Key Facts
- •Profit-sharing agreement (PSA) between JOP (deceased) and MGI Golf & Leisure Opportunities Fund Limited (Respondent).
- •JOP sold shares in Soto and Campo (Swiss companies holding Spanish real estate and trademarks, including Valderrama golf course).
- •PSA stipulated profit share upon sale of 'Real Estate Assets' by Respondent.
- •Respondent sold Soto shares to Zagaleta; Appellant (JOP's son) claims profit share.
- •High Court dismissed claim, finding PSA triggered only by direct sale of real estate, not shares.
- •Appellant appeals, arguing for a broader interpretation of 'Real Estate Assets'.
Legal Principles
Contract interpretation prioritizes the natural and ordinary meaning of the words used, unless commercially absurd or unrealistic.
Arnold v Britton [2015] AC 1619
Courts should avoid rewriting contracts to assist unwise parties or penalize astute ones; commercial common sense should not override clear contractual language.
Arnold v Britton [2015] AC 1619
Where unforeseen events occur, courts may consider what the parties would have intended, but only if the contract does not address the situation.
Arnold v Britton [2015] AC 1619
Outcomes
Appeal dismissed.
The Court of Appeal upheld the High Court's interpretation that the PSA's profit-sharing clause only applied to direct sales of real estate assets, not indirect sales via shares. The court emphasized the precise language of the PSA and rejected the appellant's arguments based on commercial common sense and unforeseen circumstances.