Key takeaways
Quantum meruit claim secures $2m payment
Court awards fee despite no formal agreement
Early advisory work held valuable by court
Facilitating merger justified partial compensation
Clear service terms help avoid disputes
Document scope and expectations from the outset
Hannam and Partners to be paid a $2m fee for Barrick Gold/Rangold merger despite no engagement letter
H&P Advisory Limited -v- Barrick Gold (Holdings) Limited (formerly Randgold Resources Limited)
On 12 March 2025 the High Court gave judgment in a claim brought by H&P Advisory Limited (“Hannam & Partners”) against Barrick Gold (Holdings) Limited (Barrick Holdings). Barrick Holdings has been ordered to pay $2 million to Hannam & Partners in an important judgment for those who provide or receive professional advisory services. The judgment can be found here.
We examine the issues in the case below and provide guidance on the importance of establishing the scope and parameters of the professional services supplied.
Background
Hannam & Partners is an independent investment bank providing advisory services to companies on mergers & acquisitions and fundraising issues, particularly in relation to the natural resources sector.
In 2018 Ian Hannam, who founded Hannam & Partners, initiated merger negotiations between NYSE & TSX listed Barrick Gold Corporation (Barrick Gold) and LSE and NYSE listed Randgold Resources Limited (Rangold). Over a number of months he took various steps to progress the deal; facilitating meetings between the key players, producing presentations and briefing Barrick Gold/Randgold on their positions. However, an engagement letter was never signed between Barrick Gold/Randgold and Hannam & Partners and Mr Hannam and his firm were later sidelined from the deal and alternative advisers were appointed. The deal between Barrick Gold and Randgold closed in 2019 creating an industry-leading gold investment vehicle however a dispute arose as to what Hannam & Partners should be paid for their role in the deal.
The claim
Hannam & Partners brought proceedings against Barrick Holdings (formerly Randgold) to recover approximately $18 million of fees and expenses it alleged were due to it for financial advisory services provided in originating and facilitating the merger.
Barrick Holdings denied any liability to pay Hannam & Partners on the basis that it had not been formally appointed to provide any services.
Hannam & Partners ran two principle arguments:-
That there had been an oral agreement between the parties for the provision of the services and reciprocal payment. This was rejected by the Court on the basis that there was no evidence of an agreement having been concluded.
In the alternative, Hannam & Partners sought payment on the basis of a quantum meruit claim. Quantum meruit means “the amount one deserves” or “as much as one has earned”. It is a claim founded in equity and therefore based upon principles of fairness. It provides an action to recover money for services rendered in the absence of a contract or where there is a “quasi-contract” where parties have failed to reach agreement on essential terms including the sum to be paid.
The Court found that the early work undertaken by Hannam & Partners in promoting the merger (and helping devise a structure that enabled a “nil premium” merger to take place) had provided a valuable benefit to parties. This led the Court to decide that Hannam & Partners were entitled to a payment on the basis of the quantum meruit claim. Hannam & Partners was awarded $2 million (plus a sum for expenses to be determined at a consequential hearing) being the sum that Randgold had contemporaneously proposed to pay Hannam & Partners for its services.
The judge in the case (Gleeson J) referred to an argument put forward by Barrick Holdings that his decision would potentially have a,
"chilling effect on the provision of professional services generally”
He said:
"The argument put forward was that since professionals generally, when seeking business, frequently seek to show off their capabilities by the provision of a certain amount of free advice, it would be dangerous for there to be a finding that the recipient of such services might subsequently find himself presented with what would be (in effect) a bill for them. I agree that this is a real issue. However, it is an issue which can easily by avoided by clear communication between the parties, and only appears significant in this case because of the highly unusual position as to the provision of free work on risk which pertains in the investment banking market. I also think, however, that the professional services market is no different from any other market to the extent that where one party confers services on another, and that other does not intend to pay for them, in circumstances where he knows or ought to know that the service provider expects to be paid, he is at risk if he does not make clear to the service provider that that is his intent.”
Commentary
While it would always be necessary to meet the hurdles of a quantum meruit claim the potential wide-reaching implications of the judgment are yet to be seen and there is a potential for it to open the ‘flood gates’ for similar claims to be brought. It is common in the investment banking and commercial professional services industry for an element of what some would consider ‘preparatory’ work to be undertaken in order to win business and secure clients and this work is often undertaken on a ‘handshake’.
The decision emphasises the need for parties involved in the provision and/or receipt of professional services to ensure that they are clear in establishing the scope and parameters of any services provided. If any services are to be provided for free or on some form of conditional basis this should be expressly communicated and documented.
In this case although Hannam & Partners are due to be paid $2 million this is substantially less than the $18 million initially claimed (although this included expenses) and a more comprehensive contemporaneous paper trail may have resulted a higher realisation for Hannam & Partners.
For further assistance on this topic or any issues arising from the provision of professional services, please contact Amanda Burge and Jade Salton-Brooks.
