & Wales |
| Judge | Jarman |
| Judgment Date | 05 June 2023 |
| Neutral Citation | [2023] EWHC 1338 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2021-CDF-000013 |
[2023] EWHC 1338 (Ch)
HIS HONOUR JUDGE Jarman KC
Sitting as a judge of the High Court
Case No: BL-2021-CDF-000013
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN WALES
BUSINESS LIST (ChD)
Cardiff Civil and Family Justice Centre
2 Park Street, Cardiff, CF10 1ET
Mr Jeffery Onions KC and Mr Guy Adams (instructed by Harrison Clark Rickerbys) for the claimant
Mr Andrew Butler KC (instructed by Acuity Law) for the defendant
Hearing dates: 22 May 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 5 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
HIS HONOUR JUDGE Jarman KC
HHJ Jarman KC:
Introduction
This is the latest round of litigation between the parties (Quad and LLP respectively) as to the meaning and effect of a services agreement (the agreement) entered into on 1 November 2007 by LLP and Quad's predecessor, which agreement was then novated to Quad. The first claim concerned whether the agreement prevented LLP from soliciting Quad's clients. His Honour Judge Keyser QC, sitting as a judge of the High Court, found largely in favour of Quad ( [2020] EWHC 1072 (Comm)). LLP's appeal was dismissed by the Court of Appeal ( [2021] EWCA Civ 227). Quad then brought a claim for declarations that LLP was obliged to carry out tendering, and to render various other services, on behalf of Quad under the agreement. The issue as to whether LLP was obliged to carry out tendering came before me, and I found that it was not ( [2022] EWHC 1423 (Ch)). Quad appealed and the Court of Appeal dismissed that appeal too ( [2023] EWCA Civ 12). The parties were then in dispute about the mark “Quantum Advisory,” which dispute came before Judge Keyser. He found that under the agreement LLP is a fiduciary to Quad in respect of the conduct of the Quad's business and is entitled by licence to the use of the mark during the subsistence of the agreement ( [2023] EWHC 47 Ch), but refused other relief. That decision too is headed for the Court of Appeal. Quad also applied for two other orders, which applications were dismissed by Judge Keyser and there is no appeal from those decisions.
The dispute which I must now resolve has a rather convoluted procedural history, which I will need to summarise, albeit briefly. Before I do so, I will set out what Mr Onions KC with Mr Adams for Quad, in oral submissions, indicated was at the centre of the current dispute, namely what LLP must do to comply with its obligations under clause 8.5 of the agreement. Quad seeks declarations, and no other relief, as to what those obligations are. The clause provides:
“8.5 The LLP shall allow Quad, upon demand from any director of Quad, immediate access to any Information requested.”
“Information” is defined to mean “such data, records, files or information in the possession of the LLP in relation to the Clients and the Services.” Schedule 7 defines the Services as “Provision of pensions consulting, actuarial, administrative and investment services” and sets out a list of examples of what falls within the definition. Clause 1 defines “Clients” to mean:
“the clients and schemes to which Quad has provided any Services prior to 1st April 2007 together with such clients as are attributable to the Pipeline Business and any parties introduced either to Quad or the LLP by any of the Introducers during the Extended Period including (without limitation) those clients and schemes as are set out in Part 1 of Schedule 2 to this Agreement which expression shall include (where appropriate) any companies within the same group of companies as the relevant Client from time to time and any pension schemes sponsored by any Clients and any new entrants into such schemes”.
The Pipeline Business is defined to mean “any engagements by Quad entered into with any of the Clients or Prospects or which are referred to Quad by any of the Introducers in connection with the provision of Services during the Extended Period”. The definition of Introducers includes all Clients, all those identified in Schedule 4 to the agreement, and everyone else with whom Quad's predecessor had had face to face contact for the purposes of engendering a commercial relationship in the twelve months immediately prior to 1 April 2007.
Little more need to be said about the factual background than set out in the earlier decisions set out above. In brief summary, before 2007 the business of Quad's predecessor was as a provider of administrative, actuarial and related services primarily for defined benefit pension schemes. The largest shareholder and managing director wanted to diversify the business, but his colleagues did not, so they agreed to form LLP and reorganise that business. This was done by ring fencing existing clients and certain prospective clients, which would remain with Quad and be serviced by LLP, but allowing LLP to develop and expand its own business. The agreement was to put this all into effect, and provides that LLP is paid a monthly amount equal to 57% of the aggregate of Quad's receipts of fee income from the Clients serviced by the LLP and any commissions. This represents the cost to LLP of providing the Services, with no profit element. LLP took over all of Quad's staff and also has full use of its premises, equipment and brand.
In the second Court of Appeal decision cited above ( [2023] EWCA Civ 12), Falk LJ, giving the lead judgment, referred to the Services to be provided under the agreement in these terms at paragraph 38.:
“The contractually agreed Services are a hybrid of client-facing and internal functions. The former, of which examples are set out in all but the final two sub-headings in Schedule 7, are restricted to “Clients”, a concept which is limited to existing clients of Quad and certain business that was in the “pipeline” in 2007. Further, the client-related activities referred to all relate to services supplied to Clients on behalf of Quad, rather than work done to obtain or retain Clients so that services can be provided, which is of course what tendering involves.”
In paragraph 42 Falk LJ referred to particular parts of schedule 7 which Quad relied on in saying that it included tendering, namely “…such other administrative support as Quad may reasonably require from time to time” at the end of the paragraph headed “Quad Administration”. Falk LJ continued:
“Tendering is a form of business development and is not aptly covered by the descriptor “administrative support”. It is also very different from the accounting and tax functions that are specifically referred to in the first part of the paragraph. Both of those are routine, continuing and necessary internal functions. They are neither client-facing nor sporadic in the way that tendering is.”
The current dispute
The claim form which included the current part of the dispute states as follows:
“The Claimant seeks the court's decision on the following question, namely whether, upon the true construction of the Services Agreement, LLP is or is not obliged (as part of the provision to Quad of the Services which LLP was appointed to provide by clause 2.1 of the Services Agreement and which it is obliged to provide by clause 7.1 of the Services Agreement in accordance with clauses 7.3 to 7.5 of the Agreement):
(a) to prepare tender/retender documentation and/or do such other things as are necessary for the participation by Quad in any procurement procedure undertaken by Clients in relation to the provision of pensions consulting, administrative and investment services during the Initial Period; and/or
(b) to prepare tender/retender documentation and/or do such other things as are necessary for the participation by Quad in the tender on consulting, actuarial, administration and investment services planned to take place in the second and third quarters of 2022 by the trustees of the Cardiff City Transport Services Limited Pension Scheme.”
As indicated above, the issue in relation to tendering has already been dealt with. Judge Keyser gave directions seeking to clarify what remained to be determined under this claim, and directed that the hearing to determine the question as to the extent to which LLP is obliged to do such other things as are necessary for the participation by the Quad in any tendering procedure be restored and re-listed. It is that hearing which has now taken place before me. Judge Keyser also directed that the parties should file statements setting out their respective cases as what remains to be decided under this claim.
That of Quad provides as follows:
“1. The Defendant (“LLP”), being under an implicit and/or implied obligation of good faith and fair dealing, is obliged to co-operate in good faith with any tendering procedure for the provision of pensions consulting, actuarial, administrative and investment services (and any other agreed services) to the Claimant's (“Quad's”) Clients (“the prospective engagement”).
2. LLP is obliged under clause 8.5 of the Services Agreement and/or as a fiduciary to Quad in respect of the conduct of Quad's business and/or pursuant to its obligation of transparency within its implicit or implied obligation of good faith and fair dealing, to allow Quad, upon demand from any director of Quad and/or in any event, immediate access to any information whatsoever available to LLP in relation to Quad's Clients and in relation to the provision of pensions consulting, actuarial, administrative and investment services (and any other agreed services) to Clients (“the client services”), including, by way of example only and without prejudice to the generality of such obligation:
2.1. information: 2.1.1. about the provision of such services both in the past and prospectively by LLP...
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