Rivnu Investment Limited and another v United Docks Limited and another

A contractual call option triggered by a change in shareholding structure and the loss of an existing controlling interest cannot be rewritten to cover the emergence of control where no controlling shareholder previously existed. Contractual construction must consider the agreement as a whole, but that does not permit a court to replace clear words with provisions the parties might have chosen. Under Mauritian civil law, a common intention may affect the meaning of written terms only where it was expressed and accepted, even tacitly. A mistaken assumption that each party had a controlling shareholder does not establish a common intention about the consequences of there being none. The option therefore did not arise merely because minority shareholders secured support at a general meeting and changed the board.

The appellants were shareholders in Axys Group Ltd under an agreement with United Docks Ltd and another shareholder. Clause 11 granted an option to acquire a party’s shares where a change in that party’s shareholding structure caused the loss of the controlling interest of the shareholder or shareholders then holding it.

Horus Ltée acquired 18.27% of United Docks Ltd and later secured the replacement of most of its board. The appellants claimed United Docks’s Axys shares under clause 11. The Supreme Court of Mauritius dismissed the claim, and the Court of Civil Appeal dismissed the appeal on 3 July 2014. The central issue before the Board was whether the clause covered the events despite the absence of a pre-existing controlling shareholder.

1. Appeal dismissed. The Board held that clause 11, read in its contractual context, required a change in the identity of shareholders which resulted in the loss of an existing controlling interest held by the shareholder or shareholders concerned. The words did not naturally cover the acquisition or emergence of a controlling interest where none previously existed.
2. Clause 1.2.6 addressed severability and validity, not interpretation. It did not require each clause to be construed in isolation. Clauses 10 and 12 supported the general commercial purpose of maintaining a closed shareholder relationship, but the court still had to identify the actual scope of the obligations undertaken.
3. Article 1156 of the Code civil required the court to seek the parties’ common intention rather than adhere mechanically to literal wording. However, a common intention capable of shaping clear written terms had to be expressed and accepted by both parties, at least tacitly. The evidence showed, at most, a mistaken belief that each party had a controlling shareholder. It did not establish any common intention covering the present circumstances or identify substitute wording.
4. The evidence did not establish that the shareholders who had previously appointed the United Docks board acted in concert as controlling shareholders. Nor was Horus shown to have been in a position to control the appointment or removal of directors on all or substantially all matters. The Board stated that this latter point was not necessary to its decision. The appeal was dismissed for the reasons in paragraphs 1 to 28. Written submissions on costs were invited within 21 days.

• Privy Council — Appeal from the Supreme Court of Mauritius dismissed; written submissions on costs invited within 21 days.
• Court of Civil Appeal — Appeal dismissed on 3 July 2014.
• Supreme Court of Mauritius — Lam Shang Leen J dismissed the claims on 30 October 2012.