Key Facts
- •Dispute over payments arising from 2012 share sale agreements concerning Spanish real estate (including Valderrama golf course) between the late Jaime Ortiz-Patino ('JOP') and MGI Golf and Leisure Opportunities Fund Limited ('MGI').
- •Claimant, Carlos Ortiz-Patino ('COP'), JOP's son, inherited JOP's rights under the Profit Sharing Agreement ('PSA') after JOP's death.
- •MGI sold shares to Zagaleta in 2015. COP claims payment under the PSA and damages for breaches.
- •MGI's main negotiator, David Spencer, did not testify. Evidence relied on witness statements, expert valuations (real estate by Gesvalt, trademarks by Valuation Consultants), and documents.
- •Significant debt existed within the Valderrama Companies prior to and after the 2012 share sale, impacting MGI's ability to meet its obligations and leading to disputes with RCV.
- •MGI's plans to list shares on the Channel Islands Stock Exchange failed, partly due to the lack of financial statements and ongoing disputes.
- •The 2012 SPA included provisions assigning JOP's debt to MGI, offsetting this debt against the PSA obligations, and MGI's assumption of remaining debts.
- •The PSA contained payment clauses based on future sales of real estate assets and trademarks; COP argues these apply to the 2015 share sale, whereas MGI argues they only apply to direct asset sales.
Legal Principles
Contractual interpretation focuses on the objective meaning of the language used, considering the natural and ordinary meaning, other contract provisions, the contract's purpose, known facts and circumstances, and commercial common sense.
Arnold v Britton [2015] UKSC 36
A term should not be implied into a detailed commercial contract merely because it appears fair or because the parties might have agreed it if suggested. Business necessity or obviousness is required.
Marks & Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited [2015] UKSC 72
The fact that a contractual arrangement has worked out badly for one party is not a reason for departing from the natural language of the contract.
Arnold v Britton [2015] UKSC 36
In determining ‘reasonable endeavours’, the court considers what is reasonable in the circumstances of the business.
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7
The potential liability should have been disclosed even if recorded in publicly available documents.
Redgrave v Hurd [1881] 20 Ch D 1
Outcomes
Claimant's claims dismissed.
The court found the PSA's payment clauses (clauses 3.2.2 and 4.1.2.2) did not apply to an indirect sale of assets through a share sale. The natural and ordinary meaning of the clauses, supported by other provisions and the commercial context, pointed to direct asset sales only. The court rejected the implication of a term requiring MGI to maintain asset value and found no breach of clause 3.1's obligation to find buyers.
MGI's claims for set-off largely rejected.
Insufficient evidence to support MGI's set-off claims related to breaches of the 2012 SPA. MGI's failure to present evidence on Swiss law (governing the 2012 SPA) was a significant factor in the rejection of some claims, despite some potential liabilities being acknowledged. The claim related to failure to disclose the querela was rejected due to lack of evidence linking it to MGI’s loss.