The Court of Appeal decision was reported in Commercial Bulletin no. 71 from December 2010.

Benedetti provided financial advisory services to Sawiris who were looking to buy a subsidiary of a big energy company in Italy. The proposed agreement between them had fallen by the wayside, not least because the eventual deal was very different from that originally envisaged. The Supreme Court had to decide what sums were due to Benedetti by way of quantum meruit for services rendered.

Relevant numbers - the original contract sum was €75 million; Mr Benedetti had already been paid €67 million (for arguably other services); and, during negotiation, Sawiris offered €75.1 million, apparently on top of the €67 million, a sum which was rejected by Benedetti as being insufficient. The High Court found that the ordinary market value of the services was €36.3 million.

The High Court held that, although the ordinary market value of the services was €36.3 million, the appropriate fee was €75.1 million, on the basis of evidence that Sawiris regarded the value of the services as being at least that sum, based on the offer of that amount in negotiations. The Court of Appeal disagreed and held that the starting point should be ordinary market value. As Benedetti had provided 60% of the services for which he was claiming a quantum meruit (and had effectively been paid for those out of the €67 million), he was entitled to 40% of €36.3 million, i.e. €14.52 million extra.

The Supreme Court accepted the judge's finding that the objective market value of Beneditti's services was €36.3 million. But as he had already received more than that, no further sums were payable. The €75 million fee set out in the abandoned agreement was not relevant to the assessment of market value.

The question which arose was the extent to which that figure for ordinary market value could be decreased if the services were of less value to the particular defendant ("subjective devaluation") or increased if the services were worth more ("subjective revaluation"):

  • All the judges agreed that the starting point in valuing services was the ordinary market value, being the price that a reasonable person in the defendant's position would have had to pay for the services.
  • The judges diverged on what happened if the services were in fact worth less to the defendant, Lord Clarke and two of the judges held that it was permissible for a defendant to prove that the services were worth less than market value. Lord Neuberger declined to express an opinion, thinking that cases where subjective devaluation could be argued would be extremely rare. Here, for instance, services were provided at the defendant's request, there was no agreement as to how the value of the services should be quantified and neither party had indicated the service should be provided at other than market value. Lord Reed said that the key was the "position of the defendant", so that position of the reasonable person would be adjusted according to the actual characteristics of the defendant (e.g. his credit rating). It was an argument open to someone who had not chosen to receive the services; it was not available to someone who had freely accepted the services.
  • All the judges agreed that subjective revaluation was not possible, i.e. a defendant should never have to pay more than market value for services valued on a quantum meruit basis. [i.e. the High Court award of €75.1m was wrong]


As Lord Neuberger acknowledged, legal academics have developed the law of unjust enrichment/quantum meruit considerably in the last fifty years, but the subject has not received much attention from the UK courts. There will be no doubt more cases to follow on the subject of subjective devaluation.

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