The broke broker: justly enriched? Benedetti v Sawiris in the Supreme Court

It really happens, apparently, in the world of international high finance: a broker is so keen to close the deal that they somehow forget to get their fee agreed. More realistically, of course, they are looking to time their agreement to the point at which the principal is in the best mood to agree the highest fee, often at closing, and they miscalculate and miss their opportunity. What happens when no agreement has actually been made with the broker?

The Supreme Court faced this situation in Benedetti v Sawiris [2013], although most of the really difficult questions had been either agreed or decided by the time the case reached the Supreme Court. In particular, it was common ground that the claimant should receive a quantum meruit payment, and the only question was how much it should be (and whether he should give credit for a sum of €67m received at an earlier stage through a company he controlled). Nevertheless, this raised interesting questions about the impact of failed negotiations in determining a quantum meruit payment.


Mr Sawiris wanted to acquire a valuable Italian company. He agreed with Mr Benedetti that he would assist in structuring and bringing the transaction to fruition and they made a written acquisition agreement in January 2004, which included provision for his remuneration. However, although the transaction did not proceed as envisaged, Mr Benedetti nonetheless continued to provide assistance in the very different circumstances the parties found themselves in.

Negotiations took place with a view to setting a specific basis for Mr Benedetti’s remuneration for his services relating to the revised arrangements. Mr Sawiris offered to pay Mr Benedetti €75.1m, but Mr Benedetti did not accept that figure and no alternative basis was agreed before the transaction successfully completed in its different form.

As part of the transaction a sum of €67m was paid to a company controlled by Mr Benedetti. Although he told Mr Sawiris that the money was required for payment of a number of necessary disbursements to third parties, the Court at first instance found as a fact that the money was not used in that way and should be treated as part of Mr Benedetti’s own remuneration for the services he rendered. At first instance, the judge allocated the payment against 60% of the services provided by Mr Benedetti, although on appeal that allocation was rejected.

Mr Benedetti claimed against Mr Sawiris for the monies, which he claimed were payable to him in respect of the services he had provided. His primary claim was in contract under the acquisition agreement. However, he also had alternative claims based on an alleged oral variation of the acquisition agreement, collateral contract, and quantum meruit.


The judge at first instance found that the acquisition agreement did not apply to the changed form of the transaction and that no other agreement had been made, so the contract claims failed. However, a claim could be made in quantum meruit. The judge found that the commercial value of the services provided by Mr Benedetti was €36.3m but that the amount of €67m received by his company must be taken into account as remuneration for part of the services rendered (60%) and so, if awarded a market rate, would be entitled to recover only a further payment of €14.52m. However, the judge decided that Mr Sawiris’ offer to pay €75.1m should also be taken into account and indeed was decisive as to the compensation that ought to be paid. Accordingly, he was awarded €75.1m.

The Court of Appeal held that the offer to pay a further €75.1m should not have been taken into account in determining the amount payable in a quantum meruit claim. It found that Mr Benedetti was only entitled to a further €14.52m (that being 40% of the market rate €36.3m – the overall market value for the part of the services not remunerated by the payment to Mr Benedetti’s company).

The Supreme Court said there was no evidence to support the allocation of 
only 60% of the amount received by 
Mr Benedetti’s company to his remuneration and so the entirety of that payment should be set off against any quantum meruit assessment.

All of the Supreme Court justices decided that it was irrelevant that the defendant had indicated that he was prepared to pay more. On a quantum meruit assessment, the claimant was, prima facie, entitled to be paid a market rate. This creates a stark difference between restitutionary quantum meruit and a contractual obligation to pay a reasonable fee. In the latter case, interpretation of what is ‘reasonable’ can take into account non-contractual expressions by the parties (usually made during negotiations) as to what a reasonable fee ought to have been. However, the dividing line between that and subjective expression of the intended meaning of the term (which is inadmissible evidence) remains somewhat unclear.

Accordingly, Mr Benedetti was entitled to no more than the market rate of €36.3m in respect of the entirety of the services he had provided and was required to give credit for the entire sum he had previously received. Consequently, Mr Benedetti was entitled to no further payment.

Whether a layman would consider either party to have been unjustly enriched in these circumstances is open to question: it is unlikely he would feel very sorry for Mr Benedetti who has no doubt been able to find some solace in his earlier receipt of €67.1m (less a no doubt modest crust payable to the numerous lawyers and other professionals involved).


Mr Benedetti’s contract claims were rejected by the first instance judge as he found that it was no longer applicable and had been abandoned and had not been replaced by substitute contract. Mr Benedetti did not appeal these findings, probably on the basis that they were principally findings of fact and so any appeal would have been difficult. Accordingly, the Supreme Court was only required to consider his quantum meruit claim. Nonetheless, Lord Neuberger questioned whether this mischaracterised the real claim. He suggested that the new arrangement pursuant to which matters were finalised ‘probably gave rise to a contract, arising from the parties’ words and conduct’ and although:

‘… that contract did not specify Mr Benedetti’s remuneration… it must be at least arguable that there would be implied into the contract a term that he should be paid a reasonable sum’.

However, he did not explore this further because the point had not been argued before the Supreme Court and even if there were a distinction in principle, it would have made no difference to the outcome of this appeal. It is perhaps unfortunate that his judgment did not fully explain his reasoning and in particular did not expressly analyse the circumstances in which a contract to pay a reasonable fee can have been 
inferred in circumstances in which, as he had explained earlier, the negotiations had been conducted on the basis that remuneration would be based on an 
expressly specified mechanism (which was not a mechanism which provided for payment of a ‘reasonable’ fee) at a level significantly in excess of a ‘reasonable’ fee and that they ‘continued desultorily’ at all material times.

A similar approach to a somewhat 
different question was adopted by 
Gloster LJ in Energy Venture Partners 
Ltd v Malabu Oil and Gas Ltd [2013], a 
first instance judgment delivered the day before the Benedetti decision was handed down by the Supreme Court. Notwithstanding the finding that negotiations as to the quantum of commission were ongoing and that the ‘overwhelming likelihood’ was that the broker was intending:

‘… to progress the… deal to the 
stage where [the other party] was 
ready to sign; and then when he effectively had [his principal] over a barrel, to negotiate and agree [his commission] at that stage, rather 
than attempt to do so at a time when [the principal’s representative] was… clearly reluctant to commit to paying…[a] large fee.’

She concluded:

‘… that there was indeed an implied agreement… that [the broker] would be paid a reasonable fee’.

Neither judgment provides guidance on the question of how negotiations directed at agreement of one mechanism of remuneration can create a specific 
contract for payment under a different mechanism.


When parties enter into a contract, they are free to agree the way in which remuneration will be calculated. Where remuneration is to be set by a quantum meruit assessment outside the context of a contract, the position is different. On a quantum meruit assessment a claimant is entitled to a reasonable value for the benefit provided; so what is the reasonable value of the benefit provided?

In Benedetti, the Supreme Court held unanimously that, in a broking context, this will, prima facie, be the market rate for the services provided. This had, effectively, been common ground between the parties and the main dispute before the Supreme Court was whether this could be influenced up or down by the subjective position adopted by the recipient of the services, in this case, Mr Sawiris.

The Supreme Court unanimously 
rejected Mr Benedetti’s claim that 
Mr Sawiris’ offer of more than the market rate should justify a quantum meruit payment in excess of the market rate. The subjective willingness of the recipient of a benefit to pay more than its reasonable value was irrelevant unless contained in a contractual obligation. In the absence of a valid contract, a claimant should not be entitled to recover more than market value for benefits conferred because, as Lord Clarke put it:

‘… the law of restitution, unlike the law of contract, is not primarily concerned with the intentions of the parties’.

The Supreme Court was, however, divided on a point of considerable significance, albeit one that did not actually arise for decision in this case: can the award be 
less than the market rate where the recipient values the benefit less than 
the market generally?

It is first necessary to distinguish two separate concepts. First, where a benefit is conferred on a recipient but confers upon them a lesser benefit than would have been conferred more generally, it is the lesser value which forms the basis of the restitutionary award. This is an ascertainment of the actual objective 
value of the benefit conferred on the recipient in its actual circumstances.Sempra Metals v IRC [2007] is an example 
of this approach: the Revenue could 
borrow at a lower rate of interest than 
was generally available and so the 
time value of overpayment to it was 
represented by that lower rate rather 
than the market rate.

The more difficult question is whether the assessment can be influenced by the recipient’s perception that the value of the benefit conferred is below its reasonable market value (referred to as ‘subjective devaluation’).

Lord Clarke, with whom two other Supreme Court justices agreed, expressed the view that although:

‘… (i) the starting point for identifying whether a benefit has been conferred on a defendant, and for valuing that benefit, is the market price of the services; (ii) the defendant is entitled to adduce evidence in order subjectively to devalue the benefit, thereby proving either that he in fact received no benefit at all, or that he valued the benefit at less than the market price…’.

It is apparent that the evidential burden on the recipient will be high. Lord Clarke also stated that:

‘A defendant can always simply assert that he valued a benefit at less than the market value. However, a court will be very unlikely to accept such an assertion unless there has been some objective manifestation of the defendant’s subjective views. In principle, this can occur before or after a transaction, although conduct after the transaction is likely to carry little weight.’

A decision on this point was not strictly necessary to dispose of the appeal, so it will not formally be binding in later cases. However, as Lord Neuberger discussed the point but did not express a concluded view, it is probably unlikely that the sole dissenting view of Lord Reed will prevail in subsequent cases, especially given that the majority appear to have experienced some difficulty identifying the precise basis for his dissent on the point.


The position is further complicated in 
many international transactions where investor, broker and target can each be in different jurisdictions and enforceability of court judgments could be problematic. For this reason, and for reasons of confidentiality, brokerage arrangements often include arbitration provisions. If the brokerage agreement has never been finally agreed but negotiations had been undertaken in which it was envisaged that any agreement would include an arbitration provision, what is the status of that provision and can the disappointed broker commence arbitration or must they take their chances in whichever court will otherwise have jurisdiction?

The answer, at least under English law, has recently been provided by Eder J. In Hyundai Merchant Marine v Americas Bulk Transport [2013], ship owners sought to enforce a charterparty that had been the subject of detailed negotiation and which included an arbitration clause subject to English law. They commenced arbitration and the respondent challenged the jurisdiction of the tribunal on the basis that no charterparty had been agreed. The ship owners argued that the doctrine of separability meant that the arbitration provision could be enforced even if there had been no agreement in the substantive charterparty.

Eder J rejected this. Whether a separate arbitration agreement can be made separately from the substantive agreement of which it forms part is ultimately a question of evidence. In a case such as he was considering, where the alleged substantive agreement and the alleged arbitration agreement were contained in the same document, failure by the parties to achieve consensus with the result that there was no binding substantive agreement would ‘necessarily mean that there was no binding arbitration agreement’. It follows from that analysis that where a broker is claiming restitutionary quantum meruit on the basis that they have rendered services of value to the principal but no agreement has been reached for their remuneration, they will not be able to pursue that claim in arbitration pursuant to an arbitration provision contained in a draft agreement, unless that was specifically and separately agreed.

By Rod Cowper, partner, and Christopher Pease, associate, Edwards Wildman Palmer UK LLP.