Tuesday 18 – Wednesday 19 June 2024
Before Lady Justice Asplin
Lord Justice Snowden
Sir Christopher Floyd
By Appellant’s Notice filed on 18 July 2023, the Appellant appeals the Order dated 27 June 2023, of Ashley Greenbank, sitting as a Deputy High Court Judge in the Business and Property Courts in which he dismissed the Appellant’s claim for a profit share under Profit Share Agreement.
good morning I’m I’m sure you have uh divided up time between you um but uh in order to uh rock that Bo very slightly um having uh uh read widely uh we would uh be grateful if you would address ground one and that we hear argument on both sides in relation to that and we’ll see where we stand at that point right okay thank you very much my lady um my lady um I appear on behalf of the appellant together with Mr Quack The respondent is represented by Mr Knox in counil uh and his Junior Mr Gold blad uh in the light of what you say we’ll deal with matters in in that um way um also in the light of should we get there uh in the light of recent announcements from the lady chief justice Master of the roles and heads of uh division uh regarding oral advocacy by junior members of the bar uh Mr Quark uh will deal with ground three of the respondent’s notice uh in so far as necessary that’s page 32 to 36 uh of our skeleton submissions uh also having reviewed uh the law in preparing uh for this appeal my lady uh one can uh strike through uh paragraphs uh 75 de and 76 of our skeleton submissions and those are the points regarding um uh the uh presumption of of similarity uh in relation to uh one point in relation to grounding we still stand by the submission that there’s been no error of law by the uh learned Deputy judge and that this is a holy unsuitable case and situation within which to apply the uh presumption but um the uh there was a misunderstanding of one passage in brownley as I say doesn’t actually affect but I just wanted to flag that up um at Mr could you give me those paragraph Gaines yes of course so if one turns to 75 yes and it’s 75d thank you it’s actually the point that it only ever operates unless until evidence of foreign law is ad jued that is correct uh and and that P part is still correct so it’s uh it’s really the second part of that paragraph and then it’s e and then 76 th those actually Fall Away in in the light but I’ll develop that argument at an appropriate thank time should it be necessary uh also the appellant raises an issue regarding the permission that the respondent requires uh in relation to ground three of the respondents um notice uh and again it may be that uh in the light of dealing with the main part uh of the appeal that uh can be dealt with at an appropriate time uh if necessary uh finally uh you’ll see at page 250 uh in the core uh bundle there is a a list of issues that have been um prepared by uh the parties of course they’re there to to assist the court um but I would very much hope that the issues will become uh rather straightforward through uh the course of uh my submissions I’d now like to before actually uh going onto the particular grounds in particular the the way I approach ground one uh it is necessary in my submission uh my lady and my lords to um set out uh some introduction as to what uh this dispute is actually um about the appellant case is that the key finding in paragraph 190 uh of the Deputy judge’s judgment was wrong for a number of different reasons and in particular uh it is our case that it leads to a completely uh uncommercial and somewhat absurd uh result and I shall highlight throughout the course of these submissions uh that lack of commerciality uh and uh absurdity uh unless you wish me to do so um I I would not take you to the actual that that actual paragraph um of the Judgment at this uh point in time the it’s it’s just a a summary of where he’s got to it’s a summary exactly my yes the so you saying it’s so uncommercial and absurd it cannot be what the parties intended is that the that’s right my Lord and I I will I will develop that during the course of but not that the parties did in fact in intend something else no it’s it’s the the the the the objective party to that uh profit share agreement could not have uh intended that a sale of the of the shares in Soo would lead to no uh profit share for um Mr ortis Mao it’s important in this case to set out uh and introduce the corporate structure uh the appeal concerns the sale of the valderama golf course in Andel laer in southern Spain uh it’s regarded as one of the world’s lead ing golf courses and has been the host of many major tournaments including the 1997 Ryder Cup the fact that the course would and continues to host leading tournaments and those that are televised is not there just simply as background information but is a relevant and material fact uh in this case the appellant’s father haime ortis patino was the founder and the owner of the golf course and much of the surrounding land for the sake of Simplicity during the course of this appeal I shall refer to him as jop jop died in January 2013 actually very shortly after the profit share agreement and the sale and purchase agreement ments were entered into in the October of 2012 jop had two sons Carlos the appellant who I shall refer to a cop and Felipe a fop the structure of the uh corporate and land Holdings is set out in paragraphs 4 to six uh of our skeleton submissions and you will hear in particular about two Spanish companies VSA and vessa and I set those out in paragraph 4 subparagraph one but I let me explain vessa owned plots of land and trademarks VSA was the company that owned also plots of land incl including the actual Golf Course itself and in addition it also owned trademarks Soo was a Swiss company which owned 100% of vessa and 94% of VSA the remaining 6% of the shares in VSA were owned by The Rail Club De valderama RCV that’s in effect uh a members club uh and those 6% of the shares are owned by the members themselves and as I shall explain my lady um later on uh in these submissions there were sign in Greater detail there were significant problems with the club members and the relationship between jop uh and RCV and its members the members had preferential rights and preemption rights over any sale of VSA shares and they were particularly hostile to jop relatively nearby but not contiguous to this land there was further land owned by another Swiss company called Campo Campo in turned owned a Spanish company called valderama 07 which I shall refer to in these proceedings as V7 and it itself owned land at castelar de la frona known as the castellar land V7 also owned trademarks and it was jop’s plan to develop the castellar land into another top quality Golf Course um presumably the my understanding is at the same sort of standard as the valderama golf course now this appeal does not concern the castellar land directly or V7 or Campo but if you can turn to um page 3 page 255 and paragraph 6 we’ve set out there an organogram that sets out pictorially the uh ownership of the various Swiss and Spanish companies and the land itself in 2010 the stripe Group which is uh referred to often as tsg headed by uh David Spencer who was well known within the gulf world tsg was interested in buying all the valderama companies and what is particularly important for the purposes of this appeal is that at that time in 2010 tsg and David Spencer carried out extensive due diligence on the valder companies that included obtaining reports from lawyers D and accountants KPMG now I am get just to be clear when you say the valder valder companies you’re actually talking about Soo vess and BSA yes you’re not talking about Campo and v no they they also carried out uh due diligence on on on that as well because they purchase everything so at that time because that’s not paragraph 48 of the Judgment paragraph 48 judgment to which you refer I think talks simply about Soo yes but it’s it’s not particularly relevant my law to the to the fact that they actually do that okay but just for terminology purposes if you’re going to talk about valderama companies you’re you’re you’re for this purpose restricting yourself to the right hand side of the organogram that’s right right yes yeah so if we turn to paragraphs 48 and and 50 um the uh learn judge sets out there the um some of the work that was actually uh carried out at that at that time in particular the fact that D Piper D provided General legal due diligence KPMG financial and accounting due diligence and then he at 50 sets out some of the key uh points that the D Piper report sets out and we see at Roman one it identifies the preferential rights of the holders of B shares that’s the RCV members and the fact that they were their consent was required before the payment of dividends out at the proceeds of sale of the gulf course they were entitled to 50% of the value of the liquidated Assets in the case of a winding up of VSA and their approval was required should Vala’s debt exceed 50% of its share Capital at Roman 2 uh the report noted the preferential acquisition rights of RCV to acquire the golf course and the trademarks uh under the framework agreement at number three that there was already a letter of complaint sent by members of RCV to fop as chairman of the club regarding charges over the golf course at at Roman 4 the existing uh conflictive uh relationship and there that uh there was even the risk of future litigation and then at Roman 5 over the page uh the pledge of Class A C and D shares uh and the debt that they were simply noted and that VSA had a negative working uh Capital uh 51 refers there to the KPMG uh report uh in the supplemental bundle the dla and KPMG reports uh are set out uh in in part but the relevant parts are set out one turns to four in the supplemental and we see a legal due diligence report dated the 20th of September 2010 called project Cruise [Applause] may I draw your attention at page 109 to the middle of the page where it says the the paragraph where it says the vendor has been provided with one a Spanish legal opinion on the triggering of the preferential acquisition rights which specifically states that instead of a direct sale of VSA shares the sh shes of the company holding Vala’s share could be sold Soo in this case the club and there it’s referred to as CGV rather than RCV or Class B shareholders should allege the existence of a fraud to their AB mentioned preemption rights and two a letter by which CGV serves notice reminding the vendor of cgb’s preferential acquisition rights which could give rise to litigation and then we see over the page at 10 uh about halfway down the page uh as described in other sections of this report although the transaction will not trigger the aforementioned preferential acquisition rights so again the legal opinion both from the Spanish lawyers and that adopted by D is that a sale of Soo would not trigger uh that but they flag up the possibility that a Spanish Court uh may consider this transaction fraudulent and eventually rule in favor of the uh of the members it wasn’t what do what do you derive from those two pages um well what I derive from that my Lord and what I’m going to uh developed during two things in particular one is the extensive due diligence that was T that took place by the stripe group and that the judge found had been adopted by uh the respond in this appeal um so that the respondent was well aware of these particular issues and secondly and most importantly my Lord is the fact that the parties to the contract and to the profit share were aware that the only way to sell the club the golf course and the valderama companies was without triggering the preemption rights and trying to a void litigation was through a sale of Soo rather than through a sale of either the land itself or through VSA or vessa I mean valsa is the the one that actually owns the the golf course so it it’s I’m just simply setting out my Lord at this point uh in terms of because there is this strange Gap here between what happens in 2010 and then the actual purchase in 2012 and so it’s very important important that um that my lady and my lords are aware of what due diligence and what extensive due diligence took place before the acquisition and can I just draw your attention as well to uh two two paragraphs further down on 110 where that paragraph where it says sorry can I just Retreat a little bit or go back the what are where where do we find the actual preferential rights of the holders of the V shares in VSA that that is that’s what’s referred to here is it yes I don’t think where are they I don’t think we actually have that in a document that’s before the uh that was either before the uh before this court Mr KNX me it was before the it was before the judge below yes I think the Judge summarized can’t remember where I it’s not well is it I mean what are the preferential rights that would have been triggered that everybody was concerned about are they as identified in paragraph 50 so paragraph one yes so it’s the ability to also purchase the shares uh for at 50% of their value and what say that that’s not what he says at 50.1 sorry that’s why I’m just trying to pin them down because we if you’re going to place Reliance on yes something that everybody is said to know about the the triggering of avoiding the triggering of preferential rights um um and your I think your argument is that everybody knew that could only be avoided if the shares in Soo were sold that’s right and that’s why you say that’s part of the Matrix yes it would be useful to understand what preferential rights are actually as it were can I come back to you my Lord on on on that and just because I I want to try and I’m sure that I can actually find the a either a document or where there is a a reference to what the preferential rights actually actually are because as reported at paragraph 50.1 if that’s what if that’s the sole extent of it I’m not at the moment quite clear what why for example the sale of a a plot of land at the side of the golf course would trigger well it it say well it’s the sale of it would be the sale of the golf club no and the sale of V but as I understand it um as well as the golf course these companies owned plots of land around the GF that that that that’s right and those plots of land could have been sold and the what I’m the I’m not able to join at the moment is if a plot of land around the golf course had been developed and sold not the golf course yes but a plot of land around the golf course what would it have triggered if anything that that’s just what I’m there’s the dots I can’t join at the moment as I said if I can return to to to that my Lord and I will I will answer that um question in a little while and then it it page can you can I just ask one other question yes of course M the passage you showed us on page 110 in the da report talks about the transaction with a capital t uh can you summarize what the transaction was was that a sale of the [Applause] um that was the original sale to uh the first purchaser was it well of course this is anticipating a purchase by um by by the strike group of the valderama companies so the shares in in Soo yes it’s the shares in Soo and and and if one looks after that it says I.E the sale of Soo shares yes but if one looks on page 107 in that due diligence report transaction uh is first um defined there it says potential acquisition of the entire group of valderama companies the group which carry out the golf related business uh at the particular um uh Place thus owning various golf courses and other related assets so it’s very widely well it goes on the trans action should be carried out by the acquisition of the entire share capital and shares of the holding company sof yeah so that’s what seems to be a it is the acquisition of the share it’s not very well put together but it seems to be the acquisition of the shares of Soo thus uh indirectly um acquiring VSA Visa VSA vessa and and the land itself and the trade marks yes and then if we turn to page 102 100 100 is the KPMG report and again we only have the key extracts that uh are relevant for the purposes of this appeal page 102 there’s a um the second um column or row should say uh indirect partial acquisition uh there’s a tax re capital gain upon the sale of Soo that is flagged up and similarly can I draw your attention over the page at 103 to the fourth bullet on the left hand uh where it says the overview of the tax treatment of Soo for direct taxes and again there’s a benefit that is set out it benefits from the holding company regime for cantonal and communal tax purposes the stripe group was not able to complete and on a number of occasions the uh agreement was deferred and in 2012 Mr Spencer introduced Richard moxon a director of the respondent to jop there was at 100 paragraph 108 of the Judgment at page 57 an important finding of fact that the due diligence reports were made available and relied upon by MGI the respondent I I will leave you my lady and my lords to read um that the whole of paragraph 108 and that was accepted sorry don’t want to run on if you’re still reading in that was accepted by Mr Mox and we see this not only in the Judgment but we also see this in the transcript there’s some very limited parts of the transcript uh in this case and we see this in the supplement why why do we need the transcript if if if the judge has made a finding of fact that’s a finding of fact well my Lord that that’s right he goes even further in in the uh in my submission he goes even further than than is set out by the Le judge uh how do we know the judge accepted but the judge did accept it yes that’s right um also what we see and I do want to draw your attention to page 221 in the supplemental bundle is a document which I do say is also relevant um for two purposes not just the due diligence but this question the whole question of contractual interpretation we see here a letter or a document at page 220 and it’s stamped by D Piper it’s before the acquisition actually takes place in October of 2012 it’s dated the 25th of September uh 20 uh 2012 and what we see at page 221 it’s not it’s not a terribly good copy but um you see in number two the offer it says as you know MGI gol Leisure opportunity fund MGI has a thorough knowledge of the assets held by Soo VSA and vessa we’ve done intensive legal and financial due diligence on the Securities provided by banif by Mr ortis patino accordingly our offer is as follows and so just that’s the first point in relation to the uh knowledge uh of and it’s signed I should say over the Page by Mr moxen at page 222 but can I also draw your attention to what is said at the bottom of 221 throughout the process of this transaction sorry where you reading from I see under the third heading Club golf balderama throughout the uh the process of this transaction it’s become increasingly more evident that the relationship between the members of uh CGV and Mr ortis Pino has deteriorated to such extent that it’s beyond repair MGI do not believe that this transaction or any transaction we have discussed previously has triggered the preemptive right as contained in the lease framework agreement between CTV and VSA that being said we’d like to nurture a friendly and proactive relationship between the members and what I say there is that they uh they were discussing the purchase of the soo shares and Mr moxon and MGI would have been well aware at that point in the September of 2012 that a purchase of their belief was that a purchase of Soo would not trigger the preemptive um rights those are the preemptive rights you’re going to come back to but I’m get to as to what they actually were yes because that talks about um preemptive rights under a lease framework agreement lease framework agreement the Le framework to be different to preemptive rights um as holders of B shares or unless again you can join the dots for me yes [Applause] now the framework agreement is actually my Lord referred to in paragraph 24 of the Judgment page 29 of the core bundle and what we see at Romans 6 is that valer agreed not to transfer the title to the least facilities I.E the golf course I’m sorry Mr Baker which um which paragraph of the judge 24 my Lord page 29 of the core thank you and I’m looking now at Roman 6 and it’s valer agreed not to transfer the title to the lease facilities i. the golf course to a third party during the term of the new lease and the lease runs until June of 2050 we see that in Roman 1 without first offering RCV the opportunity to purchase the title on the same terms if RCV exercised its right and purchase the tit of the golf course on those terms valsa was to be put into liquidation and the holders of the B shares in valsa would been tied to 50% of VSA Surplus assets in the alternative Soo could agree to sell the AC and D shares in BSA do RCB at a price equal 50% of the price offered by the third party for the golf course Less bsa’s in debted right but that that that’s dealing with the golf course that deals with and you quite understand as is the case with every piece of golf club litigation I think I’ve ever encountered that the members of the golf club the play on the course are always concerned to ensure that the golf course isn’t sold because they want to continue to play golf that’s what they do um but that doesn’t relate to anything other than the golf course at least not on its face well my Lord as as I’m going to develop during the course of these submissions it very much goes to the heart here because of the words any and all in the profit share agreement and the parties in in my submission the party’s clear understanding was that all of the assets this wasn’t a case of just nibbling away at at selling the odd plot of land around the side of valderama gulf course but this was a case of which is what actually ended up happening was all of the assets being sold and that was anticipated in the profit share agreement that in the event of either any sorry all of the assets weren’t sold well they were eventually in 2015 to because they were sold to to zagaleta uh or so so the golf course it may be that I’ll have to develop this as as as I it will become clearer as I develop my submissions but the whole point is my Lord that this is that what we say is that upon a sale of all of the assets I the golf course and the surrounding land and the trademarks The Profit share agreement was triggered it will become much clearer once I actually get to the to the to the heart of looking at the profit share agreement itself but I I felt it necessary to which I’m nearly coming to the end of to actually set out uh the the background and the historic background uh here so I was at uh looking at that document at page 221 of the uh of the supplemental um and also perhaps little seven uh was relevant BSA agreed not to transfer the trademarks to a third party yes during the terms of the new lease without first offering yes RCV yes I must not forget the trademarks they’ve become a rather subsidiary mat appeal but actually they are of course uh important and the trademarks of a of a leading golf club uh could could um be extremely uh valuable sorry Ju Just to be clear because I I just I just thought I’d moved into a parallel universe what we sold to zetto was Soo was Soo yes yeah but you you you said it was you said it was all the asss but Soo owned no but but what was sold were the shares in Soo the shares in Soo yes right so it’s not well the the sale of the assets well you know we would I I asked you about the gulf course about plots of land that’s what we having a debate and then you just said that’s what was you said that’s what was sold to zlto and it isn’t well we say that indirectly and that it triggered the the the profit share agreement because that sale of Soo that everyone knew that’s why we’re here that’s why we’re here why we say that that the the sale of Soo uh that everyone knew that the only way that the ultimately theor I just thought i’ M into sorry sorry my Lord if I didn’t make myself clear well I I thought I’d moved into parallel universe in which in fact there had been a sale of real not at the tangible land no it’s the sale of Sao no right the on October I I should just say at this point although Mr Knox will be able to to to deal with this himself is that in his skeleton submissions he has asked the court essentially to revisit this question of knowledge and attribution but we say those matters were firmly decided in favor of the appellant uh and our findings a fact that the court should uh indeed uh accept uh also that that document I should say the one that I’ve just drawn your attention to at 221 of the supplemental bundle is one that the respondent has asked to be uh included albeit we say it primarily uh assists the uh appellant on the 18th of October there was the novated uh 2012 the novated uh agreement and the profit share agreement was signed uh on the same day and we see that in tab one of the supplemental bundle that’s page two and I’ll I’ll come to this in in in in a little while the MGI owns the valderama companies for just over three years and then there is a share purchase agreement with zagal letter on the 30th of October 2015 when they sell the shares in Soo for um 20 point roughly 20.6 m million euro and the shares in Campo for one Euro what we say uh is that MGI only ever sought purchases for sto and Campo and there was no evidence before the judge um save for um what may be said by Mr uh moxen in his witness statement there’s certainly no documentary evidence to the cont a claim was issued on the 22nd of December 2020 and the first time that the defendant denied liability on the basis of contractual interpretation of Clauses in the profit share agreement was in the defense the original defense dated the 18th of February 2021 we see that uh again in the core uh bundle at uh tab six page 136 and we see that in paragraph 20 uh of the paragraph 20 of the uh defense page 1440 and there it said that the sale was not of the valderama companies but of Soo and Campo which owned shareholdings in the subsidiary companies this notably was not raised as an issue in any pre-action correspondence and we also see and I’m going to refer to it later on in Greater depth but it’s whilst we’re at the uh pleadings and statements of case if one turns to the uh rfis uh the defendant’s response to request further information 188 so why is this relevant I mean they’re either right or they’re wrong I mean this isn’t a question of credibility where a factual question is raised late and the inference is well you’ve only just thought of it and isn’t the fact I mean this is a legal argument on interpretation it’s either right or wrong no matter how how late it was that somebody got to it I um I accept that my Lord that’s right but what I do say is where this goes to is these questions and and one sees the objective intention of parties that actually Mr moxen and we see when I look at some of the evidence that Mr mock in terms of the factual Matrix and how he understood that’s that’s completely irrelevant it’s not the factual it’s not the objective intention of the parties that’s a um what’s the word that’s internally inconsistent it’s it’s what a the reasonable objective bystander would attribute to the parties because of the words that they have used and but of course my Lord knowing the B the factual Matrix that that existed at that time right and so one can’t look at these words without understanding and knowing the difficulties that that existed um in terms of for example the difficulties with the club members and those those rights of preemption and and my point is that I’m will develop during the course of these submissions is that those are very relevant factors in this case that that I say that the Learned Deputy judge um didn’t take into account and therefore avoided particularly the commerciality and the commercial real uh what what was really happening uh on the ground and also uh effectively missed out a number of factors right the point I was picking you up on is I thought you were developing a point which is was basically look how long it took for um the respondent to happen upon this defense of in interpretation and that’s where your submissions seem to be headed and I was just trying to sort of understand what legal I framework you were trying to bring to bear on that as opposed to a sort of if I dare suggest jury point no well I understand that my my Lord and I but can I just take you my lord to the point at 212 sorry we’re at 212 in in in the coure and one se’s there at reply 9 C that in October 13 the defendant decided to sell the real estate assets by whatever means possible whether by selling the shares in vs and vessa or the plots of land themselves now again um I’m not what I say is that the any objective understanding of this agreement a party would understand that selling valsa or vessa or indeed sto shares amounted to selling the real estate assets I’m sorry could you uh repeat that and take me back because um I had difficulty with my bundle I’m at 20 212 and I just asked you to read and see yes what’s said there in the um first three lines yes and and your submission that you just made was and the submission that I’m and and it will fit in with the other grounds in particular Ground Three uh of the um third point is that this was a this is shows the clear understanding of Mr moxon signed with the statement of truth Mr moxon uh during the course of the the trial that that that it on any objective reading this a sale of VSA and vessa was a sale of the real estate assets and I say that if a sale of valer and vessa was a sale of the real estate assets then so was a share sale of Soo that was the ultimate holder of the of that share of those shares so you’re saying that we can derive something from a response settled in 2022 by uh Mr Knox um attested with a statement of Truth by the defendant solicitors that we can in some way derive from that one sentence what the parties must have meant when they entered into the agreement in 2012 it’s another Factor my Lord in terms of a whole bundle of factual matters in terms of the factual Matrix that I say that the Learned judge ignored which factual Matrix principle of law allows you to look at events occurring after an agreement is entered into as a means of interpretation of the agreement well I don’t say that it’s after my Lord I say that it’s before fact when they enter into this agreement in October 2013 is after October 2012 yes but my what I say is that they they they were aware of the difficulties and what how one would sell uh all the assets because it’s any and all and how all the assets could be sold and that they were aware of that before they enter into the profit share agreement of course I’m not suggesting that the court can look at matters that postdate uh the entering of the agreement in October 12 I’m saying that before that this was something that the parties were perfectly aware of you’re driving something but from Mr knox’s choice of language he he says that um one way of selling the real estate assets is to sell the shes and V all these and what I say and I will bring come to this when it comes to the appro at time my Lord is that actually this was a matter that was accepted also firstly that that that uh the answer it’s a concession made in a pleading so um and secondly uh that these were matters that were put to Mr moxon Mr moxen accepted um that the way to sell all the assets was through a sale a share sale of Soo that was that was clearly the understanding and to deal with Lord Justice snowden’s point of the clear understanding before they entered into the uh into the um profit share agreement can I turn now to the profit share agreement itself [Applause] and in particular I’d like to take you to clause three page five supplemental bundle my lady so what we see here um is the sale of the bser or Vesta real estate assets um the purchaser 3.1 uh will use reasonable Endeavors to identify third party buyers for any and all of the real estate assets it’s accepted that all all means includes the golf course so they were under that uh that obligation uh to identify purchases for those assets at the best sailable price what we then see at 3.2 is that if after the effective date any real estate asset is sold now just pausing there this agreement’s not very well drafted there are a number of ambiguities uh in here and the word sold and transferred appears to be used interchangeably throughout and again I say that that uh is particularly important for the purposes of this appeal because um a sale uh of the real estate asset uh if that means just the land and if the meaning of sold is either the transfer of the title or a transfer of shares in a company that holds the um the owns the land or or a company that owns a company that owns the land um that um satisfies uh the meaning of the word uh sold for the purposes of of this uh Clause so if after the effective date any real estate sold to a third party unconnected or an arms length purchaser then they have to pay a net profit and the net profit is essentially a 91% 1% split how is that to be calculated well 3.3 sets out the framework for or how net profit uh should be actually uh the how the calculation should take place and we see at point one a deduction for Bank facilities at point two a deduction for commission three uh tax4 professional legal accounting fees and 0 five any direct costs uh in relation to the uh development of any uh real estate asset 3.4 deals with the uh way jop was to receive the money and there it says that uh payment was to be in 30 days now there’s an Express reference there to VSA or vessa receiving clear funds but in my submission for the reasons that I’m going to set out it can’t be as prescri sctive as that because of 3.7 which contemplates a reorganization of the corporate structure and so if another company or companies in fact was receiving the money they would still of course be obliged to transfer that money to jop or his hirs and his airs uh that is uh dealt with at 3.6 because the obligation is transferable on jop’s death to his son cop or to his grandchildren now 3.7 is particularly important for the purposes of this appeal uh it’s one it’s my ground four just solely dealing with 3.7 but it it goes wider than that until the whole commerciality uh of this uh Arrangement so no amounts shall be uh it allows for effectively a reorganization of the valderama companies and so no amount should be payable in the event that the purchaser reorganizes the purchaser group so that any real estate asset is transferred within the purchaser group or to any company in any way connected or Associated to the purchaser pausing there if however following any such reorganization any real estate asset is subsequently and here transferred is used rather than sold to a thirdparty buyer the provisions of this Clause shall apply and jop or any of his assignes as the case may be shall be entitled to any amounts payable in accordance with this Clause 3.7 then it goes on to say for the purposes of this Clause will query whether that is a reference to the whole of three or 3.7 in some respects I say that that doesn’t necessarily matter quite as much as perhaps the the the judge a trial uh gave it so for the purposes of this Clause transfers of any real estate asset shall include any asset transfers as well as any shared transfers of the company there’s a typographical error owning any such real estate asset so it creates a situation whereby even on the judges the Learned judges interpretation of 3.7 I say that if there is a reorganization such as volser and vessa drop out of the picture and sto owns the land directly if the shares in Soo are then sold that would trigger The Profit share and to use a second example if V and vessa introduced new subsidiary companies malsa Messa that that were below valser and vessa and the land holding again there would be a recovery if the shares are sold and what I say and what the appellant’s core argument is is that it would be an absurdity if the respondent could Escape liability through either incorporating a new intermediary company between valser and Vestor and the land or through removing uh valser and vessa or some other corporate uh restructuring restructuring we say that even if the judge was right it cannot have been the party’s objective intention that upon a corporate organization a share sale would trigger The Profit share but that jop is left in an inferior position if there is no reorganization and in that scenario upon the judge’s reasoning each individual plot of land whether it’s the golf course itself or the plots that surround the golf course would actually have to be sold Because unless that takes place any sale of VSA or vessa or sto would actually lead to jop and now cop recovering nothing we see also finally uh in dealing with this section at 3.8 jop shall be punctually notified in writing of any real estate assets transfer and he shall be duly in informed of the details of each specific transaction so again there we see this use of the word transfer rather than the word uh sale um the the two seem to be as I say being used uh interchangeably can I now turn to Clause four are you going to at some point come back to the sort of errors in Clause 3.7 ter of the cross references to other Clauses or of course I mean this is me just really introducing uh the point and I will of course I’m going to actually deal with 3.7 as a specific head of uh in terms of a specific submission my Lord but which which which which point well it was just I mean um just just just reading it on his face I mean yes um I I looking at the second sense if however following any such re reorganization so the first sentence you say is designed to ensure that there isn’t a as it were an inadvertent obligation there’s no obligation to pay anything if they just reorganized J if they internally reorganized that’s right but if however following any such reorganization any real estate asset is subsequently transferred to a third party Pro buyer the provisions of this Clause shall apply and jop or any sign shall be entitled to any amounts payable in accordance with this Clause 3.7 there are no amounts payable in accordance with this Clause 3.7 it must be a cross reference to 3.2 absolutely or this clause three yes so that’s one error I think yes um and then you say for the purposes of this Clause um and do you mean for the purposes of the preceding sentence or do you mean or should it so so should it have said for the purposes of this Clause 3.7 transfer shall include or does you say that it means for the purposes of this entire clause three we say it says the entire clause three and the reason we say that and rather um this a point that I have referred to in my skeleton but we say it’s the whole of clause three and we can look at the distinction here because one looks at 4.6 which has a similar clause in relation to the tra Trad marks my lord and there there’s an Express reference to 4.6 now and how the judge dealt with that um the judge said well this must be a a mistake and uh I take the view that it must have meant 3 uh seven but what we say is that one can’t do that because one can’t adopt a a literalist approach uh to one part of clause three and then uh not effectively abandon that when it comes to 3.7 and start really almost entering into the territory of of rectifying the the agreement because just to just to understand it on the fact if if the last sentence of 3.7 was limited to 3.7 yes I.E a sale to a third party following a re an internal reorganization yes that hasn’t happened has it no that’s right so if this meant for the purposes of this Clause 3.7 you would lose just to be clear sorry my Lord I didn’t catch if in the last sentence of 3.7 it meant for the purposes of this Clause 3.7 you would lose well you’re saying if if factually it actually hadn’t actually occurred there was no there was no no there was no internal reorganization following a sale so if what this Clause is trying to deal with was limited to a fancy internal reorganization then a sale that’s right you would lose because on the facts that hasn’t happened therefore it wouldn’t be triggered that’s why you say this has to mean I well I say firstly it has to mean that that it has to apply to to everything but I also say that when looked at what would happen in the scenario of a of a reorganization and a share sale a share transfer triggering uh a profit share that has to be looked at in clear distinction with what the judge has actually found which is that upon the sale of sto with no reorganization that my client recovers nothing yeah that’s a different point cuz you’re saying but you’re saying that if the parties um provided that you couldn’t avoid paying a profit share by an internal reorganization following this followed by the sale of shares of a company holding real estate asset yes you say it would be absurd if they didn’t mean that when in 3.2 they just talked about real estate sales that’s precisely what right but that so so you’d say you have to join you’d have to join those extra dots yes yeah but it’s not a triggering of 3.7 no no not no it’s not about no no that’s right no absolutely my Lord what we say is we recover under 3.2 yeah yeah but but one has to look at 3.7 because it assists the court in an understanding of the whole of clause three and the mechanism and what what the drafter and what those parties who entered into the agreement must have intended it’s slightly odd though isn’t it if the drafter is Savvy enough to make these Provisions in 3.7 um and didn’t make them in 3.2 you nevertheless said he’s what well the the objective bystander would think that the draft has just missed yes I mean it’s it’s with it’s not a very good agreement and and there are a number of of errors in in here one doesn’t know why but uh and and which is why we’re here I mean ultimately because it it it’s a it’s a agreement littered with with ambiguities and and confusions and and a lot of the the terms aren’t even aren’t defined and so um one is left having to um work through this this process of interpretation and you would say uh bottom line in effect of that uh the whole of three must be construed together yes and in context and 3.2 must be construed in the light of 3.7 yes uh whether or not 3.7 relates to the whole of three yes so two separate points there are two does it relate to the whole of three if you construe 3.7 on its own and in any event if you construe 3.2 you need to construe it in the light of 3.7 so I think you’re going this far and therefore if you did that you would understand 3.2 to cover more more than uh um yes ground my lady has my point absolutely precisely two El there are two elements to to to it absolutely correct you didn’t rather skate over 3.3 which um is the mechanism for working out the net profit yes and that is drafted purely in terms of what one might call Standard real estate sale yes so how how do you um how do you deal with let that because effectively the agreement needs to be uh re written yes to have a provision for working out net profit in the case of a sale of shares as opposed to a sale of real can I say a number of things because of course these matters were raised by particularly by Mr KNX before the the the deputy judge um firstly uh the judge found no difficulty in the end of actually carrying out that is that fair he said it is rather difficult at various points well he did it um and and the Judgment sets out those deductions and secondly my Lord the the parties were aware that that no other assets were held by Vala vessa or Soo save for the land so this wasn’t a case of as Mr Mr Knox suggested that uh there there would be a great difficulty in carrying out this exercise but the parties knew that these were just corporate Holdings uh and ways of actually holding the land for um for different reasons that I’ve already given you both the tax advantages and the um avoidance of of litigation with the members and so they were able to to to hold it in that way and make the deductions very easily Upon A Upon A a sale and and in any event the judge make a finding that uh no other assets yes were held apart from yeah that that was accepted give refence that I I I thought there was rent coming in at some point which must have gone into a bank account my learner Junior says it into an escro account but we’re to assume that a um a professionally drafted uh agreement has has in effect elided uh the uh corporate vehicle and the real estate yes and can I give also an answer to Lord just um Sir Christopher Floyd’s um a third point to your to your question and the third answer is 3.7 because 3.7 clearly anticipates a share transfer triggering the profit share and yet 3.7 doesn’t say in the event of a share transfer you have to work out the net uh profit in a different way to Clause 3.3 so one the reasonable reader would would assume that the way one does that is to go back to 3.3 so the suitably adapted for aded which is what the judge actually did and was able to carry out that exercise I mean what it BS down to you say look if if they envisage uh a trigger on a sale of shares of company’s owning real estate Assets in the circumstance set out in 3.7 where there’s been an internal reorganization first yes surely they must have intended the same where there isn’t a reorganization first to which answer might be but given that they clearly contemplated that why didn’t they say so in 3.2 which you would have us read to include that well they they didn’t say many things here and I mean the the the problem is is that um but that it were were one to adopt that literalist approach and say well they didn’t adopt that does leave the parties at the um either jop or any a in a in a in a in a rather strange position where the um where the respondent could take a very easy course actually this is a a neat um sort of segue into my ground one into a very neat way of actually effectively cutting my client out uh of any profit share you’d say it’s you’d say it’s absurd to think that the par is intended that there would be a profit share payable if uh the purchase of group conducted an internal reorganization before selling but we’re able to say well for goodness sake as long as you don’t conduct an internal reorganization first yes and then sell your one would be in the position that’s that’s right m i mean one would be in the position where um it would be then in jop or cop’s interest to encourage some form of reorganization and hoping that that the reorganization took place and then MGI would have been in a position to resist any reorganization which of course they had uh control over um because it would be in their interest not not to reorganize the corporate structure does it matter that they’ve gone on to adopt the same structure for trademarks under Clause four so again you’ve got sale of the trademarks and then a mechanism which is specifically adapted to a set of trademarks we’ve got brand development fees and so on yes and then a 4.6 which is has got the words in the last sentence but this time expressly for the purposes of this Clause 4.6 yes uh but again on your your approach the the objective uh reader would say um it’s uh 4.2 has got to be adapted and and the profit share has got to be triggered in the event of I say that well actually what you actually have to say is that the reference to 4.6 is a mistake there because you have to say no no no um it’s it should said for the purposes of of this clause for or at least for the purposes of uh the the Clause uh 4.1 so in other words you that is a mistake there so what you’re actually saying this so as as well as looking at 3.7 you’re saying the last sentence um in in essence should be either read as saying for the purposes of this clause three or at least you ought to read 3 point uh two as if it swept up the same concept I think by by a process of analysis you um you either have to say that is a mistake at the end of 4.6 or alternatively you have to also read um 4.1 as um applying if there is a share transfer rather than the sale of the asset transfer and and and I see that yes a sale has to be given that that wider that wider meaning because otherwise there is again and the points that have been made from the bench um in relation to three there is this inconsistency between the situation where there would be a reorganization and a a trigger and then a a and a a share transfer and that leads to a profit share uh taking place but if that doesn’t take place um jop gets nothing and you um justify this quite substantial um violence to the uh Express words drafted professionally on the basis of the absurdity the outcome well there’s a number of grounds and in fact my lady it leads me on to really my ground one which is the commercial unrealistic nature and I want to turn to some of the uh what I say about that and those are set out uh from paragraph 19 of my skeleton uh and starting off with um Arnold and Britain and I’ve actually set out there and I can take my lady and my lords to uh arold from Britain uh in the authority bundle um which is at I don’t think that will necessarily be necessary unless there’s something special well I I I I I wondered that and because I’ve set out what Lord Newberg um says there and in particular the bottom of page 258 what a reasonable person having all the background knowledge and that’s why I’ve spent quite some time about the background uh and that period of time from 2010 to 2012 would have been which would have been available to the party would have understood them to be using the language in the contract to me and then going over the page that that meaning has to be assessed in the light of the natural and ordinary meaning I’ll come to that in in my second ground any other relevant provisions of the lease of course that case was regarding service charges of Chalet the overall purpose of the clause and the lease the facts and circumstances known or assumed by the parties at the time that the docum was executed and then fifthly commercial Common Sense uh but disregarding subjective evidence of any part’s uh intentions now in terms of uh what I say at uh 20 um I say for a number of reasons in fact I’ve set out 10 that this leads to a commercially unrealistic uh and absurd uh result the first one is the one that uh we have just touched upon uh which was that the respondent was being afforded an easy way of circumventing the profit share agreement all it had to do was sell assets at the holding level or at the Vala vessa level and then the respondent could get 100% of the um profit sorry you mean sell shares the shares yes sorry you said sell assets sorry you mean sell the shares in the companies the shares all they would have to do is sell valsa sell vessa or sell so not having done an internal reorganization real estate or the first exactly um and there it would free itself from the financial obligations under the profit share agreement and there I’ve referred to for that point uh from Lewis and and the interpretation of contracts at 2 um six um three and the judge uh in my respectful submission um was also uh somewhat uh confused in terms of the terminology that he was uh using and we see this at paragraph 144 uh of the uh judgment page 65 of the core it’s not just Mr KNX it’s a judge as well all into this happy error and and and we see just you saying when you said lewison you refer to paragraph what so um that was paragraph 2.63 and we see that in the authorities Buton let I’ll deal with that first my Lord that’s at the back lewison is at um there are two sections of lewison that have been produced in full we see that at at tab 21 and tab 22 this is um at tab 202 paragraph 2.63 I think it’s at 21 actually sorry 21 22 is chapter 7 and we see the nature of business common sense and if we turn over to 665 and the point here is that the principle of that equivalence of obligation is a feature of most contracts and the avoidance of burdens and conversely of windfalls and what we say is that this effectively was giving the respondent a windfall that um it should should not have we must also bear in mind of course that I think it’s Lord newberger says that um uh you must take into that um sometimes uh parties enter into a bargain which is bad bargain for well I don’t say that that that this is that situation I mean that that’s absolutely right and uh I you know well aware of of that that principle my lady but this isn’t a case where one would say well it was just simply a bad bargain because what what I hope that I’ve already started to highlight I is the that clear lack of commerciality and absurdity between uh the various Provisions uh in the contract and that and and it really as to why you know why would um a party enter into an agreement uh of that of that nature which only gives them the profit share upon the reorganization in terms of a share transfer but not but not beforehand I was at page 65 of the core and the judge referred there at page 65 to Clause 5.1 of the share and purchase uh agreement and and just the reference there to the seller being the owner of Soo shares and the Campo shares and indirectly of the V this is a different this is a sale and purchase agreement this is the sale and purchase AG this subsequent this is on the same day the same day this was entered into as the profit and uh the profit share agreement it says in 144 that it’s the 20ba oh that’s the 20 that’s the 2015 um yes so so in the 2015 upon the sale the point that I wish to make is that it says that the seller is the owner of the soo shares and the Campo shares and indirectly of the uh VSA and the and the vessa shares and we see that also in paragraph one even of the Judgment where the uh judge refers there to this being a dispute relating to the sale of shares in companies holding real estate real estate in in anelia okay I mean so I’m struggling to understand how we interpret the 2012 agreement to a statement made subsequently in 2015 which doesn’t fit within Lord newberg’s framework at all accurate or inaccurate um use of language in 2015 I’m struggling to understand how that’s an a interpretation I really am well let me move on to my second my second point my Lord which is that the judge’s interpretation meant that that profit share agreement held no commercial value for jop or his airs as I say if that could be easily Sid stepped then jop may well off have entered into that agreement at all it was this the same point that you’ve already made Mr Blake I think that’s the point that I was just just just Mak isn’t it putting it a little bit too high because in the event of sales of individual plots for develop uh you would get a share of the profits calculated on the basis of clause three but but the that that’s right but uh he gets he gets a s a share remember the obligation is to find this to use the reasonable Endeavors to find any and to sell any and all um and the so if a individual plot is sold uh it recovers a profit share but not if the whole if if the whole of the group is sold and we know that in my submission that the parties were aware that they couldn’t sell the all of the land at at the level of just transferring the real estate no no commercial value it had it had much more limited commercial Li if if it was triggered on the sale of the whole thing but uh uh sales of individual plots would give him something yes um the judge actually made uh his own concession here and appears uh in my respectful submission to have uh struggled somewhat uh with the issue um at uh at and we see that for example at P paragraph 214 I’m now moving on to my third point of the bottom of uh 259 uh because he actually said uh at paragraph 214 it may be that some criticism could be made of the commercial consequences of the transaction for jop uh in my respectful submission an acceptance that his conclusion uh was uncommercial and this is important because um in my uh say respectful submission he discarded commercial reality and what before you go on um I think that’s rather an unreasonable way of um calibrating uh the role of the judge apart from what he says at 24 in the sense that uh there’s no concession he’s actually uh addressing an issue which is being raised before him and he’s putting that in the context of other things so I think that’s rather unfair to the judge Mr Blaker I I I I apologize then I I um but the the point that I seek to make uh my lady is that what the judge needed to do was to look at the commercial he accepts that that some criticism could be made of the commercial uh unreality of the situation and he needed to go on to the next step which was to um as as Mr justice lewon as he then was in Norwich Union life and I will um turn to this Authority um he said now that I set the principle out in in writing is that commercial common sense is not merely a cross check it’s it’s an essential part of the process of interpretation and so what I say is that there are two steps there um firstly the need to adopt commercial common sense as part of the interpretive process and then when when the judge has carried out that exercise to then go back and have this commercial Common Sense sort of cross check and we see that my lady are you looking for the uh CU I can take you to the um to that uh authority of Norwich Union in bundle one of the authorities sorry bundle [Applause] two this was a land tenant break clause and consent to assign case and we see that’s at page 419 and what we see at page 40 paragraph 44 of the Judgment let’s see if you can read that that it said the principle set out in paragraph 44 uh but then in rainy sky and uh cooking uh one has the situation in which uh if you just look at the head note um uh that one looks at the natural meaning of words but if they produce so extreme at this is the top of page 435 the bundle uh a a result so Extreme as to suggest that it was unintended the court had to give effect to that meaning and then uh look at surrounding relevant surrounding circumstances and if there are two possible constructions the court is entitled to prefer the construction which is consistent with business common sense so there are two different things here there is is this is this so extreme it can’t been what is intended but then business Common Sense comes in at the end if there are two opposing uh um interpretations and I think that’s the way uh that people approach this matter would you say Mr bler yes I think that that’s and I say that on both approaches um they would lead to um a reversal of of of this uh of of the result in in the trial that interpretation because um however one adopts um that that uh that approach of of the judge both I there there’s clearly um in my submission one can’t just simply only look at the words and and and just ad and and effectively ignore a the factual Matrix or or B the commercial Common Sense both are are essential parts of of aiding interpretation and uh in particular in this case clause three um so my third Point um so you is this right you said that business common sense or commercial common sense is not limited to choosing between two available meanings on the language which I think it plainly is I mean I think rainy Sky says well you’ve got two possible meanings of language business Common Sense allows you to choose the one which makes the most commercial common sense and I don’t disagree with that um do you though say that where the language looked at on its face is not ambiguous business Common Sense allows you to adopt a different interpretation short of absurdity because I thought that the I thought the the way it was put is that you can’t use business common sense to overcome language which is plain on its face unless actually the result is not just not in accordance with business concept but just absurd I say two things in relation to this particular case one is that and I don’t disagree with my Lord’s uh analysis of those points at all but I say that again in those scenarios uh here uh when one adopts uh business common sense and how many parties on an objective basis entering into this agreement they would have considered that a sale of s would trigger would trigger the um profit share and secondly I do say that actually for the reasons that I’ve already given in relation to 3 point that inter relationship between 3.7 and the rest of the other Clauses it we do start to fall into the territory of absurdity that that actually the reorganization creates a a preferable situation for my client than one where there is no real organization and so um as I say I don’t disagree with that legal analysis but its application uh to the facts of this case I say um assist my my client on both both those those principles and we see it my number four that the respondent was obliged under 3.1 to Endeavor to find third party buyers for any and all of the real estate uh assets and everyone knew that the jewel in the crown and the prize asset was the golf course um itself the parties thus intended for the respondent to Market and sell the entirety of the assets including uh the golf course well that was one of the possibilities but not I mean you could come doesn’t it says any and all Yes it means you could perfectly well um fulfilled that obligation in relation to the individual plots of land which were real estate in the narrow sense yes I mean you’re you’re you’re effectively trying to write out the words any and no just say it has to be all I mean as I understand your argument in this respect is putting a lot of weight on the word all because what you’re effectively saying is because it says you have to use reasonal Endeavors to to find a buyer for all all includes the golf course since everybody knew the golf course couldn’t be sold separately Ergo you could only do this if you could sell the shares in Soo therefore that’s what the parties must have envisaged therefore they must have envisaged the profit share to apply to it that that that that’s right but what I do say I’m not trying to rewrite or remove words because it says um firstly it says any and all so they were under I mean again that’s another of the difficulties with the way the PSA has been drafted but again in my submission they um if they decide to sell the whole of the assets including the golf course um it in my submission that clearly triggers the The Profit share uh in similarly if one um developed one plot of land if it had just said and been more specific and said develop a particular plot and they build some Villa on it um and and sell that then of course they split that profit but here if they’ve sold everything that is going to trigger the that’s going to trigger The Profit share um agreement bit more indirect than that is if if they sell everything they can’t do it by direct asset sale they have to you say they must have realized they would have to sell yes the shares and the company instead that’s right they they knew because because it’ already been flagged up so heavily that that a sale uh of the of all uh of all of the assets couldn’t be done at that lowest level in terms of a a real estate transfer of uh in terms of how a land is sold in Spanish law and we see this that even the judge at paragraph 198 um has a difficulty in the middle of that paragraph he says that explanation is not entirely satisfactory uh in that the obligation under 3.1 is wider and extends to any and all real estate assets and so includes the golf course for which there was no real Prospect of a separate sale he then goes on to um not uh follow the the um the approach that I was um urging the cour to um to to adopt but the judge and this really again comes on to some of those uh difficulties firstly the parties knew now at my paragraph uh five the parties knew that the RCV had those preemption rights which made that the a separate sale to a third party virtually uh impossible and that’s also and again I’ve set out there where that is set out uh in terms of the uh judgment and the judg was um set out that the members were concerned that the sale of Soo would override their preemption rights and there’s a a uh the issue we can see the difficulties and why very shortly after the profit share is entered into and again I I hesitate going into anything that’s after the the The Profit share but again it just highlights what must have been in the knowledge of the parties that firstly they stop paying rent for the golf course to valser in the November one month after the um transfer and we see that in the Judgment at 113 and secondly they issue what’s called in Spain a quella a private prosecution you say you hesitate but you didn’t hesitate very long I mean why are these things relevant because it it it indicates because there’re so so shortly after the profit share uh agreement that they are an aid to understanding what the parties would have been aware of in terms of the difficulties well how how how did the parties to this agreement know what the golf club is going to do a month afterwards where’s the evidence well I’ve already shown you my lord the the due diligence of course which had flagged up these ideas the due diligence is due diligence we we see the documents yes but the Dil didn’t say the members are going to issue a Corella or anything like it so I mean I don’t understand why these specific facts you’re now pointing out well go beyond what is relevant go thebly beyond what’s in the due diligence the due diligence did actually flag up my Lord the the the prospect of litigation with the members right but so I understand why you say that might have formed part of the Matrix that pre predated it but why does it help us to look at what happened afterwards well as I say it’s only if it had been anything other than such a short period of time afterwards I I wouldn’t take that point it’s only that these happen in the November and the December very short period of time after they enter into the after they entered the agreement which in my submission highlights the fact that there is this this background of tension uh even leading up to the pre to the uh PSA um the parties uh again knew that RCB held those 6% uh of the uh shares and the judge noted at paragraph 45 of the Judgment if I can take you to that 45 and 46 that the only commercially feasible way was to sell all of the real estate assets was to find a buyer or so 45 and 46 and as I’ve already said there was no evidence that they ever sought to find purchases uh for individual plots um themselves and at paragraph 100 okay so sorry what what’s your point on 45 where’s does the judge find that um MGI was notified of of what set out in 45 and if so were those are the points that I I I did draw um my Lord’s attention to earlier on this morning as to where he accepted that they had already um that they that they were aware of the due diligence and it was attributed to MGI the due diligence yeah yes and that also included those legal opinions no 45 not 46 you asked us to look at 45 yes at 45 and 46 um well I say that the um the 46 was also 45 was also referred to in that in the D due diligence because uh there there was the reference to the sale of Soo over guiding their preemptive rights and that was also set out in that document at 220 in the supplemental bundle which uh was signed by Mr moxon in the September of 2012 the may I say Mr bler that I’m becoming rather concerned about time because this is Jos ground one so I assume that you’re near the end uh of of my yes so um if I can try and move with some some greater some greater speed then at paragraph 8 and N of of of page 261 um I say that the respondent never satisfactorily the judge observed that the respondent never satisfactorily explained why if there wasn’t an intention to sell the golf course why they entered into that uh precise uh obligation in addition there was a there were practical difficulties which I alluded to at the beginning in paragraph nine um it was put to fop that the respondent accepted uh that the golf course needed uh other plots of land that were owned by valser and Vester in order to host the tournament I’m very sorry to interfere intervene I put to uh Felipe that there was one plot that would be difficult one plot next to the land because that’s where the cameramen put their cameras up one plot would be difficult to sell separately from the um golf course it certainly was not put that any of the other plots would be difficult to sell not withstanding even putting it on the narrow basis that Mr Co KNX um suggests uh the fact is is that when one’s dealing with a golf course which posts tournaments and needs to have land uh around it that was going to be able to be used for the purposes of the media and tournaments uh it wasn’t something that you were going to be able to split up um uh easily um in terms of the um the the I’ve dealt with the point at number two number 10 already uh at 21 the um I say that the construction of one part of a contract must be in harmony with the contract as a as a whole and and that was when I made those two points that I thought you were making it’s the second one you have to read it in context as a whole and if you do that you say you come that’s right that’s that’s that’s right my lady and then over the page um the as I say in 22 essentially the key asset was the uh Golf Course uh itself this is the same Point again and it’s it’s it’s it’s the same point there now what I do say again and does need to be dealt with at 24 though is the uh perilous uh that that’s the perilous nature of jop’s uh finances but I say that that reasoning is flawed firstly I say it’s a non seator that the interpretation means that it could be easily circumvented again I’ve already dealt with that point and he may well have not signed it there would have been no reason for jop to have entered into that transaction with little uh or even no advantage to him or subsequently subsequent generations and then in my second point there I say that he impermissibly strayed uh into subjective uh Intentions by looking at what uh but isn’t that uh looking at uh the context uh as it arose at the time of the agreement and that one of those was uh that um jop uh needed to sell well I I’m just yeah I I I being The Devil’s Advocate no I I appreciate that my lady but I think the the point there is that there wasn’t of course Jo P had died quite some time ago there wasn’t any particular evidence uh before the court of his precise uh Financial financial situation situation and so that’s why I say it’s a it’s impermissibly straying now my second reason is the natural and ordinary meaning we come from the commerciality to to the Natural and ordinary meaning and I say there that the natural and ordinary meaning is not a strict or pedantic or grammatical understanding of a lawyer what one has to look at is what ordinary business people would understand a contract to mean and I’ve set out uh weirdale Cole what Lord Isa Master the RO said um uh in in uh paragraph 27 again I can take you to any of these authorities that I’ve set the the principle out and similarly in manai a very well-known um case the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties uh of uh language is is that where the agree obviously manai may be different but is that no it isn’t actually when I think about it um is that where where the agreement or the instrument you’re construing is uh written by a non- lawyer can I just get my bearings here I mean this we we’re interpreting an agreement written by a lawyer or by lawyers um are your are those quotes taken from cases which um interpret documents written by non- lawyers business people I I accept that manai Mani was a with with notices a landlord tenants notice yeah absolutely but but what I say is yes of course it’s a sliding scale I mean if if one has got a document that’s been drafted by lawyers it may be treated uh in a in a different way but but not if there’s the level of ambiguity it doesn’t mean that one can just simply not not approach it as to how reasonable I thought there were a number of reasons to authorities including some from the Supreme Court um very recently which say it is important when you’re interpreting a document to un to to understand who wrote it and apply and and I appreciate that but but in this case the fact that there was a lawyer lawyers writing it still doesn’t overcome the fact that one should just adopt a a literalist uh approach to the words of clause three it’s not it’s not so much literalist it’s just that you don’t readily you might readily assume that non- lawyers Express themselves broadly and often inaccurately you don’t make the same assumption about the way that lawyers do it they might do but you don’t assume that they will from the start but what I say isin wooden cap yes is wooden cap I’ll I’ll I’ll deal I will deal with that um um in in in in a moment so what we see at paragraph 30 is that the judge focused uh on the words owned by VSA and vessa but what I say is that if one asked a business person rather than a lawyer in the shoes of zagaleta what they’ actually purchased in 2015 the natural in ordinary response would be the golf course the land and the trademarks it wouldn’t be we’re not we’re not interested in what Zeta might have thought in 2015 at all are we no but similarly one would ask if if MGI was asked the question in 2012 yes they would answer also in exactly uh the same uh the same way in my submission it’s hard to believe that any objective bystander would describe the transaction uh as just being of shares in a Swiss holding company which is the technical method uh of acquisition um and similarly as I say if someone a passer by went to valderama to play golf in 2013 and asked who owns this um they would uh they would uh not uh one presumes be given a technical answer uh in terms of various uh holding uh companies and this is important because at paragraph 32 of the judge J M so you’re saying actually that the natural ordinary meaning is always that one should look straight through a company to its assets that can’t be right Mr Blake can it I don’t say that my lady good I say that in this particular factual scenario of this case with the particular Holdings of the land and what the parties understood in terms of the uh the structure of the holding here they did uh one would look to VSA vessa and then the Swiss company soter we see this in paragraph 32 uh of [Applause] the have to find the paragraph reference but the judge himself refers to the paragraph 254 but I think some time ago thank [Applause] you yes yes in on page 254 at page 101 the judge himself refers to the real estate assets being acquired by MGI through the purchase of the soo shares and um so in my respectful submission the um acquisition of the asset is being described as an acquisition of a real estate asset and yet the sale in 2015 to zagaleta is not and it must be that the party’s reasonable contemplation was that the parties would buy and sell the real estate Assets in exactly uh the same way the what I say at 33 are some of the answers that uh I’ve already touched upon in particular um with um Sir Christopher Floyd’s uh questions which is how uh to have carried out the exercise uh under 3.3 and what I and I’ve Set uh uh those out at 33 a uh to um A2 e uh that each of those deductions under 3.3 could be carried out and indeed were carried out uh quite happily uh by the uh judge and the judge as I say at 34 found a perfectly workable formula when calculating net profit and we see that uh in detail at paragraphs 250 to 263 so it was perfectly possible and natural to apply 3.3 to a sale of either Soo or VSA or or or vessel the no adjustment actually needed to be made because Soo valser and veser only owned the real estate and the trademarks and so soo’s value was actually the same as the value of the land uh and the trademarks and the judge appeared to accept that at paragraph 173 uh of his judgment and again I leave you to look at paragraph 173 please so one reaches the conclusion my lady is that the appellant’s construction is the natural and ordinary meaning of the PSA and indeed it’s the only construction which gives a natural and orderly meaning to the phrase any and all because upon the judge’s construction the all is effectively ignored and the judge in my submission fell into error there for the reasons that I’ve set out at 36 at page 266 at paragraph 199 of the job he held that mgi’s plan was to develop and sell plots of land but the due diligence s showed that the parties expressly contemplated the sale of all the assets and indeed those are the words use uh in the agreement itself so is this an attack on his finding a factor um looks like it to me Mr Baker well he’s not really made a a what I say is well firstly these are questions of mixed fact and law anyway and that it’s not actually an Express finding that he’s made in terms of a a factual a factual finding there it’s a it’s I was just looking at paragraph 361 of your skeleton where you say at 199 the judge held Etc but I I don’t want to quibble I just um let no I understand the point my lady um what I say at paragraph two was that the whatever mgi’s plan was at that time of the profit Shar agreement on a subjective basis it has to yield to the objective approach of deducing the party’s intentions from the actual language used and that language was to find buyers for any and all um any and all the and it’s uh it’s unhelpful for effectively to say that the uh Golf Course wasn’t going to be sold during the life of potential funds that actually never got set up by uh MGI because the fact is is that objectively speaking the parties did intend for the gulf course to be marketed uh and to be sold and that profit share agreement wasn’t time limited so the evidence and again I I slightly hesitate to go into any EV any evidence but that uh this was a time limited fund um that uh would eventually be sold and my point point is is that the profit share agreement had no time limit on it if Soo uh if if the gulf course if all the assets were sold in 10 years time that would still trigger The Profit share obligation so just just going back to paragraph the judge’s finding in paragraph 199 of the judge 1999 yes his finding is that at at the time that it entered into the 2012 Spa mgi’s plan as evidenced by the draft prospectus similar to the draft perspectus produced by tsg before it was to establish a fund that would generate profits Rel leased in part through the development sale of properties on the land owned by valer and Vestor um that’s part of the Matrix a fact against which this agreement Falls to be interpreted so is the fact that yeah but on to the question I put to you before you um give me another one it’s that is or sorry is it or is it not part of the factual Matrix it is one part of the factual Matrix but there are many other parts of the factual Matrix my Lord such as the fact that the judge found that that never actually happened and the plan fell away he says later on there the plan fell away quickly and MGI was forced Falling Away of the plan I think is probably not part of the factual Matrix because that happened after the agreement we’re looking at well with respect my Lord I say no because the parties firstly have the words any and all and so the idea was to sell all the assets or certainly have the ability to sell all the assets and secondly that was already flagged up um in uh in the due diligence and all the all the information that they’d already got in advance of the profit share agreement that there was this ability to be able to sell um everything including the the golf course so it isn’t quite as as I mean I do say of course that is a strand of factual Matrix but only uh one one element and what I also say and the judge found there was no actual evidence produced that they were that a the fund never got set up that they were even going to set it up and that they actually ever tried to Market individual plots this goes that it goes to two issues which I think we’ve already asked you um early on Christ Floyd picked you up when you um suggested that there would be no benefit to your clients of this agreement if it was interpreted in the way the judge interpreted and I think as I would understand it you accepted that at least there would be some benefit to your client if um there was a series of sales of plots of land because the agreement would be triggered in relation to the sale of each plot of land as it as and when the plots of land were sold as indeed MGI were at the time contemplating doing but that benefit would be extremely limited well it would be a benefit as opposed to no benefit some benefit but you say I think your argument your argument on interpretation essentially that it’s though absurd to suggest that what the parties envisaged was that if there were sales of individual plots of land money would be paid indeed all the way right up until everything was sold um there would be profit Shar but if in fact the entirety was disposed of under the sale of the soo shares so not in fact disposed of at all but the soo Shares are disposed of which carries with it the control of everything nothing would be paid that’s right that’s one absurdity argum the other absurdity argument is if there was an internal reorganization followed by the sale of the shares in a real estate asset and individual real estate asset that triggers but not if there’s no internal reorganization and the sale of my Lord has my points right so there there are two sort of points one one deals with the question of benefit yes and the other deals with a number of factual scenarios in which you say I think you have to say that there’s just an absurd conclusion it’s an absurd result yes if you don’t interpret the agreement the way you say and have I I think that yes yeah that that’s absolutely the Case Model yes but I also say that uh and it comes on to my my uh third reason is that the judge failed to give sufficient weight to some key facts in terms of the factual Matrix uh in terms of interpreting the uh PSA and what I say there firstly as a background uh you’ll see at paragraphs 38 and 39 that I’ve referred to the um Unwritten rule of judgments being handed down within three months and this was handed down nearly six months after the uh trial now I don’t say that that is in essence itself a good ground for overturning the Judgment but what I do say at 39 is the where I’ve cited na markets is that the advant any advantage enjoyed by the trial charge diminishes in importance as a consequence of the L delay um and I say that that the delay in this case justifies a closer scrutiny of how the judge actually handled uh some of the evidential uh factual Matrix questions here I I don’t understand where that’s going in the sense that are you then uh saying again that this is uh a challenge to the facts as found or not what I’m saying is is that a number of the uh factors that I’ve set out in paragraph 40 weren’t matters that appear to even feature uh in the Judgment or the reasoning of the judge okay and so those set out at parag yeah sorry my lady I was just going to say it’s difficult for me to answer directly in the sense that it’s not a factual challenge to well the judge has reached this conclusion and uh we disagree with that these matters that I say were relevant don’t even feature at all and um so we see for example at 40 sub paragraph 1 Mr moxon said the business plan was in the next 5 years after the 2012 SBA to transfer it into another fund sell it on to a private sale sell the group for another group so there would eventually be a sale of course and uh what I say is that that indicates the very clear commercial purpose uh of this and I can take you to the actual there’s a wider just be clear are you saying this was a commercial purpose of MGI yes which had been shared with shared with um the other parties to the 2012 agreement or just would this was this an internal um subjective intent of MGI well I said it has to be the the the former because they would there would have been lengthy discussions leading up to but I mean unless this is part of Matrix known to both parties and if I was if I dare to be sort of um critical or otherwise of FL newberg’s U little pricey of the principles you have to read just to be clear when he says known to the parties he means known to both parties yes I think everybody understands that um so obviously goes without saying perhaps but if Mr moxon’s evidence is just as to the business plan of MGI I don’t really understand that it it was relevant to Matrix and I frankly wouldn’t have understood what the judge would have been doing if he’d have been referring to it anyway well I do say for example number three that he’s aware of the B shareholder rights in VSA which I’ve already dealt with and again I don’t um that uh didn’t but the fact the fact that Mr I mean the Mr moxon was aware of it I mean why is that so relevant because that is something that both parties would have been aware of what that that there were be yes and that the only way there no the relevance the relevance is that there were be shareholder rights in VSA which the judge has repeatedly referred to and and what I fact Mr moxon was aware of it is neither here nor there well what I’ve also said at number four is that he was aware that the only way around it exercising their rights was the sail in SOA I mean it’s a I don’t want to repeat and labor the point it’s already judge M finding to that more or less well more or less although that and it’s based on the due diligence that he referred to so I think we can go on yes so um what I also say is that um at paragraph um seven uh again a a what I say was a key concession um made by uh Mr moxen again didn’t feature at all uh in the uh in the Judgment that uh when asked about the hypothetical question if you if that uh if Soo is sold um there was an acceptance there that a profit if he said it sold for 50 million pounds having been brought 40 uh there would be a profit share of the1 million um profit and again again uh that uh so was was that evidence as to what Mr moxon actually understood the agreement to mean or that was the agreement that he thought he was entering into well I say that that that that that’s what he clearly understood that that was the The Objective understanding of the so why why is there no claim for rectification of the agreement I say it doesn’t didn’t need to be rectification because one could deal with this through through uh through the purposes of of um the principles of interpretation my Lord we didn’t need to but on the interpretation this sort of evidence is inadmissible and on it would be admissible and relevant but for a rectification claim you aren’t making th those are the those are the hazards of of of of litigation in terms of it’s not haard litigation I’m just trying to understand why you say that this evidence um is a admissible on a question of interpretation and B you criticize the judge for not taking into account at the moment I don’t understand it to be admissible so why is the judge to be criticize for not taking into account well I see still less for allegedly not having um uh or forgotten about it because it took him six months to produce the Judgment which is what this has actually said to all hinge on well what I say there anyway is that it goes to the heart of the the the objective um understanding of the parties before they entered into this agreement and that uh back in 2012 so you say the objective understanding of the parties this is all to do with the subjective State of Mind of Mr MOX I understand that but but but but upon a sale of Soto the uh any objective as I for for the reasons I’ve already given in terms of anyone who came along and said you know if you sell the holding company are you going to um have to pay a profit share I say that that is something that the objective reader of the agreement would understand one had to do and that it’s only for it’s for that point my and I I’m well aware that that one can’t take into account Point things that happen after the profit share agreement um was entered into and that’s paragraph eight yes I turn to my can I just ask I’d understood one of the point you were running was that this was the type of case which is referred to in some of the Supreme Court authorities where the parties have come across a state of affairs that they didn’t contemplate at the date that they entered into the agreement namely as the sale of the holding companies the points you you’ve just been making seem to me to contradict that because these are points which you’re you’re saying were obvious say time they entered I mean that’s my fifth reason my Lord and I’m just going to I’ve got number four and number five your fifth reason is in the alternative is it that that that is in the alternative yes I see um the fourth reason and I must encourage you um to move on absolutely yes thank you my lady um this really and we’ve already touched upon a great deal of this so I’ll be able to move through this quickly is 3.7 and the first point there that 3.7 um is not just merely a a drafting uh error and there has to be consistency between those uh particular uh Clauses the there was no evidence at trial and now on to my paragraph 46 there was no evidence at trial that it was a drafting error no evidential basis for that um but you wouldn’t expect that would you you just look at the agreement and uh look at it as a whole you’re not um uh seeking out uh what mistakes or what might have passed between the lawyers at the time that’s not what you’re up to anyhow go on yes at at paragraph two there’s no evidence that the parties uh intended for consistency amongst uh the uh three uh Clauses that that would been an inadmissible part’s intention well yes the in paragraph um three the judge there at paragraph 207 said that the word transfers doesn’t carry the same meaning as sale now I spent some time earlier on about this meaning of sale uh and transfers uh and sold in Clause 3.2 but for the reasons that i’ set out before uh it’s hard to see how transfers and sale can be so different as the judge um suggests because the sale of an asset necessarily involves the transfer uh o of the asset um itself and one sees throughout clause three um the uh interaction or the use of the word sale and then the use of the word more commonly uh in that Clause is is the word um transfer in paragraph 208 uh in the court uh in in the Judgment the judge goes on to reach a conclusion on uh 3.7 and he said that the parties intended to prevent MGI from circumventing the provisions of flaws three and in particular the provisions of 3.2 by parceling real estate assets into companies and selling the shares in those companies to third party buyers without triggering the obligations in 3 two now what I say is that once that principle is accepted for the reasons that I’ve already set out my lady it’s difficult to see how the court could have intended the respondent to circumvent the profit share by selling the Assets in the existing parcel of companies uh namely Soo without it being a trigger uh o of 3.2 and I’ve referred then in the following paragraph to a supreme court fairly recent Supreme Court Authority bernardos uh and buckinghamshire and these are the points that you’ve already made 49 yes um that uh they can’t have intended there to be a loophole yes I think we understand and then we move on to my final uh point which is that even if the sale of Soo was was an unforeseen event the parties would have intended The Profit share to apply uh to it what I say there at paragraph 50 is that it falls uh within uh what very much within the principles within Arnold uh and I’ve referred there to paragraph 22 uh and the infer and also paragraph 71 of Arnold and Britain and again I can uh take uh my lady and my lords to that uh [Applause] um and one sees this at paragraph 22 page 14 of the the authorities bundle that’s Lord newberg’s sixth point in some cases an event subsequently occurs which was plainly not intended or contemplated by the parties judging from the language of their contract in such a case if it’s clear what the parties would have intended the court will give effect to that intention and then we [Applause] see and then we also see uh at paragraph 71 in Lord Hodge’s uh judgment uh reference and again I I’ll just leave you to read I’m not going to read out the whole of paragraph 71 but uh there’s again the reference to the inference uh of uh intention yes they infer the intention of the parties at the time the agreement from the contracts as the whole Etc yes my lady now what I say is that it was wrong for the judge to hold that the parties would not have intended a sale of Soo because the drafting because he said the drafting Clause 3.2 simply doesn’t accommodate such a scenario because we know already 3 7 does does anticipate uh that uh precise uh example or event occurring and so what I say at 52 is that the judge ought to have considered what the party’s objective intentions should be inferred to be uh if the sale of sto was an unforeseen uh event uh and what I say there is that there were effectively two options option number one is that the parties were inferred to who have um intended the respondent could keep all the profits and share none uh all the parties were inferred to have intended that the respondent would share 9% with jop and I say for four clear reasons uh the latter is the preferable approach firstly the very existence of a profit share agreement itself the commercial purpose was to share profits uh secondly no good reason for the parties to consider that the respondent in that scenario should keep all of the profits uh thirdly the phrase any and all uh could only denote an intention for the sale of sto to be subject to profit sharing in the surrounding circumstances and finally 3.7 uh which shows that the par is intended to close any loophole that would permit the respondent to circumvent the profit share um agreement similarly uh I say and I’ve already again touched upon this was the difficulty the judge found in terms of um the words of payment being received by valer and vest I’m now on my paragraph 55 but again the judge failed to consider what would actually happen in in the event of reorganization uh in 3.7 there wouldn’t actually be a payment to VSA uh or professor and then I’ve also referred to the Contra profer principle that any ambiguities at 56 should be resolved against the drafter and again there’s a passage from lewison there at 7.74 to 7.7 um to 7.78 now finally I wish to draw uh the distinction um between uh what Mr no says in terms of uh clause five of the um Clause five of the um agree of the profit share agreement that deals expressly in a in a very it is a entirely different context uh firstly the castellar land which was then owned by V7 and that in turn owned by camper was entirely undeveloped so planning permission had been obtained but no more there were no minority interests so that was fettering uh the other land so this could be dealt with in a in an entirely different way and as such I say it was realistic for the sale to take place by selling the castellar land itself or the shares of V7 or the shares in Campo and that’s why it was drafted in in a different in a different way the um I’ve had to move rather rather slightly more quickly than I was anticipating and I I don’t know if you have any further questions for me my lady or my lords um and in terms of any I’ll just ask you one question for troubling me which is what was what would happen on your construction of the agreement if instead of selling 100% of the shares in s uh only a majority shareholding have been sold no doubt producing a profit would that profit have to be shared par passu with with uh well it would and that of course could happen under 3.7 as well because there could easily be a a transfer in that actually anticipates the transfer of shares and so if only a transfer of say 75% of shares then there would have to be that proportionate um division you thank you very much thank you given the uh um shortage of time please uh do continue Mr nox my lady my lords um I have three points if I can summarize them and then I shall argue them develop them if I may just summarize them for the moment um first I say the words of the profit share agreement are clear and unambiguous uh the appellant is entitled to a profit share only in the event of a sale of the underlying properties subject only to the provision of clause 3.7 where there has been a transfer an underlying property to a company and that company itself is then sold on that I submit is the clear meaning of the words and I say they’re unambiguous and that’s where one stops there’s no need to go any further but secondly I say in any event the limitation to sales of underlying properties in clause three is explained by the context at the time the agreement was entered into in October 2012 namely the defendant’s intention to be floated on the channelizing stock exchange and importantly to develop to develop the individual properties in the next 5 years and and then sell them off so as to make profits for essentially its investors before a final sale there is therefore no basis supposing that the limitation to the underlying properties is a mistake especially as this is a professionally drawn contract nor this all part of the second Point nor is there any read basis for reading the words in CLS three more widely so as to entitle uh the appellant to a profit share even and I emphasize this even in the event of a Bonafide sale of shares in other words not some sort of cooked up Arrangement and there’s no allegation in this case that this was a sort of cooked up arrangement to disguise the reality of a transfer property thirdly I say the limitation to sales of underlying properties safarz material does make good commercial sense first as a general Point um H tid patino was in a perilous financial position so it is not surprising that this agreement mement gives him only limited rights in relation to the sale of uh the Vala properties more limited it must be noticed than in relation to Campo where he’s given rather greater rights in relation to sale I also say it gives right there is a commercial sense for this particular reason it does give Mr patino certain limited rights a to require uh the defendant at least to look for buyers and if it sells a property indeed all the properties at a profit to pay 9% of that profit to um Mr Tino but importantly in accordance with the formula set out in clause three it also gives him the right for uh to ensure that the a sale an norward sale and I say by necessary implication is not artificially dressed up as a sale of a shares when in fact one can see from the underlying negotiations it was actually a sale of properties I say he would there would probably be an implied term to prevent that and I will take you to it later but in Fox I think my lady may be familiar with this case Martin and Morris one of the points made by the Supreme Court is one can imply terms to prevent dirty tricks being played and I would accept there would be an implied term to stop my cloud playing a dirty trick by dressing up a sale of an underlying property as a share sale in order to get out of an obligation I accept that much but well you don’t need an implied term because haven’t you got an Express term sorry have you you’ve got an Express term which deals with at least with that um in 3.7 yes what implied term you Vis vising that goes beyond the express term in 37 well it there may be no reorganization at all 3.7 we say applies only in the event of a reorganization supposing what had happened was let’s say for the sake of example but a reorganization would include wouldn’t it putting an asset into a SPV for the purposes of sale well uh one could imagine this my Lord I may be quing one could imagine this a sale of all five properties owned by vessel that’s negotiation a sale of all properties owned by vessa there’s no doubt about that but then someone has the bright idea of saying and it’s everything’s agreed hey tell you what let’s get out of that obligation to pay in relation to the underlying properties because we can just sell vessa at exactly the same price as all five properties supposing that had happen in other words a bad faith dressing up of a sale of underlying properties as a sale by in this case vessa I would accept if that had happened if there some sort of B me a sale of vessa a sale of vessa yes you just dress it up as a sale of V it’s not a dressed up sale it’s a sale of something different but why do you accept so I’m just wondering you accept do you that this profit share is triggered if there is a sale of the shares inv vessa no I wouldn’t accept that I what I would AC I’m struggling to understand the final scenario you’re putting to us well I I I would what I would say in those circumstances is there would be the appellant would be able to say you were able to and could have sold those five properties those four properties and to try to and um and you were in a position to do so but you have tried to get out of that obligation um by dressing it up as a sale of vessa shares in vessa but I am still entitled I’m not so I’m not being helped by this expression of dressing up I mean if somebody said um if vessa had sold five individual properties which it own it is accepted that the profit share would be triggered on the sale of those five properties correct that’s right if however for entirely commercial reasons the sale was structured as the sale of the shares in vessa the 94% I think it’s I think I think V is 100% 100% okay V 100% okay let’s let’s keep it that way um so if you sell instead the 100% of the shares in Vesta you’re accepting are you that that would trigger The Profit share No certainly not why not well what well what’s the distinction between your quote dressing up and your naked sale of the shares investor I’m not understanding what dress up well because there my my Lord I submit there there could be a difference and this is one one of the points taken Supreme Court in the Bon Mor’s case between um a genuine sale of the shares investor and there’s no attempt to dress anything up this is a genuine sale of the shares and vessel as opposed to let to say a sale that a negot sell of the five properties and then someone says I tell you what why don’t we just jump out of our obligations and make this artificially artificially make it uh sale of the shares inest why it’s the it’s this artificiality or dressing up or whatever else is that purely premised upon the fact the basis that there had previously been negotiations or agreement for the sale of these five properties yes and supposing there was action agreement Ser of five properties and then completion comes around and then the completion someone says why don’t we just restructure this but if somebody said for entirely other reasons tax or otherwise actually can we just sell can we just buy the shares investa oh you you you so the parties negotiate for the sale of the five individual properties and then some bright tax spark says no no sell the shares investor instead it’s much better for everybody you wouldn’t accept that the profit share is to no I would not accept because that’s bonified there’ be a bonified reason for that it’s simply where I’m you you enter into you dress up a transaction I my Lord I know you you quiz me about that well it’s because dressing up normally canotes making something appear that which it is not exactly but in fact the sale of shares would be exactly what it is well it would be my Lord yes but it would be entered into for bad faith reasons we would be you I mean in other words I would accept there must be some imp some some implication to stop us acting in bad faith I would accept that much vents Ur in the other order and you’re advised U because somebody’s read the agreement uh to affect any sale of properties uh by way of um a share sale um and that because it will avoid the obligation to pay the U profit share you um you do you accept or not I S you don’t so as long so as if you’re told at the start pick up my Lord’s point if you if you’re told at the start by your advisors look just I know they’ve come to you asking for sale of properties but in fact just talk about sale of the shares from the off because you won’t have to pay anything under the profit share agreement you you say that’s perfectly okay that would be perfectly that would not trigger come to another point of am that would not trigger the obligation per se entering into a share sale this is my fundamental point for whatever reason subject possibly to bad faith the bad faith point but entering into a share sale does not trigger the obligation to pay 9% of the profits of whatever that share sale may possibly be worked out to be what however could be said is this but it’s very important to note in this this case has not been said is let us take this example supposing there was a good market for the individual properties let’s say let’s take an example let’s say also um MGI don’t even bother to look at the market 3 months later and there’s a good market and there is something where where they so they don’t in other words comply with their obligation to identify individual buyers or buyers for the individual properties they just completely ignore that obligation and what they then do is they then just say right I’m going to I’m going to sell valer and vessa let’s say now in those circumstances what the claimant could say is this and this was the protection he’s given look I had at least you had at least the obligation to look around for buyers what you’ve gone of the individual props but you haven’t done that you’ve therefore actually and breached the agreement and once you’ve gone and done is you simply sold the properties or rather the shares but I’m still entitled to be put in the position that I would have been in had you identified buyers I’m telling you it was a jolly good market and acted in good faith having identified buyers and sold to those buyers that was the right they had to require to require my client to look for buyers of the underlying properties I that is the fundamental point in the case if my client in this case it is not alleged that we did not look around for properties or at least that we did not look around for properties and had we done so there would have been profits payable in accordance with the formula what is what essentially the appellant has sought to do is to jump from one right which is the right to share in the sale of underlying prop to require us to identify individual purchases of individual properties and then have a claim of Damages if we fail to do so is jumping from that to saying well no no no I’m also entitled to share in the profits you make by a share sale and I emphasize this again even if the share sale is of Soo itself is is of sto itself okay and so my lady that and my lords that’s what I submit the protection that this agreement gives and it is not an insubstantial protection especially given everyone’s understanding at the time that the properties were to be developed and sold that’s why the agreement is structured as it is uh and in those circumstances let’s take this example supposing it had been developed let’s say and there’s a very good market for all these lovely developed properties near the gulf course and we simply don’t try to sell them and we just decide for whatever reason to sell BSA and vessa let’s say for the sake of examp but in those circumstances what the claimant could say is look you act in breach your obligation to look for uh uh buyers of individual properties and had you looked for that you would have found lots of jolly good buyers and I would have had a 9% profit as a result that was their that was their right but they never had a right to share in the profits of a share sale which is a quite different thing and I do submit manifestly not something which the provisions of Clause 3 as a whole are designed to take into account to talk they are my submission unworkable in real life um you have to go through mental contortions to get ruls 3 three as a whole working on the share sale as opposed to on the sale of under and I make that my third point because it goes to the commerciality point and indeed the absurdity point I say that is the answer to the absurdity point these are not worthless rights if we try to be cute and just make share sales without looking for individual buyers of individual properties we are in breach of the agreement but that was not the case put against us and then the judge notes as much and that is a fundamental point of the [Applause] cas thank you Mr nox um I think in the circumstances because it is important I think that we uh complete ground one today uh that we should resume at 10 to 2 [Applause]
