Angel Alberto Buenano Gonzales v Canouan Development Corporation Limited

A contractual price-adjustment clause referring to a sale may apply to a transfer for value to a related company where the agreement contains no express limitation to arm’s-length or open-market sales. The court must begin with the natural and ordinary meaning of the words, read in their documentary, factual and commercial context. A departure from that meaning for an unforeseen event requires a clear ascertainment of the parties’ objective intention. An implied term will not be added where it contradicts the express wording, lacks obviousness, or is unnecessary for business efficacy.

The claimant sold a villa-holding company to the defendant under a 2015 share purchase agreement and side letter. The side letter required an additional payment equal to 30 per cent of the excess of the sale price over the purchase price and related expenses if the buyer sold the company, the special purpose vehicle or the property within three years.

In 2017 the defendant transferred the company to an intermediate company and, as part of a wider settlement, that company transferred it to another company. The defendant argued that the transaction was an intra-group transfer, not a sale within clause 3, and alternatively that any adjustment should be based on market value rather than the stated consideration. The central issues were the construction of the side letter, the applicability of the exceptional approach considered in Aberdeen CC v Stewart Milne Group Ltd, and the recoverable deductions.

1. Construction. The natural and ordinary meaning of “sale” in the side letter included the defendant’s transfer to the intermediate company. Property passed for consideration. The side letter’s reference to a “disposal” supported a broad construction, and it contained no carve-out for intra-group transfers, related parties, independent purchasers or market-value transactions (paras [61]-[65]).
2. The transaction was, in substance, a sale. It was part of transferring the property out of the relevant corporate control, rather than a mere reorganisation or accounting exercise. The $6 million consideration was not nominal or apparently manipulated and was supported by contemporaneous documents and the valuation evidence (paras [63]-[65]).
3. The exceptional approach discussed in Arnold v Britton, Aberdeen CC v Stewart Milne Group Ltd and Munich Re Capital Ltd v Ascot Corporate Name Limited was not engaged. Nothing comparable to the manipulation or objectively clear unexpressed intention found in those cases existed here. Even if the transaction had plainly fallen outside the parties’ contemplation, their intention could not be ascertained with sufficient certainty to justify departing from the literal wording (paras [66]-[74]).
4. The alternative implied term requiring calculation by reference to market value was unnecessary and contrary to the express terms and objective intention of the parties. The clause therefore operated by reference to the $6 million sale price (para [75]).
5. The defendant failed to prove the claimed legal-fee deductions. Cable television and telephone expenses were not fees, costs or expenses within clause 3.2. Judgment was entered for the claimant in the sum of $712,723.84. Costs and interest were left for agreement or further submissions (paras [76]-[88]).

First-instance decision. The judgment records that the claimant’s earlier application for summary judgment was dismissed on 16 October 2023.