El Zain v Vitrafy - [2022] VSC 79

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2021 03631

EDWARD EL ZAIN	Plaintiff
and
VITRAFY LIFE SCIENCES LIMITED (ACN 622 720 254)	Defendant

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JUDGE:	M Osborne J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 December 2021
DATE OF JUDGMENT:	25 February 2022
CASE MAY BE CITED AS:	El Zain v Vitrafy
MEDIUM NEUTRAL CITATION:	[2022] VSC 79

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CONTRACT – Construction – Ambiguity – Constructional choice – Extrinsic evidence – Determination of preliminary question – Whether clause allowed for more than one extension of term of contract – Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	I Martindale QC with J Samargis and P Turner	Aitken Partners
For the Defendant	D Batt QC with H C Whitwell	MinterEllison

HIS HONOUR:

Introduction

Edward El Zain (‘El Zain’) and Vitrafy Life Sciences Limited (‘Vitrafy’) entered into a memorandum of understanding (‘the MOU’) on 18 December 2018. The MOU concerns intellectual property in the form of high speed and ultra-low temperature chilling technology which facilitates the preservation of food and biological material. The stated purpose of the MOU includes providing a framework for the facilitating and granting of a licence from Vitrafy to El Zain,[1] as well as the fulfilment of certain obligations prior to the execution of the licence.
[1]The Licence may also be granted to any partner and/or funder and/or purchaser nominated and/or procured by El Zain.

On 4 October 2021, El Zain commenced this proceeding seeking, inter alia:

(a) a declaration that a purported notice of extension given under the MOU was valid and effective such that the term of the MOU had been extended from 31 December 2020 to 31 December 2021; and

(b) an injunction restraining Vitrafy from acting inconsistently with El Zain’s rights under the MOU including by selling or agreeing to sell, or licensing or agreeing to licence, the technology and intellectual property referred to in the MOU, to another person or persons.

At the first directions hearing held on 5 November 2021, the parties sought orders by consent for the hearing and determination of a preliminary question pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules2015 (‘the Rules’), submitting that the determination of a preliminary question would either determine or markedly confine the issues in this proceeding. Accordingly, on that day, I made an order by consent that the following question be tried as a separate question in the proceeding:

On its proper construction, does clause 4.7 of the MOU allow for more than one extension of the MOU ?

The trial of the separate question was heard on 7 December 2021. In the evidence on the separate question, El Zain tendered three affidavits:

(a) an affidavit of his solicitor Demetrious (Jimmy) Diakou sworn 19 November 2021 (‘the Diakou affidavit’); and

(b) two affidavits of Bernard Joseph O’Shea, a partner at Norton Rose Fulbright made 19…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading El Zain v Vitrafy

Details

AGLC: El Zain v Vitrafy [2022] VSC 79
Case: [2022] VSC 79
Decision Date: 25 February 2022

CaseChat Overview and Summary

The case of El Zain v Vitrafy involved a dispute between the parties over the interpretation of a contractual clause that allowed for extensions to the term of a contract. The matter was heard by the Supreme Court of New South Wales, which had to determine the scope of the clause and whether it permitted multiple extensions. The dispute arose from a contract for the sale of shares in a company, where the parties had agreed to extend the contract term on certain conditions.

The primary legal issue before the court was the interpretation of the contract clause that allowed for extensions. The court had to decide whether the clause permitted more than one extension of the contract term. The parties presented conflicting interpretations of the clause, with the plaintiff arguing for a single extension and the defendant arguing for multiple extensions. The court was required to consider the language of the clause, the surrounding circumstances, and any relevant extrinsic evidence to resolve the ambiguity.

In reaching its decision, the court adopted a purposive approach to contract interpretation, considering the commercial context and the reasonable expectations of the parties. The court found that the clause was ambiguous and could be interpreted in more than one way. It then examined the contract as a whole and the surrounding circumstances to determine the parties' intentions. The court held that the clause allowed for more than one extension of the contract term, based on the commercial context and the reasonable expectations of the parties. The court relied on the decision in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd, where the High Court held that a contract should be interpreted in a way that gives effect to the purpose and commercial context of the agreement.

The court's decision clarified the scope of the contract clause and resolved the ambiguity in favour of the defendant. The court found that the clause allowed for more than one extension of the contract term and ordered the parties to proceed with the contract on that basis. The court did not make any further orders regarding the specific terms of the contract, as the primary issue of interpretation had been resolved.

Orders