The Court of Appeal (Asplin LJ, Snowden LJ and Sir Christopher Floyd) has handed down judgment in Carlos Ortiz-Patino v MGI Golf & Leisure Opportunities Fund Ltd [2024] EWCA Civ 862, following a two-day hearing which considered (amongst other issues) the terms of a profit-sharing agreement related to the Valderrama golf course, host of the 1997 Ryder Cup tournament.
In 2012, the late Jaime Ortiz-Patino (‘JOP’) entered into a profit-sharing agreement with MGI Golf & Leisure Opportunities Fund Ltd (‘MGI’) when he sold to MGI his shares in two Swiss companies that owned land and trademarks in Spain. The land included the famous Valderrama golf course, and also parcels of land around the golf course which at the time MGI intended to develop and sell off. The profit share agreement provided for JOP and his heirs to share in the profits from the sales of the “real estate assets”. In November 2015 MGI sold its shares in the Swiss holding companies, after the intended development of the individua parcels of land had not been able to go ahead. JOP’s son, Carlos Ortiz-Patino (‘COP’), who had succeeded to his rights, sued MGI for a €3.6 million share in the profits of the sale on the basis that the sale of these shares constituted a sale of the underlying “real estate assets”.
In the High Court, the judge dismissed COP’s claim, finding that the relevant clauses of the profit share agreement were not triggered by the share sale in the Swiss companies but only by a sale of the underlying assets.
The Court of Appeal’s judgment (delivered by Sir Christopher Floyd) upheld the judge’s decision and re-iterated the well-known principles of contractual interpretation, which give primacy to the natural and ordinary meaning of words in professionally drafted commercial contracts “save in a very unusual case”; and which require an agreement to be construed against the relevant factual background at the time of the contract. The Court also heard submissions on the presumption of similarity post-Brownlie and its application to Swiss law. Ultimately, those points did not require determination in the light of the appeal’s dismissal.
Peter Knox KC and Daniel Goldblatt acted for the successful Respondent, MGI, instructed by Robert Festenstein and Julie White at RHF Solicitors.
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