Aberdeen Bear Pty Ltd v MJJK Investments Pty Ltd; MJJK Investments Pty Ltd v Calvert [2024] NSWSC 722

Aberdeen Bear Pty Ltd v MJJK Investments Pty Ltd; MJJK Investments Pty Ltd v Calvert [2024] NSWSC 722

On the objective construction of the Heads of Agreement, cl 8 did not confer on James an option to purchase the MJJK Interests' shares. Subclause 8(a) was directed to making the MJJK Interests' shares available for sale to an investor introduced by James, not to James himself, and its language of shares being "available for sale" was not language of obligation. Subclause 8(d) also contained no language of obligation and operated only to fix the valuation mechanism if the MJJK Interests chose to sell to James. Reading an option into cl 8 would also be inconsistent with the wider context of the Heads of Agreement, including the clawback protections in cls 3 and 11.

Jurisdiction
Australia
Judgment Date
14 June 2024
Procedural Posture
Equity Commercial List; Contracts Construction Dispute Concerning Heads of Agreement / Plaintiffs' Application for Declaration
Outcome
Plaintiffs' application for declaration refused; the Heads of Agreement do not confer on James an option to purchase.
Legal Topics
['contract Construction' 'interpretation of Heads of Agreement' 'option to Purchase Shares' 'shareholding in Family Business']
['contract Law' 'equity Commercial List'] ['contract Construction' 'interpretation of Heads of Agreement' 'option to Purchase Shares' 'shareholding in Family Business']

Case Brief

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Procedural Posture

Equity Commercial List; Contracts Construction Dispute Concerning Heads of Agreement / Plaintiffs' Application for Declaration

Legal Issues

  1. 1 ['Whether, on the proper construction of the Heads of Agreement dated 5 June 2021, point 8(d) entitled the plaintiffs to exercise an option to purchase the shares held by the first to fifth defendants, subject to the prescribed valuation process and payment of the calculated price.' 'Whether cl 8(a), read with cl 8(d), imposed an obligation on the MJJK Interests to sell their equity in the Business to James.' 'Whether the wider context of the Heads of Agreement, including clawback provisions, supported or contradicted the existence of an option to purchase.']

Ratio Decidendi

On the objective construction of the Heads of Agreement, cl 8 did not confer on James an option to purchase the MJJK Interests' shares. Subclause 8(a) was directed to making the MJJK Interests' shares available for sale to an investor introduced by James, not to James himself, and its language of shares being "available for sale" was not language of obligation. Subclause 8(d) also contained no language of obligation and operated only to fix the valuation mechanism if the MJJK Interests chose to sell to James. Reading an option into cl 8 would also be inconsistent with the wider context of the Heads of Agreement, including the clawback protections in cls 3 and 11.

Court Disposition

Plaintiffs' application for declaration refused; the Heads of Agreement do not confer on James an option to purchase.

Orders

  • ['The declaration sought by the plaintiffs is declined.' 'The Court will invite submissions as to what further steps should be taken in the proceedings.']