The Court of Appeal held that 'unrealised capital gains' in a termination adjustment clause of a property development services agreement was not limited to gains on assets held on capital account, but extended to gains on properties held as trading stock (revenue account), because the commercial purpose of the clause was to reward the service provider for unrealised gains on all projects it had managed, and the word 'capital' had sufficient work as part of the composite expression 'capital gain' connoting profit from disposal of property. However, future interest receivable on outstanding loans did not constitute an unrealised capital gain. On the method for avoiding double counting between the termination adjustment and commission on introduced projects, the Court upheld the trial judge's approach: commission is calculated on its own terms and then offset by any termination adjustment already received, rather than deducting the termination adjustment before applying the percentage bands. On costs, the Court held that r 26.08 applies to each offer of compromise on its own terms and multiple offers directed to separate claims cannot be aggregated, but a covering letter can independently operate as a Calderbank offer in respect of the global settlement position.
The full text is available to signed-in members, including the 1 later case that cites this judgment.