Wellington
chartered accountant William Giesbers failed in his claim for a success fee of
$3.6 million on the 2013 sale of cloud services company Revera Ltd to Telecom.
The High Court was told Mr
Giesbers had agreed back in 2007 to assist Revera in a possible trade sale when
Hewlett-Packard was expressing interest in buying Revera’s data centre business. Through his company, Prophecy Networks Ltd,
Mr Giesbers negotiated a consulting contract with Revera. He reorganised the group ready for sale by amalgamating
Revera with a subsidiary. He prepared an information memorandum for intending
purchasers. And he negotiated an
agreement for future services in facilitating any trade sale. Prophecy Networks was to receive a base fee of
$25,000 whether there was a sale or not and a further success fee calculated on
a sliding scale for any sale of twenty million dollars or more.
Nothing came of
Hewlett-Packard’s initial interest. Six
years later, Telecom (prior to its rebranding as Spark) purchased Revera in a
deal valued at $96.5 million.
Mr Giesbers first heard of
this sale through the news media. He invoiced
Revera for $3.6 million as a success fee based on the 2007 consulting
contract. He said the 2007 contract
still stood. The wording of the contract
applied to any sale, he said, not just a sale to Hewlett-Packard.
Justice Brewer ruled that the
2007 consulting contract was for a limited period only. The wording of the contract indicated that it
was to operate only for any sale to Hewlett-Packard or to any other buyer
surfacing around that time. The 2007
information memorandum Mr Giesbers prepared had a limited shelf life. The data incorporated rapidly became stale over
time. The consulting agreement was not
of indefinite duration. It had expired
by the time of the Telecom deal.
His Honour also ruled that the
2007 consulting contract had been terminated in 2008 when Mr Giesbers was told
to put in his invoice for $25,000 as agreed payment since no sale had then been
made. This was clear and unambiguous
evidence that the consulting contract was at end, His Honour said. Evidence was given that Mr Giesbers did not
invoice Revera the $25,000 in 2008 as requested.
Prophecy
Networks v. Revera – High Court (19.02.15)
15.010