High Court rules in favour of broker, despite unclear contract drafting

Professional finance (or mortgage) brokers, in return for a fee, assist borrowers in sourcing  offers of loan finance which are suitable for the particular borrower’s financial circumstances.

The High Court recently examined the entitlement of a broker to earn a success fee of $1,511,650 in an unclear contract.

The case: Xtellus Capital Partners Inc v DL Invest Group PM SA [2025]

In July 2021, Xtellus Capital Partners Inc, a New York based broker and specialist investment bank registered in Delaware, was engaged by DL Invest Group Pm S.A., a company registered in Poland and a wholly owned subsidiary of DL Invest Group SA, to assist it to raise finance.

The terms of the engagement (the ‘Mandate’) were recorded in writing, and the parties agreed the law of England and Wales would govern the contract. It was agreed that the broker, Xtellus, would receive a fee in the amount of 1.25 per cent of the debt finance raised and that this fee would be payable in certain circumstances, even if the Mandate was cancelled before the finance was received.

The Mandate was terminated in August 2022. Following this, in September 2022, Macquarie Euro Limited provided finance in the sum of €123,400,000 to Psary Invest II sp. z o.o. (a wholly owned subsidiary of DL Invest Group Pm S.A.). Further sums were subsequently advanced resulting in a total debt of €143,379,834.75.

In October 2022, Xtellus, presented an invoice for the broker’s fee in the amount of $1,511,650 to DL Invest Group Pm S.A. who refused to pay the invoice, citing the following reasons:

1. The Mandate was addressed to "DL Invest Group," it defined DL Invest Group as "the Company," and was executed by an individual on behalf of DL Invest Group. However, DL Invest Group has no legal personality. Therefore, DL Invest Group Pm S.A. was not the contracting party under the Mandate.
2. The Mandate had not been signed by an authorised signatory.
3. The Mandate did not specifically refer to the ultimate lender (Macquarie Euro Limited) and was not one of the potential lenders which was part of the Mandate (Macquarie Capital). A subsidiary of DL Invest Group Pm S.A. was the ultimate borrower and was not caught by the wording in the Mandate, which ambiguously referred to any financing completed by “any of the Company.”

The court’s decision

The High Court upheld DL Invest Group Pm S.A’s obligation to pay a success fee (plus interest) to Xtellus even though the Mandate was terminated.

The judge concluded:

1. A reasonable person provided with the relevant information would conclude that it was DL Invest Group Pm S.A. who entered into the mandate with Xtellus;
2. While the signatory for DL Invest Group Pm S.A. lacked actual authority, the actions, representations and presentations made through emails of the senior personnel of DL Invest Group Pm S.A. provided actual authority and the subsequent conduct of persons with actual authority further ratified the Mandate; and
3. Where language in the contract is ambiguous, the court favours the construction which makes the most common sense commercially. This led the judge to find “Macquarie Capital” included Macquarie Euro Limited and that “any of the Company” included any company in DL Invest Group Pm S.A.’s group.

Even though the judge found in favour of Xtellus, despite ambiguities in the drafting of the Mandate, the ruling is a reminder that, in order to minimise the risk of expensive litigation, that the parties to a contract should:

• Check basic contractual elements carefully to ensure the accuracy and precision of the contract; and
• The relevant entities are correctly referred to as parties to the contract.

This case is an important reminder of the importance of accurate drafting, rather than a reliance on trust between the parties.

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