This short note of the appeal in Benedetti, is an attempt to summarise parts of the decision from the extraordinarily learned judgment of Lord Reed, and Lords Clarke and Neuberger, which emphasise the following:
Where ‘Services’ are provided without agreement – regard should be had to Objective market value or market price, at the time of the provision of the service – the value to the recipient of the services is assessed on an objective basis, i.e. the price which a reasonable person in the position of the Defendant would have paid for the Services.
The arguments of the Appellant included whether it should be the value the parties put on the services? Including the late offers by the Defendants, the answer was a decisive no, as Lord Clarke emphasised below:
Lord Clarke at paragraph 30:
‘In the present case it is accepted that Mr Benedetti’s services had an objective value. The issue is whether subjective revaluation can be relied upon, not in order to identify a benefit, but in order to value the benefit so conferred. In my opinion, that is not permissible. Although there is some academic support for such a solution, there is no authority for the proposition that, in cases where a benefit has an objective market value, the Claimant should be entitled to invoke the Defendant’s subject willingness to pay a higher sum for the benefit as reason for valuing the benefit at a higher rate.’
Market value depends critically upon the identification of the relevant market and it is ‘specific to a given place at a given time’. As Lord Reed illustrated using the episode in Vanity Fair – Becky Sharp employing the panic of the British community in Brussels, selling horses prior to rumour of an impending attack by Napoleon (per Lord Reed paragraph 105); Becky obtained a price far in excess of ordinary value. Identification of the market you are in, is perhaps a little paradoxically, an important element in identifying ‘objective’ market value.
Save in exceptional circumstances, the principle of ‘subjective revaluation’ was not recognised; either for identifying a benefit, or for valuing a benefit received. Mr Sawaris made a late offer (i.e. after provision of Services by Mr Benedetti) of €75.1m to Mr Benedetti who he valued highly and wanted to be ‘generous’ to. This late offer, in the absence of contractual agreement, was not to be the high water mark for the enrichment – in addition to the €67 million Mr Benedetti already received for consultancy services.
What lessons can be learnt from the great case of Benedetti?
‘Value’ of consultancy should be governed by an agreement of the parties, by contract, otherwise the Court will have to determine market value – and strive for a measure of objective value. ‘Contract is King’ in all likelihood as Mr Howard, Counsel for Mr Benedetti said in discussion; but if you want to agree value for Services, agree a price.
There was a distinct theme that the Consultant in the case eluded all labels by which a measure for consultancy services could be fixed – was he an investment banker? No. A broker? No, probably not, too limited as a definition. A promoter? Too vague as a definition. This made it (in my view) all too easy for the Defendants to corral the Claimant into a (rough and ready) market rate and reduce the enrichment gained by Mr Sawaris to zero. The Supreme Court upheld judge’s conclusion as to ‘valuation by brokerage’; in the sum of €36.3m. (0.1 to 0.3% of the transaction value). In which case, in light of the fact that Mr Benedetti had already received €67m, he had already achieved, a quantum meruit, ‘as much as he deserved’.
The case (and the judgment of Lord Reed) can be found at:
The helpful Supreme Court Press Summary of the case can be found at: