Ugrinovski v Naumovski
[2018] VSC 437
•8 August 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL DIVISION
S ECI 2014 00189
| ROBERT UGRINOVSKI | Plaintiff |
| v | |
| VLADO NAUMOVSKI & ORS | Defendants |
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JUDGE: | ALMOND J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 19 March 2018 |
DATE OF JUDGMENT: | 8 August 2018 |
CASE MAY BE CITED AS: | Ugrinovski v Naumovski |
MEDIUM NEUTRAL CITATION: | [2018] VSC 437 |
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JURISDICTION – Whether proceeding still on foot – Whether proceeding brought to an end by July 2015 Orders – Effect of Settlement Implementation Deed – Court’s jurisdiction to hear and determine Summons – Whether Court clearly satisfied that justice can be done – Roberts v Gippsland Agricultural Earthmoving Contracting Co Pty Ltd [1956] VLR 555 applied – Seachange Management Pty Ltd v Pital Business Pty Ltd (2009) 23 VR 396.
EXPERT DETERMINATION – Expert determination final and binding in the absence of manifest error – Whether manifest error – Commercial contracts – Objective approach to contractual interpretation – Ordinary commercial meaning – Reasonable business person – Language used by the parties – Context – Commercial purpose or object to be secured – Australian Broadcasting Commission v Australian Performing Rights Association (1973) 129 CLR 99 considered and applied – Mt Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 considered and applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Evans with Mr D Mason | Aptum Legal |
| For the First Defendant | Mr P Gray QC with Mr I Hristovski | Frenkel Partners |
HIS HONOUR:
Background
Mr Robert Ugrinovski (Ugrinovski) and Mr Vlado Naumovski (Naumovski) owned and controlled corporate entities through which they conducted the business of property development.
In September 2014 Naumovski and others commenced a Supreme Court proceeding (S ECI 2014 00088) (Naumovski Proceeding) against Ugrinovski and others pursuant to ss 233 and 461 of the Corporations Act 2001 (Cth) seeking the winding up of various corporate entities, alternatively an order that one of them acquire the other’s shares in the relevant entities.
In October 2014, Ugrinovski commenced this proceeding against Naumovski and other corporate entities claiming relief from oppression which included seeking orders pursuant to s 233 of the Corporations Act 2001 (Cth).[1]
[1]Affidavit of Mr B Lambros sworn 8 March 2018 (Lambros Affidavit), [4]-[7].
In June 2015 the parties resolved the respective claims in each proceeding and entered into binding Heads of Agreement (HOA). On 24 July 2015, orders were made by consent in this proceeding giving effect to the HOA (July 2015 Orders).[2] By the July 2015 Orders, the parties were required to implement the terms of the HOA. Paragraphs 1, 2 and 3 of the July 2015 Orders replicate clauses 14, 15 and 16 of the HOA.[3]
[2]Lambros Affidavit, [8].
[3]Save for inconsequential formal differences.
The HOA provided for the appointment by the Court of a special referee in the event that certain steps required under the terms of the HOA had not occurred by a specified date. As events transpired, a special referee was appointed. As contemplated by the HOA, the special referee, Mr Leigh Baring, provided a report which set out the steps which were required to be undertaken to implement the HOA (Report).
In May 2016, Ugrinovski made an application by summons in this proceeding seeking the determination of five questions as to the proper construction of the HOA and an order that certain parts of the special referee’s report not be adopted.
In deciding the issues raised on the summons I answered the questions as Ugrinovski had contended they ought to be answered.[4] I also addressed additional issues which had been raised by the parties during argument concerning the treatment of inter-company loans.
[4]Ugrinovski v Naumovski [2016] VSC 555 (16 September 2016). Leave to appeal from this decision was refused by the Court of Appeal: Naumovski v Ugrinovski [2017] VSCA 200 (9 August 2017).
Orders giving effect to my reasons were made on 4 November 2016. Those orders included an order that the Report be adopted with some modifications.
Among other things, the Report required the parties to enter into a settlement implementation deed to give effect to the concepts and steps described in the Report. On or about 22 May 2017, the parties entered into a deed which set out the terms on which the parties would implement settlement[5] and nominated a date and place for settlement to occur (Settlement Implementation Deed).
[5]Lambros Affidavit, Exhibit “BL 3”, Settlement Implementation Deed, recitals G, H and I and clause 4.
The parties had a continuing dispute about the interpretation of one of the clauses of the HOA (clause 15) which required a cash payment of $2.7 million to be made to Naumovski and/or his nominee at the time of settlement.[6]
[6]In the Settlement Implementation Deed this amount was also defined as the Settlement Sum, see cl 1.1 of the Definitions.
In order to manage this dispute, the parties agreed in the Settlement Implementation Deed that part of the $2.7 million amount would be paid at settlement and the dispute with respect to the balance (being $760,698 and defined by the parties as the ‘Unpaid Amount’) would be determined by an independent counsel appointed to resolve it. This agreement is reflected in the terms of the Settlement Implementation Deed.
The Settlement Implementation Deed relevantly provides:
1. Definitions and Interpretation
1.1 Definitions
Detailed Transaction Steps means the document titled ‘Detailed Transaction Steps’ prepared by the Special Referee and set out in Annexure A, as modified by the 2016 Orders and clause 4.3 of this deed;
Independent Counsel means the Queen’s Counsel or Senior Counsel appointed to determine the correct interpretation of clause 15 of the Heads of Agreement in relation to the Unpaid Amount in accordance with Clause 6;
Settlement Sum means $2,700,000.00;
Unpaid Amount has the meaning given in clause 6.1
…
4.3 Obligations at Settlement
At Settlement, each party must:
(a)perform all actions, execute and deliver all Settlement Documents and make all payments required to be performed, executed, delivered and made by it as set out in steps 17-52 of the Detailed Transaction Steps, other than:
…
(iv) step 51, which is amended as follows:
Subject to clause 8 of the Settlement Implementation Deed, Group Eentities (and where insufficient funds, the Ugrinovski Entities) to pay Naumovski Entities
$2,700,000the undisputed portion of the Settlement Sum pursuant to clause 15 of the Heads of Agreement being:(a)the amount in the bank accounts of each Group Entity as at the Settlement Date, in each case up to a maximum of the amount that was in the bank accounts of such Group Entity as at 13 June 2015 and provided that Epping Gardens will not be required to pay any portion of the Settlement Sum and that the Ugrinovski Entities will pay $166,560 on behalf of Epping Gardens at Settlement in accordance with this clause to the Naumovski Entities; plus
(b)such other amounts as agreed between Robert and Vlado prior to Settlement (if any),
up to a maximum of the Settlement Sum
…
Settlement Sum
6.1 Acknowledgment of dispute
Each party acknowledges that there is a continuing dispute between the parties as to the correct interpretation of clause 15 of the Heads of Agreement such that, at Settlement, only the portion of the Settlement Sum referred to in clause 4.2(a)(iv) will be paid to the Naumovski Entities and the balance of the Settlement Sum (‘Unpaid Amount’) will be determined in accordance with this clause 6.
6.2 Appointment of Independent Counsel
(a)Robert and Vlado must, acting reasonably and in good faith, attempt to agree upon the identity of the Independent Counsel to determine the correct interpretation of clause 15 of the Heads of Agreement within 20 business days of Settlement.
(b)if Robert and Vlado do not agree upon the identity of the Independent Counsel within the period referred to in clause 6.2(a), either Robert or Vlado may request the President of the Victorian Bar Council, or his or her nominees, to appoint the Independent Counsel, in which case:
(i)the Independent Counsel will be the person appointed by the President of the Victorian Bar Council, or his or her nominee; and
(ii)the parties must provide all application documents and pay all application fees required to be paid to the Victorian Bar Council in relation to the request to appoint the Independent Counsel.
(c)For the avoidance of doubt, the Independent Counsel must be a member of the Victorian bar who holds the title of Queen’s Counsel or Senior Counsel, and must have no interest or duty which conflicts with his or her role as the Independent Counsel.
6.3 Determination of Independent Counsel
(a)The parties must instruct the Independent Counsel to make his or her determination within 30 days of the date that the Independent Counsel is appointed, with the determination notified to Robert and Vlado in writing by the end of this period.
(b)Robert and Vlado may make written submissions to the Independent Counsel, provided that copies of the submissions are provided to the other at the same time as they are provided to the Independent Counsel.
(c)Each party must give the Independent Counsel all information and assistance that the Independent Counsel may reasonably require to make the determination.
(d)The Independent Counsel has the right to determine, and the parties must fully comply with, any processes, principles, procedures, format, or requirements on behalf of the parties in relation to the making of their determination provided such procedures, principles, processes format or requirements are not inconsistent with the other provisions of this clause 6.
(e)The Independent Counsel will act as an expert and not as an arbitrator. The law relating to arbitration will not apply to the Independent Counsel or the procedures by which a determination is reached.
(f)In the absence of manifest error, the Independent Counsel’s determination will be final and binding on the parties on the date on which it is notified to the parties.
6.4 Costs
The costs of the Independent Counsel’s must be borne by the Ugrinovski Entities (as to 50%) and the Naumovski Entities (as to 50%).
6.5 Payment of Unpaid Amount
If the Independent Counsel determines that part or all of the Unpaid Amount is payable to the Naumovski Entities, the party or parties that the Independent Counsel determines are required to make such payments must do so within 10 business days on the date on which the Independent Counsel’s decision becomes final and binding on the parties.
Under the terms of the Settlement Implementation Deed, Mr Charles Scerri QC was appointed as independent counsel (Independent Counsel) to act as an expert to determine the party or parties required to pay the Unpaid Amount.
After considering written submissions prepared on behalf of the respective parties, the Independent Counsel determined that Ugrinovski was obliged to pay the Unpaid Amount (Determination).[7]
[7]Lambros Affidavit, Exhibit “BL 8”, Determination by Independent Counsel dated 10 November 2017.
By letter dated 20 November 2017 the solicitors for Naumovski requested that Ugrinovski pay $760,698 (being the Unpaid Amount) pursuant to clause 6.5 of the Settlement Implementation Deed.[8] This clause required the Unpaid Amount to be paid within 10 business days of the date on which the Determination became final and binding.[9]
[8]Lambros Affidavit, Exhibit “BL 9”, Letter from Frenkel Partners Lawyers to SBA Law dated 20 November 2017.
[9]Lambros Affidavit, Exhibit “BL 3”, cl 6.5 of the Settlement Implementation Deed.
In response to the request, through his solicitors, Ugrinovski denied that there was any debt owing. He asserted and asserts that the Determination is manifestly wrong and is therefore not final and binding on the parties.[10]
[10]Ibid Exhibit “BL 9”, Letter from Aptum Legal to Frenkel Partners Lawyers dated 1 December 2017.
By summons dated 8 March 2018 (Summons) Naumovski now seeks an order requiring Ugrinovski to pay $760,698 together with interest in full and final discharge of:
(a)clause 15 of the HOA;
(b)order 2 of the July 2015 Orders; and
(c)clause 6.5 of the Settlement Implementation Deed.
Two principal issues arise for consideration. First, whether the Court has or should exercise jurisdiction in this proceeding by hearing and determining the Summons and secondly, whether there is a manifest error in the Determination.
Jurisdictional issues
It is appropriate to deal with the jurisdictional issues first. This will involve determination of the following questions:
1. Has the proceeding been brought to an end either by the July 2015 Orders or by entry into the Settlement Implementation Deed?
2. Is Naumovski seeking to vary final orders made in the proceeding on 24 July 2015 by making application for payment of the amount of $760,698?
3. Must the dispute over the interpretation or enforcement of the Settlement Implementation Deed be the subject of a separate proceeding?
4. Is it inappropriate to determine that dispute in this proceeding?
Submissions
Ugrinovski submits that the proceeding was brought to an end by the July 2015 Orders; that the intent and purpose of those orders was to bring finality to the proceeding. Ugrinovski submits that the only jurisdiction now remaining for the Court with respect to the proceeding is to enforce the July 2015 Orders. Ugrinovski submits that the Court has no power to vary, review or set aside final or perfected orders once they are entered, save in the case of a clerical mistake, error or any accidental slip or omission.[11] Ugrinovski accepts that the Court may, in exceptional circumstances, alter or rescind the July 2015 Orders, but submits that such circumstances are not applicable here. Exceptional circumstances may include fraud or lack of procedural fairness.
[11]Ugrinovski’s Outline of Submissions, entitled Plaintiffs’ Outline of Submissions (Ugrinovski’s Outline of Submissions), dated 16 March 2015, [6], citing the Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 36.07.
In support of this proposition Ugrinovski relies on the decision of Kaye J in Lollis v Loulatzis & Anor(No 3)[12] (‘Loulatzis’) and in particular on the following passage in which his Honour states:
It is a well established principle that once an order of a Court has been perfected in a form which accurately expresses the intended form of the order (such as by being authenticated under the Rules of the Supreme Court), the Court which made that order has no jurisdiction to alter or rescind it, save in particular exceptional circumstances. Those exceptions are, in general, confined to circumstances which involve clarification of the recorded judgment, or to making minor alternations to a judgment which do not affect the operative and substantive part of the judgment, and to circumstances (such as fraud and breach of natural justice) which impeach the obtaining of the judgment or order.
[12][2008] VSC 231 (27 June 2008) [12] (Kaye J).
Kaye J then refers to a statement of events and principles as propounded by the High Court in Bailey v Marinoff[13] as follows:
The High Court unanimously held that the New South Wales Court of Appeal did not have any power, inherent or otherwise, to further deal with the appeal which had already been dismissed pursuant to the first order made by it.[14]
[13](1971) 125 CLR 529.
[14]Loulatzis [2008] VSC 231 (27 June 2008) [13] (Kaye J).
In particular, Ugrinovski relies on the statement of Barwick CJ (also cited by Kaye J in Loulatzis) in Bailey v Marinoff as follows:
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding, apart from any specific and relevant statutory provision, is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.[15]
[15]Bailey v Marinoff (1971) 125 CLR 529, 530-531 (Barwick CJ), quoted in Loulatzis [2008] VSC 231 (27 June 2008) [13] (Kaye J).
Alternatively, Ugrinovski submits that by entering into the Settlement Implementation Deed the parties agreed to rely on its terms to define their respective rights and obligations, thus merging the July 2015 Orders into the Settlement Implementation Deed. Ugrinovski submits that this has the consequence that the proceeding is spent and the Court has no jurisdiction to determine the Summons.
For his part, Naumovski submits that this proceeding was not brought to an end by the July 2015 Orders or by entry into the Settlement Implementation Deed.
Naumovski submits that: –
(a)in Loulatzis the Court had made a final order dismissing the plaintiff’s claim whereas the July 2015 Orders are demonstrably not final orders;
(b)the purpose and effect of the Settlement Implementation Deed was to set out how the parties would implement the HOA and the July 2015 Orders;
(c)clause 15 of the HOA and order 2 of the July 2015 Orders are in identical terms so that a dispute in relation to the interpretation of clause 15 of the HOA by necessary implication raises a dispute in relation to the interpretation of order 2 of the July 2015 Orders; and
(d)the parties’ entry into the Settlement Implementation Deed, which resulted in the engagement of Independent Counsel to determine the correct interpretation of clause 15 of the HOA, does not operate to preclude the Court from hearing and determining the Summons and to make the orders sought in the Summons.
Naumovski relies on the principles set out by the Full Court of the Victorian Supreme Court in Roberts v Gippsland Agricultural Earthmoving Contracting Co Pty Ltd.[16] In Roberts, a proceeding had been settled by the parties on terms which required the defendant to pay an agreed amount to the plaintiff. The defendant failed to pay the settlement amount and the plaintiff made an application in the proceeding for enforcement of the settlement deed. The defendant argued that the settlement deed compromised the existing proceeding and created a new cause of action based on the settlement and a new proceeding would be required to be issued. The Court allowed the compromise to be enforced in the proceeding.
[16][1956] VLR 555 (‘Roberts’).
In particular, Naumovski relies on the following passages from the reasons of Smith J, who summarised the position as follows:
…
(i)The Court will now enforce the agreement of compromise upon motion in the action whenever the circumstances are such that it would have been enforced in a corresponding manner in the old Court of Chancery.
(ii)In addition, the agreement may be so enforced notwithstanding the fact that it involves matters extraneous to the action, and notwithstanding that there is a substantial question raised as to the terms or validity or enforceability of the agreement, provided that the Court is clearly satisfied that justice can be done under the summary procedure. At least this is so where all that the Court needs to order for the purpose of enforcing performance upon just terms is a stay of proceedings or a dismissal of the action or some relief claimed in the action.[17]
[17]Ibid 564 (Smith J).
Naumovski further relies on the Court of Appeal decision of Seachange Management Pty Ltd v Pital Business Pty Ltd[18] (‘Seachange’) in which the Court considered the Roberts jurisdiction. In their joint judgment, Maxwell P and Nettle JA said:
In summary, therefore, the net effect of the authorities to this point seems to be that, although the power summarily to enforce a compromise is discretionary and is wider now than once was the case, it is not to be invoked unless the court is ‘clearly satisfied that justice can be done’; and whether justice can be done is a question of degree. Consistently with the equitable origins of the power, one must weigh among other competing considerations the extent to which enforcement would involve extraneous matters, how substantial the questions to be determined as a precursor to enforcement may be, and procedural considerations like the desirability of pleadings and discovery and substantial cross-examination.[19]
[18](2009) 23 VR 396.
[19]Ibid [40].
Naumovski submits that the Court has and should exercise the Roberts jurisdiction to hear and determine the Summons in this case as:
(a) the relevant parties are already before the Court in the present proceeding;
(b) the determination of the Summons requires the Court to determine a narrow legal question, namely whether the parties are bound by the Determination;
(c) there is no dispute raised as to the quantum of the debt claimed;
(d) pleadings are not required; the issue is narrow and is known to all the parties;
(e) the evidence is already before the Court and no cross-examination of any witness is required;
(f) the issue is straightforward with no substantial extraneous factors which would affect the Court’s ability to deal with the matter. The only relevant matter to occur since the orders were made is the entry into the Settlement Implementation Deed; and
(g) requiring Naumovski to commence a new action to enforce the Determination would:
(i) be an expensive and time-consuming process which would replicate what is already before the Court in this proceeding;
(ii) delay the resolution of the matter; and
(iii) not deal with the dispute in a cost effective and expeditious manner.
In the circumstances, Naumovski submits that justice can be done in the present proceeding consistently with the overarching purpose expressed in s 7(1) of the Civil Procedure Act 2010 to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. [20]
[20]Naumovski Submission dated 16 March 2018, [11]-[14].
Analysis
The July 2015 Orders required shares or assets of the corporate defendants to be transferred so that Naumovski or his nominee would hold the full legal title and beneficial interest in some assets and Ugrinovski and/or his nominee would hold the full legal title and the beneficial interest in other assets. The orders also required that an amount of cash be paid at settlement, for liabilities to be apportioned and for steps to be taken to give effect to the July 2015 Orders.
The July 2015 Orders relevantly state:
1.The shares of the Group and/or assets of the Group are to be transferred between:
(a)the Group; and/or
(b)the Plaintiff and/or his related entities; and/or
(c)the First Defendant and/or his related entities.
so that:
(d)The Plaintiff [Ugrinovski] and/or nominee hold full legal title and beneficial interest in the following assets of the Group: [assets are listed]
…
(e)The First Defendant [Naumovski] and/or nominee hold full legal title and beneficial interest in the following assets of the Group: [assets are listed]
…
2.The Group pay the First Defendant [Naumovski] and/or nominee $2.7m cash on the Settlement Date (as defined in the HOA). Such cash is to come from the bank accounts of the Group, with each bank account contributing to the payment in proportion to the account balances that the accounts bear to one another as at 12 June 2015. If the Group or any one account does not have adequate cash in hand at the time of settlement, the Plaintiff [Ugrinovski] shall pay any shortfall to the First Defendant.
3.The liabilities and guarantees of the Group are to be transferred between:
(a) the Group; and/or
(b) the Plaintiff and/or his related entities; and/or
(c) the First Defendant and/or his related entities.
so that:
(d)the Plaintiff and/or nominee take responsibility for approximately $24.4m of the Group’s debt;
(e)The First Defendant and/or nominee take responsibility for approximately $21.8m of the Group’s debt;
4.The parties are to use all reasonable endeavours to ensure that all necessary steps are taken to effect the above orders and the HOA on or before the Settlement Date.
5.In the event that the necessary steps have not occurred to effect order 1 and 2 by 28 October 2015, the Court will appoint an independent referee to determine appropriate documentation, terms of such documentation and other steps to occur in order to give effect to order 1 and 2, upon order of the Court, if necessary.
6. Liberty to apply until order 4 or 5 above is effected.
7. Each party bear their own costs of the proceeding.
The July 2015 Orders were authenticated on 24 July 2015.
It is significant that the parties did not include in their proposed consent orders an order for the proceeding to be dismissed or struck out. This is to be contrasted with orders made on the same day by consent between Naumovski and Ugrinovski, amongst others, in the Naumovski Proceeding. Those orders provided that the proceeding be dismissed with a right of reinstatement with each party to bear the costs of the proceeding. Save for the potential for the exercise of the right of reinstatement, it is apparent that the orders in the Naumovski Proceeding are, in form and substance, final orders.
The form of the July 2015 Orders (presciently as it turns out) permitted the parties to invoke[21] the Court’s jurisdiction in the proceeding after 24 July 2015 by further application to the Court which resulted in the determination of five questions as to the proper construction of the HOA.[22]
[21]This is particularly evident from the language used in orders 5 and 6.
[22]Ugrinovski v Naumovski & Ors [2016] VSC 555 (16 September 2016).
In this respect, the case of Loulatzis relied on by Ugrinovski is relevantly distinguishable. In Loulatzis, the proceeding had been brought to an end. Kaye J had delivered written reasons for judgment and had pronounced final orders, including an order dismissing the plaintiff’s claim.[23] These orders were subsequently authenticated by the Prothonotary.[24]
[23]‘The claim by the plaintiff for damages against both defendants is dismissed’.
[24]Loulatzis [2008] VSC 231 (27 June 2008) [3]-[4] (Kaye J).
In contrast, despite the fact that the parties in the current case compromised their dispute in the terms reflected in the HOA, which deals with both this proceeding and the Naumovski Proceeding, no final orders have been pronounced in this proceeding. This is so even if it may be supposed that at the time the July 2015 Orders were made the parties expected that no further steps would be taken to prosecute the claims and counterclaims made in the proceeding.
There is a further distinguishing feature of this case; namely, entry into the Settlement Implementation Deed after the making of the July 2015 Orders.
In clause 6.1 of the Settlement Implementation Deed the parties acknowledge there is an ongoing dispute as to the correct interpretation of clause 15 of the HOA concerning the obligation to make a payment of $2.7 million at settlement (which is in identical terms to order 2 of the July 2015 Orders). As a whole, clause 6 of the Settlement Implementation Deed governs the mechanism for resolution of this dispute for the ultimate purpose of regulating and implementing the compromise.
The fact that an original cause of action may have been superseded by an agreement to compromise and, in this case, by the additional dimension of a further agreement (as reflected in the Settlement Implementation Deed) does not mean that it is necessarily inappropriate for this Court to exercise summary jurisdiction in the proceeding to the extent necessary to hear and determine the issues raised in the Summons.
In the joint reasons of the President and Nettle JA in Seachange, the Court of Appeal explains:
With the passage of the Judicature Acts, courts exercising both legal and equitable jurisdiction were enabled to deploy the summary jurisdiction more freely, with the result that it ceased to be fatal to the summary enforcement of a compromise that it may have involved some matters extraneous to the proceeding or some parties who were not parties to the proceeding. Consequently, it is no longer necessarily inimical to summary enforcement of a compromise that the original cause of action has been superseded by a new and different agreement, or that the applicant for judgment is seeking to enforce obligations that are new or different from those in issue in the proceeding.[25]
[25]Seachange (2009) 23 VR 396, 406 [34] (Maxwell P and Nettle JA).
The Court of Appeal also noted in Seachange that there are limits to the extent to which obligations provided for in a compromise agreement may differ from those in issue in the proceeding and yet be summarily enforced, citing various cases including Phillips v Walsh. In Phillips v Walsh, McLelland J concluded that summary enforcement is not appropriate in cases involving substantial matters beyond the ambit of the proceedings as originally constituted.[26]
[26]Phillips v Walsh (1990) 20 NSWLR 206, 210 (McLelland J), quoted in Seachange (2009) 23 VR 396, 407-408 [38] (Maxwell P and Nettle JA).
Central to the reasoning in Seachange is the notion that the discretionary power of the Court to summarily enforce a compromise is not to be invoked unless the Court is clearly satisfied that justice can be done, and that whether justice can be done is a question of degree.[27] It is therefore necessary to consider whether the Court can be clearly satisfied that justice can be done in the circumstances of this case.
[27]Barratt v Rees (2014) 13 ASTLR 99, 110 [50] (Neave and Kyrou JJA and Ginnane AJA).
It is self-evident that the applicants seek to enforce obligations including some which arose after the original compromise was reached. The Settlement Implementation Deed and the Determination came into existence after the compromise of the dispute and the coming into existence of the HOA. It is also self-evident that the issues raised by the Summons involve consideration and determination of issues which differ from those in issue in the proceeding.
Nevertheless, I am clearly satisfied that justice can be done in this case for the following reasons:
(a) the question whether there is a manifest error in the Determination, though extraneous to the issues raised in the proceeding, is a precursor to the enforcement of the compromise reflected in the HOA and order 2 of the July 2015 Orders;
(b) all interested parties are before the Court in the proceeding;
(c) the facts are uncontested.[28] The only evidence before the Court at the hearing of the Summons was an affidavit filed by the Naumovski parties with relevant documents exhibited thereto. The affidavit outlined the key background facts objectively and was received without objection;
[28]Cf Gondarra v Minister for Families, Housing, Community Services and Indigenous Affairs (2014) 311 ALR 21, 37 [59] (Kenny J).
(d) there is no dispute about quantum. The Unpaid Amount is $760,689. The hearing proceeded on that basis;[29]
[29]Transcript of hearing on 19 March 2018, T2.23-31 – T3.1-2.
(e) the questions to be determined are not substantial or of a nature that would lead to questions of credibility;[30]
[30]Roberts [1956] VLR 555, 564 (Smith J); Bendigo and Adelaide Bank Ltd v Lonergan [2018] VSC 357 (3 July 2018) [17] (Croft J); ABL Custodian Services Pty Ltd v Freer [2018] VSC 355 (3 July 2018) [9] (Croft J).
(f) pleadings are not required.[31] The ultimate question (whether the Determination is manifestly wrong) is confined and well understood by all parties;
[31]See, eg, Fuji Xerox Australia Pty Ltd v Xtreem Pty Ltd [2017] VSC 333 (21 June 2017) [34] (Kennedy J).
(g) requiring Naumovski to commence a new proceeding would significantly delay resolution of the issues and would necessarily require the parties to incur further expense;
(h)the issues raised by the Summons have also been raised by Ugrinovski’s counterclaim in a separate proceeding brought by Ugrinovski’s former solicitor. Naumovski has entered an appearance as defendant by counterclaim in that proceeding. In my view, it does not follow by reason of that circumstance that the Court should abstain from exercising jurisdiction in this proceeding or that it is inappropriate for the issues raised in the Summons to be determined in this proceeding. On the contrary, in my view there is considerable merit in addressing the issue here and now. Determination of the issue in this proceeding will inform the issues that need to be addressed in the counterclaim in the separate proceeding and likely reduce costs and inconvenience in doing so;
(h) under the terms of the Settlement Implementation Deed, the parties carved out and postponed performance of the payment required by clause 15 of the HOA (and concurrently order 2 of the July 2015 Orders) to the extent of the Unpaid Amount. To this extent there is still a pendant matter remaining in the proceeding which needs to be addressed, which is not only of interest to the parties but is also of interest to the Court in ensuring that Court Orders are complied with;
(i) there has already been a hearing on the merits subject to the Court’s ruling on the issue of jurisdiction. A further hearing on the merits would involve unnecessary duplication of resources; and
(j) Naumovski is not seeking to vary ‘final’ orders made in the proceeding. On the contrary, it is evident from the relief sought in the Summons that he seeks to enforce order 2 of the July 2015 Orders which virtually replicates clause 15 of the HOA.
In the circumstances, I propose to determine the issues raised on the Summons.
Manifest Error
Is there a manifest error in the Determination?
The Settlement Implementation Deed provides that the Independent Counsel’s determination will be final and binding on the parties in the absence of manifest error.[32] It follows that unless Ugrinovski can show there is a manifest error in the Determination, he is bound to pay Naumovski the Unpaid Amount.
[32]Lambros Affidavit, “BL 3”, clause 6.3(f) of the Settlement Implementation Deed.
Applicable principles
Ugrinovski relies on the decision of Australian Broadcasting Commission v Australian Performing Rights Association to the effect that the words of a clause in a written agreement are to be given the most appropriate meaning which they can legitimately bear, having regard to all of the provisions of the agreement with a view to achieving harmony among them.[33]
[33]Australian Broadcasting Commission v Australian Performing Rights Association (1973) 129 CLR 99, 109-110 (Gibbs J).
Naumovski relies on passages from my decision in Funtastic Ltd v Madman Film & Media Pty Ltd in which the meaning of the term ‘manifest error’ was considered:[34]
52The term ‘manifest error’ is not defined in the… Its meaning is to be determined following established principles of contractual interpretation. In the present context, the terms must be given its ordinary commercial meaning, shaped by reference to what a reasonable businessperson would understand it to mean, having regard to the background, context and commercial purpose or objects of the contract.
53.The Oxford English Dictionary defines ‘manifest’ as ‘clear or obvious to the eye or mind’. The Macquarie Dictionary similarly defines ‘manifest’ as ‘readily perceived by the eye or the understanding; evident; obvious; apparent; plain’. A ‘manifest error’ in the context of arbitral awards liable to be set aside for ‘manifest error of law on the face of the award’ has been variously described as an error that is ‘apparent to the understanding of the reader’, ‘obvious rather than arguable’, ‘easily demonstrable without extensive investigation’, ‘an oversight [or] blunder so obvious as to admit no difference in opinion’ or ‘apparent to the judge upon a mere perusal of the reasoned award’. It is clear that an error that is ‘abstruse’ obscure or inconsequential’ will not fall within the definition of ‘manifest error’.’ (citations omitted)
[34]Funtastic Ltd v Madman Film & Media Pty Ltd [2016] VSC 708 (29 November 2016) [52]-[53] (Almond J) (citations omitted).
In determining whether the Independent Counsel has made a manifest error in this case it will be necessary to bear in mind established principles of contractual interpretation which require commercial contracts to be given an ordinary commercial meaning determined objectively by asking what a reasonable business person would understand the clause to mean, having regard to the language used by the parties, the context and the commercial purpose or object to be secured.[35]
[35]For elaboration of these principles see Mt Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116-117 [46]-[51] (French CJ, Nettle and Gordon JJ) and Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656-657 [35] (French CJ, Hayne, Crennan and Kiefel JJ).
The Determination
In his Determination, the Independent Counsel sets out the following reasons relevantly:
Reasons
6. Clause 15 of the HoA provides:
‘The Group [shall] pay Naumovski and/or nominee $2.7m cash on the Settlement Date. Such cash is to come from the bank accounts of the Group, with each bank account contributing to the payment in proportion to the account balance as the accounts bear to one another as at 12 June 2015. If the Group or any one account does not have adequate cash in hand at the time of settlement, Ugrinovski shall pay any shortfall to Naumovski’.
7. The first sentence of Clause 15 says that ‘the Group shall pay’.
8.However, the Group is not a legal person, either incorporated or unincorporated. It is simply a group or list of the entities referred to in Clause 2 of the HoA. The difference between ‘the Group’ and the entities that comprise the Group is reflected, also, in the definition of ‘Group’ in the Deed. That definition distinguishes between the Group and a ‘Group Entity’.
9.Nor does ‘the Group’ have any bank account of its own. The relevant bank accounts are those of the entities that comprise the Group.
10.Consequently, the first sentence of Clause 15 of the HoA, which requires ‘the Group’ to pay, must mean that all of the entities that comprise the Group must pay.
11.The precise extent of that obligation is defined by the second sentence of Clause 15. It provides ‘Such cash is to come from the bank accounts of the Group, with each bank account contributing to the payment in proportion to the account balance as the accounts bear to one another as at 12 June 2015.’ This delineates the extent of the liability of each member of the Group. It also gives meaning to the first sentence of Clause 15. That leads to the third sentence of Clause 15 which provides ‘If the Group or any one account does not have adequate cash in hand at the time of settlement, Ugrinovski shall pay any shortfall to Naumovski.’
12.Apart from the reference to the Group in this sentence there is no doubt that the second sentence means that if one or more of the bank accounts of the members of the Group has insufficient funds to pay the relevant proportionate amount, Ugrinovski must pay the shortfall or shortfalls applicable to that account or accounts.
13.The principal contention put on behalf of Ugrinovski is that because the combined balances of the bank accounts of the Group exceeded $2.7m at the relevant day, ‘no shortfall arises’. The contention is based upon the argument that the obligation to pay the $2.7m is imposed on the Group, and that there is no ‘shortfall’ if the total of all the balances in all of the accounts exceeds $2.7m. It is submitted also that this is the only interpretation that gives meaning to the second sentence of Clause 15.
14.With respect, the fallacy with this argument is that it fails to give any material effect to the second sentence of Clause 15 which gives precise meaning to how the payment is to be made ‘by the Group’. Payments are to be made by the respective members of the Group, in specified proportions. Nor can the argument be reconciled with the reference in the third sentence to the adequacy of funds in ‘any one account’.
15.Contrary to the submission made on behalf of Ugrinovski, the reference to ‘the Group’ in the second sentence – although probably otiose – can be understood to refer to the situation where none of the entities in the Group has sufficient funds to make their respective payments.
16.Further, the argument that Clause 15 imposes the payment obligation on ‘the Group’ rather than on the entities comprising the Group, in specified proportions, can be tested by asking how would the obligation be specifically enforced. Which entity or entities would be ordered to make payment, and in which amounts? The answer is plainly that all the members of the Group would be ordered to make the payments but that they would be severally liable only for their respective proportions.
17.A second argument made on behalf of Ugrinovski is that since Clause 16 of the HoA says that Clause 16 is ‘Subject to Clause 15’, this supports the construction for which Ugrinovski contends. However, I do not find that reference (and the detailed arguments made in respect of it) of any material assistance in construing Clause 15. The reference in Clause 16 to Clause 15 is understandable without distorting the plain meaning of the latter clause.
Ugrinovski submissions
Ugrinovski submits that the Determination contains manifest errors for the following reasons:[36]
[36]Reproduced from Ugrinovski’s Outline of Submissions [7]-[10]. These reasons differ slightly from the reasons previously advanced in correspondence dated 1 December 2017 which forms part of Exhibit “BL 9” to the Lambros Affidavit. For present purposes, I rely on the written submissions filed in the Court.
(1)the Independent Counsel erred in law by failing to give the most appropriate meaning to the words in clause 15 of the HOA which they could legitimately bear in circumstances where at paragraph 15 of the Determination the Independent Counsel conceded ‘that his construction rendered the reference to ‘Group’ … to be otiose’ (Reason 1);[37]
[37]Ugrinovski’s Outline of Submissions [10(a)].
(2)the Independent Counsel took into account irrelevant considerations when determining the meaning of clause 15 of the HOA when he asked in paragraph 16 of the Determination how the obligation would be specifically enforced in circumstances where:
(iv)the parties have provided for the obligations to be met by the Group prior to separation of the Group;
(v) the obligation under clause 15 of the HOA was a precondition to the separation of the Group; and
(vi)to the extent that there was any uncertainty regarding the performance of clause 15, the parties had expressly provided in the HOA that performance of the HOA was subject to final terms being drafted and agreed upon, and as a consequence the parties did not intend for a question of enforcement against any of the Groups’ entities to arise (Reason 2); and
(3)the Independent Counsel erred in law by failing to have regard to all provisions in the HOA, in particular clause 16, with a view to achieving harmony among all provisions (Reason 3).
Naumovski submissions
As to the contention in Reason 1, Naumovski submits that the Independent Counsel ‘didn’t quite say’ that reference to ‘the Group’ is otiose. Naumovski submits that it has some work to do if it is read as a reference to all of the bank accounts of the various entities.[38]
[38]Transcript of the hearing on 19 March 2018, T20.23 – 23.18.
Further, Naumovski submits that even if it turns out that the reference to ‘the Group’ was treated as otiose, it does not necessarily mean there is a manifest error and that one would have to have regard to all of the reasoning of the Independent Counsel to determine whether he properly construed the words in clause 15 of the HOA.
In respect of Reason 2, Naumovski submits that it is conceivable that enforcement of clause 15 of the HOA might have been required. Naumovski submits that the specific performance point is just another way of conceptualising the need for certainty as to an allocation mechanism, and it would be unreasonable to say that certainty as to the allocation mechanism was not a material issue in construing the HOA. Further Naumovski submits (without conceding) that even if there was some error in reasoning, it does not affect the burden of the reasoning of the Independent Counsel concerning the need for certainty as to an allocation mechanism.
As to the contention in Reason 3, Naumovski submits this complaint has no foundation; that the Independent Counsel expressly considered Ugrinovski’s arguments on this point and disagreed. Before the Independent Counsel Ugrinovski contended that his construction was the only construction of clause 15 that achieved harmony between the provisions of the HOA. In particular he referred the Independent Counsel to clause 16 of the HOA. Naumovski submits that the Independent Counsel did consider the need for a harmonious construction; as shown by his consideration of the issues relating to the definition of group entities and how that affected the interpretation of clause 15 as well as the potential for contextual interaction with clause 16.
Generally, Naumovski submits that the Independent Counsel’s interpretation is in fact correct, or at the very least is strongly arguable, and was reasonably available to the Independent Counsel, and that there is no obvious or apparent error with the reasoning or with the conclusion reached.
Analysis
In my view, the arguments advanced, considered individually and as a whole, do not demonstrate that the Determination contains a manifest error.
Reason 1
In my view, the Ugrinovski formulation of Reason 1 (that ‘at [15] of the Determination, the Independent Counsel conceded that his construction rendered the reference to ‘Group’… to be otiose’) is not strictly accurate. It is evident from the reasons given in the Determination, viewed as a whole, that the Independent Counsel did not go so far as to determine that the words ‘the Group’ were otiose. The Independent Counsel does interpolate in a passing remark that the reference to the Group is ‘probably otiose’ before expressing his opinion that it can be understood to refer to the situation where none of the entities in the Group has sufficient funds to make its respective payment.
The Independent Counsel construed the reference to ‘the Group’ in the third sentence of clause 15 of the HOA as a collective reference to the bank accounts of the several entities comprising the Group. In my view this construction is clearly open, having regard to the preceding (second) sentence of clause 15 of the HOA, about which there is no dispute, the particular subject matter of which concerns the bank accounts of the several entities comprising the Group. It provides that the cash (for the $ 2.7 million cash payment) is to be sourced from the bank accounts of the Group, with each bank account contributing to the payment in a proportion specified.
Immediately following is a proviso: ‘If the Group or any one account does not have adequate cash in hand at the time of settlement Ugrinovski shall pay any shortfall to Naumovski’. Given the fact that ‘the Group’ is a collection of entities with no independent existence, that the entities have bank accounts (but there is no evidence of any Group bank account), and that the sentence preceding the proviso concerns the bank accounts of the entities in the Group, in my view the Independent Counsel properly construed the reference to ‘the Group’ in the third sentence as a collective, albeit shorthand, reference to all of the bank accounts of the corporate entities in the Group. The Independent Counsel observes that this construction accommodates a situation where none of the bank accounts of the corporate entities have adequate cash on hand at the time of settlement. He ascribes commercial utility to the clause by giving it meaning and purpose in its context. He appears to have determined this construction objectively. In my view, the construction aligns with what a reasonable business person would understand the clause to mean. There is no manifest error.
Reason 2
In paragraph 16 of the Determination, the Independent Counsel purports to test the proposition that clause 15 of the HOA imposes the (whole) payment obligation on ‘the Group’, rather than on the entities comprising the Group in specified proportions, by asking himself hypothetically how the obligation would be specifically enforced. According to Ugrinovski, this question is irrelevant to the task of determining the meaning of clause 15 of the HOA for three reasons: (i) the obligations were to be met prior to separation of the Group, (ii) the obligations were to be met as a precondition to separation of the Group, and (iii) the parties had expressly provided that performance of the HOA was subject to final terms being drafted and agreed upon. In such circumstances Ugrinovski submits that the parties did not intend that a question of enforcement against any of the Group entities would arise.
I am not persuaded by any of these reasons. The objective intention of the parties reflected in the terms of the HOA is to be ascertained as at the date of its execution on 13 June 2015. Payment of the cash was to occur on 28 October 2015 or earlier by agreement.[39] The source and extent of the liability to pay was fixed by application of the formula in the second sentence in clause 15 of the HOA. There is no reason in principle or in practice why failure or refusal by one of the entities to make its proportionate contribution when the payment fell due on Settlement Date under the terms of clause 15 of the HOA could not lead to an application for specific performance of that obligation.
[39]Lambros Affidavit, Exhibit “BL 1”, cl 11 of the HOA.
In my view, it was open for the Independent Counsel to take into account the potential need for enforcement. A reasonable business person would do so. The parties were settling proceedings in which each alleged oppression by the other, expressed their intent to sever their interests and relationships and agreed to divide the shares/assets of the Group and distribute cash in the accounts for the various entities. For the agreement to have commercial utility it was imperative for there to be an allocation mechanism to facilitate enforcement against particular entities for particular amounts if necessary. In my view, considerations of the potential need for enforcement appear to have, at least in part, informed the Independent Counsel’s process of reasoning and the testing of his reasoning in a way that is not clearly or obviously erroneous.
Contrary to the submissions made on behalf of Ugrinovski, the fact that the obligations were to be met prior to, and as a precondition of, separation of the Group, and that performance of the HOA was subject to final terms being drafted and agreed upon, does not in my view suggest as a consequence that the parties did not intend for a question of enforcement against any of the Group’s entities to arise.
This is tolerably clear from other HOA terms which include the giving of irrevocable consents to the making of the Court orders (clause 12), an express term which states that steps were to be taken, among other things, to effect the terms of the HOA ‘upon order of the Court if necessary’ (clause 25), and a term which states that upon execution of the HOA, the terms were intended to be binding (clause 26). None of these clauses are expressed in a way which is antithetical to enforcement, or which might reflect any objective intention against enforcement against the relevant corporate entities comprising the Group.
I do not accept that the Determination reveals that the Independent Counsel took into account irrelevant considerations.
Reason 3
The Independent Counsel’s process of reasoning, and the extent of his consideration of the terms of the HOA and the Settlement Implementation Deed, is revealed by his analysis of clause 15. For convenience, clause 15 is again reproduced:
The Group shall pay Naumovski and/or nominee $2.7m cash on the Settlement Date. Such cash is to come from the bank accounts of the Group, with each bank account contributing to the payment in proportion to the account balances that the accounts bear to one another as at 12 June 2015. If the Group or any one account does not have adequate cash in hand at the time of settlement, Ugrinovski shall pay any shortfall to Naumovski.
The approach is methodical. Initially the Independent Counsel grapples with the reference to ‘The Group’ in the first sentence. He notes that the Group is not a legal person and is simply a group or list of the entities referred to in the HOA. This conclusion appears to be correct given the definition of ‘the Group’ in the recitals to the HOA which contains a list of corporate entities including a trust and a partnership, which are collectively described as ‘the Group’.[40] The Independent Counsel then notes that ‘the Group’ does not have a bank account and that the relevant bank accounts are those of the entities that comprise ‘the Group’. This appears to be supported by the content of the respective written submissions provided to the Independent Counsel. Neither proposition is challenged as erroneous.[41]
[40]Lambros Affidavit, “BL 1”, recital 1 of the HOA.
[41]Lambros Affidavit, “BL 8”, paragraphs 8-9 of the Determination.
The Independent Counsel concludes that in consequence the reference to ‘the Group’ in the first sentence of clause 15, requiring the Group to pay $2.7 million, must mean that all of the entities that comprise the Group have an obligation to pay. It is not suggested that this conclusion is erroneous.
Having identified that all of the entities which comprise the Group must pay, the Independent Counsel focuses on the second sentence of clause 15 of the HOA. He concludes that the second sentence defines the precise extent of the obligation by delineating the extent of the liability of each member of the Group (i.e. each bank account is to contribute to the payment in proportion to the account balances as the accounts bear one to the other as at 12 June 2015).
The Independent Counsel then focuses on the third sentence of clause 15. He considers the principal contention put on behalf of Ugrinovski to the effect that, because the combined balances of the bank accounts of the Group exceeded $2.7 million at the relevant date ‘no shortfall arises’ and therefore the obligation requiring Ugrinovski to pay any shortfall does not arise.
The Independent Counsel states that this contention is based upon the argument that the obligation to pay the $2.7 million is imposed on the Group.[42] The Independent Counsel regards this argument as fallacious because in his opinion it fails to give any material effect to the second sentence of clause 15, which requires payments to be made by the respective members of the Group in specified proportions and cannot be reconciled with the reference in the third sentence of clause 15 to the adequacy of funds ‘in any one account’.
[42]Ibid paragraph 13 of the Determination.
The Independent Counsel determines that reference to ‘the Group’ in the third sentence[43] of clause 15 can be understood to refer to a situation where none of the entities had sufficient funds to make their respective payment. Substantively, this is another way of saying that the third and last sentence contemplates both the circumstance where all of the entities in the Group had insufficient funds in their accounts and the circumstance where any one entity in the Group has insufficient funds in its account; contrasting the plural with the singular. In my view, this is an ordinary commercial construction which achieves a harmonious outcome with the other clauses of the HOA.
[43]Incorrectly stated in the Determination as the second sentence, though no issue arises from this as the respective counsel agreed this was an inconsequential error.
It is to be noted that the parties agreed to the appointment of the Independent Counsel to act as an expert and not as an arbitrator. Their agreement expressly provides that the law relating to arbitration will not apply to the Independent Counsel or to the procedures by which a determination is reached.[44] The parties were required to instruct the Independent Counsel to make his or her determination within 30 days of the date of appointment.[45] The parties were required to give the Independent Counsel all information and assistance that the Independent Counsel reasonably required to make the Determination[46] and gave the Independent Counsel the right to determine the processes, principles, procedures, format or requirements on behalf of the parties in relation to the making of the Determination.[47] The parties were permitted to make written submissions to the Independent Counsel. Otherwise, the parties did not fetter the process of determination by the Independent Counsel.
[44]Lambros Affidavit, Exhibit “BL 3”, cl 6.3(a) of the Settlement Implementation Deed.
[45]Ibid.
[46]Ibid cl 6.3(b) and (c) of the Settlement Implementation Deed.
[47]Ibid cl 6.3(d) of the Settlement Implementation Deed.
It can be inferred that the parties preferred to engage an expert to determine the correct interpretation of clause 15 for reasons of economy and expedition. One cannot expect the Independent Counsel to necessarily reveal in the Determination the extent to which he has had regard to the other provisions in the HOA to achieve harmony amongst those provisions. The expert was not required by the terms of the Settlement Implementation Deed to give reasons. Nevertheless there are sufficient indicia in the Determination which show that the Independent Counsel in all likelihood had regard to all of the relevant provisions of the HOA. The Independent Counsel received submissions and reply submissions from both parties.[48] Those submissions, included the matters which Mr Ugrinovski contended were relevant to giving a harmonious interpretation to clause 15 of the HOA. I infer from the introductory remarks of the Independent Counsel in the Determination that his submissions were taken into account. It is obvious from the reasons given in the Determination that the Independent Counsel perused the HOA and the Settlement Implementation Deed for the purposes of considering whether any definition might shed light on the construction issue. The Independent Counsel also examined and rejected an argument put on behalf of Ugrinovski that clause 16 of the HOA supported the construction for which Ugrinovski contends. The Independent Counsel expressly states that he notes the detailed argument made in respect of clause 16 but says that he did not find the argument of any material assistance in construing clause 15.
[48]Lambros Affidavit, Exhibits “BL 4”, “BL 5”, “BL 6” and “BL 7”.
If it matters, I agree with the observation of the Independent Counsel that clause 16 is of no material assistance in determining the proper meaning of clause 15. Clause 16 deals with the transition period between agreement and settlement. It identifies the legal person entitled to the net income derived from each property during this period, namely the entity entitled to retain or acquire the particular property. That entitlement to net income is qualified by the opening words ‘Subject to clause 15.’ In my view, a reasonable business person would give an ordinary meaning to those words which, in their context, mean simply that the right to the net income from the relevant properties is subject to the pre–existing obligation of each entity to pay its allocated proportion of cash needed to fund the $2.7 million payment.
The fact that the Independent Counsel does not elaborate further in a manner that might be expected had the parties chosen to have the matter determined by curial process or by arbitration, does not reveal any manifest error.
Conclusion
In this matter I have found that the Court has and should exercise its jurisdiction to determine the matters raised in the Summons.
Further, whilst the Determination does contain some inconsequential errors[49] (which the parties sensibly disregarded for present purposes), I am not satisfied that it contains any manifest errors. Indeed, in my view, the construction is correct. Accordingly, the Determination is final and binding on the parties pursuant to clause 6.3(f) of the Settlement Implementation Deed. Ugrinovski must pay Naumovski the amount of $760,698 together with interest pursuant to statute from the date the amount fell due pursuant to clause 6.5 of the Settlement Implementation Deed.
[49]For example, the Independent Counsel mistakenly refers to the second sentence of cl 15 of the HOA in paragraphs 12 and 14 of the Determination when the reference should have been to the third sentence of cl 15 of the HOA in each case.
I will hear counsel on the appropriate form of orders to give effect to these reasons.
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