Gem Management Ltd v Firefox Ltd and 21 others
| Jurisdiction | UK Non-devolved |
| Judge | Lord Leggatt |
| Judgment Date | 09 May 2022 |
| Neutral Citation | [2022] UKPC 17 |
| Docket Number | Privy Council Appeal No 0116 of 2019 |
| Court | Privy Council |
[2022] UKPC 17
Privy Council
Easter Term
From the Supreme Court of Mauritius
Lord Briggs
Lord Sales
Lord Hamblen
Lord Leggatt
Lord Stephens
Privy Council Appeal No 0116 of 2019
Appellant
Stephen Donnelly
(Instructed by Berkeley Rowe)
Respondents
Hervé Duval
(Instructed by Sheridans)
Respondents:
(1) Firefox Ltd
(2) Francois d'Hotman
(3) Michel Pitot
(4) Jason Ltd
(5) Société Jason
(6) Bertrand Rey
(7) Bernard Piat Dalais
(8) Jean Francois Bernard Rousset
(9) Odile James
(10) Celina Piat Dalais
(11) Marie Lise Douyere
(12) Succession Jacques Piat Dalais
(13) Francois Rousset
(14) Société Frenesie
(15) Marie Alice Desvaux de Marigny
(16) Dominique Rousset
(17) Société Du Cap Fleurie
(18) Société Zorba
(19) Marie Antoinette Benedicte d'Hotman de Villiers
(20) Louis Henri Georges Wiehe
(21) Pascale May Francoise d'Hotman de Villiers
(22) Louis Christian Herbert Wiehe
Heard on 5 April 2022
This appeal raises a short question of interpretation of a written “undertaking agreement” (“the Agreement”) made between the appellant, Gem Management Limited (“GEM”), and a group of shareholders who owned some 35% of the shares in a Mauritian company, Deep River Investment Ltd (“Deep River”). These shareholders (“the Shareholders”) or in some cases their successors are the respondents to the appeal.
The Agreement contained an “irrevocable and unconditional undertaking” by the Shareholders, referred to as “the Commitment”, to pay to GEM a sum described as a “Commitment Consideration” upon the sale of their shares in Deep River to any party other than GEM (or its nominees) at any time during the “Commitment Period”. It is not in dispute that the Shareholders did subsequently sell their shares in Deep River to a third party. The issue on the appeal is whether it is plain that GEM is not entitled to be paid the Commitment Consideration (calculated as 2% of the proceeds of sale of the shares) because, on the proper interpretation of the Agreement, the “Commitment Period” had expired before the sale took place.
The issue arises on a plea in limine litis to set aside GEM's plaint with summons claiming the Commitment Consideration from the Shareholders. For the purpose of this plea, the facts averred in the plaint with summons are assumed to be true. No evidence is admissible on a plea in limine litis except by agreement between the parties. The only document which has been admitted in evidence is a copy of a letter dated 10 February 2012 to GEM from the Shareholders, signed by the parties, which records the terms of the Agreement.
The background to the Agreement was an approach made by the Shareholders to GEM some time in 2011 inviting GEM to make an offer to buy the entire shareholding of Deep River, including the Shareholders' own shares. This led to the Agreement and to GEM making an offer on 5 March 2012, as contemplated in the Agreement, to Deep River's board and shareholders to acquire up to 100% of its shares.
GEM received no response to its offer. At some point between 31 December 2012 and 12 November 2013, and without notifying GEM, the Shareholders sold their shares in Deep River to a third party for Rs 1,410,870,480.
On 12 November 2013, GEM served a notice on the Shareholders of its intention to exercise its right under the Agreement to extend the Commitment Period to 31 December 2013. GEM then claimed from the Shareholders the Commitment Consideration under the Agreement, in the amount of Rs 28,217,409.50 (being 2% of Rs 1,410,870,480). The Shareholders have not paid that amount.
It is averred in the plaint with summons, and is therefore to be assumed for present purposes, that the Agreement was drafted by the Shareholders or their agents.
In support of their plea in limine litis, the Shareholders say that they have no obligation to pay the Commitment Consideration because the obligation to pay it arose only upon any sale of shares during the Commitment Period, which had ended on 31 December 2012 before the sale took place. The Shareholders argue that, under the Agreement, the right to extend the Commitment Period could not be exercised after it had ended, and the extension notice served on 12 November 2013 was therefore served too late and had no effect. It follows that the sale of the Shareholders' shares did not trigger the Commitment and GEM's claim cannot succeed.
The judge, Angoh J, accepted the Shareholders' argument and set aside the plaint with summons. GEM appealed and the Court of Civil Appeal upheld Angoh J's decision. From that decision GEM has appealed to the Board.
After reciting GEM's engagement in discussions concerning its potential acquisition of shares in Deep River in accordance with an offer letter referred to as “the Proposal”, the Agreement states:
“In consideration of the substantial direct and indirect benefits to the Shareholders flowing from GEM's engagement with Deep River through the Proposal, but irrespective of whether or not GEM ultimately succeeds in acquiring some or all of the shares in Deep River whether in terms of the Proposal or any other process, we, the Shareholders, hereby wish to confirm our irrevocable and unconditional undertaking to pay to you a Commitment Consideration following any sale, whether in whole or in part, of our shareholding in Deep River at any time during the Commitment Period to any party other than GEM or its nominees (‘the Commitment’). The Commitment shall be binding, irrevocable and unconditional from the date of signature hereof for the duration of the Commitment Period.”
The duration of the Commitment Period is specified in the following key provision:
“The Commitment Period shall initially endure until 31 December 2012, and the parties agree and hereby record that GEM shall be entitled, but not obliged, to further extend the Commitment Period until 31 December 2013 in its sole discretion. Should GEM so elect, it shall communicate its election to extend in writing to the Shareholders.”
Also relevant are the following provisions which refer to “the Termination Date”:
“The Commitment shall be triggered upon the sale of the whole or any part of the Shareholders' shareholding in Deep River during the Commitment Period, whether such disposal occurs in one transaction or a series of transactions by one or all of us … For the purposes of this Agreement, and depending on GEM's right to further extend the Commitment Period, 31 December 2013 shall hereinafter be referred to as ‘the Termination Date’.”
The phrase is used only once in the rest of the Agreement, in a provision which states:
“This Agreement is a continuing agreement and shall remain in full force and effect until the earlier of (i) the payment and performance in full of the Commitment Consideration and (ii) the Termination Date.”
The Agreement contains a number of provisions which, broadly speaking, seek to foreclose any defence which the Shareholders might otherwise have to a claim by GEM under the Agreement for the Commitment Consideration. GEM relies, in particular, on two of these provisions which have been referred to as the “Late Notice Waiver” and the “Delayed Exercise Clause”. These clauses provide as follows:
“The Shareholders hereby waive promptness, diligence, notice of acceptance and any other notice with respect to the Commitment and any other document related thereto. We furthermore waive any right to revoke this Agreement, and acknowledge that this Agreement is continuing in nature.”
(the “Late Notice Waiver”)
“No failure on the part of GEM to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right …”
(the “Delayed Exercise Clause”)
The Agreement is expressly subject to the law of Mauritius.
The relevant principles of Mauritian law are not in dispute and chiefly comprise the following provisions of the Mauritian Civil Code (followed below by agreed informal translations):
Article 1156: “On doit dans les conventions rechercher quelle a été la commune intention des parties contractantes, plutôt que de s'arrêter au sens littéral des termes.” (“One must ascertain the contracting parties' common intention, rather than merely the literal meaning of the terms.”)
Article 1157: “Lorsqu'une clauses est susceptible de deux sens, on doit plutôt l'entendre dans celui avec lequel elle peut avoir quelque effet, que dans le sens avec lequel elle n'en pourrait produire aucun.” (“When a clause can bear...
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Alphamix Ltd v The District Council of Rivière du Rempart
...and that to give effect to the “volonté commune” of the parties the court may draw appropriate inferences: see Gem Management Ltd v Firefox Ltd and 21 others [2022] UKPC 17, para 16, approving the statement of the law by Mungly-Gulbul J in Bahemia MH & Partner Ltd v Production Menuiseries ......