Lloyd v Ohlstein & Ors

In *Lloyd v Ohlstein & Ors*, the High Court of Australia considered a dispute concerning the interpretation of a clause within a deed of settlement. The applicant, Mr Lloyd, sought to enforce certain terms of the deed against the respondents, who were the executors of the estate of the late Mr Ohlstein. The core of the disagreement lay in whether the deed imposed an obligation on Mr Ohlstein to procure the transfer of certain shares to Mr Lloyd, or merely an obligation to use his best endeavours to do so.

The primary legal issue before the High Court was to determine the precise nature of the obligation undertaken by Mr Ohlstein under clause 10(a) of the deed. Specifically, the Court had to ascertain whether the wording "shall procure the transfer to the Purchaser of the said Shares" imposed a strict or absolute obligation, or whether it was qualified by an implied term requiring Mr Ohlstein to use reasonable or best endeavours. This involved an analysis of the contractual language used and the surrounding circumstances at the time the deed was executed.

Heydon J, delivering the judgment of the Court, held that the language of clause 10(a) imposed a strict and unqualified obligation on Mr Ohlstein to procure the transfer of the shares. His Honour reasoned that the use of the word "shall" in conjunction with "procure the transfer" indicated a mandatory requirement, not a mere undertaking to attempt to achieve the outcome. The Court rejected the argument that an implied term of best endeavours should be read into the clause, finding that such an implication was not necessary to give business efficacy to the contract and would contradict the plain meaning of the express terms. The Court therefore found that Mr Ohlstein had breached the deed by failing to procure the transfer of the shares.