Supreme Court New South Wales Medium Neutral Citation: Markovsky v Teplitsky [2022] NSWSC 1164 Hearing dates: 25 August 2022 Date of orders: 31 August 2022 Decision date: 31 August 2022 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Declare that the Deed dated 18 May 2018 is valid and binding on the parties to it; otherwise dismiss the Summons Catchwords: CONTRACTS – proper construction – whether agreement that a party has the commercial and economic ownership of identified assets entitles that party to require that the assets be transferred to him Cases Cited: Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54; [1977] HCA 71 Ex parte Dawes (1886) 17 QBD 275 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 Victoria v Tatts Group Limited [2016] HCA 5 Texts Cited: P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) Category: Principal judgment Parties: Lynelle Markovsky (First Plaintiff) Curlewis Street Investments Pty Ltd (Second Plaintiff) Michael Teplitsky (First Defendant) Zone Developments Pty Limited (Second Defendant) Spring Street Property Group Pty Limited (Third Defendant) Roscoe Street Investments Pty Limited (Fourth Defendant) Cross Street Investments Pty Limited (Fifth Defendant) Representation: Counsel: S Epstein SC with G Tsang (Plaintiffs) M S Henry SC (Defendants) Solicitors: Baron & Associates (Plaintiffs) Equium Lawyers (Defendants) File Number(s): 2022/135582 Judgment 1. The plaintiff, Mrs Lynelle Markovsky, is the widow and executrix of the estate of the late Mr Boris Markovsky. Mr Markovsky died on 12 December 2020. I will refer to Mrs Markovsky as "the Executrix". 2. Mr Markovsky and the first defendant, Mr Michael Teplitsky, were cousins. For convenience, and without intending any disrespect, I will refer to them by their given names, Boris and Michael. 3. Boris and Michael were both born in Odessa in Ukraine. 4. Boris obtained qualifications in engineering in Odessa and worked there in the building industry before coming to Australia in about 1989 at the age of 32. After coming to Australia, Boris lived with Michael's family, who by then had also emigrated to Australia. 5. Michael was then working in the real estate industry. Between about 1989 and 1994 Michael and Boris discussed the possibility of working together in a property development business. 6. Over the following years, Boris and Michael participated in property development projects through the following entities: 1. Cross Street Investments Pty Ltd, [1] which purchased a property in Cross Street Double Bay in December 1996; 2. Curlewis Street Investments Pty Ltd, [2] which purchased a property in Curlewis Street Bondi Beach in November 1998; 3. Roscoe Street Investments Pty Ltd, [3] which purchased a property in Roscoe Street Bondi Beach in November 1998, apparently simultaneously with the Curlewis Street purchase; 4. Zone Developments Pty Ltd, [4] which purchased a property in Bourke Street Surry Hills in March 2000; and 5. Spring Street Property Group Pty Ltd, [5] which purchased a property in Spring Street Bondi Junction in December 2007. 1. During this period Boris and Michael were both directors and, either directly or ultimately, equal shareholders in those companies. 2. From about 2015 Boris and Michael had disagreements, in particular about the appropriate level of borrowing against their commonly held corporate investments. During that period they did not purchase new property development projects jointly but worked to complete their existing projects. 3. On 18 May 2018, Boris and Michael, as well as the companies referred to at [6] above, executed a "Deed of Agreement". 4. In an affidavit sworn in earlier proceedings Boris deposed: "Over the past 2 years [prior to March 2019], [Michael] and I have had extensive negotiations about separating our investments. These negotiations culminated in the Deed. [Michael] and I both paid Sevag Chalabian (a solicitor practising in NSW under the business name Reign Consulting) to do the drafting and our accountant was involved in negotiations. Various versions of the Deed were drafted before it was finalised … The reason my interest has not been documented before includes the fact that, because [Michael] and I are cousins, we did not feel the need to document our arrangements." 1. Now, by Summons filed on 11 May 2022, the Executrix seeks: 1. a declaration that the Deed is "valid and binding"; 2. an order that Michael transfer to her, as Boris's executrix, his shareholding in Curlewis Street Investments; 3. an order that Zone Developments transferred to her, as executrix, identified lots in Zone Developments' Surry Hills property (the "Zone Lots"); and 4. an order that Spring Street Property Group transfer to her, as executrix, identified lots in Spring Street Property Group's Bondi Junction property (the "Spring Street Lots"). 1. The Executrix contends that Michael, Zone Developments and Spring Street Property Group are obliged to take these steps by reason of the terms of the Deed. 2. Resolution of the claim requires a conclusion as to the proper construction of the Deed. 3. Michael accepts that the Deed is valid and binding on the parties to it. However, Michael disputes that, on its proper construction, the Deed obliges him, Zone Developments or Spring Street Property Group to transfer to the Executrix the shares or lots. 4. The language of the Deed is difficult. 5. As Mr Epstein SC, who appeared with Mr Tsang for the Executrix submitted: "The language of the Deed now under consideration may not correspond to the language which might normally be expected in a competent lawyer's drafting of a transaction document …". 1. That carefully expressed submission understates matters somewhat. 2. The critical provisions upon which the Executrix relies are cll 1.3, 2.4 and 4.6 which provide that the "parties have agreed" that Boris "has the commercial and economic ownership" of the Spring Street Lots, the Zone Lots, Curlewis Street Investments and the property owned by that company in Curlewis Street. 3. There are corresponding provisions providing that Michael "has the commercial and economic ownership" of the remaining Zone lots, all but one of the remaining lots in the property at Spring Street, Roscoe Street Investments and the property owned by that company in Roscoe Street. 4. The Executrix's contention is that the parties' agreement that Boris had such "commercial and economic ownership" bespeaks the parties' intention that: 1. Boris was entitled to compel Michael to transfer to him his shares in Curlewis Street Investments; 2. Boris was entitled to compel Zone Developments to transfer to him the Zone Lots; 3. Boris was entitled to compel Spring Street Property Group to transfer to him the Spring Street Lots; [6] and 4. the Executrix has corresponding entitlements. 1. My conclusion is that, whatever else the Deed means, it does not have the effect contended for by the Executrix. 2. Mr Henry SC, who appeared for Michael, submitted that cll 1.3, 2.4 and 4.6 are void for uncertainty. I do not find it necessary to decide whether or not that is so. It is sufficient, in my opinion, to conclude that the clauses do not have the effect contended for by the Executrix. 3. For the reasons set out below, it appears to me that Boris and Michael set out in the Deed the rights that they intended would follow from their agreement that each had the "commercial and economic ownership" of the relevant assets. Whether either could enforce any of those rights is not a matter that arises for consideration in these proceedings. Principles concerning construction 1. Mr Epstein and Mr Tsang, in their written submissions, referred to a great many authorities concerning the proper construction of commercial documents. 2. This is, however, a case where it is particularly important to focus on the words actually employed by the parties in the Deed. 3. As has been correctly stated, "… the only relevant meaning is that which the text conveys. This follows from the need to ascertain the intention expressed in the document. Although, as discussed below, context and purpose are relevant, ultimately the court must attribute meaning to the words actually used." [7] (Emphasis in original.) 1. The leading modern statement about the importance of context and purpose is found in the reasons of French CJ, Nettle and Gordon JJ: [8] "The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. … Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. However, sometimes, recourse to events, circumstances and things external to the contract is necessary." 1. Mr Epstein and Mr Tsang pointed to the matters I have set out at [3] to [10] above, and in particular Boris's statement that the Deed was a culmination of "extensive negotiations about separating our investments", as being "things external to the contract" relevant to the construction of the Deed. 2. However, I do not find these matters of assistance in construing the Deed. Accepting that Boris and Michael meant for the Deed to record the terms on which they intended to "separate" their investments, it is to the words they actually used that attention must be paid. The Spring Street Lots 1. I will deal first with the Spring Street Lots. 2. The "Operative provisions" concerning the Spring Street Lots were contained in cl 1 of the Deed as follows: "1. Spring Street 1.1. Spring Street is a company. Spring Street owns the Spring Street Property. 1.2. The parties have agreed that [Michael] has the commercial and economic ownership of the following parts of the Spring Street Property: 1.2.1. Level 2 (Lots 9-13 and 24-28) 1.2.2. Level 4 (Lots 50-70) 1.2.3. Level 5 (Lots 71-75 and 81-85) 1.3. The parties have agreed that [Boris] has the commercial and economic ownership of the following parts of the Spring Street Property: 1.3.1. Level 2 (Lots 14-23) 1.3.2. Level 3 (Lots 29-49) 1.3.3. Level 5 (Lots 76-80 and 86-90) 1.4. The parties have agreed that they both continue to have commercial and economic ownership of Lot 4 (Reception Lot) of the Spring Street Property. 1. 5. The parties agree as follows: 1.5.1. [Michael] and [Boris] can each separately mortgage their respective Lots with a non recourse mortgage by Spring Street and any required ancillary security with the borrower being each of [Michael/Boris] (or their SPV entities) as the case may be. 1.5.2. Any such mortgage or security must provide that: (a) There is no recourse beyond the Lots being mortgaged by [Michael] or [Boris] (b) The lender must agree to not appoint a receiver if it acts on its security without giving the other shareholder notice and can only appoint a receiver for the purpose of realising its security and then must remove the receiver. 1.5.3. Each of [Boris] and [Michael] retain their share of the net income from their Lots and from any sale retain the sales proceeds (subject to clause 1.5.5) from the sale of their respective Lots. 1.5.4. A float of 20% of the income from the Spring Street Property is to be retained in the bank account of Spring Street and managed by Dimitry Chachko to pay the outgoings of Spring Street including land tax, strata levies, water and council rates and preparation of annual accounts and tax returns. [Boris] and [Michael] may be required to proportionally contribute to the float amount in order to pay the property outgoings not covered by the property managing agent or [Boris] and [Michael] separately. 1.5.5. Each of [Boris] and [Michael] must ensure that from the sale of any of their respective Lots they must retain in the account of Spring Street the amount equal to tax at the prevailing company tax rate at that time of the net profit on sale of that Lot (net sales price less cost base) to be retained by the trust account of the lawyer acting on the sale to meet its tax liability." 1. As I have said, the Executrix's contention is that the effect of cl 1.3 of the Deed, in which the parties agreed that Boris had the "commercial and economic ownership" of the Spring Street Lots, is that Spring Street Property Group must transfer to Boris the Spring Street Lots identified therein. It must follow, if that contention be correct, that the effect of cl 1.2 is that Spring Street Property Group must transfer to Michael the lots there identified. 2. Recital C of the Deed provides, relevantly, that: "[Boris] and [Michael] have agreed to confirm and verify their respective interests in … Spring Street [Property Group] … as set out in this Deed." (Emphasis added.) 1. There is no suggestion in the recital that the parties agreed to transfer their interest in Spring Street Property Group, or the Spring Street Lots. [9] On the contrary, the recital states that Boris and Michael agreed to "confirm and verify" their "respective interests"; that is, their existing interests. 2. There are established rules about the way in which recitals should be used to interpret the operative part of an agreement: "If the recitals are clear and the operative part is ambiguous, the recitals govern the construction. If the recitals are ambiguous, and the operative part is clear, the operative part must prevail. If both the recitals and the operative part are clear, but they are inconsistent with each other, the operative part is to be preferred." [10] 1. Here, the recital is clear. The parties are confirming and verifying existing interests in the assets referred to. Indeed, in their written submissions, Mr Epstein and Mr Tsang accepted that this language was "more consistent with recording an existing state of affairs rather than bringing into existence a new state of affairs". To the extent that cl 1.3 [11] is ambiguous, it is governed by the recital and should not be read as having the effect of changing the parties' interests. 2. Turning to the particular wording in cl 1 of the Deed, cl 1.1 provides that Spring Street Property Group "owns" the property in Spring Street. 3. Mr Epstein submitted orally that cll 1.2 and 1.3 were intended by the parties to vary the position stated in cl 1.1. 4. For the reasons I have set out, I do not accept that submission. The parties do not state in either provision that they intended to vary the position as stated in cl 1.1. Further, the parties' agreement that Boris had the "commercial and economic ownership" of the Spring Street Lots bespeaks the parties' intention that the "commercial and the economic ownership" of those Lots was something short of legal ownership; which, according to cl 1.1 of the Deed was to remain with Spring Street Property Group. 5. Mr Epstein submitted that the language used by the parties in cl 1.3 [12] was itself that of a recital and pointed to the statement by Mason J in Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth [13] that: "No doubt it is correct to say that, where in the recitals to a deed or an agreement it is acknowledged that the parties have agreed to do, or will do, certain acts, a promise to do those acts will be read into the agreement in the absence of an express promise to that effect. Then, there being no indication of a contrary intention, it may be safely inferred that the absence of a contractual provision was due to oversight or inadvertence." 1. Mr Epstein submitted that the parties' agreement in cl 1.3, that Boris had the "commercial and economic ownership" of the Spring Street Lots, bespeaks the parties' intention that such "commercial and economic ownership" of the Spring Street Lots be transferred to Boris. [14] 2. However, Mr Epstein's submission begs the question of what the parties agreed to do consequential upon their agreement that Boris had the "commercial and economic ownership" of the Spring Street Lots. 3. As I set out below, later provisions in cl 1, particularly cll 1.5.1 and 1.5.3, show that the parties set out, in the Deed itself, what they saw as being the consequences of Boris having the "commercial and economic ownership" of the Spring Street Lots. [15] 4. Further, later subclauses in cl 1 are inconsistent with cl 1.3 having the effect that Spring Street Property Group was obliged to transfer the Spring Street Lots to Boris. [16] 5. The first clauses dealing with what the parties appear to have contemplated as being the consequence of Boris and Michael having the "commercial and economic ownership" referred to in cll 1.3 and 1.2 are cll 1.5.1 and 1.5.2(a). 6. Those clauses are not clearly drafted but appear to provide that each of Boris and Michael could "separately mortgage their respective Lots". This must be the Spring Street Lots in the case of Boris and the lots referred to in cl 1.2 in the case of Michael. The clauses appear to contemplate that, if required by either Boris or Michael, Spring Steet Property Group would grant a lender to Boris or Michael a "non recourse mortgage" over "their respective Lots" to secure a loan to either Boris or Michael. That is, presumably, a mortgage under which Spring Street Property Group would not, but Boris and Michael would, be liable; but not "beyond the Lots", [17] whatever that may mean. 7. I see these provisions as providing an example of a consequence that the parties saw as flowing from their agreement that Boris and Michael have the "commercial and economic ownership" of the lots in question. They appear to be designed to deal with the disagreements between Boris and Michael about the level of borrowing against their jointly owned properties, to which I referred at [8] above. 8. The provisions cannot be reconciled with the proposition that cl 1.3 entitled Boris, and thus now entitles the Executrix, to call for the transfer of the Spring Street Lots. [18] If Boris was entitled to call for transfer of the Spring Street Lots, there would be no need to make provision in the Deed for him to "mortgage" them. 9. Clause 1.5.2(b) appears to be an agreement that Boris or Michael must procure that, if they caused Spring Street Property Group to execute such a mortgage, any lender not be able to appoint a receiver (presumably to the lot in question) without giving "the other shareholder" notice. That provision would also not be necessary if, as the Executrix contends, "the other shareholder" was entitled to become the owner of the relevant lots by reason of cll 1.2 and 1.3. 10. Clause 1.5.3 provides, first, that Boris and Michael may "retain their share of the net income from their Lots". Again, the reference to "their Lots" must be to the lots in respect of which, by cll 1.2 and 1.3, they have agreed they each have "commercial and economic ownership". Thus, in effect, Boris and Michael agreed that the other could retain rent or other income able to be derived from "their Lots". 11. This again shows that Boris and Michael turned their minds to what the consequences would be of each having "commercial and economic ownership" of the respective lots; something different to, and short of, an entitlement to legal ownership of those lots. 12. Clause 1.5.3 goes on to provide that Boris and Michael could "retain" the sales proceeds "from the sale of their respective Lots". That provision would not be necessary were each to have an entitlement to call on Spring Street Property Group to transfer "their respective Lots" to them; and proceeds upon the assumption that, until any sale, the lots remained owned by Spring Street Property Group, as is expressly stated in cl 1.1. 13. This second entitlement in cl 1.5.3 is, in any event, subject to cl 1.5.5, which requires both Boris and Michael to retain "in the account of Spring Street [Property Group]" an amount on account of Spring Street Property Group's "tax liability" in relation to the sale. Again, this provision is consistent only with Spring Street Property Group remaining the owner of the property. 14. Finally, cl 1.5.4 provides that "a float of 20% of the income" from Spring Street Property Group's property "is to be retained in the bank account of Spring Street [Property Group]". That again is consistent only with Spring Street Property Group retaining the lots and is inconsistent with Spring Street Property Group having an obligation to transfer to Boris or Michael the lots referred to in cll 1.2 and 1.3 of the Deed. 15. For these reasons, the words used by the parties show that they turned their mind to what would follow from their agreement that Boris and Michael have the "commercial and economic ownership" of the lots referred to in cll 1.2 and 1.3; namely the rights set out in cll 1.5.1 to 1.5.3. 16. It may be difficult to give precise meaning to those entitlements. Their precise ambit does seem uncertain. It may be difficult for Boris or Michael to enforce them. 17. But it cannot follow from these matters that the Deed be given a meaning that its words do not permit, and which would contradict its express terms. The Zone Lots 1. The "Operative provisions" concerning Zone Developments were contained in cl 2 of the Deed as follows: "2. Zone 2.1. Zone is a company. Zone owns the Zone Property. 2.2. Magid is a registered 50% shareholder of Zone however the parties have previously agreed that Magid has economically has [sic] no interest in Zone and Magid's registered interest in Zone is in fact held as bare trustee for [Boris] and that [Boris] is the economic and commercial beneficiary of Magid's interest in Zone so that Zone is owned equally between [Boris] and [Michael]. 2.3. The parties have agreed that [Michael] has the commercial and economic ownership of the Lots 14 and 16 of the Zone Property. 2.4. The parties have agreed that [Boris] has the commercial and economic ownership of the Lots 1, 5, 9, 11, 12, 13 of the Zone Property. 2.5. The parties agree as follows: 2.5.1. Based on the last valuation, [Michael's] lots in Zone have a value of $10,555,500 and [Boris's] lots a value of $11,266,241. However, because the parties have agreed a similar value apportionment for the Roscoe Street Property and Curlewis Street Property as set out in clause 4, each of [Boris] and [Michael] agree that the values are equal. 2.5.2. There is a mortgage of circa $11m across all the lots owned by Zone and this will be split 50/50 between [Boris] and [Michael] given the agreement that the values are equal. 2.5.3. [Michael] and [Boris] can each separately mortgage their respective Lots with a non recourse mortgage by Zone and any required ancillary security with the borrower being each of [Michael/Boris] (or their SPV entities) as the case may be. 2.5.4. Any such mortgage or security must provide that: (a) There is no recourse beyond the Lots being mortgaged by [Michael] or [Boris] (b) The lender must agree to not appoint a receiver if it acts on its security without giving the other shareholder notice and can only appoint a receiver for the purpose of realising its security and then must remove the receiver. 2.5.5. Each of [Boris] and [Michael] retain their share of the net income from their Lots and from any sale retain the sales proceeds (subject to clause 2.5.7) from the sale of their respective Lots. 2.5.6. A float of 20% of the income from the Zone Property is to be retained in the bank account of Zone and managed by Dimitry Chachko to pay the outgoings of Zone including land tax, strata levies, water and council rates and preparation of annual accounts and tax returns. [Boris] and [Michael] may be required to proportionally contribute to the float amount in order to pay the property outgoings not covered by the property managing agent or [Boris] and [Michael] separately. 2.5.7. Each of [Boris] and [Michael] must ensure that from the sale of any of their respective Lots they must retain in the account of Zone the amount equal to tax at the prevailing company tax rate at that time of the net profit on sale of that Lot (net sales price less cost base) to be retained in the trust account of the lawyer acting on the sale to meet its tax liability." 1. As can be seen, and subject to one matter, the provisions made in cl 2 of the Deed concerning Zone Developments correspond to those provided for in cl 1 concerning the Spring Street Property Group. [19] 2. The sole difference in cl 2 is that cl 2.5.2 records that Zone Developments had granted a mortgage to an unnamed lender "across all the lots owned by Zone". There is no suggestion in the Deed that the mortgage was to be discharged. On the contrary, cl 2.5.2 provided that the loan would "be split 50/50" between Boris and Michael, presumably so that Boris and Michael would equally assume responsibility for half of Zone Developments' obligations under the mortgage. Again, this is consistent only with Zone Developments remaining the legal owner of the Zone Lots, as is stated in terms in cl 2.1. 3. Thus, I come to the same conclusions concerning the Zone Lots as I have concerning the Spring Street Lots. Curlewis Street Investments 1. In the Deed, Boris's and Michael's rights concerning Curlewis Street Investments are dealt with together with their rights concerning Roscoe Street Investments. 2. Recital C to the Deed provides: "[Boris] and [Michael] have agreed to confirm and verify their respective interests in … Curlewis Street … as set out in this Deed." 1. Under the heading "Operative provisions", the Deed provided, relevantly to Curlewis Street Investments: "4. Roscoe Street and Curlewis Street 4.1. Roscoe Street and Curlewis Street are companies. 4.2. Roscoe Street owns the Roscoe Street Property and Curlewis Street owns the Curlewis Street Property. 4.3. A boundary alignment has been registered between the Roscoe Street Property and Curlewis Street Property however the transfer of the title is still unregistered between Roscoe Street and Curlewis Street is as at the date of this Deed unregistered. The parties must ensure the transfer is registered as soon as possible but in any event agree that the sole ownership is as set out in clause 4.2 despite the registered titles as at the date of this Deed. 4.4. Although the Roscoe Street Property and the Curlewis Street Property have different values (Roscoe Street Property being more valuable) because the parties have agreed a similar value apportionment for the Zone Property as set out in clause 2, each of [Boris] and [Michael] agree that the values of Roscoe Street Property and the Curlewis Street Property are equal. 4.5. The parties have agreed that [Michael] has the commercial and economic ownership of the Roscoe Street and the Roscoe Street Property. 4.6. The parties have agreed that [Boris] has the commercial and economic ownership of the Curlewis Street and the Curlewis Street Property. 4.7. Shareholdings in Roscoe Street and Curlewis Street are to remain as they are however on and from the date of this Deed [Boris] is to be the sole director of Curlewis Street and [Michael] to be sole director of Roscoe Street. 4.8. The parties agree as follows: 4.8.1. [Michael] and [Boris] can each separately mortgage Roscoe Street Property and the Curlewis Street Property (as the case may be) Lots with a non recourse mortgage by Curlewis Street and Roscoe Street and any required ancillary security with the borrower being each of [Michael/Boris] (or their SPV entities) as the case may be. 4.8.2. Any such mortgage or security must provide that: (a) There is no recourse beyond the Roscoe Street Property or the Curlewis Street Property being mortgaged by [Michael] or [Boris]. (b) Any security either [Michael/Boris] need to provide to the others lender (mortgage of shares for example) will be on the basis that it is to allow the Lender to perfect its security and upon a default, once it has sold the secured property release the security. For example, [Boris] will need to sign share mortgages over his shares in Roscoe Street (as well as a share transfer in blank). If [Michael] defaults, the lender can step in control Roscoe Street for the sole purpose of realising the security [Michael] has provided (ie mortgage on his lots). 4.8.3. Each of [Boris] and [Michael] retain their share of the net income from either Roscoe Street Property or the Curlewis Street Property and from any sale retain the sales proceeds from the sale of their respective Lots. 4.8.4. However, if either Roscoe Street Property or the Curlewis Street Property are sold, tax is paid by Curlewis Street or Roscoe Street and either [Boris] or [Michael] (as the case may be) must transfer their shares in either Roscoe Street or the Curlewis Street (as the case may be) to the other party." 1. Just as cl 1.1 provides that Spring Street Property Group "owns" the property at Spring Street and cl 2.1 provides that Zone Developments "owns" the property at Surry Hills, cl 4.2 provides that Roscoe Street Investments "owns" the property at Roscoe Street and Curlewis Street Investments "owns" the property at Curlewis Street. 2. Clauses 4.5 and 4.6 provide that the "parties have agreed" that Michael has the "commercial and economic ownership" of Roscoe Street Investments and the Roscoe Street Property and Boris has the "commercial and economic ownership" of Curlewis Street Investments and the Curlewis Street Property. 3. Clause 4.7 provides that the shareholdings in both Roscoe Street Investments and Curlewis Street Investments "are to remain as they are". On the face of it, this provision is a complete answer to the Executrix's contention that the Deed should be construed as obliging Michael to transfer his shareholding in Curlewis Street Investments to Boris. 4. In their written submissions, Mr Epstein and Mr Tsang accepted that: "Sub-clause 4.7 of the Deed can be reconciled with sub-clauses 4.5 and 4.6 if and only if sub-clause 4.7 is treated as regulating the current and ongoing relationship of the parties, with the shareholdings in the two companies remaining as they are, until either or both of the parties with "the commercial and economic ownership" of the company sought and obtained the transfer of the shares in it to him." (Underlined emphasis added.) 1. I do not see how cl 4.7 could be read that way. The clause does not say that shareholdings in the two companies will "remain as they are" until a future event. And the clause goes on to provide that "from the date of this Deed" Boris "is to be" the sole director of Curlewis Street Investments and Michael "is to be" the sole director of Roscoe Street Investments. The clause thus contemplates matters that will not change (the shareholdings) and matters that will in the future change (the directorships). In those circumstances I can see no room for construing cl 4.7 in the manner proposed by Mr Epstein and Mr Tsang. 2. Subclauses 4.8.1 and 4.8.2 are equivalent to cll 1.5.1 and 1.5.2 and cll 2.5.3 and 2.5.4 and, like the latter clauses, appear to set out what the parties meant when they said that Boris and Michael would have the "commercial and economic ownership" of the companies in question. 3. Clause 4.8.2(b) contemplates, in terms, the possibility that Boris or Michael (the example is given only of Boris) might "need to sign share mortgages" over their shares in Curlewis Street Investments or Roscoe Street Investments, as the case may be. That provision is consistent only with the shareholdings remaining "as they are"; as is expressly stated in cl 4.7. The clause is also inconsistent with the suggestion that cl 4.6 gave Boris the right to require Michael to transfer to him his shares in Curlewis Street Investments. 4. Clause 4.8.4 appears to provide that if either the property owned by Roscoe Street Investments or Curlewis Street Investments was sold then, and only then, Boris and Michael must transfer their shares in the relevant company to the other. Whatever that means, it is inconsistent with Boris having a present entitlement to call on Michael for his shares in Curlewis Street Investments. Conclusion 1. On its proper construction, the Deed does not require Michael to transfer his shares in Curlewis Street Investments to the Executrix, nor to require Zone Developments or Spring Street Property Group to transfer the identified lots to the Executrix. 2. As I have said, it is not, in those circumstances, necessary for me to decide whether cll 1.3, 2.4 and 4.6 are void for uncertainty, and thus liable to be severed from the Deed as contemplated by cl 7.7. [20] 3. Nor is it necessary for me to decide whether specific performance of the promises in the Deed ought be denied by reason of any want of consideration for the promises. 4. I will make a declaration that the Deed is valid and binding on the parties. Otherwise, the Summons is dismissed with costs. ********** Endnotes 1. The fifth defendant. 2. The second plaintiff. 3. The fourth defendant. 4. The second defendant. 5. The third defendant. 6. There is no contest before me as to the nature of Michael's rights, but they must correspond with those of Boris. 7. P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [19.60]. 8. Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46] and [48]-[49], approved in Victoria v Tatts Group Limited [2016] HCA 5 at [51] (French CJ, Kiefel, Bell, Keane and Gordon JJ) and Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78] (Gageler, Nettle and Gordon JJ). 9. Nor the lots referred to in cl 1.2. 10. Ex parte Dawes (1886) 17 QBD 275 at 286 (Lord Esher MR); cited in P Herzfeld and T Prince at [23.10] and approved in Australia in the authorities there referred to. 11. And, equally, cl 1.2. 12. The same must follow for cl 1.2. 13. (1977) 139 CLR 54; [1977] HCA 71 at [23]. 14. And, presumably, likewise in relation to Michael and the lots referred to in cl 1.2. 15. And thus, of Michael having the "commercial and economic ownership" of the lots referred to in cl 1.2. 16. Or that cl 1.2 had a corresponding effect in favour of Michael. 17. Clause 1.5.2(a). 18. Nor with the corollary that Michael could call for the lots referred to in cl 1.2. 19. Thus, cl 2.1 corresponds to cl 1.1, cl 2.3 to cl 1.2, cl 2.4 to cl 1.3, cl 2.5.3/4 to cl 1.5.1/2, cl 2.5.5 to cl 1.5.3, cl 2.5.6 to cl 1.5.4 and cl 2.5.7 to cl 1.5.5. 20. The terms of which it is not necessary for me to set out. Amendments 31 August 2022 - [76] amended to reflect orders made when judgment handed down DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 August 2022