Signet Partners Ltd v Signet Research & Advisory SA & Ors [2007] EWHC 1263 (QB)

[2007] EWHC 1263 (QB)

Case No TLQ/06/0849

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 24 5 2007

Before

MR JUSTICE BURTON

Between

Signet Partners LtdClaimant

Signet Research & Advisory SA & OthersDefendant

Mr Romie Tager QC and Mr Gary Blaker (instructed by Manches LLP) for Claimant

Mr Michael Lazarus (instructed by SJ Berwin LLP) for Defendants

Hearing Hearing dates: 20, 21, 22, 26, 27, 28, 29 March, 2, 4, 25, April 2007, 8, 9 May 2007

Judgment

[1]In these two consolidated proceedings the Claimant is Oppenheim Partners Ltd, formerly Signet Partners Ltd (“SPL”), of which the principal is Marc Oppenheim (“MO”). The claims in both proceedings arise out of the relationship between MO, through SPL, and one or more of the Signet Group, which lasted from 2002 to 2006, but continues by virtue of SPL’s accounting entitlement in respect of investments placed during that period. There is, as will appear, an issue as to whether that relationship was with Signet Research and Advisory SA (“SRA”), the first Defendant, or with one or more other Signet companies in addition, so, save where it is necessary for the purpose of distinction – or resolution of that issue – to refer to a particular company, I shall use the generic term “Signet”.

[2]From 2002 MO was engaged by Signet as an introducer of their hedge funds, which are based in Lausanne in Switzerland. Signet, under the guiding influence of Mr Robert Marquardt (“RM”), has been active since 1993 in the alternative investment markets and, since the late 90s, ever more successfully in the operation of hedge funds.

[3]Introducers are remunerated, and generously so, for finding potential investors, such as pension funds, to place monies into the various hedge funds. Such remuneration is, or can be, shared with intermediaries who themselves influence or advise clients, and/or with the introducer’s own sub-agents or sub-introducers. The different fees that can be earned, for the purposes of this case, are management fees which, because they are ongoing for so long as the monies remain invested in the fund, are also called trailer fees, calculated by a reference to a small percentage of the funds invested (known as “basis points” (bps), 0.75% for example being 75 bps): performance fees, being a percentage payable depending upon the achievement of the fund: and sometimes, though not always, a one-off placement fee by way of a percentage of the sum invested.

[4]There is no issue that MO, after a fairly considerable period for learning curve on his part and contact-developing, such that his first investor placed funds about a year after he started in February 2002, became very successful, and by February 2005 had introduced some $55m of funds. It is not in dispute both that he was entitled to receive the various fees in respect of investments he, or SPL, introduced, and that he has continuing entitlement so long as those funds remain invested with Signet.

[5]The issues which I have to decide in the first of these proceedings (“Claim 1”) relate to whether he is entitled to receive, both as to the past and continuing into the future, fees, and/or damages, in respect of investments introduced, not by him or SPL, but by a Mr Vilien Stanisic (“VDS”), through his company VDS Investment Group AG (which I shall also refer to as VDS, save where distinction falls to be made between him and his company).

[6]The second proceedings (“Claim 2”) relate to the fact that Signet has deducted from the fees to which SPL was otherwise entitled a sum of £123,623, which Signet asserts was due to them in respect of recoupable advances made at the outset of their relationship. The amount claimed in respect of Claim 2 is thus not in dispute, and the issue as to entitlement is in relatively short compass, although, as will be seen, its resolution has required consideration of contested evidence as to what occurred in May 2002 and of some authorities.

[7]As to Claim 1, the extent of the entitlement, if the Claimant is successful, is not agreed nor could it be established in these proceedings: in part it would depend upon the taking of an account, and in part it may depend upon an assessment of damages, although I am invited to resolve certain issues of principle with a view to simplifying any subsequent enquiry. I have heard evidence from eleven live witnesses (one by video link) and read statements from a further seven, over a period of 8½ extended days of oral evidence in a trial which took 11 hearing days in all (plus a 2-hour evening interlocutory hearing (“Day 10”)). However, as will be seen, both as a result of the co-operative attitude and constructive approach of the able Counsel for both sides, Mr Tager QC leading Mr Blaker for the Claimant and Mr Lazarus for the Defendants, and the discipline of a list of agreed issues, what appeared, at the outset, to be a case bristling with contested facts became one which it was common ground had only a few areas of disputed factual evidence for me to resolve.

[8]This is primarily for two reasons: first because there is a substantial amount of documentation relating to contemporary events which either pre-empted, or in some cases in the event resolved, what might otherwise have been factual disputes, and secondly because, at the end of the day, the real issues in this case revolve around the proper construction and application of the contract between the parties, eventually dated 4 March 2004, which I shall call the “Introducer Agreement”, and to which much reference will be made below.

[9]In those circumstances I propose to recount, at the outset of this judgment, the factual history, which can be done relatively non-contentiously, but the setting out of which will facilitate and provide the backdrop for the resolution of the various issues. It will not be necessary to refer to very many individuals, not even to all of the witnesses whom I have heard, during the course of this history. For clarification at this stage, it should be explained that, apart from RM, there are two other senior figures within SRA, Dr Umansky (“SU”), Mr Marquardt’s fellow director and shareholder, and his brother Chris Marquardt (“CM”), from 2001 a consultant, and from 2004 an employee, of SRA, responsible for corporate communications. Mrs Christine Staheyeff (“CS”) joined SRA in April 2005 as executive assistant to RM.

[10]Hedge funds were memorably described in evidence by Mr Berman, to whom I refer below, as like a vendor who sells both ice cream and umbrellas – the one for the sun and the other in case it rains. The Signet hedge funds have, under the guidance of RM, been operating ever more successfully since 1999. Continued success in the development of the funds depends upon their continually attracting new investors, and for that reason they need introducers.

History

[11]RM has been involved in banking and alternative investment markets since 1979 and, after a long and senior career in banking, he founded the first Signet company in 1993. For more than 10 years, throughout the 1990’s, he himself was an introducer of hedge funds in Luxemburg. MO was in 2002 a newcomer to the field of alternative investment. After graduation from university in 1992 he entered the world of advertising, where he remained as a successful account manager through to 1999, when he ventured into the Internet business. A short period with his own Internet company, called Giraffe.Net, ended with its collapse and the voluntary liquidation of the company in mid-2000, which led to MO entering into an IVA.

[12]He looked for new fields of endeavour. One of the things he did was to spend some time, about a total of 20 hours over a period of months, with hedge fund analysts Allenbridge Hedgeinfo, where he began to learn something of hedge funds, and made a good contact in Mr Jacob Schmidt, the co-founder of that company and the originator of its global hedge fund rating and research service, with the title of Director of Hedge Fund Research. In January 2002 MO was introduced by a firm of recruitment consultants to a Mr Iyad Mazhar, then an introducer or consultant with Signet, and through him he began to negotiate a position as an introducer with Signet. Discussions took place, through the intermediacy of Mr Mazhar, between MO and RM, who met for the first time in February 2002, when a remuneration package was discussed. MO, because of his financial position, could not afford to be remunerated only on a commission basis, and RM recognised that fact, although RM does not now recollect whether he knew at the time that MO was subject to an IVA.

[13]MO seems to have started the job before finalisation of the remuneration package, and there was then a meeting between MO and Mr Mazhar in London, when terms were further discussed, and some correspondence by email. The outcome was that there had not in fact been a face-to-face discussion between RM and MO in which the terms were spelt out, and MO summarised what he understood to be the position in an email of 2 May 2002. His fee entitlement was to be 75 bps by way of trailer fees (this was in fact half of the trailer fees charged by Signet, being 150 bps or 1.5 %) and 2.5% by way of performance fees, and he was to receive certain sums, in the event totalling £13,000, by way of loans and advances in respect of expenses, and a sum of £15,000 per quarter. MO’s email read as follows:

“Bob [RM], Good to have confirmed the way forward, as follows: £5,000 expenses plus 6 weeks salary (£7500) = £12,500 to be sent via Swift to Lloyds today. This covers all payments until end of June [2002]. £15,000 payment at beginning of July to cover Q3 salary (£12,500) plus £2,500 expenses. Once funds come in, pre-paid salary and expenses are deducted from my trailer fees. Please can you confirm that this is the correct remuneration package.”

Good to have confirmed the way forward, as follows: Please can you confirm that this is the correct remuneration package.”

[14]MO states, and RM does not disagree, that there was then a lunch between them very shortly afterwards at the Sofra restaurant in Mayfair. MO recounts that, at that lunch, he raised his query as to whether the £15,000 salary would or would not be recoupable from trailer fees. He says that RM confirmed that they would not be. He thus, according to MO, clarified the implicit question in his 2 May email, by confirming that the £15,000 would not be recoupable. RM agrees that there was the Sofra meeting, but he states that what he said was to the effect that “You will never have to repay if you go down [i.e., RM explained, if MO did not make £15,000 per quarter]. If this doesn’t work, we are not going to claim our money back” [transcript Day 8 pp109-118]. Recoupability or not is the issue to be resolved in Claim 2. The Defendants contend that what MO stated as to deduction in his 2 May email remained the case, that they were entitled to recoup, and that, consequently, when and after the parties had fallen out in April 2006, they were justified in their offset.

[15]MO continued to act as introducer, without any written agreement being drawn up, and, as I have set out above, in December 2002, the first investment resulting from one of his introductions was made, in a sum of $200,000. In January 2003 an English branch of Signet was set up, being the second Defendant, Signet Capital Management Ltd (“SCML”). This resulted from the involvement at the London end of the business of two significant and talented people, Mr Berman and Mr Banks. Heads of agreement were drawn up in January 2003, whereby those two, together with RM and SU, and to the extent of a 5% shareholding, MO, became the shareholders. There was soon friction between MO and SCML, particularly Mr Berman and Mr Banks. SCML was setting out, in a very professional way, authorised, as MO was not, by the FSA - and thus enabled to take a much more advisory role in the process of introducing investors - to bring in funds, effectively in competition with MO, and MO felt, with or without justification does not for my purposes matter, that they were interfering with leads which he regarded as his. There followed what were described, in the course of the hearing before me, as the “turf wars” between MO and SCML, and indeed between MO and one or two of the other Signet introducers, in which there were complaints of ‘muscling in’ on contacts, and indeed difficulties of differentiation in relation to large firms or companies, with multiple departments or branches, as to which contact was whose. MO regarded it as important that a list of contacts should be produced by each introducer so as to warn off others, and began to produce his own such list, with the encouragement of RM: but the others were not so forthcoming. It was clear, as RM said in his email of 15 May 2003, thata relationship between MO and SCML would not work. MO decided to set up his own company, and SPL duly changed its name for that purpose in July 2003: the name, Signet Partners Ltd, plainly carried with it the representation to the public as to its association with Signet, although of course, as his own company, it was in fact entirely independent. His email address was prior to SPL, and remained, moppenheim@signetmanagement.com(the ending being the same as all those in the Signet team).

[16]No doubt because of the friction with SCML, MO concluded that he ought to have a remuneration agreement in writing, and in an email to RM of 18 June 2003 he wrote:

“As you suggested, my remuneration agreement will remain directly with SRA. My clients will continue to subscribe directly via SRA and none of my client subscriptions will be attributed to SCML capital raising. It is also the right time for a proper remuneration agreement between SRA and myself.”

[17]Once SPL was established, in an email to CM of 22 July 2003 he expressed the desire that SPL should have a “solid agreement with SRA”. RM sent an email to MO, which MO had requested, on behalf of SRA dated 10 September 2003, stating:

“This is to confirm that Signet Partners Ltd and you represent the Signet group as an introducing agent, currently receiv[ing] a £15k quarterly retainer until such time as net trailer fees (based upon a gross trailer fee entitlement of 75 bps) exceed £15k/quarter. SPL also receives placement fees charged to clients.”

[18]After 4 months of negotiation and several drafts, an agreement, originally drafted by MO’s lawyers (the first draft “proposed agreement between SRA and SPL” was sent by MO on 25 July), was eventually signed on 12 November 2003. This was the Introducer Agreement, which came into effect then and was renewed, with an additional clause (1.5), in March 2004 and I shall refer to and recite it at that stage. Although, as will be seen, the Introducer Agreement did not provide for the £15,000 per quarter ‘retainer’ to continue, payment of that sum de facto continued until the fees exceeded £15,000 in a quarter (this occurred in the second quarter of 2004), whereafter the actual figures fell to be paid.

[19]As will appear, the Introducer Agreement permitted (under clause 2.5) the appointment by MO of sub-agents or sub-introducers, and MO now involved his lawyers in drafting a document for such purpose. At that stage MO had in mind signing up as a sub-agent a Martin Rashdi, who actually worked for or with a firm, St James’s Place, which was in any event engaged as an intermediary on behalf of potential investors: he also had in mind the possibility of appointing as another sub-agent a friend of his, a Danny Schweiger, who was engaged in a family run business in the North, producing textile products, and who MO thought might have an entrée to people with monies to invest.

[20]MO sent an email to CM (copied to RM) on 19 January 2004 as follows:

“Bob has asked me to email you the Introducer Agreement that SPL will be signing with introducing agents – Signet/Bob are a required signatory to this agreement. Schulte’s [MO’s lawyers] and I prepared this agreement based exclusively on the terms of the main SPL/SRA agreement that has already been signed so there are no additional liabilities placed upon SRA … Bob wanted you to briefly run through it before we sign it with SPL’s first introducer Martin Rashdi.”

[21]As I have set out above, there was to be an update of the November 2003 Introducer Agreement, as was made clear by MO’s email to CM of 16 February 2004:

“3. SPL/SRA contract I’ve attached the original contract and added one clause 1.5, which basically states that this agreement covers all subscriptions introduced to SPL to date as well as all going forward – this is implied but for the sake of completeness should be expressly stated, especially since it was initially signed nearly 3 months ago.”

[22]This Introducer Agreement, finalised on 4 March 2004, is the centrepiece for these proceedings, and I shall recite the relevant paragraphs. The reference in clause 4.5 to BDO is to BDO Simpson Xavier, the accounting firm who performed the accounting function for the Signet group. Schedule 1, of which I have set out only the text and not the actual list of names which followed, enshrined the principle of the client list intended to protect MO in the turf wars to which I have referred: what RM called in evidence (transcript Day 9 p9) “a delineation of turf”. The agreement was addressed to “Bob Marquardt, Chris Marquardt Signet Research & Advisory SA” at SRA’s address in Lausanne, Switzerland. It was sent on SPL notepaper and its heading was:

“Re: Agreement between Signet and Signet Partners Ltd”

. The relevant clauses are as follows:

“1. INTRODUCTION AND MANDATE 1.1 This letter sets out the terms upon which ‘Signet Partners Ltd’ (“SPL”, “We”, “Us, and SPL’s successor in title pursuant to Clause 5) agree to introduce the hedge fund of funds of Signet Research and Advisory SA (“Signet”, “You”) to potential investors (“The Investors”) and intermediaries (“The Intermediaries”) who may be interested in investing in Signet’s hedge fund of funds (“Signet Funds”) or introducing Signet funds to potential investors. For the purpose of this Agreement “Signet” includes any related or connected party or group company of Signet, including Signet Capital Management Ltd (SCML). “The Investors” includes any related or connected party or company of The Investors. “The Intermediaries” includes any related or connected party or company of The Intermediaries, and “SPL” includes any related or connected party or group company of SPL. … 1.3 The relationship between SPL and Signet shall be one of an independent contractor and client. … … 1.5 In addition to covering all future assets and subscriptions introduced to Signet by SPL, SPL clients, SPL intermediaries and SPL sub-agents this Agreement will be deemed to cover all assets that have been introduced to Signet by SPL, SPL clients, SPL intermediaries and SPL sub-agents to date. 2. SIGNET OBLIGATIONS 2.1 Signet will keep SPL informed of all material aspects and developments relating to any matters with which SPL is dealing in regard to The Investors and The Intermediaries including all correspondence between Signet and The Investors and The Intermediaries and details of amounts raised and fees and retrocessions payable to SPL and The Investors and The Intermediaries. 2.2 A list of Investors and Intermediaries is attached as Schedule One at the back of the Agreement and this list has been approved by Signet as representing the introduction contacts of SPL. Schedule One will be updated once new Investors and Intermediaries are introduced to Signet by SPL and approved by Signet, by signed supplements to this Agreement and Signet will inform SPL of updates to its own client lists. 2.3 Signet will not, during the period of this Agreement and for a period of 3 years after the termination of this Agreement, directly or indirectly, approach any Investors of Intermediaries introduced to Signet by SPL (including those listed in Schedule One and subsequent supplements), for any commercial (including investment) purposes, without first consulting and receiving the full written approval of SPL. In this regard, Signet will be bound by the terms outlined in Clause 5. … 2.5 Signet acknowledges that SPL may delegate performance of its services to suitable employees or independent sub-agents or intermediaries, such persons being subject to the obligations outlined in Clause 1.3 and Clause 3 of this Agreement. Delegation by SPL of performance of its services shall not relieve SPL of any of its obligations under this Agreement and SPL shall remain responsible for the full and proper performance of any services carried out by employees or sub-agents (“Sub-agents”) that relate to this agreement. Signet reserves the right to pre-approve all independent sub-agents appointed by SPL and agrees to undertake such approval in a reasonable and fair manner. Schedule Two outlines current approved Sub-Agents of SPL and further approved sub-agents will be added to this Schedule Two by signed Supplements to this Agreement. … 3. SPL OBLIGATIONS … 4. FEES AND EXIT PARTICIPATION FEES 4.1 The fees referred to in this Clause 4 shall be paid in relation to all assets invested by Investors or Intermediaries that have been introduced to Signet by SPL, its Intermediaries or Sub-Agents or others on its behalf (“SPL Introduced Assets”). 4.2 Signet and BDO will be notified by SPL in advance of The Placement Fees (“Placement Fees”) to be charged in respect of SPL Introduced Assets, such notification to be outlined in the monthly “Signet Partners Limited Confirmed Introduced Assets Schedule “ (“SCIAS”). Signet will charge such Placement Fees on all SPL Introduced Assets and Signet will pay all or, in certain cases, a proportion of these Placement Fees to SPL, depending upon to what extent Investors of Intermediaries of Sub-Agents of SPL charge Placement Fees on such SPL Introduced Assets, within two weeks of such fees being received by Signet. The proportion of Placement Fees paid to SPL and to its Investors and Intermediaries and Sub-Agents for each subscription will be confirmed to Signet by SPL in the monthly SCIAS. If Investors contact Signet directly regarding Placement Fees Signet will confirm the charging of the specific Placement Fees payable by the specific Investor. Placement Fee charges shall remain confidential to Signet and SPL except where BDO, The Intermediaries, The Investors, Sub-Agent and other interested parties approved by both SPL and Signet require such information. 4.3 Signet has agreed to pay SPL a quarterly trailer fee (“Trailer Fee”) of 75 basis points on all SPL Introduced Assets (less redemptions), within 4 weeks after the end of each quarter, such Trailer Fee to cover both the Trailer Fee entitlement of SPL as well as potential Trailer Fee entitlements of SPL’s Investors, Intermediaries and Sub-Agents. If Trailer Fees are due to be paid to Investors or Intermediaries or Sub-Agents of SPL in regard to SPL Introduced Assets then Signet will be advised of the distribution of such Trailer Fees in the monthly SCIAS sent to Signet by SPL. Signet will pay due Trailer Fees directly to the Investor or Sub-Agent or Intermediary. For example, if an Intermediary of SPL is entitled to receive a 25 basis points Trailer Fee on assets specifically introduced by them to SPL then Signet will pay such Intermediary the quarterly 25 basis points Trailer Fee and Signet will pay SPL the balance 50 basis points quarterly Trailer Fee on such assets. Trailer fees will be calculated by Signet and SPL has the right to inspect and audit these Trailer Fees at any stage by given Signet one week’s notice to this effect. Trailer Fee calculations will be based upon the monthly SCIAS reports that are signed by BDO. … … 4.5 Placement fees and Trailer Fees payable to SPL and Placement and Trailer Fees payable to Investors and Intermediaries and Sub-Agents of SPL (collectively referred to as “Retrocessions”) will be administered by BDO, who will authorise and sign the monthly SCIAS, confirming receipt of the monies invested by the Investors. In the case of any dispute between Signet and SPL in regard to SPL Trailer Fees, SPL Placement Fees or Retrocession calculations, then these signed monthly SCIAS will serve as the final and unequivocal confirmation of such fees. … 5. TERMINATION AND FUTURE BUSINESS 5.1 Either Party has the right to terminate this Agreement with three calendar months’ written notice. 5.2 Upon termination, SPL will remove the trade name “Signet” from its name as specified in 3.1, and will not cause any Investors to leave so long as Signet’s performance is reasonable. 5.3 Upon termination for any reason, if SPL (or any successor in title of SPL, as actively directed by Marc Oppenheim) continues actively to maintain existing Investor and Intermediary relationships, Signet will continue to pay SPL or SPL’s successor in title all Trailer and Placement Fees outlined in Clause 4, in the same timeframes outlined in Clause 4, on all existing and future assets invested by the Investors for as long as said assets remain invested in Signet. If SPL chooses not to maintain existing Investor or Intermediary relationships, Signet will pay full fees for the first year (i.e. four quarters) and one-half of fees thereafter, as long as the un-maintained Investor (The Un-maintained Investor) remains invested. For the purposes of this Agreement an Investor or Intermediary will be considered to be maintained on the basis that the Investor (or associated Intermediary Introducer of the Investor or related or connected party of The Investor) or The Intermediary receives a minimum of one form of written (including email) or verbal communication from SPL per quarter. … 5.6 Upon or after termination, Signet will continue to pay Retrocessions to the Investors and Intermediaries and Sub-Agents of SPL for as long as the relevant assets remain invested in Signet. Signet will pay full Retrocessions to any Intermediary or Sub-Agent or Investor or successor in title of The Intermediary or Sub-Agent or Investor upon the untimely death or incapacitation of The Intermediary or Sub-Agent or Investor for as long as the assets introduced by the Intermediary or Sub-Agent or invested by the Investor remain invested. In respect of future assets invested through the Sub-Agent or The Intermediary or invested by the Investor Signet will pay the Sub-Agent or Intermediary or Investor or their successor sin title full fees for the first year and then 50% of such fees thereafter. … 5.8 Upon termination Signet will continue to inform SPL of all matters as specified in 2.1. … 8. GENERAL 8.1 This Agreement and the Schedule hereto represents the entire Agreement between SPL and Signet. Signet and SPL acknowledge that they have not entered into this Agreement in reliance on any representations or warranties made by any person except as set out herein. These terms shall only be varied if such variation is in writing signed by both Parties. In the event of any conflict between these terms and any terms sought to be imposed by either Party these terms shall prevail. … 8.3 If this letter is addressed to more than one Party all shall be jointly and severally liable hereunder. … 8.6 No one who is not a Party to this Agreement may enforce it or have any rights under the Contract (Rights of Third Parties) Act 1999. The agreement may not be assigned or delegated by any Party without the other Party’s written consent. … Schedule One: Marc Oppenheim/Signet Partners Ltd Client List [A] This Schedule has been approved by Signet including all group companies of Signet and including Signet Capital Management Ltd and related and connected parties of Signet and SCML (“Signet”). [B[This Schedule outlines current Investor contacts of Marc Oppenheim and Signet Partners Ltd (SPL) and it is agreed that Signet will not … make any direct approaches to the Investors or Intermediaries outlined below. [C] Signet will ensure that it does not independently develop contacts with individuals or departments within the same Investor or Intermediary or Sub-Agent entities outlined in this Schedule, except in regard to specific Investor entities which are considered by both SPL and Signet to be global in their size or where Signet already has existing live contacts. These Investor entitles will be referred to as “Open Investors”

. The Open Investors will be mutually agreed by both SPL and Signet and specified as Open Investors in this Schedule and subsequent supplementary Schedules that confirm the addition of new Investors and new Open Investors. [D] In situations involving Open Investors each of SPL and Signet agrees to reasonably consider sharing fees with or ceding fees to the other, whichever may be appropriate under the circumstances as mutually agreed by both Parties. SPL Clients [32 identified entities] Schedule Two – Approved sub-agents of SPL Martin Rashdi (company) Daniel Schweiger (company) per email 28 Jan 2004.” I have added the lettering A to D to Schedule One above (not in the actual document) for ease of reference later in this judgment. Signet Research & Advisory SA” “Re: Agreement between Signet and Signet Partners Ltd”. “1. INTRODUCTION AND MANDATE 1.1 This letter sets out the terms upon which ‘Signet Partners Ltd’ (“SPL”, “We”, “Us, and SPL’s successor in title pursuant to Clause 5) agree to introduce the hedge fund of funds of Signet Research and Advisory SA (“Signet”, “You”) to potential investors (“The Investors”) and intermediaries (“The Intermediaries”) who may be interested in investing in Signet’s hedge fund of funds (“Signet Funds”) or introducing Signet funds to potential investors. For the purpose of this Agreement “Signet” includes any related or connected party or group company of Signet, including Signet Capital Management Ltd (SCML). “The Investors” includes any related or connected party or company of The Investors. “The Intermediaries” includes any related or connected party or company of The Intermediaries, and “SPL” includes any related or connected party or group company of SPL. … 1.3 The relationship between SPL and Signet shall be one of an independent contractor and client. … … 1.5 In addition to covering all future assets and subscriptions introduced to Signet by SPL, SPL clients, SPL intermediaries and SPL sub-agents this Agreement will be deemed to cover all assets that have been introduced to Signet by SPL, SPL clients, SPL intermediaries and SPL sub-agents to date. Schedule One: Marc Oppenheim/Signet Partners Ltd Client List SPL Clients [32 identified entities] Schedule Two – Approved sub-agents of SPL Martin Rashdi (company) Daniel Schweiger (company) per email 28 Jan 2004.”

Martin Rashdi (company)

[23]The reference to the email of 28 January 2004 is to one sent by MO to RM and CM, in which he said that he “would like [Schweiger] to become SPL’s second sub-agent”: there is no sign of a response at that stage. On 26 April 2004 MO sent an email to CM mentioning a proposed new sub-introducer, CSTIM CCFAS Ltd (“CCFAS”), and MO said “we will have to sign an agreement, where, as you know, SRA are co-signatories, so let’s discuss this when we meet up next week.”

[24]Problems had now arisen in relation to Martin Rashdi, because it seems that Mr Berman had caused CM to be worried about the fact that Mr Rashdi was “moonlighting” while working for St James’ Place, which he might well not be entitled to do (and it seems to have turned out later that he was not). By email of 4 June CM asked MO whether there had ever been a signed sub-introducer agreement for Rashdi. CM also asked about an agreement for Schweiger. MO responded on 16 June 2004 in relation to Rashdi (although he does not appear to have dealt with the question in regard to Schweiger) that no agreement had been signed with him, and that “if he is unable to act for Signet in a second introducer capacity then it’s the end of the story.” In an exchange of telexes between CM and MO of 17 June 2004, the position was put on hold in relation to Rashdi who, it seemed, had been in fact indeed been acting exclusively in his capacity as a partner of St James Place. Plans were discussed for an agreement to be signed with CCFAS, although again no agreement ever materialised.

[25]The events in June 2004 constitute the next of the factual issues between the parties. VDS was an experienced financial trader from Zurich, marketing financial services products including hedge funds, who wanted to be in contact with hedge funds which he could introduce to his contacts in Switzerland. In early 2004 he contacted Mr Schmidt of Allenbridge to ask his advice. At a dinner, the European Hedge Funds Review Awards Ceremony (“the Awards Dinner”), in London, on 15 June, Mr Schmidt introduced VDS to RM and SU. MO was to have been at the Awards Dinner as a guest of Mr Schmidt, but for reasons related to the deteriorating health of his fiancée, he had had to fly to the United States and did not attend at the dinner. Subsequent to the dinner, VDS contacted Mr Schmidt to ask to be put in touch with RM, because he was interested in marketing Signet funds. Mr Schmidt telephoned RM. RM was interested, but did not want to take on another direct introducer at that stage. RM suggested both to Mr Schmidt and, subsequently, to MO that VDS should contact MO, to see if he could work out with him some arrangement for introducing Signet funds. Mr Schmidt also discussed this with MO, and notified VDS. VDS then got in contact with MO, and an arrangement was made between them, summarised in MO’s email to VDS, copied to Mr Schmidt, of 5 August 2004, of which the material part reads as follows:

“I’d … like to confirm our verbal agreement that you will be entitled to receive 30bps from the management fee and 25% of the 10% performance fee. Feel free to initiate introductions and I suggest that in advance of this we speak at your convenience to discuss your approach.”

[26]Meanwhile by July 2004 MO had been doing well, and for the first time SPL’s trailer fees for the quarter exceeded £15,000, namely £18,207. By exchange of emails of 2 July 2004 between CM and MO, an updated “client and sub-agent list” was attached. In Schedule Two – headed up “approved sub-agents of SPL”, to which CM added the words “(pending agreement)” - there was now listed, in addition to Rashdi and Schweiger, CCFAS, with a reference to the email of 23 April 2004 which had first mentioned that company.

[27]By email of 3 September 2004 to CM, MO stated, after adding three to his client list, the following: “Intermediary addition. VDS Investment Group AG – a regulated Zurich-based investment adviser that Allenbridge have introduced me to who will act as a sub-introducer for SPL”.

[28]In an email of 12 September 2004 to RM, MO followed this up:

“Just to let you know that I’ve invited a colleague of mine called [VDS] to join us as an observer during the meetings on Tuesday … I was originally introduced to [VDS] by Jacob Schmidt.”

[29]Mr Lazarus described this at the hearing as the laying of a “paper trail”. MO’s explanation in evidence why the email was couched in those terms was that he was not sure if RM would remember VDS, given how busy he is, but that does not explain the apparent emphasis on the introduction of VDS, nor the odd description of him as his ‘colleague’. In any event, the fact that RM was and remained busy is the one factor which is plain and obvious from the evidence I have seen, and he did not reply to the email, if indeed he ever properly read it – he says he saw it as a “silly game”.

[30]CM’s 14 September reply to MO’s earlier email of 3 September 2004 to him is relied upon by the Defendants as significant. Whilst adding the clients to the client list, CM gave a different response in relation to what MO had called the proposed “Intermediary addition”. He said this:

“Per what I remember of our discussion of a few weeks ago, let’s hold off adding intermediaries until we’ve got something signed with them – Schulte [agreement] or whatever. TBD next week if that’s all right?”

[31]MO’s response of 15 September is to report that those lawyers, Schulte, had strongly recommended that he stick to their original draft sub-introducer agreement, a tripartite agreement between SPL, the sub-introducer and SRA, and he stated his intention that such sub-introducer agreement was to be signed the next week in Lausanne by RM and VDS: he sent the draft through to CM by attachment to a further email of 27 September 2004, with a view to its being signed by VDS in Lausanne on 4 October. It was not in the event so signed, as there was, it seems, not time to discuss it.

[32]Had it been signed, such draft sub-introducer agreement would have provided, by a subclause 4.1(x) (wrongly numbered as a second (viii)), for a restrictive covenant to restrain the sub-introducer from approaching Signet for the purposes of establishing a direct commercial relationship during the period of the agreement (terminable on 30 days’ notice in writing) or for two years thereafter. There was to be no restrictive covenant to restrict VDS from approaching, after the termination of the agreement, anyone who had invested during it (although it is to be noted that such a subclause had been included in the equivalent proposed draft sub-introducer agreement for Rashdi): and the investors whom VDS (described in the draft as “IR”, as abbreviation for “Introducing Representative”) might introduce were described as “IR Investors”, and the IR’s entitlement to receive commissions from Signet was by reference to assets invested into Signet funds by “IR Investors” (“IR Introduced assets”).

[33]MO sent an email to BDO on 17 September 2004 indicating that:

“There are quite a few potential clients on the horizon and some are coming from a Swiss partner of mine called [VDS]. He has asked [us] to make sure that BDO are aware that a couple of clients whom he has presented to would like to subscribe but do not want to pay the placement fee.”

[34]On 1 October 2004 MO sent to CM an updated client list, which included (though such was not indicated) some contacts of VDS. VDS itself was included in a separate schedule, together with Schweiger and CCFAS (though not Rashdi), as “approved sub-agents of SPL (pending agreement)” (the parenthesis introduced by CM thus being retained by MO). CM responded on 6 October 2004 by noting that:

“VDS clients are mixed in with the rest. Are you keeping a separate list of VDS–related clients with whom you’re splitting fees?”

[35]The background to the client list reared its head once more, by reference again to the turf wars problem, in an email which MO wrote to another Signet introducer, Timothy Weiss on 8 October 2004, when he pointed out that Mr Weiss had not supplied him with a client list whereas:

“Signet Partners’ client list is updated daily and emails to Chris so that you, SCML and [Bodart, another Signet introducer] have transparent access to who my clients are as well as the clients of any partner of mine such as [VDS].”

[36]The dispute between Mr Weiss and MO continued in a further email of 8 October, in which a dispute about entitlement to approach Credit Suisse was amplified by MO explaining that “[VDS], my partner in Zurich” had a contact with them. RM resolved this dispute in an email of 8 October by emphasising the importance of definition in a client list by stating:

“[MO] must define your and [VDS’s] contact names in your client list … [Weiss] will lead the charge over any and all personal relationships at [Credit Suisse] that are not specified by [MO/VDS].”

[37]As to the state of negotiations between MO and VDS on the draft sub-introducer agreement, after the meeting in Lausanne when it was not signed, MO rang VDS on 5 or 6 October and indicated that he was increasing VDS’s trailer fee entitlement from 30 bps to 37.5 bps. Although he did not explain this at the time, this meant that he and VDS were now sharing equally the 75 bps payable by Signet. They met again on 18 October in Zurich, when again there was no signature. VDS raised a specific point about one of the clauses, a proposed amendment of which was notified by MO to CM on 21 October, which was acceptable to CM, although CM continued to raise concerns about the lack of differentiation between MO and VDS clients on the client list. By an email dated 27 October 2004 there was discussion about verbal go-ahead on the latest form of client list. There was now a separate column for VDS contacts, under the heading “Vilien Stanisic”. There was no separate sub-agents list. On 15 November, RM and MO met in Zurich, and over lunch they went through a schedule which contained the client list, with its separately identified VDS category, and a restored list of “Approved Introducers”: this now contained all four names, including Rashdi.

[38]VDS by now was busy and successful in Switzerland, developing contacts. One contact in particular was to prove very fruitful; Complementa, included under the VDS heading in the client list discussed over lunch on 15 November, were advisers to and, for the purposes of this case it is accepted, intermediaries for, potential investors, particularly pension funds. On 1 November VDS had been in direct contact with CM in relation to a request for a sensitivity analysis in relation to the Signet hedge funds, to be produced for Complementa at its request. A good deal of information was required for Complementa to encourage them to consider advising their clients to invest, and most of this was done by the Signet in-house team. MO, who was identified in the RFP (Request For Proposal) as one of the two personal contacts, the other being a Mr Hora of Signet, did spend some limited time -which he estimated at between four and seven hours, including half an hour drafting answers for the RFP, although VDS estimates MO spent no more than an hour in all - in assisting in the due diligence, but it is clear that VDS, out in Switzerland, and with the primary relationship with Complementa, was the key to obtaining the investments. On 12 November VDS notified MO that “Complementa, or actually the pension fund of PriceWaterhouseCoopers, has decided to invest” SF5m into Signet funds. The VDS clients or contacts, such as Complementa, were separately identified by MO in his October and November SCIAS reports.

[39]On 30 November 2004 there was a Signet gathering in Lausanne. The draft agreement was still not agreed or signed – a further provision was discussed about ‘exit fees’. VDS also indicated that, although he was not keen on placement fees, as he believed that they were a potential put-off for investors, if there were to be placement fees, as - except in relation to Complementa’s pension funds, where MO had agreed (see paragraph 33 above) not to insist on them - there normally were, he should be entitled to more than 50%. MO did not agree. VDS discovered from a Tom Canning of Signet what he had not previous known, namely that MO was receiving 75 bps by way of trailer fees on all SPL investments which, he says, made him feel that it was unfair that MO was receiving 75 bps on his own introductions and 37.5 bps on VDS’s, but he did not at this stage raise this either with MO or with Signet. At the Signet team gathering, MO gave a presentation to the rest of the Signet team on the achievements of SPL in 2004, with the benefit of visuals. These recorded in diagrammatic form the impact of sales by “SPL clients, VDS”: $32m assets had been introduced in the year to date. He says that he referred to having agreed a “sub-agent partnership” with VDS. The visuals refer to his having, in August, “signed distribution partnership with VDS, Zurich” and as anticipating for 2005 that he would “capitalise on growing success of VDS partnership in Zurich”.

[40]Unfortunately MO’s fiancée’s health continued to deteriorate, and he was obliged to go with her for treatment of her cancer to Mexico and the United States. By email of 31 December 2004 he notified the Signet team that he had had to take her for immediate cancer treatment, that he would not be in Zurich for the planned meeting with VDS, and that he would be away, at that stage he anticipated until 22 January, although in the event he was away in the United States or Mexico (with the exception of a short skiing trip in March) until April 2005. His estimate in evidence was that, despite his absence, he was able to spend some five or six days on Signet business until the end of February.

[41]In MO’s absence of course VDS continued to cultivate and deal with his contacts in Switzerland, and in particular Complementa. A meeting took place with Complementa on 12 January attended by VDS and by RM.

[42]By email of 12 January 2005 VDS raised with MO the issue of the still as yet uncompleted contractual negotiations:

“Marc is it possible that we can proceed with the contract? Can you email me the contract so that I can go through it again before we sign it? It would be great if we could finish this.”

[43]MO’s response was that he also wanted to get it finished, but that he had no spare time while the cancer treatment was proceeding until after 22 January. On 26 January MO emailed to RM an updated client list, which still listed VDS clients separately and contained the four names under ‘Approved Introducers’. By email to a number of recipients at Signet, as well as VDS, dated 27 January, MO stated that he had been totally focussed on the situation out there with his fiancée, so that there might well be items requiring his attention that had not been actioned: and he would only be able to return to the UK in early March. VDS responded on the same day by asking whether MO would be able to speak with him the following week. VDS’s evidence was that he wanted to settle the question of the contract, but in particular he wanted to talk further about fees; it is clear that this must have been particularly in the light of how well things were going in Switzerland. MO was able to find time to send an email of 28 January dealing with SPL’s fee entitlement. By email of 2 February headed “Your phone call?”, VDS asked whether MO would be able to speak on the phone on that day, Wednesday, to which MO responded that he would call on the following day 3 February. This telephone conversation did not go well. VDS began by reiterating his complaint and request about placement fees. It is common ground that he was also intending to, and did start, to speak about his unhappiness about only receiving 37.5 bps on his trailer fees also, but before the conversation had gone very far, MO refused to have any further discussion and put the phone down.

[44]MO now sent an email (“the 3 February email”), which formed a turning point in this history, so I shall set it out in full. It was plainly in unacceptable terms, as MO acknowledges, justifying it on the basis that he was overwrought by his fiancée’s ill health and irritated by what he saw as unjustifiable complaints by VDS: “Vilien This is the second time that you have approached me to re-negotiate your proposed placement fees and your position here is totally unacceptable. You are well aware of the fact that from day one I have made it clear that SPL placement fees are non-negotiable. You have the opportunity to act as a sub-agent of SPL and share these fees and no more, its 50 50 or no deal. You also appear to have forgotten the fact that when we first discussed doing business together you told me that it would be very difficult to charge placement fees to your clients. I gave you the confidence to charge these fees and kept you focused on standing by them. After we met with Graff you even told me how much you appreciated seeing me negotiate/position these fees. Your 50% of the placement fees are there to cover you if you introduce potential clients and SPL’s 50% cover the fact that I can give you the opportunity to represent Signet. My fees also cover the extensive subscription administration that my company would need to carry out on behalf of VDS, processing your subscriptions, arranging invoicing to you and your clients, providing you with fund information, new prospectus, updated client lists etc etc. Therefore, let me make it very clear that you have two options going forward: Option 1 Sign the contract which I will send to you next week, based on the fees that we have agreed in principle. I will now add a clause to the contract to say that if you ever approach me again to discuss more trailer or placement or performance fees then the contract will be terminated and you will lose all your fee entitlements. I will also now add a second clause to the contract to say that or if you ever approach Signet to try and represent them directly then the contract will be terminated and you will lose all your fee entitlements. Be aware that you will never be able to approach Signet direct because my company’s contract with them absolutely prevents this from happening. If you choose this option we can do business together. Option 2 If you refuse to sign the contract outlined in Option 1 then I will immediately terminate all of your activity with regard to Signet. Since we have no signed contract you risk losing all fees on all business and you also need to be aware that you currently have no exclusivity over your clients. Additionally, if you choose this option I will immediately contact Jacob Schmidt and update him on the situation. You will inform me by 5.00pm this Friday of your decision. All you need to email me is your choice, nothing more will be read and I will not respond to any more explanations or negotiations. If do not receive your response by this time I will immediately terminate your involvement with Signet and notify Bob. I will not waste any more of my time on this issue because I have plenty of business coming in from my direct clients which requires my attention. Marc Oppenheim Therefore, let me make it very clear that you have two options going forward: Option 1 Option 2

Marc Oppenheim

[45]VDS was, not surprisingly, astonished and distressed, and he sent it on to RM on the Friday, 5 February:

“Unfortunately I have received this email from Marc yesterday. I don’t know what to say. How should we proceed with this? It would be great if you could give me a call. Thank you.”

[46]RM tried to mollify VDS, and he and SU spoke to MO. They indicated to MO that if he was going to get anything to work he must offer VDS more. MO then sent VDS an email of 8 February headed “Signet fees going forward”. “Bob, Serge [SU] and I have discussed the situation regarding your fees. We have agreed that we want you to be fully incentivised in your role as a sub-agent of SPL and would like to meet up with you next month (when I return from the US) to arrange a solution that works for all parties. Going forward, it’s business as usual.” Going forward, it’s business as usual.”

[47]VDS sent a temporising response by email of 9 February saying “It is good that we will meet up in March to arrange a solution for all parties.” Not surprisingly however, VDS gave evidence that he had decided that he could not possibly have any continuing relationship with MO.

[48]VDS had, before the 3 February email, by email to MO of 2 February asked him to add four names, including New Century Bank, to “my list” and MO had responded on that day to say that he should be able to email “a fully updated list of VDS-approved clients by Wednesday”. MO, by email of 14 February, now wrote to update SPL’s client list, to include those names and RM responded by email of 19 February:

“These are obviously [VDS’s] contacts. Let’s resolve this issue between ourselves before trying to adjust the client list.”

[49]What precisely happened next is a matter in issue to which I shall return, but in general terms on 22 February there was a meeting between RM, SU and VDS, as a result of which it was agreed that a financial proposal would be put to MO and that VDS would work directly for Signet as an introducer. RM was due to speak by telephone with MO on that day, but, as MO explained in an email, he was not contactable until the following week.

[50]On 2 March, CM sent an email (“the 2 March email”) to all the Signet team and introducers, including MO and VDS, congratulating them all on “another terrific month of asset-raising … which received inflows of more than 30 million [dollars] for Feb 28.” There then followed the breakdown of that figure of $30 million, including $2-3m by MO and “Vilien: 4m from a Swiss pension fund”. This latter referred to the Complementa–induced investment of SF5m by PriceWaterhouseCoopers, notified the previous November by VDS to MO, as described in paragraph 38 above, and recently received by Signet, as BDO had informed the Signet team, including MO, by email of 10 February 2005.

[51]On 9 March, RM and SU had a telephone conversation with MO, who had just returned to the UK with his fiancée. They told him that VDS did not want to be his sub-agent and that Signet were going to take him on direct. They proposed that SPL would receive full fees on the existing assets of approximately $13m that VDS had introduced to Signet during the previous six months, and that SPL would then receive no further fees on any further assets raised by VDS in the future. MO neither accepted nor rejected such proposal. He said he would like tomeet, but, although he took the two to three days skiing trip to Davos in mid-March to which I referred in paragraph 40 above, he did not visit Lausanne. RM chased MO by email of 23 March 2005 to have a discussion, because he wanted to “wrap it up”, but by email of 24 March, while referring to the continuing “labour intensive” involvement in his fiancée’s treatment, and saying that he would revert in early April with his “thoughts on the way forward with Vilien”, he stated that “as I mentioned in our brief phone call last week, from my perspective it’s business as usual regarding Vilien because I have not agreed to any changes in the sub-introducer relationship”.

[52]A further email was sent by MO to RM and SU on 1 April 2005 recording that he was very keen to resolve the matter, recognising that Signet had chosen to work directly with VDS, that VDS clients “no longer seem to be considered SPL clients and I don’t get notification of his new subscriptions”, and that he wanted to find a solution. Matters continued to deteriorate in respect of his fiancée’s health. No meeting or discussion took place, and by email of 26 April 2005 RM notified MO that SRA were going to hire VDS and were setting up a Zurich office with him. Notwithstanding further email exchanges, there was no further meeting: by email to MO of 26 May, RM recorded that they had not seen MO in 6 months and hoped to meet him when he and SU were in London on 8 and 9 June. That email recorded that MO would be receiving his rebate schedule from VDS: “We have removed the Vilien sheet from the schedule but not the investments you are participating in up to end Q1”.

[53]On 3 June 2005 MO’s fiancée died in London. There was no further material communication for some time. In response to an email from MO of 2 September, RM recorded that they had not seen him in 9 to 12 months and would like him to get fully back into the Signet picture if he intended to. In June 2005 Signet had not only paid MO what he was entitled to in respect of SPL investments other than VDS, but had also paid him in accordance with the unaccepted offer of 9 March, namely based upon the $13m assets introduced by VDS then referred to. A meeting was arranged between them in Lausanne for 19 September to try and resolve matters, to be attended by MO and by RM and SU, with CS taking notes.

[54]Provisional agreement was reached at this meeting. The Signet team thought that full agreement had been reached, but it is apparent that they now accept that there were too many loose ends untied by the end of the meeting for it to be said that there was anything binding. The following was the basis of the agreement: i) MO would go ahead with the transfer of his shareholding in SCML, to which he had in fact agreed back in September 2004, provided that Signet waived any claim for repayment of advances made to MO at the outset of the relationship. ii) MO informed them that he wanted to find a purchaser of SPL: a new agreement would be put together between SPL and Signet, on a basis which was discussed, including a proposed reduction of trailer fees to 50 bps, and Signet would be prepared to enter into discussions facilitating a potential sale of SPL to a third party. iii) Signet would pay MO a sum of a maximum of £10,000 in respect of his legal costs incurred with regard to his contract negotiations with VDS and a payment of £20,000 in full and final settlement of any claim he might have to fees in respect of VDS introductions. It is not entirely clear to the parties now whether they would or would not have left him in addition with the ‘income stream’ from the $13m in the ‘unaccepted offer’.

[55]The amicable basis of the discussions appears to have begun to break down when subsequently MO went to solicitors and, in the light of pressure by CS for him to consider various drafts, incorporating the above proposals, he sent her a copy of his solicitor’s letter of advice dated 28 November 2005:

“I have now considered the letter of waiver from … SRA and I am glad that you seem to be reaching a satisfactory accommodation in a spirit of mutual goodwill. I think however that it is important that the various elements of any settlement are carried out in the right order so that by the time the settlement is finally concluded there are no outstanding loose ends. To achieve this, my advice is that the agreement whereby … SPL waives any claims in respect of the VDS circumvention should be conditional to take effect only when the new distribution agreement with Signet has been entered into by SPL and your successor has taken over the business. I understand you are also to transfer your 5% shareholding in … SCML in consideration of the waiver by SRA of a loan of £13,000 and any other claims related to your shareholding in SCML. Likewise that should take place on completion of the sale of SPL.”

[56]This was obviously not satisfactory to Signet. CS was, as she made clear in her email of 14 December to MO “somewhat surprised to see that your lawyer is making a proposal which is clearly not in line with our mutual intention to come to a suitable arrangement in good faith. Asking us to pay you £30k before agreeing on anything is obviously not a win/win proposition … [Our] intention is to cover simultaneously the share transfer, the loan waiver, the VDS waiver and the new contract … In the meantime, as we clearly stated last September, we do not want to continue our relationship under the existing contract. For the sake of good order, we hereby terminate the agreement between Signet and [SPL] … in accordance with Clause 5.1 thereof.”

[57]This was therefore notice of termination, expiring on 14 March 2006, of the Introducer Agreement. On that date SPL changed its name to Oppenheim Partners Ltd, the name of the Claimant company. A formal direct agreement between SCML and VDS, on terms which included a provision for 50 bps by way of trailer fee, dated 27 February 2006 was signed in or about April 2006.

[58]The writ in claim 1 was issued on 6 March 2006 and was served with a lengthy letter of claim from solicitors dated 9 March 2006. Signet resisted that claim and, by a letter from their solicitors dated 13 April 2006, required repayment of the £15,000 per quarter paid between 2002 and 2004: which they then recouped against the fees shown otherwise to be due to SPL for the June 2006 quarter. Proceedings by MO in respect of claim 2, for the fees thus set off, were issued on 22 June 2006. With the exception of the deduction by way of alleged recoupment, Signet have continued to account quarterly to SPL, but only in respect of introductions by SPL (MO) itself (there were never any investments introduced by Rashdi, Schweiger or CCFAS) and not in respect of VDS contacts.

[59]Apart from pursuing the two claims (and a third claim issued in December 2006, which has not featured before me), MO has pursued a number of extra-judicial methods of seeking to recover relief or at any rate satisfaction as against the Defendants in respect of the claims he considers he has. He has pursued, in respect of Signet and individuals associated with it, what Mr Lazarus called a barrage of complaints to regulators, professional bodies and public authorities, among them Companies House, the FSA, the DTI, the SFO, the Irish Stock Exchange, the British Virgin Islands Financial Services Commission, the Irish Financial Services Regulatory Authority, the Institutes of Chartered Accountants in the UK and Ireland, the European Commissioner for Internal Markets and Services, the Swiss Federal Banking Commission and Federal Finance Administration, the Association of Corporate Treasurers, the Irish Department of Enterprise, Trade and Employment, and the Securities and Investment Institute. In addition he has sent a flood of email communications or letters to a number of people, including those whom he believed would be likely to be called as witnesses by the Defendants. One email, setting out what he considered to be his complaints, many of which feature in claim 3 which is not before me, in graphic and derogatory terms, was sent on 20 December 2006 to 43 recipients, 12 of whom were bound to be and were witnesses for the Defendants whom he wanted to “make aware that should this proceed to trial they [would] be liable to account for themselves”. Little, if any, of this was wise or appropriate, as MO accepted in cross-examination. Indeed he acknowledged in evidence that, notwithstanding that it would not in fact been to the benefit of his own clients whom he had introduced to Signet funds, part of his purpose was to reduce the rating of those funds. He accepted that his purpose in such communications was to induce Signet to settle with him on terms acceptable to him.

[60]Most objectionable was his correspondence with Mr Schmidt. His solicitors had sent a letter to Mr Schmidt dated 14 September 2006 which, albeit taking the opportunity to suggest that he might have been in a conflict of interest, purported to ask him to provide a witness statement in support of MO, to which he properly responded by email of 19 September 2006, indicating that he was not willing to make a witness statement on the Claimant’s behalf, although recognising that he could be served with a witness summons by them with which he would comply, though he would not be making any further substantive response. Not content with including Mr Schmidt as one of the 43 recipients referred to above on 20 December, MO, two days after that, sent him what can only be interpreted as a threatening letter. When questioned, MO, while first describing his intention as being that Mr Schmidt might be “rendered neutral”, as he had categorised his purpose in relation to the other recipients of his email of 20 December 2006 whom he anticipated might be a witness at the trial, he acknowledged that his hope was that if he “put enough objective pressure on Mr Schmidt and the like perhaps Signet would consider settling” and that his aim was to make Mr Schmidt “back off so that he did not give evidence for the other side”. This is not far short, if short at all, of contempt of court. As will be seen, Mr Schmidt’s evidence is central to the resolution of one factual issue in the case, namely relating to the circumstances of the introduction of VDS in June 2004 referred to in paragraph 25 above.

[61]The trial before me began on 20 March. CS was to give evidence on the sixth day of the hearing by video link from Switzerland (a technically disastrous experience it is to be noted – there were 13 breaks in transmission). For the purpose of her evidence, a bundle of documents was put together. In that bundle there was disclosed for the first time, on the day before, what has been called the CS schedule, as a result of a request by the Claimant’s solicitors for “Vilien’s sheet”, referred to in CS’s disclosed preparatory notes for the 19 September meeting. The CS Schedule thus disclosed contains figures for “Vilien fees from inception”, commencing in November 2004. Recorded in the CS schedule were the investments that it was known had come from Vilien contacts from 23 November 2004, including the SF5m from PriceWaterhouseCooper, recorded as received on 22 February 2005, and also investments via two other contacts of VDS, Gräff and New Century Bank, also recorded as received on 22 February 2005, which were notified to MO by BDO in respect of placement fees, and picked up by MO in March 2005 on the basis that there also ought to have been payment of trailer fees in relation to them, which were duly then made. What however were also recorded in the CS schedule were three further investments from pension funds, known as Antalis (in the sum of SF 2.5m), Bosch (in the sum of SF20m) and AVOP (in the sum of SF8m). The Antalis investment was recorded as being received on 17 February, Bosch on 22 February and AVOP on 25 February. No previous disclosure had been made in relation to these investments. Further disclosure was ordered, and VDS was then recalled as a witness.

[62]It became apparent that all three of these investments had come through Complementa. It turns out that, on 8 February, when VDS was still smarting from the slammed down telephone receiver and the 3 February email, he had received very good news from Complementa, and on 17 and 18 February VDS learnt, first, of the Antalis subscription and then the proposed Bosch subscription. None of this was disclosed to MO at the time or to him as the Claimant in the course of disclosure for the purpose of these proceedings, until after the hearing commenced, as I have described. By this time MO had given evidence, and before the contents of them could be assimilated so had VDS: hence their return to the witness box to give further evidence (Day 11) after the Easter break. The information derived from the CS schedule, albeit at that stage not yet backed up by the subsequently disclosed documents, had however been put by Mr Tager QC to RM on Days 8 and 9 in his cross-examination.

[63]The following at least became entirely clear: i) RM and SU, to whom the ‘good news’ emails of 8 (in the case of RM), 17 and 18 February (in the case of both) were sent, and who will inevitably in any event have learnt immediately of the ‘golden eggs’ of SF30.5m new investments, not only did not disclose those facts to MO in the conversations they had with MO on 9 March, but allowed MO to believe, and either stated expressly (see paragraph 166 of RM’s main witness statement) or did not contradict MO when he so stated, that VDS had introduced $13m of assets, when in fact it was double that sum if the additional SF30.5m were included. ii) Not only was BDO instructed, clearly either by RM or with his knowledge, not to report the three new subscriptions to MO (while he had to, or was enabled to, know of the PriceWaterhouseCooper, Gräff and New Century investments), but he caused or allowed CM to distribute not only to MO, but, as would be essential in order to achieve verisimillitude, to all the 16 recipients of the 2 March email, the false information that, in the period 2 February to 28 February, VDS had caused an inflow of $4m, thus excluding any reference to the SF30.5m received on 17, 22 and 25 February. iii) The deceit was perpetuated by RM‘s email of 26 May 2005, referred to in paragraph 52 above, even though to those who knew (which MO did not) the words could have been justified by an implication that it was some but not all of VDS’s investments that were left in the schedule. iv) VDS’s evidence was false both in his witness statements at paragraphs 67 and 70 and in his evidence when first called (transcript Day 6, page 81) when he stated figures for receipts prior to the end of February which did not include the SF30.5m, not yet revealed via the CS schedule, and that he had in February “reluctantly agreed that SPL should be paid a 50% fee share … up to the end of February 2005” implying that this was 50% of the fees in respect of total receipts. After the disclosure of the CS schedule, and on his recall, he said that he had only been prepared to agree to 50% of the fees other than the three new ones.

[64]The result is that MO, had he reached agreement either by accepting or counter-offering to the unaccepted offer of 9 March 2005, referred to in paragraph 51 above, or in agreeing to accept £20,000 plus £10,000 legal costs, a figure he himself put forward, albeit in ignorance of the true position, as a result of the 19 September meeting, would have been induced into such agreement by fraud. In the event no such agreement was made. The true position has now been disclosed, and MO’s claim extends to the now disclosed figures. RM and SU, and Signet, cannot escape serious criticism both for the misleading of MO at the time and for the failure to disclose plainly relevant documents in these proceedings until after the trial began.

[65]However RM at least acknowledged the true position in the witness box, and put forward his explanation and self-justification for his misleading of MO, namely his firm belief then and now that MO had and has no entitlement to any fee or share of fee in respect of the SF30.5m investments concealed from him. He explains that he had, not for the first time (viz the turf wars), to arbitrate between two intransigent and determined men, both of whom were important to Signet. On the one hand VDS was saying that, in the light of the disgraceful 3 February email, he would have nothing further to do with MO, and was not prepared to agree to share any fees with him in respect of his own contacts which, had so remarkably come good in such a short time. On the other hand he knew how very difficult and determined MO is and was, and if MO learnt of the golden eggs so recently laid, albeit by VDS’s contacts with whom he had had no or no material involvement, and at a time when he had been out of both England and Switzerland for the previous three months, he would insist on payment for them.

[66]RM’s evidence in cross-examination was (transcript Day 9 at pp17ff):

“A: So on the one hand, [VDS] would not go further, would not pay out on his clients. On the other hand, why give a free amount of money to [MO] that he did not deserve? So I omitted it from the discussion on March 9 … A: Had I mentioned these subscriptions, we would not have reached an agreement. It was in the sense of wanting to reach an equitable agreement between two parties. We had no obligation … Q: How can you reach a fair and equitable agreement if you are not honest with [MO] and say, at the very least, “There are some big ticket items that came in at the end of February. [VDS] wants you to have nothing to do with that and so you will not be getting that in any event.”

Why not tell [MO] that? A: Because it would not have worked. He would have been furious. He would have sued us. You know, he felt he owned [VDS], which he did not. He would have been, you know, just as furious – and we would have started receiving more four-page e-mails. Q: You intentionally withheld that information and intentionally misled [MO], did you not? A: I intentionally omitted that information because I felt it would be the best way to reach an equitable relationship, because [VDS] would not have paid out on those accounts. Those were [VDS’s] accounts, not [MO’s]. [MO] had nothing to do with those accounts. [MO] knew nothing about them. They were not on any list.”

Q: You intentionally withheld that information and intentionally misled [MO], did you not?

[67]It is clear therefore that RM, SU, CM – the author of the 2 March email – and VDS all knew that the $30.5m investments were intentionally concealed from MO: and once this had happened then the false statements – of a total sum which omitted them – and the failure to disclose in these proceedings followed as a consequence. Signet’s explanation for this unacceptable conduct is that MO was not entitled to fees on them. It is conceded that all three investments came via Complementa, which was an intermediary which had been included on MO’s list. It is now one of the issues for me to decide, perhaps the most vexed issue, whether MO is entitled in respect not only of the three concealed fees, but to any and all fees, both to date and for the future, in respect of investments by VDS contacts, by clients introduced by VDS but placed on the SPL client list.

The Witnesses

[68]I turn to resolve the issues before me, but, before I do so, I should say a little as to my conclusions about the two major participants in the events. MO, described by Mr Schmidt succinctly as “very commercial”, is talented, personable, ambitious and arrogant. After a successful career in advertising, his time in the Internet market was obviously chastening, and he started again in the new field of hedge funds by seeking to build up new contacts such as Mr Schmidt – and I am satisfied that he exaggerated his experience with Allenbridge in his CV just because his 20 hours or so with them needed to be put forward as his only available springboard. He brought however to the field of hedge funds, in which he was wholly inexperienced, and as to which he knew almost nothing except that which he will have learnt in his short time with Allenbridge, his undoubted talents as a salesman and as an advertiser, coupled with a very careful attention to record-keeping and documentation, and he was clearly very successful, notwithstanding his lack of detailed knowledge of the subject, in drumming up business, although not as successful as VDS was to become.

[69]Although it took him more than two years to get going, cushioned as he was by the retainer he was being paid, once the commission entitlement triggered in in June 2004 he soon found that he could earn a very substantial amount of money from a relatively minimal expenditure of time and effort: his graphic comparison, and justification, of his earning capacity as successful hedge fund introducer by analogy with Picasso, creating a sketch in a few moments worth a vast sum, could entitle him to the sobriquet of the Picasso of the hedge funds.

[70]He ameliorated his position as best he could by very careful defence mechanisms against other competitors in the turf wars, to which I have referred in paragraphs 15 and 35 above, ensuring that he was compiling client lists, and including on those client lists any potential contact as soon as, if not sooner than, there was any prospect of business eventuating through that contact; and by dint of such client lists, very careful attention to correspondence and assiduous concentration on the drafting of the most favourable possible contract, he was set for success.

[71]Unfortunately he was plainly derailed by the tragedy of the illness and death of his fiancée. This led to his lengthy periods of absence, to his ‘taking his eye off the ball’ and in particular to his not giving the time and attention he should have done to the development of his relationship with VDS, and in particular the finalising, before VDS had ‘taken off’, of his arrangements with VDS.

[72]I am satisfied that i) until his time and attention were overtaken by his need to look after his fiancée, he took every step he could to improve his position by the careful production of paperwork in order to gain advantage over others who were not so careful: ii) aided so far as possible by such paperwork, he has exaggerated some aspects of his evidence, for example, his account of events relating to the introduction of VDS, perhaps in the hope that Mr Schmidt would not in the event attend to give evidence: iii) his overconfident belief in the strength of his case, and his intolerance of anyone else’s position, has led him to take unacceptable steps in order to seek to pressurise the Defendants into settling his claims for substantial sums of money.

[73]RM is clearly enormously clever and successful in the making and maintaining of profitable investment businesses: so focussed on the success of those businesses that he has had insufficient time for or interest in supervising other aspects of the affairs of the Signet Group on a day-to-day basis. He seems to have failed to appreciate that Signet itself needed protection from that very entrepreneurial spirit and determination which could be so successful when directed towards bringing in business from outside. He allowed MO to get the better of him in particular by taking insufficient steps to consider – or have the company’s lawyers do anything more than a minor look at - the detailed contract, so favourable to MO; and unfortunately SU was even less hands-on and business-minded than he was, and CM was no match for MO. RM’s constant priority towards the actual investment side of the business, which can hardly be criticised, given how successful it has been, also led him to the unfortunate mistake of abdicating responsibility in respect of VDS (who was in the event to prove even more successful than MO), simply because he was too busy at the time. In the end he found himself stranded between these two very strong-minded and successful men, though plainly much more favourably inclined towards VDS, not only because he was now seeming to be more successful, but also because MO, due to his family adversity, had effectively vanished from the scene for months. He was faced with an angry VDS, who was not prepared to work any longer with MO, and with MO, who had managed to negotiate himself such a favourable contract that he now believed himself to be in an impregnable position. Believing that MO did not have the entitlement he was asserting, while attempting to placate both MO and VDS, RM, and with him SU, CM and VDS, stooped to concealment of the true position from MO. RM at least was entirely frank about this in the witness box, unlike VDS.

[74]My conclusions as to the evidence and the issues is coloured by my assessment of these two major personalities in the relevant events, RM and MO. Apart from them, and VDS, none of the other witnesses have played a material role or necessitated material conclusions, with the exception of Mr Schmidt. As to him, I found him an impressive and truthful witness.

Introduction of VDS in June/July 2004

[75]The first question I must decide, by reference to clause 2.3 of the Introducer Agreement set out in paragraph 22 above, is whether VDS was “introduced to Signet by SPL”. I refer to the short summary in paragraph 25 above. MO’s case on this is threefold: i) According to paragraphs 151 to 153 of MO’s main witness statement, Mr Schmidt specifically arranged an introduction of VDS to MO:

“151. In June 2004, I had a meeting with Jacob Schmidt (as I recall in a coffee shop in Mayfair) where he recommended that I meet some of his contacts who could operate as sub-agent intermediaries for SPL and introduce SPL to potential investors. 152. … Jacob Schmidt then informed me of a … contact of his called [VDS] of VDS Group, a Zurich-based distributor of funds. Jacob Schmidt said that VDS had strong potential as an SPL sub-agent and VDS could add much value to SPL’s Zurich-based sales strategy which had been developing since 2002. 153. Jacob Schmidt made it clear that he wanted SPL exclusively to benefit from the VDS introduction … Jacob Schmidt subsequently invited me to attend the Hedge Fund Awards Dinner in June 2004 as his guest where I could meet [VDS]. I would have like to have attended this dinner because, whilst I had had in depth discussions with Jacob Schmidt regarding [VDS] I had not yet met him. Unfortunately I was unable to attend the Awards Dinner …”

MO’s Reply, at paragraph 12.3, specifically pleaded that “Jacob Schmidt invited [MO] to attend the … Dinner in June 2004 so that [MO] could meet [VDS]. ii) The way that Mr Tager put MO’s case in closing, to which I shall return, was simply that prior to the Awards Dinner, and at a time when it was expected that MO would be going to it as Mr Schmidt’s guest, Mr Schmidt told him that there would be at his table a man from Zurich interested in hedge funds, called VDS. iii) The third way can be called the ‘reintroduction route’ developed by Mr Tager. Although MO did not go to the Awards Dinner, yet the central plank is that RM, to whom, with SU, VDS was actually introduced at the Dinner by Mr Schmidt, subsequently suggested to Mr Schmidt - when VDS, after the Dinner, asked to be put in touch with RM, whom he had met at the Dinner - that, if VDS were interested in selling Signet funds, he be referred to MO. Thus when MO then had his discussion with VDS and made arrangements for him to sell Signet funds, MO ‘reintroduced’ VDS to Signet. Therefore: a) MO was the effective cause of the introduction of VDS to Signet; and/or b) that ‘reintroduction’ was when VDS was introduced to Signet as a potential introducer of funds.

[76]Plainly if the facts in proposition (i) are correct, there is much more of a case factually that, even though MO was not at the Awards Dinner, and VDS was physically introduced by Mr Schmidt to the senior management of Signet, RM and SU, at the Dinner, MO/SPL could be said to be responsible for the introduction, because it had been set up for MO’s benefit. But I reject it. Mr Schmidt’s account was completely different. He had no previous discussions with MO about introducing him to VDS, and certainly did not ask MO to the Dinner for the purpose of his being introduced to VDS. In his witness statement, at paragraphs 6 to 9, his account was at follows:

“6. In June 2004, I attended the … [Awards] Dinner in London. … I hosted a table and had invited a number of guests including [MO] and [VDS]. In the event [MO] did not attend the dinner. … 7. Although I cannot remember specifically, I probably told [MO], in advance of the dinner, which guests would be attending. 8. At the dinner [VDS] asked me to introduce him to a number of hedge funds of funds managers since he was looking at the possibility of introducing a suitable fund product to his clients. I introduced [VDS] to several guests, including [RM] and [SU] … They sat at a table close to mine. 9. A few weeks after the dinner, [VDS] called me by telephone and asked to be put in contact with the Signet Group more formally. I called up [RM] …”

[77]In his evidence, MO described Mr Schmidt’s evidence in paragraphs 7 and 8 above as false. The passages in MO’s witness statement, paragraphs 151 to 153, to which I refer in paragraph 75(i) above, were not put in cross-examination to Mr Schmidt, when he gave evidence. I thought it important that such paragraphs be put to him for his comment at the end of his cross-examination, which I did. He convincingly rejected the account. He explained that, when inviting MO as his guest (although he did not in the event come) as Signet were to be given an award at the Dinner, he probably mentioned to him the names of other guests coming, and probably mentioned VDS amongst them. There was no question of his having had “in depth discussions” or indeed any discussions, with MO about VDS before the Dinner, or of his invitation to MO as having been for the purpose of introducing VDS to him or to SPL. I accept that evidence.

[78]Perhaps because of the convincing nature of Mr Schmdit’s evidence, the only factual case that was put to me by Mr Tager in his closing speech was by reference to the second and limited proposition set out in paragraph 75 (ii) above. He submitted that the “only real difference” between Mr Schmidt’s version and MO’s version was whether he had said prior to the Dinner that VDS would be present, and that he would introduce him to MO. This was however not the difference between the versions, as can be seen, and I accept Mr Schmidt’s evidence that the most that was said was that, amongst the other guests on the table, there would be a Mr Stanisic from Zurich.

[79]The third proposition, upon the facts that are not now in material dispute as to what happened subsequently, is unsustainable. The concept of ‘reintroduction’ is not a good starting point when it effectively concedes that VDS was introduced to Signet already by Mr Schmidt before such ‘reintroduction’. But in any event, it is quite apparent that VDS was introduced/introduced himself to RM at the Dinner, and subsequently via Mr Schmidt, as being a potential introducer of Signet funds; and it was in fact Signet, at the instance of RM, who introduced VDS to MO/SPL as such potential introducer of funds. To assert the reverse is as much an attempted rewriting of history as was MO’s email to RM of 12 September 2004 quoted in paragraph 28 above, to which RM unwisely did not reply. I am satisfied that VDS was not introduced to Signet by SPL, but by Mr Schmidt.

Is VDS a Sub-agent within the Introducer Agreement?

[80]The next issue is whether VDS was Sub-agent of SPL within clause 2.5 of the Agreement. It is clear that, as Mr Tager forcefully points out, there is no requirement for writing in clause 2.5 (cited in paragraph 22 above), albeit that sub-agents must be subject to the specified obligations in the Agreement. There is a history underlying this which appears in part in the summarised history above, particularly at paragraphs 19, 20, 23-24 and 30-31 above. There were three other ‘sub-agents’ mentioned at various times. In the Introducer Agreement of 4 March itself, under “Schedule Two – Approved sub-agents of SPL” there were, as set out in paragraph 22 above, two names, that of Rashdi and Schweiger. So far as Rashdi is concerned, it was always intended that there would be (paragraphs 19-20 above), and had not yet been and should be (paragraph 24 above), and never was, a written agreement with Rashdi. It was also intended that there would be (paragraphs 23-24), and never was, a written agreement with Schweiger. There was also intended to be (paragraphs 23-24), and never was, an agreement in writing with CCFAS. In July 2004 CM added the words “(pending agreement)” to Schedule Two of the “Client and sub-agent list” sent to him by MO which contained those three names.

[81]Agreement with Rashdi was never reached because he could not get clearance from St James’s Place, and his name disappeared from the October “client and sub-agent list” submitted by MO to CM, which was the first list upon which VDS appeared: the words “(pending agreement)”, now adopted by MO, still remained. As set out in paragraph 37 above, in the client list at the end of October, there was no ‘sub-agent’ list at all.

[82]At some stage in mid 2004, MO was unable to reach an agreement on fee terms with CCFAS, so there was no agreement with them. Nevertheless they, and indeed Rashdi once more, and Schweiger and VDS, now appeared in a new form of Excel schedule in November, under the heading “Approved Introducers” without the rubric “(pending agreement)”. The client list, with a separate column of clients under the heading “Vilien Stanisic”, and then those four names under “Approved Introducers”, was shown by MO to RM at their meeting on 15 November in Zurich, when they went through it over lunch, and RM raised no objection. CM also made no comment in relation to that form of list, either then or when it was subsequently repeated. So far as the reporting to Signet was concerned therefore, MO’s paperwork was in order, whatever the underlying reality.

[83]But the significant question, whatever was being reported or indeed approved in the sense of not being objected to, is whether VDS was a Sub-agent within clause 2.5. The fact is that, just as with Rashdi and CCFAS, if not Schweiger (he, a close friend of MO, without any knowledge at all of hedge funds, running as he did a family business producing textile products, gave a written statement before me that – although no business ever resulted – he was content with an oral agreement), there was to be a tripartite written agreement between MO and VDS, as Signet knew, and indeed as they required (see paragraph 30 above).

[84]The proposed sub-introducer agreement between SRA, SPL and VDS was in a number of drafts, which are in the bundles before me, and I have described, in paragraphs 31, 37, 39 and 42-43 above, the fact that no agreement was ever signed. That arose for these reasons: i) VDS’s unhappiness. He says he only accepted the trailer fees of 30 (subsequently increased by MO to 37.5) bps, and the other fees, on a temporary basis, before and until he could prove his marketing skills. He says that he complained about the fees at the time in August and/or October 2004, but I do not accept that he did so. However it is common ground that he did complain about, or request an increase of, his entitlement in respect of trailer fees, on 30 November, and I am satisfied that on that occasion he did start to become disgruntled when Mr Canning told him about MO’s fee entitlement (see paragraph 39 above). ii) MO’s delays. Uncharacteristically, and entirely due to his fiancée’s unfortunate illness, which took up much of his attention and concentration during the later months of 2004, and finally took him right away in December, his talent for sorting out favourable agreements and for tying down paperwork failed him. This was disastrous as it turned out because: iii) As time passed, VDS became more and more successful and more and more confident in his marketing skills and their likelihood of success. Although, by the end of the year, the PriceWaterhouseCooper investment had not yet come through, it had been notified by Complementa, other investments had been made, and he was plainly confident that there would be a number of ‘golden eggs’ via Complementa. VDS was no longer content to accept the fees which MO was offering. He wanted a look at the draft (see paragraph 42 above), as he explained, for his lawyer to go through; but at least by January, if not before, he was now determined to press for higher fees than he was being offered.

[85]There was no agreement, because they had not yet finalised the terms until the tripartite agreement was signed, and they were operating pro tem on a fee-sharing basis. That MO was reporting in his SCIAS, under a separate heading, fees emanating from VDS’s clients, and that VDS was being paid via BDO on the basis of the intended agreement, were not, in my judgment, as Mr Tager submitted in his closing submissions “in anticipation of whatever relationship then develops”, but, as RM said in cross-examination on a “temporary administrative basis”, namely in anticipation of a sub-agency. The fact that there was not yet an agreement may well have contributed to the difficulty that MO found in describing his relationship or arrangement with VDS to Mr Weiss (paragraphs 36 and 37 above) and at the Lausanne session (paragraph 39 above) and there was certainly no justification for the removal of the rubric “pending agreement” on his lists. His own true attitude is best illustrated by the telling words of his own 3 February email, set out in paragraph 44 above, namely “since we have no signed contract, you risk losing all fees on all business and you also need to be aware that you currently have no exclusivity over your clients”. In evidence, he confirmed to me (transcript Day 4 pp147-8) that:

“I cannot explain to you consciously how I crafted this email and what went through my mind at the time. I can only confirm its contents … That we had not at this point signed a written agreement, and therefore in any post-termination situation of our existing oral agreements, he was not covered for fees after that termination … When I wrote this email my view was that he was not going to get … [trailer or placement fees] even on existing [done] business.”

[86]I conclude that, by 3 February 2005, VDS was not a Sub-agent of SPL within the Introducer Agreement, because no agreement had been reached, and he consequently never became one.

[87]It is not in those circumstances necessary to conclude what the position was if, contrary to my conclusion, he was or became a sub-agent prior to 3 February, but, if he was then a sub-agent, such sub-agency was plainly terminated soon afterwards. I find Mr Lazarus’s argument persuasive that the 3 February email constituted conditional notice of immediate termination by 5pm on 4 February if VDS did not elect for one of the two options by that time: and as he did not respond by that time limit, on that basis the termination became unconditional as at 5pm. Mr Tager submits that this is not a proper construction of the email because of the words that follow, namely “if I do not receive your response by this time I will immediately terminate your involvement with Signet and notify Bob”. However, I do not conclude that the notification of RM was a necessary part of the termination, nor that there was, in the light of the express deadline, any need for any further action by either party once the deadline had expired. The fact that MO sent a more temperate email on 8 February, namely after the deadline of 5pm on 4 February had expired, does not in my judgment affect the conclusion. First, if the contract has been terminated the previous Friday it is too late to revive it on the Tuesday. Secondly, in any event, the email of 8 February does not in terms seek to withdraw any part of the earlier email or seek to emphasise the continuing sub-agency (if such it was) on its previous terms: it indicates a willingness to discuss fresh terms, and hence a fresh agreement, if agreement be reached. I would therefore have concluded that the sub-agency terminated on Friday 4 February. If I am wrong as to that, then the sub-agency could alternatively have been said to have terminated by the very email of 8 February (paragraph 46 above) which, although it indicated “business as usual” (his words, I am satisfied, not those of RM – see his repetition in the 24 March email quoted in paragraph 51 above), implies the termination of the old arrangements for fees, such as they were. In the yet further alternative, the 3 February email was plainly repudiatory of whatever sub-agency existed at the time. Whatever the pressures which MO felt he was under (and his fiancée’s ill health does not appear to have been any worse in February than it had been in the previous weeks, and the email itself refers to his requiring to give his attention to business from his direct clients), nevertheless it was plainly destructive of any relationship of trust and confidence. The question would be when that repudiation was accepted by VDS. At the latest, it must have been accepted in fact when VDS had his meeting with RM and SU on 22 February. If such acceptance required communication, then it was communicated via RM in his conversation with MO on 9 March 2005 referred to in paragraph 51 above.

The construction of the Introducer Agreement

[88]I am satisfied that this Agreement should be construed contra proferentem, the proferens being MO. He himself in evidence emphasised how he spent six months negotiating his contract in order to protect his entitlement to his clients. It is, on any basis, a contract which is extraordinarily favourable to him. It is common ground that it gives him lifelong entitlement to fees, 100% for a year after the termination of the agreement, and continuing at 100% thereafter if he can maintain a relationship with the relevant investor or intermediary, which he is deemed to do if that investor or intermediary simply receives one form of written (including email) or verbal communication from him per quarter (and if he cannot or does not so communicate then he is down to 50%). Such fees are payable not only on investments made by an investor on his list during the life of the Agreement, but on investments that that investor may make at any time thereafter, if the investor was introduced by SPL (clauses 4.3 and 5.3). The Agreement also, as is common ground, restrains Signet from approaching any investor or intermediary which was introduced to Signet by SPL for three years after the termination of the contract (clause 2.3), even if that investor or intermediary did not in the event make any investment during the contract but was simply listed in Schedule One.

[89]It is important to bear in mind that success for the Claimant in this action will involve an extension of that entitlement, if it be an extension, which is part of what I have to decide, to investors or intermediaries, and investments made in the past, present or future by such investors, with whom MO need have had no contact, being VDS’s clients or contacts. It is in that context that: i) a strict construction contra proferentem is appropriate in respect of the clauses relied upon to establish the Claimant’s entitlement. ii) in the well known words of Lord Reid in L. Schuler AG v Wickman Machine Tool Sales Ltd

[1974] AC 235

at 251E:

“The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.”

Who are the parties to the contract?

[90]As can be seen in paragraphs 16, 17, 18, 20 and 21 above, MO in regular communications (and there are others in the papers) referred to the Agreement as the SPL/SRA contract. Also as appears in paragraph 17 above, he had specifically sought a “solid” contract with SRA and both he, and it is clear, for a quiet life, RM, wanted to keep the affairs of the new company, SPL, which MO had specifically set up in order to be distinct, separate from those of what was now to be a rival competitor for introductions to Signet Funds, SCML. Nevertheless, MO’s case now is that, upon a proper construction of the Agreement, the contracting parties were not SPL and SRA, but SPL and all the companies of the Signet Group, including SCML. The significance of this is explained on the basis that MO is not confident that, if he succeeds to the extent of the very substantial claim he is bringing, SRA will be good for the money. The only other Signet company that he has in fact joined into proceedings is the very SCML to which I have referred above, although it is the case that that appears to be the only UK company, and hence within the jurisdiction, in the Signet Group, but there is a number of other Signet companies in other jurisdictions and fulfilling other roles within the Group.

[91]In addition, MO has joined RM personally as a Defendant to both claims. This is on the basis that, if it should turn out that his construction is correct, and that SCML was also a party to the Agreement, and it should also turn out to be the case that RM had no authority to bind SCML (of which he was only one of the shareholders), then RM would have been in breach of warranty of authority. It is not suggested that he made any separate warranty of authority, otherwise than by signing an Agreement which, MO now asserts, is to be construed as having had SCML as one of the parties.

[92]The only explanation that MO has given as to his contemporaneous attitude was when he was giving evidence on Day 3 (pp178-9), when he accepted that, so far as he was concerned, he had no remuneration agreement with SCML and was looking to SRA (through its agent, another Signet company SML) for payment, but that he had what he calls the “restrictive covenant objective”. That explanation is of course entirely consistent with the proposition that SRA is the party to the Agreement, and the paying party, and that SRA agrees to ensure that not only itself but all the other companies in the Group are bound by the restrictive covenant: none of that would go to the question as to whether SPL is now entitled to a money judgment against any other company than SRA.

[93]All this, if I were to reach the question of consideration of the factual matrix, would be relevant and powerful evidence. However I am entirely satisfied that I have no need to look to the factual matrix, and on a proper construction of the contract (whether by reference to the tools of construction to which I have referred in paragraph 89 above or in any event) I have no doubt at all that this is not a case in which every Signet company was a party to the agreement, whether named or not, but that the parties were indeed SRA and SPL.

[94]Mr Tager’s contentions in this regard can be summarised as follows: i) First, he refers to the words in clause 1.1:

“for the purposes of this Agreement ‘Signet’ includes any related or connected party or group company of Signet, including … SCML.”

He submits therefore that “Agreement between Signet and [SPL]”is to be construed as ‘Agreement between all and any Signet or related or connected companies and SPL.’ ii) Secondly, he refers to the particular obligations of Signet under the Agreement, particularly the three-year restrictive covenant under clause 2.3 and the information obligations under clauses 2.1 and 5.8, which, he submits, could not be performed, or performed to MO’s satisfaction, by SRA alone. iii) Thirdly, he points out the obligations of SPL in the various subclauses of clause 3 of the Agreement (which I have not recited in paragraph 22 above), some of which will or may be for the benefit of other Signet companies: and points to clause 8.6, whereby non-parties to the Agreement cannot enforce it. iv) Fourthly, he draws attention to the terms of paragraph A of Schedule One, which states that that Schedule had been “approved by Signet including all group companies of Signet and including [SCML] and related and connected parties of Signet and SCML (“Signet”)”. He submits that this emphasises that all those companies are parties to the Agreement.

[95]I am entirely persuaded by Mr Lazarus’s submissions to the contrary: i) It is wholly unlikely that it was intended, without specific reference, without proper definition, and without any explanation as to capacity or authority, that an agreement was being made by an unlimited number of companies, many, if not all, in other jurisdictions. ii) With regard to the definition to which, for the purposes of his first proposition, Mr Tager refers, that does indeed appear in clause 1.1; however, it is subsequent to the first and seemingly governing sentence:

“This letter sets out the terms upon which ‘Signet Partners Ltd’ (“SPL”, ‘We’, ‘Us’, and SPL’s successor in title …) agree to introduce the hedge … funds of Signet Research and Advisory SA (“Signet”, “You”), to … investors.”

At the lowest, this combination into one paragraph of two definitions is ambiguous. Such ambiguity, however, not least in the light of Mr Lazarus’s other submissions, is easily resolved by differentiating between the definition of SRA, as Signet, being the party to the Agreement, the subject of the definition of ‘You’ at the outset, and the definition of ‘Signet’ when referred to in the text of the Agreement and “for the purposes of the Agreement”. iii) This is put beyond doubt in my judgment by Mr Lazarus’s further submission, by reference to the addressee of the letter which constitutes the Agreement. The addressee is SRA, and clause 8.3 of the Agreement provides that “if this letter is addressed to more than one party all shall be jointly and severally liable hereunder”. The letter was not addressed to more than one party. iv) As to Mr Tager’s fourth submission, the reference in Schedule One is, as Mr Lazarus points out, simply explained by its being a warranty by SRA, the party to the Agreement, as to approval of the Schedule by other group companies. In any event I would add that the very fact that there is a re-definition of “Signet” as embracing a large number of other companies, for the purposes of Schedule One, both supports the proposition that SRA is the party to the Agreement as defined in the first sentence of clause 1.1 and that the definition “for the purposes of this Agreement” upon which Mr Tager places reliance in the third sentence of clause 1.1 is similar in kind, to, and indeed a duplicate of, the rubric in Schedule One paragraph A for the purposes of the Schedule. v) As to Mr Tager’s second proposition, this too can plainly be explained by SRA being in a position to warrant that there will be no breach of the restrictive covenant by any of the companies in its Group, and warranting to provide the necessary information that might be in the possession of any member of the Group: while Mr Tager’s third point, if indeed it is a matter of concern for SPL if some of its obligations are not enforceable, is in any event met by the fact that SRA would be in a position to enforce, by specific performance as well as by termination of the Agreement, any obligations of SPL which may in fact be for the benefit of some other Group company.

[96]SRA was the only Signet party to the Agreement, and the only party which may be liable in these proceedings. SCML is not a party, and the question of warranty of authority does not arise.

Approaching VDS direct

[97]The next issue relates to whether there was an obligation, of which Signet were in breach, by virtue of their contracting direct with VDS in or about March or April 2005. This is said to have been(i) in breach of clause 2.3 since it was during the period of the Agreement (not terminated until 14 March 2006) and in any event (if by reference to when the written Agreement with VDS was signed) during the three years after its termination

(ii) in breach of Schedule One paragraph B and/or Schedule One paragraph C, which only apply for the duration of the Agreement, prior to 14 March 2006. (i). Clause 2.3.

[98]Drawing the significant words out of clause 2.3, the complaint is that Signet are in breach when they “directly or indirectly approach … [an] Intermediar[y] introduced to Signet by SPL (including those listed in Schedule One and subsequent supplements) for any commercial … purposes …”. As I have concluded, as set out in paragraphs 75 to 79 above, that in any event VDS was not introduced to Signet by SPL, but rather was introduced to SPL by Signet, this allegation fails in limine. However, for the avoidance of any doubt, I turn to the question of whether VDS was an Intermediary within the Agreement at all.

[99]It is clear from the definition “Intermediaries … (including those listed in Schedule One and subsequent supplements)” that Intermediaries are not intended to be exclusively defined by reference to inclusion in Schedule One. In the event, VDS was not included in Schedule One or any supplements: the attempt to suggest that VDS was somehow included in a supplement to Schedule One by virtue of the heading “Vilien Stanisic”, appearing above the list of distinct VDS clients in the later Excel lists, was a quite hopeless argument.

[100]Nevertheless the fact is that there is bound to be a distinction between those classed as Intermediaries in Schedule One and those classified as Sub-agents in Schedule Two. If VDS had become a Sub-agent within clause 2.5 of the Agreement, then VDS would have properly appeared in Schedule Two. I do not consider that it would have been possible to be both an Intermediary for the purposes of Schedule One and a Sub-agent for the purposes of Schedule Two. That seems to be have been one of the problems about Mr Rashdi.

[101]But in any event, quite apart from the inconclusive question of listing in Schedule One, it is, as Mr Lazarus submits, necessary to look at clause 1.1 for the definition for the purposes of this Agreement of an Intermediary. By the first sentence of clause 1.1, “SPL … agree to introduce the hedge fund of funds of … Signet … to potential … intermediaries (“The Intermediaries”) who may be interested in … introducing Signet funds to potential investors.” It is quite plain that this is a reference to those, like Allenbridge, St James’s Place or, probably, Complementa, who operate as consultants or wealth managers or financial advisers, making recommendations to clients or contacts of theirs who may be prepared to invest. Those are the Intermediaries (to be listed in Schedule One) to whom SPL was to set out to introduce Signet hedge funds. It is not an apt definition for a party who is to go out and find those intermediaries or investors. It is clear that in the hedge fund industry the reference to intermediaries can sometimes be a loose one, but Intermediaries for the purposes of this Agreement are carefully defined, and VDS was not one. (ii). Schedule One Paragraph B

[102]I shall repeat this paragraph for convenience:

“This Schedule outlines current Investor contacts of [MO] and … SPL and it is agreed that Signet will not … make any direct approaches to the … Intermediaries outlined below.”

[103]VDS was not an Intermediary, for the reasons set out above. VDS was also not an Intermediary “outlined below”, as it is not in Schedule One (or, if there is to be a broad definition of “outlined below” so as to include supplements to Schedule One, then VDS was not listed as an Intermediary in those supplements either). (iii). Schedule One Paragraph C

[104]Again I repeat the material parts of this paragraph:

“Signet will ensure that it does not independently develop contacts with individuals or departments within the same Investor of Intermediary or Sub-Agent entities outlined in this Schedule, except in regard to specific investors or entities which are considered by both SPL and Signet to be global in their size or where Signet already has existing live contacts. These Investor entities will be referred to as “Open Investors”

. The Open Investors will be mutually agreed … and specified as Open Investors in this Schedule …” There continue in paragraph D provisions in relation to those Open Investors.

[105]This is a difficult clause to interpret without reference to the clear factual matrix, which was the turf wars. The clause makes entire sense if seen in the context of the problems referred to in paragraphs 15 and 35-36 above. It obviously relates to the kind of situation where there are large, perhaps multi-national entities, in which different people, branches or departments, may develop contacts with different people – hence the approach in appropriate cases of accepting ‘open house’ in respect of an Open Investor. It is difficult to see the applicability of it in any event to a one-person company such as VDS. Once this is appreciated, it can be understood that the reference to independent development of contacts with individuals or departments within the same investor is intended to deal with simultaneous approaches to different people within the same organisation.

[106]In those circumstances in which the clause can make perfect sense – particularly bearing in mind Wickman Machine Tool referred to in paragraph 89(ii) above – not only does the clause have a good and sensible purpose, which is not that for which MO contends, but it can be construed strictly and contra proferentem without depriving it of effect. There are no “Sub-Agent entitiesoutlined in this Schedule”. Any Sub-Agents would not be in Schedule One but in Schedule Two, and in addition there would need to be the further extension of the words “outlined below”, not only to ‘Schedule Two’ but to ‘Schedule Two and its supplements’.

[107]However, even if paragraph C were to be construed widely: i) For the reasons set out in paragraphs 80-86 above, VDS was not a Sub-Agent. ii) For the reason set out in paragraph 101 above, nor was VDS an Intermediary. (iv). Approach or Independent Development of Contacts

[108]If, contrary to my conclusions, VDS was an Intermediary introduced to Signet by SPL within clause 2.3, or an Intermediary within Schedule One paragraph B, then Signet could not approach VDS directly (both clauses) or indirectly (clause 2.3). I conclude, however, that I am not satisfied in any event that Signet did approach VDS directly or indirectly. It appears to me on balance more likely that it was VDS who approached Signet, in the circumstances described in paragraphs 44-49 above. Even less can it be said that, within Schedule One paragraph B, Signet independently developed contacts with VDS. The contacts were already developed. In the alternative in any event this approach or development of contacts was after VDS had ceased to be a sub-agent or intermediary if he ever was (see paragraph 87).

[109]The difficulty of MO’s case is perhaps implicitly accepted by Mr Tager’s pointing out in paragraph 12 of his last written submissions, by reference to the clause of the draft sub-introducer agreement which I have recited in paragraph 32 above, and which, had it been signed and agreed, would have restrained VDS from approaching Signet. Mr Tager comments that “the events of February to April 2005 would have been very different if VDS had signed up to this subclause.”

[110]If it had been the case that Signet approached or developed contacts with VDS, and in breach of an obligation not to do so, then, in the absence of such corresponding obligation on VDS as referred to by Mr Tager, it is clear that, even if Signet had not approached VDS, VDS would have in any event approached (did approach) Signet, and in any event VDS would not have worked again with MO, It would thus seem unlikely that SPL could show that any loss would have been established to flow from any such breach.

[111]In any event, for those multiple reasons there was no obligation and no breach.

VDS’s contacts/clients

[112]During Mr Tager’s opening at the outset of the hearing, it became apparent that he was pursuing a case which had not featured in the pleadings and was a new way of framing MO’s entitlement, and permission to amend was in the event sought and, after some argument and particularisation, granted. Such case did not relate to a complaint about an approach to VDS, but to VDS’s contacts. This was put and pursued in two ways: i) Clause 2.3. This clause was said to restrain Signet from approaching (directly or indirectly) during the agreement, and for three years after its termination, any VDS contacts, investors or intermediaries, who were put on SPL’s list and forwarded to Signet by MO, and approved by Signet, a practice which continued at any rate until January 2005. This would depend upon establishing that Signet was not entitled to but did approach VDS’s contacts on the SPL list since March 2005: although Mr Lazarus did not accept that an approach to such contacts by VDS would amount to an ‘indirect’ approach by Signet, I would have thought it most likely that such would be found to be the case, depending upon the precise facts. Once breach of such obligation is established, Mr Tager is satisfied that he must be able in due course to prove that Signet were in breach of this and must pay damages, alternatively there would be an assessment of damages as at March 2005: in either case probably by reference to an entitlement of 37.5 bps in respect of trailer fees on such business (and 50% of performance and placement fees, but for simplicity’s sake I shall make no further reference to this aspect in this judgment). ii) Clauses 4.1, 4.3 and 5.3. Mr Tager relies upon the combination of these clauses to establish that, both during the agreement and after termination, Signet is obliged to account in respect of any investments made either during the agreement or at any future stage, by any VDS contact who was put on the SPL lists by MO. Although Mr Tager primarily asserts an entitlement to an account of 100% of the trailer fees on such past, present and future business, i.e. 75 bps, subject to allowance of 50% after April 2007 if MO is unable or unwilling to ‘maintain’ the relationships pursuant to clause 5.3 of the Agreement, he is in the alternative pursuing a claim to 50%, i.e. 37.5 bps, throughout, on the basis that VDS should be entitled to the other 37.5 bps. It is of course known that there were the investments from VDS contacts of $13m, plus now the SF30.5m; but the liability to account would extend to any continued investments by VDS contacts on the SPL list. There would be an argument, made briefly by Mr Lazarus, by reference to his assertion as to the proper construction of clause 5.3, that any such entitlement would only extend to continued investment by investors on the list, not by other investors through intermediaries who were on the list, but this is not a matter that was fully argued, or upon which it is necessary for me presently to express a view. On any basis, this is potentially a very large claim. (i). Clause 2.3

[113]Mr Tager points to the fact that VDS contacts were always notified by VDS to MO and then included in MO’s lists, his SCIAS, even though MO had no involvement with them save for such reporting (and possibly to some limited extent in relation to the due diligence for Complementa), and even though the draft sub-introducer agreement, had it been signed, would have expressly described such investors as (VDS being defined as IR) VDS Investors or VDS Introduced Assets (see paragraph 32 above).

[114]As can be seen in paragraphs 34, 36 and 37 above, MO was quickly told that he had to identify the VDS clients separately, and he did so. He included them in his client lists, albeit under a separate heading “Vilien Stanisic”, and such lists were approved by Signet, usually by CM, but at the lunch on 15 November by RM. Such lists ought to have constituted “signed supplements to this Agreement” by reference to clause 2.2, but in practice this was waived and, in any event, it is clear that clause 2.3 does not make it a necessity for the relevant investors or intermediaries to have been listed in Schedule One or subsequent supplements, because such requirement is, as referred to in paragraph 99 above, not mandatory and the definition is not exclusive.

[115]The nub of this is really expressed in the exchange between Mr Tager and VDS in his cross-examination (transcript Day 5 p189) when he said:

“Q. All the business you introduced to Signet got from you to Signet via SPL, did it not? A. Right.”

[116]That is the be-all and end-all of Mr Tager’s case, namely that, by including the investors and intermediaries introduced by VDS in the SPL list presented to Signet, those investors and intermediaries are “introduced to Signet by SPL” and fall within the ambit of clause 2.3, so that, even if MO has no contact with them, and indeed even if they only remain on the list for a short time and no business is done with them at that stage, they cannot thereafter be approached for three years after the termination of the Agreement by Signet or (albeit that there was no restrictive covenant on VDS even if the sub-introducer agreement had been signed (see paragraph 32 above)) indirectly through VDS.

[117]Mr Lazarus’s submission, once again by reference to construction of the Agreement, but if necessary using the tools of construction referred to in paragraph 89 above, is simple. He refers once again to the important clause 1.1. He points out that, by the Agreement, SPL “agreed to introduce the hedge fund of funds of Signet … to potential investors and intermediaries.” It is, he submits, the Signet funds which are to be introduced, and, for the purpose of turf wars or otherwise, the client contact which is required to be protected is in respect of investors/intermediaries who have been introduced to Signet funds by SPL. The subsequent delivery of the information by SPL to Signet HQ is purely administrative and cannot need or justify protection. I agree. The investors or intermediaries, which Signet must not directly or indirectly approach during the prohibited period, are those whom SPL has introduced to Signet, i.e. to Signet funds. Albeit that SPL, in notifying Signet for the purpose of making payment of the split of fees, included VDS clients in their list, that did not make the VDS clients clients who had been introduced to Signet by SPL. The answer in fact lies in the very way in which Mr Tager formulated the question in cross-examination to VDS, because it includes, within Mr Tager’s question, the very answer which Mr Lazarus gives, namely that “all the business you introduced to Signet” was not, as it was not in Mr Tager’s similar argument relating to Mr Schmidt, referred to in paragraph 75(iii) above, “reintroduced” to Signet simply by the administrative exercise of transmitting the information to Signet HQ, or in particular to BDO.

[118]In those circumstances, there has been no breach of clause 2.3, if and insofar as VDS has, or Signet directly or indirectly has, approached VDS investors or intermediaries who were included on SPL lists. Accordingly MO has no claim under this head. (ii). Clause 5.3

[119]As I have previously discussed, the Agreement drafted and presented by MO and accepted without, as it seems to me, any proper consideration by RM, is a very beneficial one for MO in a number of respects, many of which I have canvassed already. His entitlement, by reference to clauses 2.1 and 5.8 (the information paragraphs) and 4.1, 4.3 and 5.3 (the accounting paragraphs), has the additional advantages to those mentioned in paragraphs 112(i) and 116 above that: i) unlike clause 2.3, which prevents any approaches to SPL clients for three years after the termination of the Agreement, these clauses impose the sanction that, even after those three years are up, if any further business is done by those clients, Signet must account (and at 100% of MO’s original fees if he sends four communications a year to the relevant investor): ii) this applies to subsequent investments, even if an investor did not invest during the period of the Agreement and was only on the list for a short time or (subject always to the protection that Signet ought to have checked the position before they approved the inclusion of the name on the list) possibly as a result of very minimal contact by MO at the time. Once again, this beneficial entitlement is, if MO is right, to be extended yet further. Mr Lazarus made this point very forcibly in his closing submissions.

[120]The obligation of Signet during the Agreement is to account in respect of “SPL Introduced Assets” in accordance with clause 4.3, and, although there is no specific reference to those words in clause 5.3, it appears to be common ground, in that clause also, because of the cross-reference to clause 4, even though the concentration in clause 5.3 is to lay emphasis on “all existing and future assets invested by the Investors for as long as said assets remain invested in Signet”. SPL Introduced Assets are defined in clause 4.1 as:

“All assets invested by Investors or Intermediaries that have been introduced to Signet by SPL, its Intermediaries or Sub-Agents or others on its behalf.”

[121]It is worth considering, in this context, clause 1.5 which was, as explained in paragraph 21 above, added in in February 2004, so that the whole Agreement was re-executed on 4 March with its incorporation; and as the Agreement which is sought to be enforced is that of 4 March 2004, which incorporates it, it is necessary to construe the Agreement as a whole including that clause. Clause 1.5 states:

“In addition to covering all future assets and subscriptions introduced to Signet by SPL, SPL clients, SPL intermediaries and SPL sub-agents, this Agreement will be deemed to cover all assets that have been introduced to Signet by SPL, SPL clients, SPL intermediaries and SPL sub-agents to date.”

[122]It is noteworthy that the definition of what is covered by the Agreement both as to the past and as to the future (repeated in full on each occasion), is different from that in clause 4.1, by virtue of the omission of the words “or others on its behalf”.

[123]I turn to consider whether investors or intermediaries introduced to Signet by VDS are caught by the obligation to account by reference to the definition of SPL Introduced Assets in clause 4.1: i) They were not “introduced to Signet by SPL” (see paragraphs 113-117 above). ii) VDS was not an intermediary (see paragraph 101 above). iii) VDS was not a Sub-Agent (see paragraphs 80-86 above). iv) What of “others on its behalf”?

[124]The first point is that the construction of those words must be seen against the fact that, when gathering up the definition of assets covered by the Agreement in clause 1.5, there was no reference to this fourth category, so that it can hardly be said to colour or affect the definitions to any significant extent.

[125]There are two considerations: i) When VDS contacted, and sought to introduce Signet funds to, an entity such as Complementa, did VDS do so on behalf of SPL? The “verbal agreement” between MO and VDS is set out in paragraph 25 above. That gives no support to a case that VDS, when introducing contacts to Signet funds, was doing so on SPL’s behalf. They remained VDS clients as between SPL and VDS right down to 2 February, as set out in paragraph 48 above. ii) Is there any construction that can be given to “others on its behalf”, particularly given its insignificance (see paragraph 124 above), short of the dramatic extension for which Mr Tager has to contend if he relies on these words as giving him the entitlement claimed by MO? It seems to me that there is no need to construe “others on its behalf” more widely than by reference to employees, and any others who, when seeking to introduce Signet funds to Complementa, held themselves out as acting on behalf of SPL, which there is no suggestion VDS did.

Damages

[126]There was considerable discussion about damages if MO were to have established that Signet were in breach of clause 2.3, either in relation to having approached VDS direct (which would in any event have had the problems referred to in paragraph 110 above) or in relation to approaching directly or indirectly VDS contacts/clients. There was discussion as to whether any loss could be established, and if so how (and if any principles were to be laid down on the basis of which an enquiry were to follow, I was to endeavour to express them): and as to whether the burgeoning concept of restitutionary damages (as in AG v Blake

[2001] 1 AC 268

, Experience Hendrix LLC v PPX Enterprises Inc

[2003] FSR 853

, WWF – World Wide Fund for Nature v World Wrestling Federation Entertainment Inc

[2006] EWHC 184 (Ch)

and

[2007] EWCA Civ 286

or indeed Douglas and Others v Hello! Ltd and Others

[2007] UKHL 21

or perhaps the possible availability of damages under Lord Cairns’ Act e.g. Wrotham Park Estate Co Ltd v Parkside Homes

[1974] 1 WLR 798

)might have assisted. I have so firmly concluded that, on neither of these bases, does any claim for damages arise, that it is in my judgment unprofitable, if not impossible, for me to speculate as to the routes to damages (if any) which might have been capable of establishment.

Other Remedies

[127]As to other remedies in respect of claim 1, I consider that it is appropriate to grant a declaration and an order for accounts to enforce Signet’s obligations pursuant to clauses 4.1, 4.3, 5.3 and 5.8 with regard to SPL clients not being VDS clients or contacts (which I invite Counsel for the Claimant to draft), given the matters to which I have referred in paragraphs 60 to 66 above: even though in the event the matters which were not disclosed did not evidence or constitute any entitlement to MO, and the belief which RM had in that regard was in the event justified. On any basis the documents should have been disclosed by way of standard disclosure in these proceedings.

Claim 2

[128]I refer to the short summary of the factual issue in paragraphs 13 and 14 above. The following matters are plainly significant in my resolution of the issue.

[129]The email of 2 May set out in writing MO’s record, by way of ‘confirmation of the way forward’, of what he understood to have been agreed, namely that the “pre-paid salary” (the quarterly £15,000), as well as the expenses, were to be deductible from his trailer fees. Although he asked for confirmation that this was correct, there is nothing else in writing to the contrary.

[130]If there was, as he recounts, an express confirmation to the contrary as to his understanding with regard to deductibility at the Sofra Restaurant shortly afterwards, it is wholly uncharacteristic of him not to have recorded that: i) It would be his most significant – if not only – failure in respect of paperwork, of which he was to prove a master. ii) If, as he explains, RM said that he was someone who “liked to do handshake business” and was not in favour of written agreements, then there was nothing to stop MO unilaterally writing a confirmatory email (as he had just done) to set down the answer now given to his previous implicit query, and correct the incorrect record.

[131]There was no mention of recoupability or deduction in the email of 10 September which RM sent to MO on behalf of SRA, setting out the terms of his appointment, which I have recited at paragraph 17 above.

[132]The suggestion that the £15,000 payments were recoupable or repayable was never made and the matter never discussed: RM agrees it was not raised between 2002 and 2005.

[133]There was in particular no attempt to recoup, (nor mention of it) when the “watershed moment”, as RM himself described it, occurred, of the first quarter (the second quarter of 2004) when MO exceeded £15,000 in trailer fee entitlement; although RM recalls that he would probably have had a telephone conversation with MO and congratulated him. And there was no recoupment, or mention of recoupment, or of waiver of repayability, at the time of, or in respect of, any subsequent quarterly payment.

[134]There were witness statements adduced by Signet from three other introducers. Mr Polednik did not receive any advances or retainers, but was paid simply on commission. Mr Bodart and Mr Weiss explained that they each did have an arrangement for recoupable advances, and that they were subsequently told by RM, Bodart in 2003 and Weiss in Spring 2005, that their obligation to repay was waived.

[135]At the 19 September 2005 meeting, described in paragraph 54 above, both RM and SU agreed (and MO confirms) that there was no mention of any obligation to repay what already at that stage would have been easily calculable as a sum in excess of £120,000. It would clearly have been a good negotiating weapon for Signet to refer, in the course of discussion, to that repayability, or the generosity of the waiver of it, even if the meeting was amicable. Some reference is made to the wording of the Minutes and/or of MO’s solicitor’s subsequent draft settlement agreement, from which it could be inferred that it may have been in the mind of one or other of the draftsman (CS on the one side and MO on the other) to encompass or provide implicitly for a waiver of any claim over and above the £13,000 personal loan (see paragraph 13 above) which it is common ground was, on any basis, to be waived. But it is plain that the waiver of repayment of advances was expressly discussed in the context of, and in return for, the transfer by MO of his shares in SCML (see paragraph 54(i) above): and SU agreed in cross-examination that the value of those shares would not have justified more than the £13,000 personal loan which was expressly discussed.

[136]When the Defendants’ solicitors’ letter first raised the claim based on the 2 May email in April 2006 (paragraph 57 above) repayment of the total sum was sought (and subsequently deducted), without reference to a suggestion, which, as will be seen, is now the Defendants’ case, that recoupment would only be made insofar as and to the extent that there is an excess over £15,000 in any given quarter.

What is the case for the Defendant?

[137]Mr Lazarus’s submission as to repayability/deductibility of the £15,000 retainer/advance is by way of an implied term that the advances would be repaid as and when a quarterly entitlement exceeded £15,000, but only to the extent of off-set of any sum over and above £15,000 in a quarter; so as to leave a continuing minimum of £15,000 until such time as all the advances were repaid. This is of course not spelt out or expressed in the 2 May email, but is said to be implied. It is not seemingly what was said or done in April 2006, it is not spelt out in paragraph 14.4 of Signet’s Defence in claim 2, which simply asserts that “the advances would be repayable by deduction from [MO’s] trailer fees”, and what is said in RM’s relevant witness statement (paragraph 17) is that it was “understood that SRA could seek to recover the amount at its discretion; since the advances were only repayable if [MO] earned sufficient commission to repay them, and had sufficient earnings in addition to his personal financial requirements, there was no need for a precise arrangement for when the payments would be recovered.”

[138]SU suggested a slightly different implication when he was cross-examined, namely that the £15,000 would be repayable “when [MO’s] revenues from trailer fees grow substantially over” £15,000.

[139]From the point of view both of MO and RM, it is now some five years since the events at Sofra, and for four of those years there was no call to recollect what had occurred, nor was it at any time in mind. MO’s best recollection now, which he gave in evidence, was that RM said to him words to the effect “Marc, we do not expect you to repay the money; you are out there, you are working full time for us”, which he says was said in a “very gentle, almost grateful way” (transcript Day 3 pp102-126). RM does not deny that there was a meeting, and that there was a discussion at the Sofra Restaurant, which it is clear arose specifically as a result of the implicit query raised by MO at the conclusion of the 2 May email, because RM does not deny that there was such a clarificatory conversation. What he recalls, which is not consistent with the implications contended for by either Mr Lazarus or SU, is that which I have set out in paragraph 14 above. He clarified this later in his evidence (transcript Day 8 pp137-144):

“We would not have obliged him to pay it back if he had done poorly, and if he does well, which is not defined, we would also not oblige him to pay it back. In other words, the expectation would not be that we would ever ask for this money back, and the trigger that causes us to ask for our advances back are the fact that he is using them against us after we had been so, I think, generous, in order to build this business. … I wanted him to have some sort of sense of obligation that at some point he would, should or could pay us back, and if he goes down, he does not have to. There is no more and no less than that.”

[140]This is wholly unworkable as a contractual system, reliant upon either express or implied terms, and can only be read as an implication that the sums were repayable, but only at the discretion of Signet, which would be unlikely to be exercised, in that it would not be exercised so as to enforce repayment if things went badly (and this was made, RM contends, expressly clear) and it would not be exercised if things went well (as it was not in the case of Weiss and Bodart, although I have no detailed evidence as to their arrangements).

[141]I am satisfied that MO’s account as to what happened in the ‘clarification’ discussion at Sofra is more likely to be correct. I conclude that someone, on the Defendants’ behalf, in looking at the position in defence or counter-attack to MO’s claim in April 2006, came upon the 2 May email, and concluded that the monies fell to be repaid; and that RM had by that time forgotten the discussion which he has now, but only now, had the opportunity to think about in response to reading and hearing what MO has said about it, and he has sought to do his best to reconcile what is now his own recollection of what occurred with the position earlier taken.

[142]Although it was out of character for MO not to have confirmed the discussion in writing, that was at a stage when he had only just met the charismatic and impressive RM – the previous discussions, summarised in his 2 May email, having been piecemeal, and the termsharing largely resulted from discussions and understandings with Mr Mazhar rather than RM. He may well have gone with the flow of RM’s ‘handshake’ approach, which I note surfaced again in relation to the much later discussion about client lists in October 2004 when, in an email of 27 October 2004 (referred to in paragraph 37 above), RM was clearly somewhat offended, or at any rate taken aback, by what he saw as an attitude by MO that “[his] word is not good enough”. MO’s arrangement continued on the basis of an oral arrangement for more than a year after this (just as did VDS’s from March 2005 onwards) and writing only became necessary as MO’s sensitivity increased as a result of the turf wars.

[143]The generous, almost insouciant, approach by RM to the repayability of the initial retainer, is in fact consistent, in my judgment, with what I have seen of his approach, dedicated to broadbrush encouragement and, if not inattentive to, certainly dismissive of, detail, and is consistent with his subsequent treatment of Weiss and Bodart. My conclusion is that, rather than the kind of difficult implication which he now seeks to read into what was said, that there would not be recoupment if things went well and there would not be recoupment if things went badly, much the most likely is that he simply indicated that there was no intention to recoup. This would also chime with the generous approach which he seems to have been adopting, to what he may well have thought was a really good prospect in the new and enthusiastic MO, when it is noted that in Mr Mazhar’s email of 14 February 2002 to RM (when indicating the kind of remuneration which, after his discussions with MO he believed MO would be likely to accept), he said:

“I leave it up to you if you would like to reduce the 75 bps to 50 bps, which I think he would accept.”

There is no evidence that RM ever sought to take that line, or other than to give and agree to a generous approach to MO, and I conclude that, when MO asked for clarification as to whether the sums would be recoupable, he was given the answer that they would not be. This is not at all an uncommercial arrangement, but what it means is that he would receive a basic sum during the period until he started to earn commission, and would not then be saddled with what might be a heavy repayment. If however he got started quickly, then he would have no need of the retainer for very long, because he would speedily be earning commissions.

[144]In the circumstances there was, at the time of the Introducer Agreement, no prior oral agreement to repay or entitlement to recoup. If there had been such a prior oral agreement, then the respective contentions of the parties would arise as to whether MO’s obligations to repay and Signet’s entitlement to recoup under such prior oral agreement survive the Introducer Agreement and the ‘entire agreement’ clause, contained in clause 8.1, set out in paragraph 22 above. The arguments are nicely poised, and I have been referred to a number of authorities, particularly Inntretreneur Pub Co (GL) v East Crown Ltd

[2002] Lloyds Rep 611

, Royal National Lifeboat Institution v Bushaway

[2005] IRLR 674

EAT, said by Mr Tager to be per incuriam by virtue of the lack of citation of relevant authorities, Proforce Recruit Ltd v The Rugby Group

[2006] EWCA Civ 69

, and Chartbrook Ltd v Persimmon Homes Ltd and Others

[2007] EWHC 409 (Ch)

[145]Mr Lazarus submits that the Introducer Agreement of November 2003, and then of March 2004, did not affect or overtake the earlier oral agreement in relation to the retainer and its (for this purpose assumed) repayability. Whereas the authorities on entire agreement clauses deprecate, and make clear that an entire agreement clause is intended to avoid, ‘threshing through the undergrowth’ to establish some allegedly binding oral collateral warranty, it is not intended, unless the agreement relates to the same subject matter, to oust or implicitly prevent reliance upon, any binding earlier agreement between the parties. The Introducer Agreement was concerned only with an obligation to pay trailer fees etc (although in one clause, clause 5.4 (not recited in pargraph 22 above), relating to the provision for payment of a ‘termination fee’, in circumstances which did not in fact arise, there is a reference to “SPL’s current £15,000 quarterly Consulting Fee”). De facto, the old £15,000 agreement continued to operate (and the trailer fees provided for by the Introducer Agreement were not paid) until Q2 2004, but, even if there was no continuing obligation to pay the £15,000, as both RM and MO seem to have accepted in evidence, the obligations relating to repayability continued.

[146]Mr Tager submits that there are no obligations relating to remuneration for introductions thereafter otherwise than by reference to the Introducer Agreement. The £15,000 continued de facto until Q2 2004, but without any contractual obligation, although there was recognition of it by virtue of the reference to the “current … Consulting Fee” in clause 5.4, which gave it legitimacy within the boundaries of the new Agreement (and made no reference to recoupment). Signet have sought to offset the £15,000 payments made to MO, prior to the inception of SPL and the Introducer Agreement, as well as those made subsequent to such inception: the only basis upon which this could be justified (setting off sums ostensibly owed by MO against sums owed to SPL) must be on the basis of an implicit novation, and that novation must have been effected by the Introducer Agreement.

[147]If I was compelled to make a choice between these arguments, I would prefer those of Mr Tager, which would also accord with the reality, described above, that in fact there never was any mention of recoupability of earlier advances when the new arrangement going forward was put in place. However, as I have found that there was no agreement for repayment, I conclude in any event that Signet was not entitled to deduct from the trailer fees payable to SPL the sums paid by way of retainer/consulting fee/pre-paid salary to MO and/or SPL, and accordingly SRA is liable to pay the £123,623 (plus interest) to SPL.

Cited in 1 later judgment

AZ v BY 2024