CL-2022-000522 - [2025] EWHC 2739 (Comm)

ANALYSIS

RMK submits that the parties’ communications leading up to the conclusion of the Advisory Agreement are relevant and admissible because they show that the agreement’s purpose was to appoint RMK to a limited role rather than as a full M&A adviser. It contends that:-

I am unable to accept those submissions. I have aimed to summarise the parties’ discussions in the lead-up to the Advisory Agreement in §§ 54-69 above. Probably the most fundamental problem with RMK’s approach is that the exact scope of RMK’s role was not an established aspect of the aim of the transaction: rather, it was one of the terms under discussion during the course of the negotiations which led up to the agreement on clause 1.1(i) to (v) of the agreement. In substance, therefore, RMK is seeking to deploy things said, and positions allegedly reached, during the negotiations in order to decide the meaning of that clause.

Further, and in any event, in my view the course of the negotiations does not support RMK’s thesis. RMK suggests, for example, that Mr Rodger’s email of 4 July 2016 (§ 57 above) rejected Mr Moore’s suggestion in his 3 July email that RMK be engaged as a “proper adviser”, because Mr Rodger talked about taking a more selective approach and using several firms. I think that is reading too much into the message, especially in circumstances where there were some potential roles in relation to the acquisition that RMK would not be expected or able to fulfil (such as providing debt financing or a fairness opinion), for which Euronav might therefore need to engage other firms. In addition, Mr Rodger’s email to Mr Kirk the same day (§ 58) left open what RMK’s precise role would be. After that came Mr Kirk’s email, asking Euronav to engage RMK as a “full-advisor”, and indicating that RMK had marked up the draft Advisory Agreement “to this effect”. The mark-up added clause 1.1(v) (“Other Advisory related work that would be deemed appropriate for the Transaction”), and that clause remained in the agreement as executed. I do not agree that Mr Rodger’s 8 July 2016 email, in response to Mr Kirk’s of 5 July, turned down RMK’s aspirations for a broad role: see §§ 65-66 above. The email was imprecise precise as to RMK’s envisaged role during the transaction as a whole. The reality is that there was no clear or established consensus as to RMK’s role, other than that both parties were ultimately willing to live with clause 1.1, as amended to include subclause (v), in the contract they each executed. Finally, Mr Kirk’s 14 July 2016 change of the word “Transaction” to “Project” in clause 1.1(v) is in my view of no significance: it simply brought that subclause into line with the rest of the clauses 1-3, which did not use the term “Transaction”. (I deal later with the use of the word “Transaction” in subclauses 4.1(v) and (vi).)

RMK also relied on written and oral evidence from Mr de Stoop and Mr Rodger about their subjective intentions, during the lead-up to signature of the Advisory Agreement, as to RMK’s role in the transaction (for example, Mr Rodgers’s statement in cross-examination that he did not want to engage RMK at all but Mr de Stoop felt that he wanted them to give advisory services around model construction, and Mr de Stoop’s statement that Euronav did not want to engage RMK as a “full M&A adviser”). These are, however, of limited if any real assistance. The parties’ private intentions do not themselves show the genesis and aims of the transaction. Moreover, the evidence indicates that the relevant individuals’ thought-processes progressed, as the communications between the parties and the drafts of the Advisory Agreement progressed. Mr Rodger, for example, said in § 24 of his first witness statement (in a passage on which RMK rely) that he needed a team to take responsibility for producing and updating an acquisition model, intending to instruct a merchant bank later if needed to carry out other work, and that Euronav’s focus was “on the model” (§ 30). However, he also said that he regarded various additional services, such as advising on capital structure, as falling within the draft agreement as it stood even before the 5 July proposed amendment (§ 35). Ultimately, Mr Rodger said, that (as quoted earlier) Euronav was willing to agree to the new clause 1.1(v) in order to allow room for additional services to be provided.

The scope of the services in the Advisory Agreement is defined by reference to the “Project” which is defined in Recital A. Recitals A and B record that:-

“(A)

The Company [Euronav] is studying a possible acquisition of Gener8 Maritime Inc., a company listed on the NYSE (the “Project”);

(B)

The Company wishes to use the services of the Advisor [RMK] as an independent contractor for the development of an offer document for the Project as further defined hereunder;”

RMK submits that the “Project” was the study of a possible acquisition of Gener8, which concluded not later than the making of an offer pursuant to the offer document contemplated by recital B, and is to be distinguished from the “Transaction” (i.e. the acquisition of Gener8) referred to in clause 4.1(v) and (vi). As a result, any work done after Euronav had submitted an offer to Gener8 fell outside the scope of the agreement.

I am unable to accept those submissions. The natural reading, as a matter of ordinary syntax, of recital A is that the “Project” means the possible acquisition. That interpretation of “Project” then makes perfect sense with recital B: Euronav wishes RMK to develop an offer document for the possible acquisition. The idea that an offer document might, instead, be prepared for the study of a possible acquisition is strained: an “offer document” naturally refers to the document to be sent to Gener8, rather than an internal document used for the purposes of a study. Clause 1.2 would make little sense if the Project were merely a study, as it is hard to see why a study would require US broker-dealer registration. Other provisions also point towards the Project being the possible acquisition rather than merely a study:-

RMK submits that point (ii) above does not assist, because a success fee is a standard form of remuneration for discrete services (whatever their extent and duration) in the M&A industry, relying on section 12 of the experts’ Joint Memorandum and some evidence Mr Pedder gave in cross-examination. Section 12 of the Joint Memorandum concerned the question “What is the usual method(s) of remunerating a party in the position of RMK for any additional service?” The Memorandum recorded that the experts “Agreed with respect to what the usual method of remunerating a party in position of RMK for any additional service”, albeit the precise extent of agreement is not entirely clear. Mr Knight’s comment, so far as relevant, was:-

“Specific small services are usually paid with a lump sum. RMK were renumerated by a success fee a) to control costs for Euronav in the event of the transaction not going ahead, and b) to incentivise RMK to update and explain their model. ”

Mr Pedder said:-

“The remuneration method would depend on what the additional service was. The remuneration structure in the Transaction suggests there was an element of M&A advisory work as part of the fees were dependent on a successful outcome. I would therefore have expected that any additional service would be remunerated in the form of a lump sum success fee, unless the additional service could be seen as a totally separate workstream, in which case another milestone fee could have been agreed”

and cross-referred to § 57 of his report, where he said:-

“In this case, the fees were structured with milestones with some of the fee linked to a successful closing. This would suggest that the agreed scope of work did involve a degree of advisory work. Had the scope of work simply been to develop a model, you would expect to see a fixed fee not dependent on a successful outcome. Success fees tend to be agreed where the advisor in question is able to influence the outcome of a transaction (i.e., through their analysis or advice provided). This is further indicated by one of the milestones being triggered when certain investors agreed to the deal, suggesting RMK was expected to play a role in convincing such investors to agree to support the transaction. This supports my view that, that to the extent that the Court finds that RMK did provide services in addition to what had been agreed, and these would be deemed M&A advisory services, I would expect this to be remunerated in the form of a success fee.”

In the oral evidence on which RMK relies (expanded to show his full answer rather than merely the first word), Mr Pedder said:-

“Q. Okay, lump sum success fees, Mr Pedder. If we go to D1/88. Paragraph 56, where you are talking here about additional fees for additional services, and you say remuneration for an additional service would be in the form of a lump sum success fee. You are considering fees for individual additional services, is that right?

A. Yes, I mean it's -- my Lord, the question here is "additional services" without specifying what they might be. I'm talking about a new work stream. So it would have to be a service that could be provided stand-alone, right? Something that could be added to an already agreed scope of work.” (Day 7/139-140)

Mr Pedder went on to explain that core buy-side advisory services are very integrated, and one would not split them up e.g. by having one adviser doing the modelling, another the structuring and another the negotiations (Day 7/140-141). Further:-

“As I said earlier, a lot of the important information comes out of the model, right? It goes into the model, comes out of the model, right? Things that you find out in due diligence will affect in terms of how you build the model. You know, it may bring up structuring issues. It may give you input for how you would negotiate the deal. So yes. So modelling is key. Therefore, I think companies would want the same firm to be doing the modelling as the firm that's also providing the advice.” (Day 7/142)

In response to questions about the remuneration of advisors being asked to carry out individual services separately, Mr Pedder said:-

“The only thing you could conceivably look at is you could have somebody else prepare a model. You could have someone prepare a model. If you had somebody prepare a model and that was their task, I think you would find a party who might do it on an hourly basis or a fixed cost. You know, it wouldn't be linked to successful outcome of the deal, whatever. If all you are asking is an exercise, build this model, this is what we want you to do, and it stops there then the model's going to be handed over to someone else. So having somebody build the model, yes, it would cost something but it wouldn't be hugely expensive compared to success fees and M&A.” (Day 7/148)

I do not consider this evidence to support the proposition for which RMK relied on Mr Pedder’s evidence, namely that the remuneration structure in the Advisory Agreement was consistent with RMK having a limited model-related role in the early stages of the transaction (up to the time at which an offer was made to Gener8). Rather, the evidence indicates that the remuneration structure, with staged payments up to and including the completion of the transaction, suggested that the parties envisaged RMK having a continuing role throughout the process. I do not accept the suggestion that its objective was simply to limit Euronav’s costs of the transaction did not go ahead.

Finally on this topic, I do not consider that the references to “Transaction” in clause 4.1(v) and (vi) have much significance. Unlike “Project”, the word “Transaction” is not defined in the agreement, which is relatively informally drafted. It may be a relic of an earlier draft of the agreement, though the evidence does not establish that one way or the other. In any event, viewed in the context of the agreement as a whole, I do not accept the view that it sheds light on, and diminishes, the scope of the word “Project”.

RMK also argued that much of the modelling work it did during the transaction related to a “transaction model”, and that that is different from an “acquisition model”, which is the term used in the Advisory Agreement. RMK cited parts of the witness statements of Mr Kirk and Mr de Stoop, and the evidence in section 4.12 of Mr Knight’s report.

Mr Knight said:-

“4.12.3

An acquisition model looks at the financial profile of the combined entity, the objective is to assess whether the deal adds value for the acquirer’s shareholders. 4.12.4 A transaction model is more detailed and will be used for deal structuring and to monitor compliance with financial and operational constraints. A transaction model is more strategic than an acquisition model because at this point, the transaction has moved past an acquisition model which was only to study the deal. With a transaction model, you are no longer studying the deal but rather are providing more detailed input into an active transaction and providing direction on, amongst other things, deal structure.”

Mr Kirk in § 93 of his first witness statement said:-

“By July 2017 it had stopped being an Acquisition Model and had become a Transactional Model (although some work had been done prior to this date had been done which extended beyond the scope of the Advisory Agreement), i.e. it had ceased being a “study” and was the live deal that was now being done. It went from being an internal document to an external document that was shared with the board, directors and shareholders. ”

Mr de Stoop in his second witness statement said at §§ 21- 25:-

“21.

… First of all, although I agree that if we analyse the technical terms, there is a big difference between what is expected of an “acquisition” model in comparison to a “transaction” model, that is not to say that I engaged RMK to produce an “acquisition” model in this sense. RMK were very much aware that Euronav required a dynamic transaction model for this Transaction.

22.

To explain the technical terms, an acquisition model is a static model. It is something which I could have created during the exploration stage of the Euronav and Gener8 merger within one or two hours. To create an acquisition model, I would do the following:

Stage 1 – list all the assets. The main asset for both companies is their fleet of vessels. I would therefore simply log on to a valuation website, such as “www.vesselvalues.com”, where I would have access to the valuations of practically all the vessels in the world. I would note down the relevant figures for each fleet and plug the numbers into the model.

Stage 2 – list the debt and/or any liabilities of each company, to arrive at the net asset value. As part of this process, I would analyse the (publicly available) annual reports of each company to consider the liabilities, as well as conduct my own research into the companies to understand if there are any off-balance-sheet liabilities.

23.

By the end of this task, I would have a nearly perfect picture of what the merged company would look like. What is important here is that I could go back to the board of Euronav and explain that, if we were to go ahead with a merger between the two companies, the Euronav shareholders reaction to the same would represent, for example, 58% of the company and Gener8 shareholders would represent 42% (i.e., Euronav shareholders would still be dominant post-merger). I would say an “acquisition model” is more of a “spreadsheet” than a “model”, as it is not something to necessarily be updated.

24.

In comparison, a “transaction” model is incredibly dynamic. It is something which takes a lot of time to produce and is constantly updated throughout the Transaction. In fact, a good transaction model is something which is extremely flexible and can be updated quickly to play with different scenarios, so that we can see the impact of making a certain decision. The model is a key tool for negotiation in a transaction, as it is presented to a buyer/seller on the other side to compare figures. It is not until around completion that you start to see a real shift in the numbers set out in the transaction model – this is the point in the negotiations where each party starts to ‘get some’ and ‘give some’. This is why we needed RMK onboard for the Transaction from start to finish. We needed a team to dedicate the time and be available to constantly update the model as and when required, in response to the ongoing negotiations between the Euronav management team and Gener8/UBS.

25.

I think that I made my intentions clear to RMK that what I required their team to produce was a dynamic “transaction” model. As per the Advisory Agreement, RMK were required to “keep the model updated to the extent relevant with any information to which becomes privy in relation to Gener8 Maritime Inc., the Company, the Project or possible completion” [HDS1/13-18]. What I instructed RMK to do was to produce various iterations of a transaction model throughout the Transaction cycle.

…

27.

The words “acquisition model” in the Advisory Agreement should not be interpreted as a requirement for RMK to produce a static model in the technical sense. To be honest, before reading MK and RM’s witness statements, I would have never thought to differentiate “acquisition” and “transaction” into their technical terms. RMK were aware of the standard of work that they were required to produce. It is particularly interesting that the “acquisition” model that RMK originally produced during the exploration of the Transaction is the same and/or similar type of model as the “transaction” model that RMK later produce around the time of completion. It seems to me that these so-called differences between the models is a bit of a reach from RMK’s side. ”

In his oral evidence, Mr de Stoop explained that, whilst he understood how one could draw distinction between a model called an ‘acquisition model’ and one that is called a ‘transaction model’, it was not a distinction that was standard in the industry. His understanding of how one might draw a distinction between an ‘acquisition’ model and a ‘transaction’ model appears to have come from internet research after receiving Mr Kirk’s witness statement referring to the distinction. He said it was not a distinction he was aware of or made at the time of the Advisory Agreement.

Based on that evidence, RMK submits that:-

RMK did not plead any such case, and I am in any event unable to accept it. The case is closely linked to RMK’s contention, which I have rejected, that the “Project” to which the Advisory Agreement was confined to “studying a possible acquisition of Gener8”. On the (correct) basis that the “Project” meant the proposed acquisition, the reference in clause 1.1(i) to the “project” can be seen to be a reference to the acquisition too. (In the context of a short and fairly informal contract such as the Advisory Agreement, I do not consider it significant that the word “project” in clause 1.1(i) lacks an initial capital. There is no indication in the agreement that “Project” and “project” were intended to mean different things.) Thus, clause 1.1(i) required RMK to develop an acquisition model for the proposed acquisition itself, not merely for a study of a possible acquisition.

Moreover, clause 1.1(iii) required RMK to keep the model updated, inconsistently with the notion that only a static model was required. Further, the requirement in clause 1.1(iv) to explain the model to third parties, if requested, points against the idea that the model was merely an internal one to help Euronav study the possible acquisition. That requirements is also hard to square with the idea that the model would cease to be relevant once an active transaction was taking place, and far more consistent with the idea of a dynamic model that would be shared and discussed with the target company, banks, shareholders in the acquirer and target and potential investors.

A further pointer is the provision in clause 1.1 for RMK, if requested, to develop the model directly on Euronav’s server via a dedicated remote connection, which would “also allow for the exchange of information required for the development of the model”. Such a provision makes far more sense if the parties had in mind a dynamic model that might, for example, need to be applied to various potential scenarios based on non-public information, and then used for negotiations, than if the model were merely to be a static one.

Further, by the time the Advisory Agreement was fully signed, RMK had already almost finished the first version of the model, which would make it surprising if its future obligations and fee entitlements under the agreement did not require any significant more work on the model. The essential form of the spreadsheets comprising the model then did not change from the version as it stood when the Advisory Agreement was signed in July 2016, to the versions produced after Mr de Stoop’s input in August 2016, after Euronav’s board approved it in September 2016, and as shared with Euronav on 16 November 2016. Rather, the same model was ‘updated’ from time to time (and that is the term RMK frequently used for the process).

Turning to the scope of clause 1.1, RMK submits that the primary obligation is that in subclause (i), to develop, the model and that the other subclauses should be read in that light, applying an ejusdem generis construction. Further, RMK says, significant weight must be given to recital B, which provides a temporal longstop: the submission of an offer document. I am unable to accept those submissions.

Clause 1.1 describes five “main services” that the parties intended RMK to provide. Subclause (i) relates to the development of the model. Two other subclauses, (iii) and (iv), refer to the model but are not limited to modelling work: subclause (iii) includes an obligation to keep Euronav informed “with any information to which [RMK] becomes privy in relation to Gener8 Maritime Inc., [Euronav], the Project or possible competition”, and subclause (iv) concerns explaining the model to named individuals and advising Euronav of the outcome of such meetings. Subclause (ii) does not refer to the model at all, and requires RMK to “[a]ttend all meetings related to the Project by phone or in person, if so requested by [Euronav]”. Subclause (v) is broadly expressed, referring to “[o]ther Advisory related work that would be deemed appropriate for the Project”.

In my view, the subclauses of clause 1.1 (or any combination of them e.g. (i) to (iv) viewed together) are not of one genus, save in the broad sense that they all relate to M&A advisory services. They include duties capable of applying to all stages of the acquisition process. Similarly, recital B refers to the development of an offer document, but does not exhaustively state the scope of RMK’s role (and the words “as further defined hereunder” tend to suggest that the recital is not to be read in isolation). Recital B must in any event be considered in the light of (a) the breadth of the operative wording in clause 1, (b) the fact that (in my view) the “Project” means the proposed acquisition and not merely a study, (c) the remuneration structure providing for payments up to and including completion as discussed above and (d) the provisions of clauses 2.1 and 2.2, which expressly indicate that the Advisory Agreement will continue until the completion of the Project, i.e. the acquisition (and thus contradict any suggestion that RMK’s work would end on the submission of an offer to Gener8).

In those circumstances, I do not think it justifiable to adopt a restrictive reading of the subclauses of clause 1.1, including subclause 1.1(v). The latter clause seems likely to reflect the point that, as Mr Pedder explained it, M&A buy-side advisory services are interlinked and hard to separate out. In principle, that sub-clause is easily capable of covering such matters as advice or discussions about the capital structure of the deal, advice or discussions relating the value of the assets to be utilised in the model, due diligence for the purposes of obtaining information relevant to modelling work, relaying information to the client based on the input into and output from the model, and discussions with third parties more generally. Conversely, on RMK’s approach it is difficult to find any real content at all for subclause (v).

RMK points out that clause 1.1(v) does not refer, expansively, to “any” advisory-related work, or use the word “whatsoever”; and that the ensuing wording stating that subclauses (i) to (v) are not exhaustive and may be changed by written agreement. RMK says this indicates that subclause (v) is not to be expansively construed and is not unlimited. However, none of those considerations suggests that the subclause should be narrowly construed. By its natural language, it is capable of covering a broad range of activities, provided that they are advisory-related work in relation to the proposed acquisition. RMK also suggests that the words “advisory-related” underscore the limitation of RMK’s role to the development of an offer document as indicated in recital B. I do not agree that the words “advisory-related” have that effect, nor (for the reasons given above) that that is the effect of recital B.

RMK suggests that the clause about the development of the model on Euronav’s server does not envisage the model, or any part of it, being provided to Gener8 or UBS, or information exchanges between Euronav and Gener8/UBS that might impact on modelling as happened during negotiations and diligence. I do not agree. The clause concerns an aspect of how RMK and Euronav are to work together in relation to the development of the model. It does not preclude exchanges of information with Gener8 or UBS, whether involving disclosure of parts of the model or impacting on the model. Moreover, clause 1.1(iv) positively envisages explanation of the model to third parties.

I consider in this section whether the main tasks RMK undertook fell within or outside the scope of the Advisory Agreement, in the light of the conclusions I reach above about its correct interpretation.

As a preliminary matter, it is worth noting that by the date on which Euronav’s board executed the Advisory Agreement, 25 July 2016, RMK had already sent Euronav the first version of the model in “Final Draft Form”. On RMK’s case, it would follow that most of the work done, even in the weeks immediately following execution of the agreement, with the exception of periodic updating and discussion of the model, fell outside the scope of the Advisory Agreement.

For example, discussions began the very next day of production of the Board Book: as noted earlier, Mr Kirk on 26 July 2016 said he would “take a first crack at a Board book”. Had anyone thought that work to fall outside the scope of the Advisory Agreement, one might have expected that to have been raised, and indeed to have been a source of surprise: since it would mean that the Advisory Agreement did not cover work on which RMK was embarking the day after its execution. In addition, the greater part of the first ‘cut’ of the Board Book was produced by Mr Kirk’s junior employees, particularly Ms Motyka, in mid August 2016 making significant use of material from the model. In my view the Board Book was closely related to the model, albeit not identical to it, and was in substance one vehicle whereby the contents of the model were to be explained to Euronav’s board. In my view, it was an aspect of keeping the company informed about information in the model and/or otherwise relating to the proposed merger and its parties, within clause 1.1(iii) of the Advisory Agreement, failing with a facet of other advisory-related work within subclause (v).

The Pitch Book, too, was closely linked to the model, as described earlier. Both the Board Book and the Pitch Book served purposes similar to the model, in that all three were tools or presentations used to help Euronav assess the financial and other implications of the contemplated merger and whether it should be recommended to Euronav’s shareholders. I consider the Pitch Book work to have fallen within the Advisory Agreement on the same basis as the Board Book.

The pieces of deal structuring advice RMK provided in late October 2016, early January 2017 and mid April 2017 (see §§ 84-86, 103 and 130) also had a link to the model, since the model could be adjusted in order to test the consequences of different deal structures. Moreover, Mr Knight stated that a transaction model involves providing detailed input into an active transaction and providing direction on, among other things, deal structure (§ 4.12.4, quoted earlier). That statement is applicable here, on the footing that (as I have concluded) the Advisory Agreement required RMK to maintain a dynamic model up to and including the active transaction stage.

In addition, deal structuring advice was it was in my view “[o]her Advisory related work that would be deemed appropriate for the Project” within clause 1.1(v) of the Advisory Agreement.

As to what is described as the ‘advice’ on the Gener8 employment/consultancy contracts, in late November 2017, in reality this comprised no more the provision of some factual information Mr de Stoop had requested (because he was trying to find a mechanism to incentivise certain people in Gener8), namely whether two individuals’ contracts contained notice periods, whether the proposed termination of two other individuals’ consultancies simply reflected the expiry of their contracts, and whether their consultancy agreement had a change of control clause (and, if so, the consequences). I do not consider that any of that can be described as deal structuring or (as Mr Kirk put it) strategic advice: it was a request for factual information to enable Mr de Stoop to make any strategic decision involved. It was, however, closely related to the model, because it concerned one of the consolidation costs of the merger and seems likely to have been information RMK would have had a result of building the model; and in my view fell within clause 1.1(iii) and/or (in any event) clause 1.1(v) of the Advisory Agreement.

So far as valuation advice is concerned, I agree with Euronav’s basic submission that ascertaining the two merger parties’ net asset values (NAVs) is a fundamental and central part of developing the model. Thus establishing the value of the components of each party’s NAV is an inherent part of the building and maintenance of the model. That in itself makes it difficult to see how valuation advice falls outside the obligations in Advisory Agreement clause 1.1(i) to develop the acquisition model, keep it updated and explain it. Even if not otherwise caught, such advice would fall within clause 1.1(v). Further, the following points should be noted as regards specific aspects of the valuations highlighted by RMK.

Turning to negotiations between RMK and UBS, Euronav accepts that RMK and UBS were in direct communication in respect of the parties’ respective NAVs and modelling. It is also the case that some of those discussions could be described as ‘negotiations’, in the sense that RMK, under Euronav’s direction and with Euronav having the final say, was explaining and seeking to persuade UBS to accept aspects of Euronav’s valuations. As part of that process, as Euronav accepts in its written closing, RMK and UBS sought clarification of calculations from one another and challenged each other’s calculations and inputs used to arrive at the respective NAVs.

Mr Steve Smith, formerly of Gener8, in his hearsay statement states that RMK was introduced to him as Euronav’s M&A advisor by Mr de Stoop, that RMK took “a front seat in the negotiations on behalf of Euronav”, that he “always assumed that RMK was the M&A advisor appointed on behalf of Euronav”, and that “[RMK] negotiated with Gener8’s bankers, UBS, and were considered by those of us on the Gener8 side as Euronav’s M&A advisors”. Similarly, Gener8’s Schedule 14A information stated that:-

“From August to October 2017, representatives of the Gener8 Transaction Committee and UBS continued to negotiate with representatives of Euronav and RMK regarding, among other items, proposed adjustments to each of Euronav’s and Gener8’s NAV, the appropriateness of such adjustments and certain components of NAV for purposes of agreeing on a fixed exchange ratio, which would ultimately be the result of the final relative NAV calculations of Euronav and Gener8, as negotiated between Euronav and the Gener8 Transaction Committee, with assistance from their respective advisors. This included a meeting on August 17, 2017 between Mr. Smith and the Chief Executive Officer and the Chief Financial Officer of Euronav, along with a representative from RMK”

Euronav’s own filing contained the same statement, referring also to several other sets of negotiations with representatives of Euronav and RMK particularly in October and December 2017.

I do not accept Euronav’s submission that any negotiations RMK entered into with UBS took place without Euronav’s authority. There are indications that, in July 2017, Mr Rodgers had some concerns in that regard. In an email of 10 July 2017 he said “I think Mike needs to be stopped right now. This is drifting into an unplanned negotiations without analysis of how the arguments on value will play out”; and in a message to Mr Kirk on 13 July 2017 (in response to a request for approval to send something to UBS) Mr Rodgers stressed that “You may not send anything out until you have authority from either myself or Hugo. For the sake of clarity.” In his first witness statement, Mr Rodgers said:-

“… RMK did not have authority or instructions to represent Euronav in negotiations at any point throughout the Transaction. MK is therefore wrong to state in paragraph 138 of MK1 that RMK had a mandate to negotiate commercial issues with Gener8 and/or UBS. This was not what was discussed in our telephone conversation of 30 June 2017. Instead, I thought it would be easier if RMK and UBS opened a direct stream of correspondence to discuss and/or explain the respective models (i.e., the source and/or method used to achieve their figures). This is entirely different to a negotiation, where both parties reach an agreement on the final figures.”

However, that evidence confines the idea of ‘negotiation’ to a process in which the negotiator has authority to bind his client to an agreement. In fact, on the evidence of Mr Pedder as well as Mr Kirk, that is not typically the case in an M&A negotiation: the client always has the final say. RMK did not purport to enter into binding agreements as to NAV on Euronav’s behalf; and in his oral evidence Mr Rodgers accept that (as is evident from the documents) the proposals put and positions adopted by RMK in its discussions with UBS (including during the period of these messages from Mr Rodgers) occurred in close liaison with Euronav, particularly Mr de Stoop, and with his prior authorisation. Mr de Stoop recognised that in relation to the FSO JV, for example, he and RMK were working collaboratively to maximise the Euronav valuation, and he was very happy with the outcome. He accepted that the process included challenging UBS’s assumptions through RMK, RMK seeking to persuade UBS of the validity of Euronav’s assumptions, and Mr de Stoop engaging in the same process vis a vis Steve Smith: though Mr de Stoop added that “if I have to choose who do I need to persuade let em tell you that I prefer to persuade Mr Smith of Gener8 than Mr Smith of UBS … He’s the ultimate decision-maker”.

As Euronav points out, there were highly significant direct negotiations between and Gener8, resulting in agreement finally being reached on contentious points. Examples of such direct negotiations are the meeting on 17 August 2017, the 6 September 2017 call between Steve Smith, Mr Rodgers and Mr de Stoop, the further call with Steve Smith about the long-term business relationship value, and the contacts between Mr de Stoop and Mr Smith from 12-19 September 2017 which resulted in agreement on the valuation of the FSO JV. (RMK makes the point that few emails between Euronav and Gener8 were disclosed, compared to the number between RMK and UBS. However, that is not a particularly telling point in circumstances where communications between Euronav and Gener8 were not a focus in the agreed list of issues for disclosure in this case.)

It does not follow that RMK’s dealings with UBS cannot also accurately be described as ‘negotiations’. However, ‘negotiations’ is not a term of art whose absence from the Advisory Agreement is necessarily significant. The question is whether the negotiations RMK engaged in were of a kind which fell outside clause 1.1 of the Advisory Agreement. Mr Pedder’s evidence was that an M&A adviser may lead or assist with negotiations, and indeed RMK in its written closing made the point that Mr Rodgers “accepted that the work RMK did during negotiations was what he would expect of an M&A advisor”.

RMK submits that:-

“The real question is - what was RMK doing in relation to NAV: was it simply (“initially” or at an “evaluation” phase) modelling each company’s NAV in the abstract, for the purposes of a study of the possible acquisition (or at the highest, the development of an offer document)? Or had it stepped out of the laboratory in order to negotiate each company’s NAV to achieve an advantageous deal ratio? (If there is any doubt about this, Mr Pedder agrees that modelling and negotiations are different tasks: [7/74/18-20].)

For the reasons given below, RMK submits that it was the latter. This is rightly not something which Messrs Rodgers and de Stoop envisaged RMK doing when the Advisory Agreement was concluded (see, respectively, [4/56/13-14] and [5/69/14-21]). The Advisory Agreement carved out a limited, pre-offer, “evaluation phase” (to adopt Mr Rodgers’ wording) role for RMK. The notion that RMK would be going into bat with UBS on an active transaction approved by the Board was the last thing intended.” (§§ 245-246)

However, that approach would be correct only on the narrow view of the Advisory Agreement which I have rejected. The Advisory Agreement was not confined to modelling, internally, at a limited pre-offer evaluation phase. It covered work in the specific areas through the whole of the transaction up to and including completion, and including meetings about the model and approaching third parties to explain it. Further, I do not consider that the evidence cited in the passage quoted above supports RMK’s view. Mr Rodgers’s evidence at Day 4/56/13-14 was:-

“MR RUSSELL: Yes. In June/July 2016, when you were having your negotiations with RMK, you didn't envisage that RMK would be going into the room with Gener8's M&A advisor to negotiate net asset values and deal ratios, did you?

A. We envisaged them as described in the agreement that they would go in and explain the model.

Q. Well, again, that is arguing about what is the proper construction of the contract that we now see. When you spoke to them you did not suggest that they would be doing the negotiation, did you?

A. No and I don't believe that they did do the negotiations.”

However, that merely reflects Mr Rodgers’s narrow view of the term ‘negotiations’. It is clear that Mr Rodgers did not consider that the Advisory Agreement limited RMK’s role to initial modelling work as distinct from engagement with other parties during the active stage of the transaction. He went on to say:-

“A. Well look, it -- the point that you're emphasising is that to underplay the significance of the model and the fact that as a financial advisor presenting – preparing that model it is axiomatic that you will then present it, explain it and that that will be part of a process of determining value between the business entities.

Q. Mr Rodgers, I'm not making any point. I'm just asking you what you said to Mr Moore and Mr Kirk.

A. The -- I think the construction of the way that you've put your point was to underplay the value of the work. The work is very important, but I think what you – what we're not trying to suggest here is that they simply worked in a back room on a model and nobody ever saw them. It was very clear from the agreement and it is very clear from the way that we work in understanding value that the person who had prepared and done all the modelling work would have to demonstrate that value to the people that were going to rely on it. Those people wouldn't just be Euronav, they would be outsiders who we would list it as a possibility and had stated would be a possibility because that's the critical part of going through a common understanding of value that will allow a business combination to take place.” (Day 4/58/21 – 59/18)

Mr de Stoop’s evidence at Day5/69/14-21 was:-

“Q. And what you certainly did not have in mind in early July 2016 is that it could be RMK who would be going in to bat to negotiate net asset values with Gener8's M&A advisor. That's correct, isn't it?

A. It's not only correct, it's not what I saw them doing.

Q. Well, we'll come back to that in a moment. And to the extent that you discussed this with Mr Moore or Mr Kirk, that is very much the impression that you would have conveyed, that you did not envisage that they would be doing any negotiating work in relation to net asset values down the line?

A.

I didn't have that conversation with them.”

Again, it is evident from the answer at line 14 that Mr de Stoop was taking a restrictive view of the nature of ‘negotiation’. It is clear from his evidence as whole that he did not consider the work RMK was doing to fall outside the scope of the Advisory Agreement: see, in particular, §§ 114-116 and 230 above.

In my view, this work fell within clause 1.1(ii), (iv) and/or (v) of the Advisory Agreement.

As noted earlier, RMK suggested at trial that its model changed, over time, from being an ‘acquisition model’, as required by the Advisory Agreement, and a ‘transaction model’, outside the scope of the Advisory Agreement. I have rejected that argument in section (G)(1)(c) above.

A distinct facet of this argument concerns Mr de Stoop’s 3 November 2017 request, which RMK says led to a ‘transaction model’ being produced (at the latest) by 16 November 2017. This was the stage at which Mr de Stoop wrote that “… we need to work on a model and a pro forma financials of the combined group to present to banks but also the market in general. RMK proposed and agreed to change their model from proportionate to Equity method to be aligned with the way we present our numbers”; leading to a model provided by Mr Keros of RMK on 16 November 2017 and an updated version on 21 November 2017 (see § 196 above). However, this was in substance no more than the production of a further updated version of the model, incorporating a change of accounting methodology in order to make it more readily explicable to certain third parties by corresponding to how Euronav presented its accounts to the market. That was, in my view, an example of a request to update and explain the model within clause 1.1(iii) and/or (iv) of the Advisory Agreement. Failing that, it was closely related advisory work falling within clause 1.1(v).

It is common ground that RMK provided some assistance in relation to due diligence. It took on a coordinating role, involving uploading documents, relaying questions and keeping track of responses. RMK accepts that much of the due diligence related to legal and tax issues, in which M&A advisors are not typically involved, and the majority of UBS’s questions required agreement or details that only Euronav or its lawyers would have been able to provide. However, an M&A adviser’s role in due diligence is typically administrative, and UBS’s due diligence timeline envisaged RMK having the same role for Euronav as UBS did for Gener8 (save that, as the sell-side adviser, UBS set up the data room).

In addition, RMK says it provided due diligence analysis, including responding to Mr de Stoop’s queries arising out of documents provided by UBS on 7 July 2017, advising on Gener8’s lease on 10 July 2017, giving detailed comments on UBS’s diligence request list on 19 November 2017, providing a breakdown of Gener8’s shares on 28 November 2017, advising on the lending secured by Gener8’s vessels on 6 December 2017, and analysing Pool Agreements, which then enabled RMK to advise Euronav on whether Gener8 vessels should be transferred into the International Tankers Pool.

Viewing the due diligence exercise more broadly, Euronav points out that Euronav and Gener8 themselves carried out extensive due diligence on each other’s records during the period from about late October to end December 2017. On the Euronav side, there was a large internal team of at least 13 people from Euronav, led by Ms An Goris, together with a team from SewKis, totalling at least 38, who carried out the vast majority of the work (with Motyka of RMK managing its status). On the Gener8 side, the work was carried out by a team of 58, including a large team from UBS. Euronav which set up the data room from its side and granted access to RMK. RMK would not have had the resources to carry out the due diligence exercise even if it had been asked to. Ms Motyka carried out an administrative role by tracking the due diligence process and passing on requests made by one side to the other.

Euronav accepts that RMK also had a small role in identifying what it had already sent to UBS, what it had not and missing information that Euronav would need to provide.

The involvements referred to in § 332 above were in general closely related to the task of keeping the model updated.

Overall, I consider that RMK’s work in relation to due diligence was either part of the ongoing updating of the model, within clause 1.1(iii) of the Advisory Agreement, or related work falling within clause 1.1(v).

The Share Purchase Agreement was produced by the parties’ lawyers, but RMK says it was consulted on the drafting of the precursor term sheet and provided input on the Share Purchase Agreement. It refers in its opening to the involvements referred to in §§ 184 (draft exclusivity agreement), 192, 197, 198 (pool fees) and 199 (RSUs and options) above. RMK’s input to the draft exclusivity agreement was slight and peripheral. The involvements referred to in §§ 192 and 197 did not involve any substantive input by RMK into the envisaged contents of the SPA. I have already commented on the § 198 involvement, relating to the tanker pool arrangements, in § 335 above. The discussions about RSUs and options (§ 199) had an obvious link to the NAV ratio for the merger which was the focus of the model. All of these matters fell within Advisory Agreement clause 1.1(iii) and/or (v).

I have summarised RMK’s involvement in the Gener8 debt rollover discussions in §§ 212-223 above. RMK claims that this is an issue on which it advised Euronav and which fell outside the scope of the Advisory Agreement. Mr Pedder’s evidence was that an M&A advisor’s role can include leading or assisting with the structuring and financing of a transaction. RMK says it did more than merely interrogating the model projections, noting for example that the simplified model it was asked to produce for KEXIM contained new information and in substance was an entirely new model. RMK submits that all this work was done post-offer and post-study: its goal was to help close the deal after it had been voted for an announced, by providing advice that the merged business would be sufficiently healthy to warrant rolling over the debt

In my view, RMK overstates its role here. There is no evidence that RMK provided advice to Euronav, as distinct from adjusting and re-running scenarios in its model in order to fulfil information requests from the lenders. Mr de Stoop’s evidence, which I accept, was that he liaised direct both with Citi and Nordea and with the lenders, KEXIM and K-Sure; and that he “travelled to South Korea and China to sit down with the lenders to explain the deal, robustness of the balance sheet and export credit agent. RMK, however, did not attend and would not have had a seat at this table.” As part of the process, the lenders wished to interrogate the economic projections in the model and to see various ‘stressed’ market scenarios in order to test their robustness. Here, Euronav turned to RMK for further details and iterations of the model projections, and for the simplified version requested by KEXIM so that it could interrogate the projections itself. Even on the footing that the simplified model for KEXIM took Mr Keros two long days to produce and included certain new inputs, it did not involve building a new model from scratch and remained closely related to the existing model.

I also do not accept the suggestion that the work in relation to the rollover could not fall within the Advisory Agreement because the merger had by then been approved and announced. Under clause 2.2 of the Advisory Agreement, it continued until the completion of the Project, i.e. the acquisition of Gener8, which did not occur until June 2018.

In my view, RMK’s involvement in the rollover amounted to the updating of the model, within clause 1.1(iii) of the Advisory Agreement, and/or other advisory related work within clause 1.1(v) (noting Mr Pedder’s evidence, on which RMK relies, referred to in § 338 above). It might also have constituted explaining the model to third parties, within clause 1.1(iii), but for the fact that that sub-clause appears to envisage explanations provided in meetings.

RMK provided input on KMPG’s fair value assessment, which it says was akin to an auditing process and had nothing to do with the acquisition model. I have summarised RMK’s involvement in §§ 231-232 above. RMK says the deal ratio calculation was the product of negotiations between RMK and UBS. Further, it would not have made any sense for Mr de Stoop to request a further iteration of the acquisition model to resolve KPMG’s queries, and that is not what he did. RMK says it also provided Euronav with support in relation to its F-4 filing, as summarised in § 224 above. RMK says it was very much SewKis’s point of contact during the drafting of the filing in relation to issues such as the agreed NAVs. All this work contributed to deal closure and could not, RMK says, have been related to the study of any possible transaction or the now long redundant acquisition model.

So far as the fair value information is concerned, this seems to me a clear example of work done to update the model and/or explain it to a third party, as envisaged by Advisory Agreement clause 1.1(iii) and/or (iv). To the extent that subclause (iv) might not strictly apply because the input was provided by email rather than in meetings, the work remained closely connected to the model and was covered by subclause (v). Similarly considerations in my view apply to RMK’s input to the F-4 filing. Much of the input involved information it had had to collate/analyse in order to prepare the model. In any event, however, I do not consider that liaising with other professionals (such as SewKis) involved in the same transaction, to assist in respect of matters in which RMK had direct knowledge and involvement, could realistically be regarded as work above and beyond the services required by the Advisory Agreement. It was covered at least by clause 1.1(v) as other advisory-related work.

RMK submits that the contacts between the parties referred to in sections (E)(6), (8), (10), (11), (13), (15) and (17) above, and some of the events referred to in section (E)(19) above, demonstrate “the joint basis that RMK was providing additional services in return for additional payment of which would be a reasonable fee”.

I do not accept that submission, for three reasons.

First, the terms of the Advisory Agreement in my view leave no room for a restitutionary claim, even in respect of extra-contractual services. That is not merely because it contained, in clause 12.3, a ‘no oral variations’ clause, though that is a relevant consideration. More particularly, the agreement contained two provisions specifically directed towards the possibility of expanding the scope of the services to be provided:-

To my mind, those provisions reflect a clear consensus that if additional services were required, then a written document would be needed. That would provide both parties with clarity about the scope of the additional services and the terms on which they were to be provided. Among other things, these provisions were evidently designed to avoid either party seeking to argue, by reference to oral conversations (minuted or otherwise), emails, text messages and so on, that extra services had been requested or provided or that additional payments were due for them: in other words, precisely the type of case as RMK now seeks to advance. The clarity which these provisions sought to achieve about the scope of the services is undermined just as much by a claim framed in restitution as by a claim that the agreement has been varied orally or by conduct. (As Euronav pointed out, RMK’s now-abandoned case of contract variation relied on essentially the same facts and matters as its restitution claim.) The provisions were thus also a form of risk allocation: they meant that RMK could not claim to be providing additional services, and to be entitled to payment, unless those points had been agreed in writing. They accordingly displaced any unjust enrichment claim based on the alleged provision of such services. In addition, given the presence of these provisions, it is not possible in my view to sidestep (as RMK seeks to do) the effect that Lord Leggatt’s observations in Barton about the ‘subject-matter of the contract’ by arguing that additional services cannot be the subject-matter of the contract. Here, any additional services are, in the relevant sense, part of the subject-matter of the contract, which ‘covers the ground’ by stipulating how any such services are to be addressed.

Secondly, even if the analysis above is wrong, the provisions quoted in § 346 above, point significantly against any conclusion that the parties were operating on a joint basis of the kind RMK alleges, i.e. that it was providing additional services for which it would be entitled to payment of an objectively reasonable sum. The whole point of the contractual provisions was not to leave such matters up in the air in that way. A party in Euronav’s position would be presumed, in the light of the contractual provisions, to take the view that the services being provided fell within the scope of the Advisory Agreement unless RMK sought a written change/revision. Against the background of those provisions, it would be inappropriate to find a joint basis or understanding of the kind alleged, unless supported by particularly clear and compelling evidence. No such evidence exists here.

Thirdly, and in any event, even if the evidence is assessed without any presumption of the kind referred to in the preceding paragraph, it does not in my view establish the alleged joint basis.

I have considered the contacts between the parties referred to in sections (E)(6), (8), (10), (11), (13), (15), (17) and (E)(19) above individually. For the reasons given in those sections, I do not consider any of them to indicate a joint basis of the kind alleged.

I reach the same conclusion when I revisit them consider them in the round. I find there to have be no occasion on which Euronav accepted that RMK was working beyond the scope of the Advisory Agreement, or that RMK would have an entitlement to additional payment, or any pattern of contacts from which it could reasonably be assumed that Euronav accepted either of those points. To the contrary, I have found that Euronav indicated that any additional payment would be a discretionary bonus for work done well within the auspices of the Advisory Agreement.

RMK also put forward, in its closing submissions, a new and unpleaded case that there was also a failure of a basis even if Euronav indicated that it would pay a discretionary bonus but then failed to do so, with the result that RMK was entitled to claim a reasonable sum. I am unable to accept that submission. The point was not put to any of the witnesses, and cannot in my view fairly be advanced now. In any event, it fails to take account of the fact that Euronav did, at the end of the transaction, offer a discretionary bonus of US$ 1 million. There cannot have been a failure of basis merely because RMK chose not to accept that offer. The outcome for which RMK contends would be perverse.

For all these reasons, I conclude that there was no joint basis or understanding such as could found a claim in restitution.

The case law on free acceptance, discussed in section (F)(4) above, arises mainly from situations where an anticipated contract does not materialise. They do not focus on the position where, as in the present case, the parties are already performing a contract. In those circumstances, the considerations I refer to in §§ 346-348 must again apply, and, if anything, even more potently than in a case where a joint basis could otherwise be established on the facts. In the present case, given the three provisions of the Advisory Agreement referred to in § 346 above, the dealings (specifically, the contract) between the parties indicated that the basis of any ‘transfer’ was that it was not to be paid for unless a written agreement was made revising the scope of the Services. Further, the terms in which any additional services were requested did not involve any assurance or indication by Euronav that it would be altering the scope of the Services set out in the Advisory Agreement, or that it considered any such variation to be necessary. On the contrary, Euronav’s position, viewed objectively through its communications with RMK, was consistent with the view that it considered the Advisory Agreement to govern all the work being provided and was envisaging only that a discretionary bonus might well be merited at the end of the transaction. By providing any additional services without negotiating a written alteration to the list of Services (and consequent revised remuneration provisions), RMK was taking the risk that those Services would be unremunerated save via such bonus as Euronav in its discretion might agree to pay.

In all the circumstances, it would not be just to allow RMK a claim for additional remuneration on a ‘free acceptance’ basis, even assuming that to be a valid basis in law for a restitution claim.