(ii) Payment re Cammeray "profit"
16 The second relevant aspect of the Terms of Settlement is that which relates to the audit claim. Paragraph 1 of the Terms of Settlement provided for Castle Constructions to pay to Joseph Lahoud, by bank cheque no later than 6.00 pm 6 February 2001, the sum of $570,000. That sum (which was duly paid on the date the Terms of Settlement were signed) represented a share out of the estimated profits of the Cammeray property development in which the brothers had been involved.
17 Victor Lahoud had indicated to Joseph Lahoud, shortly before the Terms of Settlement were agreed, that the net profits of the Cammeray development would be in the order of $1.5 million. However, on the morning the Terms of Settlement were signed, certain "figures" were provided to Joseph Lahoud which showed a lower net profit for the project. Joseph Lahoud did not accept that those figures (which form part or all of Annexure "A" to the Terms of Settlement) were accurate. His legal advisers told him that he could seek to have a provision included in the Terms of Settlement allowing for an audit. The Victor Lahoud interests acceded to the request for such a provision on the basis that there should be a right on both sides to elect to have an audit carried out. This led to the balance of paragraph 1 of the Terms of Settlement, in which provision was made for either party "to elect to have the figures audited".
18 Shortly after the Terms of Settlement were signed, Victor Lahoud raised the issue of an error in his profit calculations for the Cammeray project (errors in the calculation of the sum of $570,000 having been discovered by his accountants) (see letter dated 7 March 2001, p 144 revised audit tender bundle). There followed communications between the parties' lawyers (which I will consider in more detail later) in relation to the profit calculations, which led to Victor Lahoud's eventual exercise, or purported exercise (in October 2002), of the right to have an audit carried out of the kind contemplated by the Terms of Settlement. It is accepted that no such audit took place. (Although at one stage Victor Lahoud did assert that an audit had been carried out and demanded payment of a sum said to be owing as a result, ultimately, any suggestion that there had been an audit under the Terms of Settlement was rejected by both sides.)
· Commencement of proceedings after Terms of Settlement
19 Paragraph 7 of the Terms of Settlement contained an agreement by the parties to enter into a deed "in accordance with this agreement", such deed to include the additional terms outlined in paragraph 9(a) and (b), namely releases and a clause requiring Joseph Lahoud to complete the necessary documents to transfer shares held by him in, and resign as a director of, the companies associated with Victor Lahoud (Castle Constructions and Solidare).
20 There was some delay in the finalisation of the terms of the proposed deed, initially due to the time taken by the parties seeking advice as to the tax implications or structuring of the settlement. (Palmer J noted, in his May 2005 judgment, that a great deal of the negotiations both on 5 and 6 February and thereafter were concerned with tax issues - Lahoud v Lahoud [2005] NSW 509 at [38].)
21 According to evidence which was before the Court of Appeal, preparation of a draft deed had already commenced before the Terms of Settlement were signed. There were further drafts, including one produced on the evening of 5 February 2001 to which reference was made by Hodgson JA in the Court of Appeal.
22 Insofar as I make reference to the existence of various draft deeds and to the fact that advice was sought as to the recitals/terms contained therein, I do so by way of background only as I do not consider them relevant to the tasks of construction with which I am faced in the audit proceedings. Neither Mr Epstein nor Mr Einfeld sought to identify any omission from the Deed of Settlement ultimately executed of a provision contained in an earlier draft which might negative an inference that the Deed of Settlement bears a meaning positively rejected by the deletion (see Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 at 352-353 per Mason J, Esso Australia v Australian Petroleum Agents' & Distributors' Association [1999] 3 VR 642 at 647-648 per Hayne J and Zaccardi v Caunt [2008] NSWCA 202 at [35] per Campbell JA).
23 Mr Epstein stated that I was able (and ought) to look outside the four corners of the Deed of Settlement, even absent any ambiguity in its terms, and I accept that this is the case (Synergy Protection Agency Pty Ltd v North Sydney Leagues' Club Limited [2009] NSWCA 140 at [22] per Allsop P; Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 at [7]-[13] per Spigelman CJ). However, neither Counsel suggested that the negotiations themselves ought to be rendered admissible other than to the extent that they tend to establish the objective background facts which were known to the parties, to establish the subject matter of the contract or to evidence deletions or omissions of the kind mentioned above (see J J Spigelman, 'From Text to Context: Contemporary Contractual Interpretation' (2007) 81 Australian Law Journal 322 at 331-334; Philips Electronics Australia Ltd v Insight Oceania Pty Ltd [2009] NSWCA 124 at [46]; cf Donald Nicholls, 'My Kingdom for a Horse: The Meaning of Words' (2005) 121 Law Quarterly Review 577 and David McLauchlan, 'Contract Interpretation: What Is It About?' (2009) 31 Sydney Law Review 5).
24 By letter dated 12 February 2001, Tillyard & Callanan forwarded a draft deed to Windeyer Dibbs (acting for the Joseph Lahoud interests), noting that the deed had been agreed and "we will arrange exchange on 15 February". The Joseph Lahoud interests apparently signed the deed so forwarded to them and their lawyers advised that this had been done on 15 February 2001. However, Tillyard & Callanan on that date advised Windeyer Dibbs that "the amendments to the draft DA prepared by you are currently with our clients' tax advisers and we hope to finalise our position in the next day or so … ".
25 It appears that Victor Lahoud had sought advice from accountants (Castletons) in relation to the tax implications of the deed for both himself and Castle Constructions on or about 12 February 2001 (the same day on which his legal representatives had forwarded what they described as an "agreed" deed) (see letter dated 19 February 2001 from Castletons to Victor Lahoud, p 213 revised damages bundle). Advice was also sought by Tillyard & Callanan from another firm of accountants (A D Hills & Co Services Pty Limited) (letter 21 February 2001 p 218 revised damages tenders bundle). The upshot was that new draft recitals were prepared, which were not agreed by the Joseph Lahoud interests.
26 The Joseph Lahoud interests were given advice from Windeyer Dibbs and from accountants (Crispin & Jeffery) as to the deed (also apparently to ensure the transactions which had been agreed upon were structured in a tax effective way) (see eg letter dated 28 February 2001 from Windeyer Dibbs to Joseph Lahoud, p 223 revised damages tender bundle).
27 By letter dated 7 March 2001 (p 144 revised audit tender bundle), Tillyard & Callanan wrote to Windeyer Dibbs conveying their clients' complaints as to the delay in finalisation of the terms of the deed and advising that:
If no response is received on terms acceptable to our client, which terms must acknowledge the spirit and intent of our respective clients' agreement, namely that payment of proceeds of sale of units to your client shall be deductible in the hands of our client, then our client will consider that the spirit and intent of the agreement between your client and our client will not have been achieved, and our client cannot proceed on that basis.
28 In late March 2001, Cowley Hearne took over the conduct of the matter from Windeyer Dibbs for the Joseph Lahoud interests and demanded execution of the deed which they said had been agreed by both parties (letter dated 26 March 2001). In response, by letter dated 28 March 2001, Tillyard & Callanan (somewhat inconsistently with what had been said in their 12 February letter, presumably written on their clients' instructions) advised that the deed annexed to their 12 February 2001 letter was not acceptable to their clients.
29 By letter dated 29 March 2001, Cowley Hearne's response was to assert that the parties were bound to execute and exchange the "agreed Deed of Agreement" and failing this their instructions were to enforce the Terms of Settlement and the said deed.
30 By letter dated 3 April 2001, Tillyard & Callanan repeated their assertion that the deed submitted on 12 February 2001 had not been agreed by Victor Lahoud. The Victor Lahoud interests then asserted (by letter dated 17 April 2001 from Tillyard & Callanan to Cowley Hearne, p 148 revised audit tender bundle) that the Terms of Settlement were conditional on the honouring of a private (or collateral) agreement between the two brothers (which agreement was in due course said to relate to possession of their late father's watch and the sharing of expenses in respect of the care of their handicapped brother, Riad). The Victor Lahoud interests contended that, by Joseph Lahoud's actions (there referring, it would seem, both to the delay in effecting exchange of the Deed and to Joseph Lahoud's denial of the alleged private agreement), Joseph Lahoud had evinced an intention to repudiate the "overall agreement".
31 The position of the Victor Lahoud interests, as communicated to the Joseph Lahoud interests in April 2001, was that either performance of the "entire overall agreement" should be effected or they would accept the "repudiation" by Joseph Lahoud of the agreement (by which it appears they were referring to the Terms of Settlement).
32 This correspondence produced no acceptance by the Joseph Lahoud interests of the alleged private agreement and, by letter dated 2 July 2001, Tillyard & Callanan wrote to Cowley Hearne, advising that they had concluded that Joseph Lahoud was repudiating the agreement reached on 5 and 6 February 2001 and that their client accepted that repudiation and considered "the agreement rescinded ab initio" (p 172 revised audit tender bundle).
33 The litigious fallout from the dispute over the alleged private agreement was traced by Campbell J (as his Honour then was) in his judgment handed down on 10 March 2006 (on indemnity costs applications made by the Joseph Lahoud interests in the damages proceedings - Lahoud v Lahoud [2006] NSWSC 126). As it assists in understanding the manner in which the claims were particularised before me, I summarise (in part with reference to some of the factual background outlined by Campbell J) the way in which the litigious saga unfolded as follows:
· On 2 May 2001, the Joseph Lahoud interests filed a notice of motion in the 1999 Industrial Relations Commission proceedings (that is, in the proceedings which had already been dismissed on 6 February 2001) seeking a declaration that the Terms of Settlement were binding and orders in the nature of specific performance. (It is not clear to me whether in so doing they were seeking to compel execution of the deed said to have been agreed as at 12 February 2001, though nothing turns on this.)
· On 5 July 2001, the Victor Lahoud interests filed a notice of motion in the 1999 Industrial Relations Commission proceedings seeking a declaration that any agreement reached on 5/6 February 2001 had been repudiated by the Joseph Lahoud interests and an order for repayment of the sum of $570,000.
· In mid/late July 2001, the Joseph Lahoud interests commenced proceedings in this Court to extend caveats which had been lodged over the title to the Units.
· On 5 November 2001, the Victor Lahoud interests commenced fresh proceedings in the Industrial Relations Commission seeking an order under s 106 of the Industrial Relations Act 1996 to declare void ab initio the Terms of Settlement.
· On 22 November 2001, the Joseph Lahoud interests filed a notice of motion in the 2001 Industrial Relations Commission proceedings, alleging that the Commission had no jurisdiction and an estoppel arising from the Terms of Settlement in the 1999 proceedings.
· On 21 February 2002, the Joseph Lahoud interests filed an amended summons in the Supreme Court proceedings, seeking, among other things, a declaration that the parties had settled their proceedings before the Industrial Relations Commission of New South Wales (by the Terms of Settlement) and an order that the Victor Lahoud interests specifically perform and carry into effect the Terms of Settlement, provide access keys and details of the Units and transfer the Units.
· On 9 August 2002, the 2001 Industrial Relations Commission proceedings were permanently stayed by Glynn J (Lahoud v Lahoud [2002] NSWIRComm 182). The Victor Lahoud interests appealed from that decision and, in June 2003, a Full Bench of the Commission allowed that appeal (Lahoud v Lahoud [2003] NSWIRComm 179).
· By early 2004, Federal Court proceedings had been commenced by the Victor Lahoud interests alleging misleading and deceptive conduct in relation to the entry into the Terms of Settlement.
· In March 2004, there was argument before Nicholas J as to the question of transferring the Industrial Relations Commission proceedings to this Court. A Further Amended Summons was filed by the Joseph Lahoud interests in the Supreme Court proceedings, on 10 March 2004 seeking a further declaration that the transfers be freed and discharged from all encumbrances and, in the alternative, declarations that the Terms of Settlement did not express the true intention of the parties and were executed under a common mistake by reason of the failure of the Terms of Settlement to specify that the Units should be transferred to Joseph Lahoud or his nominee freed and discharged from all encumbrances. An order for rectification of the Terms of Settlement to that effect was sought.
· In April 2004, Nicholas J ordered the transfer to this Court of the two notices of motion in the 1999 Industrial Relations Commission proceedings and of the 2001 Industrial Relations Commission proceedings. The Federal Court proceedings were by consent subsequently transferred as well, so that all matters were brought before this Court, and effectively subsumed, as I understand it, into the damages proceedings (although each of the 1999 and 2001 Industrial Relations Commission proceedings and the Federal Court proceedings, as transferred, were given separate matter numbers). The Statement of Claim of the Victor Lahoud interests in the Federal Court proceedings became the Cross-Claim in the damages proceedings.
· Damages Proceedings
34 By mid 2004, therefore, there were before this Court proceedings (the damages proceedings) in which, on the one hand, the Joseph Lahoud interests were seeking specific performance (and rectification) of the agreement contained in the Terms of Settlement to transfer the Units (and that such transfer be free of all encumbrances) and, on the other hand, the Victor Lahoud interests were alleging that such agreement had been induced by a misrepresentation made by Joseph Lahoud and were seeking that the Terms of Settlement be declared void ab initio under s 106 of the Industrial Relations Act or otherwise set aside (as well as contending that the agreement constituted by the Terms of Settlement had been repudiated and was no longer on foot or, alternatively, that the Joseph Lahoud interests were estopped from enforcing the Terms of Settlement).
35 By an Amended Notice of Cross Claim filed on 12 October 2004, the Victor Lahoud interests further claimed (by reference to the matters alleged in paragraphs 12-14) the repayment of the sum of $570,000 paid to Joseph Lahoud on 6 February 2001. Paragraph 12 pleaded the audit provision in paragraph 1 of the Terms of Settlement and paragraph 13 pleaded that an audit (though not expressed to be pursuant to an election made under the Terms of Settlement) had been carried out by Castletons, accountants, which it was said had disclosed that the profit of the Cammeray development was less than the profit calculations. Paragraph 14 pleaded an entitlement to the difference between the sum of $570,000 and the lesser profit calculation.
36 By a subsequent Further Amended Notice of Cross Claim, a claim was also made against the Joseph Lahoud interests based on the alleged collateral contract between the brothers.
37 At a directions hearing on 14 February 2005, Palmer J expressed the view that if Victor Lahoud's version of the facts were to be correct he would be able to obtain the remedy he sought (under the alleged collateral agreement) without reliance on s 106 of the Industrial Relations Act. Shortly thereafter, on 9 March 2005 the Victor Lahoud interests advised that the s 106 claim was not pressed. (Nevertheless, I note that Campbell J was not prepared later to conclude that the s 106 claim had been hopeless, in circumstances where the Full Bench of the Industrial Relations Commission had overturned Glynn J's summary disposal of the claim; his Honour noting ([2006] NSWSC 126 at [40]) at that stage that the law concerning the extent of the jurisdiction of the Commission under s 106 was labile.)
38 The damages proceedings were heard by Palmer J in May 2005.
39 Before me, it was submitted by Mr Epstein SC that during the May 2005 hearing the Victor Lahoud interests had abandoned their claims based on the alleged unenforceability of the Terms of Settlement. This was denied by Senior Counsel for the Victor Lahoud interests (Mr Einfeld SC) and I was taken to the Further Amended Notice of Cross-Claim from which it is apparent that the relief still sought (at least on the pleadings) included a declaration that the Terms of Settlement be set aside.
40 What was expressly noted as having been abandoned at the start of the hearing before Palmer J was the claim for repayment of the $570,000 by reference to the audit pleaded in paragraphs 12-14 (those paragraphs having been deleted). The prayer for relief so abandoned sought a declaration as to the obligation to repay the difference if the audited profit was less than $570,000. A claim for return of the $570,000 was said still to be sought on a restitutionary basis or as relief under the Trade Practices Act 1974.
41 Nevertheless, it would appear from the transcript of argument on 17 May 2005 that the position of the Victor Lahoud interests, expressed through Senior Counsel then appearing for them (Mr Weber SC), was that they did not seek to deny the Terms of Settlement but, rather, were seeking to enforce the collateral agreement. Victor Lahoud was cross-examined before Palmer J on this position and accepted (in cross-examination on 20 May 2005) that his position from 2 July 2001 onwards was that all aspects of what had been agreed on 5 and 6 February were no longer applicable and that this was his case up to the hearing:
Victor Lahoud: My position is, was that I wanted the terms of agreement enforced in totality, or not enforced. That was my position. (T 133.46)
42 In an exchange with Mr Weber during opening submissions, Palmer J observed, in effect, that insofar as Victor Lahoud was content to observe the terms of the written agreement but really wanted the private agreement performed, the nub of the case was for specific performance of the alleged collateral agreement.
43 Mr Weber's response accorded with Victor Lahoud's explanation in cross-examination of his position, namely that (absent carriage of the alleged private agreement into effect) the Victor Lahoud interests opposed enforcement of the Terms of Settlement and said they should be set aside.
· Determination of substantive issues in damages proceedings
44 Ultimately, Palmer J found against the Victor Lahoud interests on the alleged collateral agreement. His Honour did not prefer the credit of Victor Lahoud over the credit of Joseph Lahoud (and noted that he was not satisfied that the evidence of Victor Lahoud's lawyers unequivocally corroborated Victor Lahoud's evidence) ([2005] NSWSC 509 at [127]-[128]).
45 While it was later put to Campbell J (on the indemnity costs application) that the allegations by Victor Lahoud were baseless and known to be so, Campbell J did not accept that, at the time Victor Lahoud had made the allegations as to a private agreement, he must have realised they were false. His Honour noted that on Palmer J's findings the case was decided having regard to the onus of proof but that his Honour had not found that the claim was "a complete concoction" on Victor Lahoud's part ([2006] NSWSC 126 at [16]-[17]).
46 Palmer J held that the Joseph Lahoud interests were entitled to specific performance of the agreement recorded in the Terms of Settlement. However, orders were not finally made by his Honour until October 2005. This is because on 17 June 2005, when the matter came before his Honour for the making of orders to reflect his reasons for judgment, there was an argument over two aspects of the orders - first, as to whether the parties should be ordered to execute a deed (in accordance with paragraph 7 of the Terms of Settlement) and, secondly, as to the construction of paragraph 8 of Schedule 1 of the Terms of Settlement (namely as to whether the order should be for the transfer in specie of the Units subject to, or free of, encumbrances over those properties).
47 As to the first of the contentious issues which had arisen in relation to the orders, on 17 June 2005, Mr Epstein submitted that an order for execution of a deed would be "quite illusory" and later, in similar vein, that it would be "unnecessary and illusory". Palmer J, during the course of submissions, observed that all that the court could require specific performance of in this regard would be simply to incorporate "perhaps in tidier form" the very words of the Terms of Settlement in a deed, his Honour accepting that: "It is, I think, sadly apparent that the principal parties in this litigation are incapable of any sort of resolution of their difficulties. Everything will have to be decided by the court". The matter was adjourned at that stage for later argument as to the construction of paragraph 8 of Schedule 1 (and as to other issues relating to a requested stay of any orders and the question of costs).
48 On 22 July 2005 the matter came back before Palmer J. At that stage the question of vacant possession of the Units was raised (seemingly, for the first time, though this had been noted in the Points of Claim filed in June 2005). Mr Epstein noted that although there was no registered lease on the title, there were indications in the material from the Victor Lahoud interests of a tenancy said to be current with respect to the property (there referring, it would seem, to Unit 31). Mr Epstein submitted that the Victor Lahoud interests ought to be required to provide the plaintiffs with vacant possession, saying: "In the absence of any evidence to the existence of such a tenancy, the [Joseph Lahoud interests] press for their ordinary entitlement to vacant possession on completion".
49 At that stage, evidence was apparently produced of a lease of Unit 31 which, according to Mr Gyles of Counsel then appearing for Victor Lahoud, was to terminate early the following year (ie early 2006). It was noted that Unit 4 was occupied by the brothers' handicapped brother, Riad, and was not subject to any lease, so Mr Gyles indicated there was "no issue so far as vacant possession of that if that's what Joseph wants".
50 In relation to the question of an order for the execution of a deed in accordance with paragraph 7 of the Terms of Settlement, Mr Epstein again argued that such an order would be a purposeless procedure. Palmer J evidently did not accept this submission, nor was it accepted by Counsel for the Victor Lahoud interests that the Deed would be purposeless. Indeed, Mr Gyles pointed, so far as the utility of a deed was concerned, to the fact that it was to cover additional items, saying that "to the extent that matters obviously enough the acquisition of those shares or the transfer of those shares is something that is of significance."
51 Palmer J said, during argument (T 277), "At first blush, at least it seems to me, that if one is to have specific performance of a contract, then one is to have specific performance of the whole of the contact except insofar as specific performance is impossible. It might be pointless or of little point but if performance is possible then one cannot, as it were, order specific performance of parts of a contract which are considered desirable but not parts which one considers relatively undesirable".
52 His Honour noted that a requirement that the parties enter into a deed in accordance with this agreement was not impossible of performance and neither did it require further agreement between the parties:
If they are able to agree upon something or other to be inserted additionally that's fine that is a matter of new agreement. If they are not able to agree, specific performance of that obligation seems to me simply requires there be cast into the form of a deed simply the provisions of paragraph 2 and 3 and whatever. In other words, if they are not able to agree on word changes, even so much as the variation of a comma or any punctuation marks, then the very words of the document are incorporated in the deed and that's it.
53 Mr Epstein referred his Honour to the evidence that the parties had previously tried but failed to agree upon the terms of such a deed and had become embroiled in a dispute as to whether Victor Lahoud was bound to execute a deed in the form which his solicitor had approved, but Palmer J observed that that was because they were trying to add into the deed additional matters.
54 Palmer J (T 281) (albeit in the context of the example which had been put that there might be a dispute if Joseph Lahoud refused to hand over the shares) said, somewhat presciently: "If that arises, that dispute will be heard by another judge thank goodness in proceedings for specific performance of the deed". (My emphasis)
55 In his reasons for judgment published on 13 October 2005 (Lahoud v Lahoud (No 2) [2005] NSWSC 1019), Palmer J noted (at [20]-[21]) that:
If Joseph seeks specific performance of the contract constituted by the Terms of Settlement, the whole of the contract must be performed, including clause 7. I accept, as Mr Epstein submits, that it is highly probable that the parties will not be able to agree about any terms to be included in the deed. However, no further agreement is needed. Crude and inelegant though it might be as a piece of drafting, the deed required by clause 7 need contain no more or less than the provisions of the Terms of Settlement, excluding Schedule 2 which makes provision as to how any dispute about the terms of the deed is to be resolved. (My emphasis)
56 His Honour also noted that, ultimately, Mr Epstein had indicated that he would not resist an order for specific performance of that paragraph of the Terms of Settlement.
· Deed of Settlement
57 As part of the relief granted, his Honour declared that paragraph 7 of the Terms of Settlement (for execution of a deed) should be specifically performed and carried into execution; and ordered that the Victor Lahoud interests execute a deed to be tendered by the Joseph Lahoud interests containing the Terms of Settlement other than Schedule 2 to those terms. That order was stayed pending the unsuccessful appeal by the Victor Lahoud interests against his Honour's decision.
58 Following dismissal of the appeal on 30 June 2006, a draft deed was tendered on 6 July 2006 by the solicitors who were by then acting for the Joseph Lahoud interests (baron & associates) to the solicitors who were by then acting for the Victor Lahoud interests (Aitken McLachlan Thorpe).
59 On 2 August 2006, Aitken McLachlan Thorpe forwarded an amended Deed of Settlement the amendments to the first draft being said, "to reflect certain obligations which as at 6 February 2001 were to take place but have since taken place". A deed in that amended form (the Joseph Lahoud interests apparently accepting the proposed amendments) was executed on 5 February 2007 after some debate (to which I refer later) as to the timeframe within which certain obligations were to be performed (the Victor Lahoud interests having apparently taken a position that the six month sale process would be reactivated under the deed).
60 As executed, clause 2 of the Deed of Settlement (which broadly incorporated the matters contained in paragraph 1 of the Terms of Settlement but, significantly, with a change in tense in the opening sentence) provided, relevantly:
… Either party may elect to have the figures audited by an accountant to be agreed or, in default of agreement, as nominated by the President of Institute of Chartered Accountants. If on audit, the audited profit exceeds the said profit calculation, [Joseph Lahoud] is to be paid one half of the difference by [the Victor Lahoud parties]. If on audit, the audited profit is less than the said profit calculation, [Joseph Lahoud] will pay the [Victor Lahoud parties] one half of the difference.
61 The opening sentence of clause 2 (not reproduced above) was one which operated to acknowledge receipt of the sum of $570,000 rather than being framed (as was its counterpart in the Terms of Settlement) in prospective terms. Further, in its amended form the clause referred to a past belief, held in February 2001 (ie not making any assertion as to the state of belief in February 2007) as to the accuracy of the figures on which the $570,000 sum was calculated.
62 Almost immediately after execution of the Deed of Settlement, the Victor Lahoud interests, by letter dated 6 February 2007, notified the Joseph Lahoud interests of their election to have an audit conducted pursuant to clause 2 of the Deed of Settlement.
63 The Joseph Lahoud interests responded by denying, in effect, that there was, as at 6 February 2007, any subsisting entitlement on the part of the Victor Lahoud interests to an audit. It was asserted by baron & associates that the claim in respect of an audit had been abandoned in the damages proceedings (presumably by reference to the deletion of paragraphs 12-14 of the Amended Notice of Cross Claim and the corresponding prayer for relief).
64 The Joseph Lahoud interests in the audit proceedings before me maintain that the right to elect for an audit under paragraph 1 of the Terms of Settlement had expired by 5 February 2007 and that no new right to an audit was conferred by the execution of the Deed of Settlement. Clause 2 of the Deed is said to be, in effect, otiose.
Issues
65 The issues to be determined, therefore, are as follows: