Naumovski v Ugrinovski [2017] VSCA 200

1 The applicant, Vlado Naumovski, and the respondent, Robert Ugrinovski conducted a property investment and property development business together utilising a variety of companies, partnerships and trusts. In 2014 they issued proceedings against each other alleging, amongst other things, that the affairs of the companies were being conducted contrary to the interests of the members.

2 By a document entitled 'Binding Heads of Agreement' dated 13 June 2015 signed by Naumovski and Ugrinovski the proceedings they had issued were settled. The agreement, which we will refer to as the 'Heads of Agreement', provided for the disentanglement of their joint affairs and the allocation of assets and liabilities to Ugrinovski and/or his related entities on the one hand and Naumovski and/or his related entities on the other.

3 The Heads of Agreement provided for the appointment by the Court of an independent referee should the steps necessary to implement the agreed disentanglement and allocation not have occurred by a specified date. The Heads of Agreement also provided for the making of consent orders which replicated the key terms of the agreement and which also provided for the appointment of an independent referee if those orders were not implemented by the specified date. Those orders were made by consent on 24 July 2015.

4 By an order made 12 October 2015 Mr Leigh Baring, a partner in the solicitors firm, Maddocks, was appointed as a special referee. The appointment was made under Order 50 of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules').

5 After hearing submissions from the parties Mr Baring produced a report dated 28 October 2015 setting out the steps which were to be undertaken in order to implement the Heads of Agreement. Among the steps which he required be undertaken were steps concerning inter-company loans. In substance, Mr Baring required that the inter-company loans be set off or repaid at settlement, and that Naumovski and/or his related entities and Ugrinovski and/or his related entities provide sufficient funds to enable the relevant debtor entities to repay the inter-company loans in cash.

6 The respondent, Ugrinovski,[1] considered that the steps required by the special referee were inconsistent with the terms of the Heads of Agreement. On 23 November 2015 Ugrinovski issued a summons seeking the determination of five questions as to the proper construction of the Heads of Agreement,[2] and seeking an order that certain parts of the special referee's report not be adopted as a consequence of the answers to those questions.

7 A judge in the Trial Division heard the summons. He answered the questions as Ugrinovski contended that he should. The judge determined that the special referee's requirements concerning the inter-company loans were not consistent with the proper construction of the Heads of Agreement. The judge made orders in relation to the adoption of the special referee's report which were consequent upon the answers he had given on the questions of construction. In substance, the judge found that, contrary to the special referee's report:

(a) The Heads of Agreement did not impose an obligation on Ugrinovski and/or his related entities or Naumovski and/or his related entities to fund the debtors.

(b) The inter-company loans were not required to be repaid in cash.

(c) The inter-company loans were required to be repaid or set-off before settlement, not at settlement.

8 In the course of submissions and evidence before the judge, issues concerning how the Heads of Agreement's provisions concerning inter-company loans ought to be implemented, given the rejection of the special referee's requirements, were addressed. The focus of attention was upon two issues: (1) whether settlement could proceed leaving some inter-company loans outstanding; and, (2) how could the inter-company loans be repaid before settlement. As to the second issue, attention focused upon options for the repayment of the inter-company loans prepared by a chartered accountant engaged on behalf of Ugrinovski named Daniel Allison. These options were referred to as the 'Allison options'. There were originally three such options, but before the judge the relevance of the third option fell away. The judge expressed views and conclusions on these two issues, but those views and conclusions were not embodied or reflected in the orders he made, notwithstanding that Ugrinovski had requested an order to the effect that in the absence of agreement one of Allison's options should be performed.

10 A number of significant matters only emerged clearly in the course of oral submissions before us. They were:

• Of the six proposed appeal grounds, the first proposed ground, and elements of four others, rely upon a construction of the Heads of Agreement which is contrary to the construction contended for by Naumovski before the trial judge.
• Naumovski's principal concern with the judgment below is with the views and conclusions expressed by the judge in relation to the issue of whether inter-company loans could remain outstanding after settlement and in relation to the Allison options. These views and conclusions are not embodied or reflected in the orders made.
• The principal grounds upon which Naumovski's criticism of the Allison options is based were raised for the first time before us and had not been put to the judge below.

11 We have determined that leave to appeal should be refused. As to the issue of construction, where Naumovski seeks to resile from the submissions made below, our conclusion is that the submissions made on Naumovski's behalf below, which the judge accepted, were clearly correct. As to the contentions concerning the issues of whether inter-company loans can remain outstanding and the Allison options, leave should not be granted to address those issues because they have not been finally determined; because, even if accepted, they would not render any of the orders which were in fact made incorrect; and because the respondent has been given no proper opportunity to meet matters raised for the first time before us.

13 The Heads of Agreement is a brief document, in light of the complexity of the issues it addresses. It provides for subsequent agreement on 'full terms'. That has never occurred. The Heads of Agreement were intended to be binding.

14 The Heads of Agreement sets out in a series of recitals a description of the companies, trusts and partnerships which Naumovski and Ugrinovski employed in their joint undertaking, which are then defined as 'the Group'. The recitals then set out the various properties owned by entities in the Group, and the entities associated with Naumovski and Ugrinovski through which it is said that Naumovski and Ugrinovski have 'equal ownership of the shares in the Group'. The proceedings are referred to, as is the fact that those proceedings have been settled. It is recited that the 'intent of the settlement' is to sever the respective interests and relationships.

15 Under the heading 'Terms' the Heads of Agreement then sets out a division of 'shares of the Group and/or assets of the Group'. In addition to the asset division, the 'Group' is to pay Naumovski and/or nominee a cash sum.

16 Settlement was to take place on 28 October 2015 or earlier by agreement. Clause 16 of the Heads of Agreement relevantly provided:

... all net income derived between the date of this agreement and the Settlement Date from each property referred to herein shall accrue to the entity entitled to retain or acquire (as the case may be) that property under these terms.

17 In relation to at least one entity, Geopec Pty Ltd, its properties were to be divided, and clause 16 required a consequent division of its income.

18 The Heads of Agreement then contains the following relevant terms, which it is necessary to set out in full:

1. The liabilities and guarantees of the Group are to be transferred between:

(a) the Group; and/or

(b) Ugrinovski and/or his related entities; and/or

(c) Naumovski and/or his related entities.

so that:

(d) Ugrinovski and/or nominee take responsibility for approximately $24.4m of the Group's debt;

(e) Naumovski and/or nominee take responsibility for approximately $21.8m of the Group's debt;

1. All inter-company loans will be repaid or set off before the Settlement Date with any such repayments and set offs not to affect the liability and asset distributions in paragraphs 14, 15 and 22 above.

24. The parties are to use all reasonable endeavours to:

(a) ensure that all necessary steps are done so that the above orders are effected in the most tax effective way on or before the Settlement Date; and

(b) ensure that the value of the shares, units, interests and assets of the Group are maintained between date of this agreement and Settlement Date;

(c) ensure that the set-offs and payments referred to in paragraph 23 above do not result in a liability between the Ugrinovski interests and the Naumovski interests following settlement.

1. In the event that the necessary steps have not occurred to effect the settlement by the Settlement Date, the Court will appoint an independent referee to determine appropriate Documentation and other steps to occur in order to give effect to the settlement, upon order of the Court, if necessary.
2. Each party releases the other from all claims made in the Naumovski Proceeding and the Ugrinovski Proceeding including any costs orders and any claim presently known to the party giving the release.
3. Upon execution, these terms are intended to be binding as between the parties.

19 Clause 23 of the Heads of Agreement provided that all inter-company loans 'will be repaid or set off before the Settlement Date'. An issue arose as to how that could be implemented in circumstances where the debtor entity did not have sufficient cash to repay the debt (and there was no set off). The special referee dealt with that issue in part 3 of his report as follows:

2.14 The Heads of Agreement require that the Inter-Entity Payables will be either paid or set-off. The amounts are not required to be forgiven. Based on the information provided to me, there appears to be no simple way to set-off the Inter-Entity Payables at an individual entity level. Accordingly, unless the parties can agree to 'group' the Inter-Entity Payables for the purposes of calculating a 'net' figure owed by or to the Ugrinovski Entities or the Naumovski Entities then:

2.14.1 the Naumovski Entities will have to provide sufficient funds to allow the Naumovski Transferring Entities to cash settle the Inter-Entity Payables payable by them;

2.14.2 the Ugrinovski Entities will have to provide sufficient funds to allow the Ugrinovski Transferring Entities to cash settle the Inter-Entity Payables payable by them;

2.14.3 the Naumovski Investment Trust and the Ugrinovski Investment Trust will each have to provide one half of the funds necessary to allow Geopec to cash settle the Inter-Entity Payables payable by the Geopec Partnership; and

2.14.4 Dalbe and Evla will each have to provide one half of the funds necessary to allow the payment of the Inter-Entity Payables payable as a consequence of their tenant in common ownership of Caravel Lane.

20 The special referee also determined that the inter-company loans were to be repaid or set off 'at Settlement', and he set out that requirement in part 4 of his report at paragraph 1.3.2.

21 Ugrinovski issued a summons seeking the determination of the following questions:

(a) whether upon the proper construction of the HOA, clause 23 thereof requires:

(i) that an accounting is taken of the all amounts owing between the companies in the Group (as defined in the HOA), and that after allowing all set offs as between the entities in the Group, the Ugrinovski entities (being the entities acquiring the Ugrinovski Properties) (as defined in the HOA), are obliged to pay any net amount owing by them to any Naumovski entities (being the entities acquiring the Naumovski Properties under the HOA);

(ii) the Naumovski Entities to provide sufficient funds to allow the Naumovski Transferring Entities to cash settle the Inter Entity Payables payable by them;

(iii) the Ugrinovski Entities to provide sufficient funds to allow the Ugrinovski Transferring Entities to cash settle the Inter Entity Payables payable by them;

(iv) the Naumovski Investment Trust and the Ugrinovski Investment Trust to each provide one-half of the funds necessary to allow Geopec to cash settle the Inter Entity Payables payable by the Geopec Partnership;

(v) Dalbe and Evla to each provide one-half of the funds necessary to allow the payment of the Inter Entity Payables as a consequence of their tenant in common ownership of Caravel Lane ...

23 The summons issued by Ugrinovski also sought an order that the special referee's report not be adopted insofar as it was contrary to the answers given to the questions. In that respect the judge relevantly ordered as follows:

1. 2. The Report of the Special Referee, Mr Leigh Baring, dated 28 October 2015 be adopted in its entirety pursuant to rule 50.04 of the Rules, save that:

(a) Paragraph 2.14 of Part 3 be amended to excise the part commencing with the word 'Accordingly' and concluding with the words 'Caravel Lane' and paragraph 1.3.2 of Part 4 be removed;

(b) a new subparagraph in paragraph 1.2 of Part 4[1] be added so that paragraph 1.2 reads as follows:

'1.2 Prior to the Settlement Date

(a) the parties use all reasonable endeavours to perform clause 23 of the Binding Heads of Agreement dated 13 June 2015 (the HOA) in a manner that does not necessarily require cash payment of the intercompany loans and does not require the Ugrinovski Entities nor the Naumovski Entities to fund the repayment.

(b) the Naumovski Entities and the Ugrinvoski Entities will finalise the financing arrangements necessary to allow the parties to take responsibility for the Group Debt contemplated by clause 22 of the Heads of Agreement'.

24 Before the judge below Ugrinovski submitted that clause 23 of the Heads of Agreement did not impose an obligation on Ugrinovski to fund the repayment of inter-company loans, and that the requirement that repayment be in cash was unwarranted.

25 Before the judge senior counsel for Naumovski accepted that the Heads of Agreement did not impose an obligation on Ugrinovski or Naumovski to finance debtor entities so as to enable them to repay inter-company loans. Senior counsel said:

It's no part of my submission that Mr Ugrinovski must go to a bank and borrow the money. If it turns out that we cannot collect, bad luck for us. If it turns out we can't get it, we are like any other creditor suing any other debtor company. We are in no better or worse position. We haven't taken any security and that's what it is.[3]

The first question on which there is agreement under the Heads of Agreement, on whom is the obligation to repay an inter-company debt imposed? The answer is on the debtor company and only the debtor company. No debate.[4]

27 Naumovski submitted to the judge below that clause 23 provided for the inter-company loans to be repaid, if there was not a set off, before settlement;[5] but Naumovski also submitted that, if, after reasonable endeavours, the parties failed to achieve that outcome, then inter-company loans could remain outstanding after settlement.[6]

28 Before the judge below were three affidavits sworn by Allison. In those affidavits Allison set out three options whereby he contended that clause 23 could be complied with without Ugrinovski or Naumovski having to finance the debtor companies. As indicated earlier, the relevance of option 3 fell away in the course of the hearing.

Option 1 simply involves increasing the secured debt of the entity required to make payment, using the funds to discharge the intercompany loan, and then immediately applying those funds to discharge the equivalent amount of secured debt for the entity receiving the payment. In this way, there is no overall increase in the group secured debt, because the increase in secured debt of the debtor entity is matched by the decrease in secured debt of the creditor entity.

For example, in relation to the $4,963,579 debt owed by West Springs to Resdal:

(a) firstly, West Springs increases its secured debt facility by $4,963,579;

(b) secondly, West Springs pays Resdal $4,963,579 to discharge its intercompany loan to Resdal; and

(c) thirdly, Resdal immediately applies the funds to repay $4,963,579 in its secured debt.[7]

30 Option 2 produced the same outcome as option 1 but involved the debtor entity directly making payment to the secured lender of the creditor entity in exchange for the discharge of the inter-company loan.

31 Allison was cross-examined and it was put to him, amongst other things, that option 1 involved activities outside clause 23 (arrangements concerning the secured borrowings),[8] and that his options were hypothetical in that it was not known whether the lenders would agree to them or whether they could be practically implemented.[9] Allison accepted those propositions.

32 Senior counsel on behalf of Naumovski submitted that the Allison options did not constitute 'payment' within the meaning of clause 23. He said:

'Payments' contemplates money changing hands. That's what 'payments' means. There's no fancy meaning to the word 'payment'. It's not forgiveness of debts and consolidations and going out to the bank and borrowing $5,000,0000. You either set off or you pay. It is intended that it be cleared up and no hangover liability. If it hasn't been cleaned up, if there are hangover liabilities between the companies, you still have to settle. It's not a condition precedent to settlement.[10]

33 After setting out the submissions made and relevant legal principles, the judge below turned to the determination of the first three questions asked. These three questions concerned the general operation of clause 23.

34 The first matter the judge observed in relation to clause 23 was that inter-company loans were to be repaid or set off 'before' the Settlement Date. That is what clause 23 says. The judge recorded that fact nine times in his judgment.[12] Counsel on both sides had recognised that fact. The two sides had differed on the issue of whether inter-company debts could be left unpaid if, notwithstanding reasonable endeavours, they could not be repaid or set off before settlement.

35 As to the obligation to fund the repayment as required by the special referee, the judge said:

Neither Mr Ugrinovski nor Mr Naumovski or their respective entities are obliged by clause 23 to finance the repayment of Group inter-company loans. The Special Referee's conclusions in paragraphs 2.14.1 and 2.14.2 of Part 3 of the Report - that the Ugrinovski Entities and the Naumovski Entities will have to provide funds to allow the Group entities to cash settle the Inter-Entity Payables - do not reflect the terms of the HOA[13]; the entities acquiring the properties (which are not companies in the Group) are not obliged by the HOA to pay any inter-company loan. [14]

36 As indicated earlier, this conclusion also reflected the submissions both sides had made to the judge below.

37 The judge accordingly answered questions (i)-(iii), no.

38 The judge then turned to the questions which concerned four specified entities, being questions (iv) and (v). He answered question (iv) no because it raised, in substance, the same issue as questions (i)-(iii).[15] He answered question (v) no for the following reason:

Clause 23 does not confine the manner of discharge of inter-company loans to discharge by cash payments, and does not require the repayment or set-off to occur on the settlement date. Clause 23 requires inter-company loans to be repaid or set-off before the settlement date. Accordingly, it follows that the answer to question (v) is also no. [16]

39 The judge then turned to what he described as consequential orders and directions. He recorded the fact that Ugrinovski had proposed, not only that the portions of the special referee's report which did not reflect the terms of the Heads of Agreement be excised, but also that the following paragraphs be added:

(i) the parties use all reasonable endeavours to perform clause 23 ... in a manner that does not necessarily require cash payment of the intercompany loans and does not require the Ugrinovski Entities nor the Naumovski Entities to fund the repayment; and

(ii) failing agreement on the performance of clause 23 ... the parties must perform clause 23 in the manner outlined by Mr Allison as Option 2 ...[17]

40 Consistently with the submission made by senior counsel for Naumovski (as quoted earlier), Naumovski proposed that the report be adopted in its entirety save for amendments to excise the portions requiring that the Naumovski entities and the Ugrinovski entities had to provide sufficient funds to allow the inter-company loans to be repaid.[18]

41 The judge then addressed the issues agitated before him as to whether inter-company loans could remain outstanding after settlement and as to the Allison options. He expressed views and conclusions on these issues, but he did not make a final determination as to the parties' obligations, and the views and conclusions he did express were not embodied or reflected in the orders he made.

42 The judge began by observing that clause 23 was 'in mandatory terms', requiring that inter-company loans be repaid or set off before settlement, and that leaving them outstanding after settlement 'sits uneasily' with what the judge described as the 'intent of the settlement'.[19] When expressing his view as to the 'mandatory terms' of clause 23 the judge added a proviso in parentheses as follows: 'notwithstanding arguably the possibility of that not having occurred is introduced by the reasonable endeavours clause at clause 24(c)'.[20] The judge said that there was 'tension' between the objective of severance of the respective interests and an outcome where inter-company loans remained outstanding.[21]

43 The judge then turned to a consideration of the Allison options. He said that there was a specific issue as to whether 'reasonable endeavours' would include undertaking the Allison options and he concluded '[w]ithout being unduly prescriptive, the answer, in principle, is yes'.[22] The judge then considered the Allison options, and the evidence Allison had given, in some detail.[23] He observed that if the inter-company loans were to be repaid before settlement then entities that did not have sufficient cash would have to borrow to enable that to occur.[24] The judge said that these circumstances must have been within the contemplation of the parties to the Heads of Agreement.[25]

44 The judge concluded that Allison options 1 and 2 'appear to represent a comprehensive solution'.[26] The judge said the parties to the Heads of Agreement are obliged to facilitate the repayment of inter-company loans before settlement.[27] He said they also had an obligation to use reasonable endeavours and he said that in his view this would include taking steps to borrow the required funds and to apply them in a way which was consistent with the Heads of Agreement.[28] The judge recognised that the Allison options involved the participation of financiers who might offer different terms or suggest other alternatives.[29] The judge then continued:

As an essential first step, reasonable endeavours must be made by the Group entities which need to borrow funds on a basis which will ensure that inter-company loans are paid before settlement and that all other terms of the HOA can be implemented. Until that step is taken, settlement cannot occur. Failure to take such steps will amount to a breach of the terms of settlement.[30]

45 Finally, the judge said that leaving inter-company loans outstanding was 'not within the spirit of the HOA'.[31]

46 At this point it is necessary to recall the orders made by the judge. The judge answered the questions raised in the summons, no. He excised from the special referee's report the parts that required Ugrinovski and Naumovski to fund debtor entities that could not repay in cash. As to what the parties then were required to do, the only relevant order was order 2(b) (quoted earlier) whereby the judge made an addition to the special referee's report by adding a paragraph 1.2(a) requiring that, prior to the Settlement Date:

[T]he parties use all reasonable endeavours to perform clause 23 ... in a manner that does not necessarily require cash payment of the inter-company loans and does not require the Ugrinovski Entities nor the Naumovski Entities to fund the repayment.

Proposed grounds of appeal and applicant's contentions

47 The proposed grounds of appeal were set out in the application for leave to appeal in a manner which was somewhat confusing. Adapting the headings in the application and in the applicant's written case the proposed grounds are that the judge below erred in:

(1) Finding that the Naumovski entities and the Ugrinovski entities are not required to provide sufficient funds to enable payment [of] any inter-company loan upon settlement because such a requirement is inconsistent with the HOA (orders 1(a)-(c)).

(2) Misconstruing the HOA by not permitting settlement on the basis that recovery of outstanding inter-company loans could be pursued after settlement (orders 1(a)-(c)).

(3) Finding that the Ugrinovski Investment Trust and the Naumovski Investment Trust are not each required to provide one-half of the funds necessary to enable Geopec Pty Ltd to cash settle the inter-company loans payable by Geopec Partnership (order 1(d)).

(4) Finding that Dalbe and Evla are not each required to provide one-half of the funds necessary to allow the payment of inter-company loan accounts as a consequence of their ownership of Caravel Lane as tenants in common (order 1(e)).

(5) Failing properly to exercise the discretion under rule 50.04 by excising paragraph 2.14 of the Baring report on the basis that it did not accord with the HOA (order 2(a)).

(6) Failing properly to exercise the discretion under rule 50.04 by including a requirement that was not prescriptive (order 2(b)).

48 The contentions the applicant wishes to argue on appeal were significantly clarified in the course of oral submission. They are as follows:

(1) The applicant seeks to resile from the submissions made below as to the construction of clause 23 and to contend that the special referee had been correct in requiring the Ugrinovski entities and the Naumovski entities to fund the repayment of the inter-company loans.

(2) The applicant contends the judge was wrong to find that the inter-company loans had to be repaid before settlement, and he ought to have found that if they could not be repaid, notwithstanding reasonable endeavours, they should remain outstanding and settlement should occur in any event.

(3) The applicant contends the judge was wrong to conclude that the Allison options were consistent with the terms of the Heads of Agreement because the effect of the Allison options is to deprive the Naumovski entities of the benefit of the agreement as to the allocation of secured indebtedness in clause 22, and because the Allison options are inconsistent with what was characterised as the 'entity by entity' approach made clear in clause 16.

Construction of clause 23 - the obligation to fund

49 Senior counsel for the applicant[32] submitted that the proper construction of clause 23 was an issue of law, which could not be affected by anything which had occurred, or not occurred, before the judge below. It was submitted that there was accordingly no reason why he should not be permitted to resile from the construction contended for below.

50 In Boz One Pty Ltd v McLellan[33] this Court said:

Ordinarily, a party will not be permitted to raise on appeal an issue which was not pursued by that party at first instance unless it raises a pure question of law (such as the construction of a statute or some other instrument) or a question that arises out of facts which are not in dispute. Leave to raise a new argument on appeal usually will not be granted if evidence could have been given (including by way of cross-examination) which possibly could have prevented the argument from succeeding at trial.[34]

51 If there were merit in the submission as to the construction of clause 23 advanced by the applicant, we would not preclude him from relying upon it because it is contrary to the submission that was put below. However, in our view there is no merit in the submission. The submissions made by senior counsel on behalf of Naumovski before the trial judge were clearly correct. The Heads of Agreement does not impose any obligation on a non-debtor entity to fund or otherwise meet the obligation of a debtor entity. The Heads of Agreement and the consequent consent order provide for the appointment of a referee to determine the appropriate documentation and other steps to occur in order to give effect to the matters agreed. The referee cannot in the course of that process impose upon a party an obligation to pay or fund the payment of another entity's debt which had not been agreed.

52 Leave to appeal in relation to proposed ground 1 will be refused because it is not arguable. Insofar as proposed grounds (3), (4), (5) and (6) rely on this same contention, leave to appeal must be refused. Otherwise, leave to appeal is refused on those proposed grounds because, in our view, the judge's relevant conclusions were clearly correct. In particular, the judge's finding that question (v) had to be answered no because clause 23 requires payment or set off before settlement, rather than at settlement, is incontrovertibly what the Heads of Agreement itself says.

Whether the inter-company loans may remain outstanding after settlement

53 The judge correctly observed that clause 23 provides that the inter-company loans are to be repaid or set off before settlement. There is a separate obligation in clause 24(c) requiring the parties to use all reasonable endeavours to ensure that the set offs and payments under clause 23 do not result in a 'liability between the Ugrinovski interests and the Naumovski interests following settlement'. The judge did not finally determine what the parties are presently obligated to do pursuant to clauses 23 and 24. The additional paragraph 1.2(a) added by the judge's order 2(b) does not determine that issue. That paragraph is consistent with the relevant contentions of both sides. Accordingly, there is no order to appeal. The judge did not determine the issue because as matters stood before him the Allison options, which appeared to him to be a practical solution, remained hypothetical.

54 In substance, what was submitted by senior counsel for Naumovski before us was that there were two inconsistencies between the Allison options and the Heads of Agreement.

55 The first inconsistency was the most fundamental. It was that implementation of the Allison options would effectively remove, or neutralise, the benefit Naumovski was entitled to receive under clause 22. It was submitted that on the basis of the secured debt as at June 2015 an adjustment in Naumovski's favour of approximately $7,000,000 was required, in effect, under clause 22. Clause 23, in requiring that inter-company loans be repaid or set off also, in effect, required an adjustment in favour of Naumovski of approximately $6.9 million. It was submitted that these were separate entitlements and that the effect of the Allison options was to remove the benefit of the adjustment in secured debt in favour of Naumovski by re-structuring the secured debt in the course of the inter-company loan repayments under clause 23.

56 The second inconsistency was that the Allison options undermined what was contended to be an 'entity by entity' approach required by the Heads of Agreement and most clearly reflected in clause 16.

57 Both of these matters were advanced on the application before us for the first time. They had not been put to the judge below. Senior counsel for Ugrinovski advised he had not heard them until they were put to us in the course of oral submissions.

58 It is impossible to assess the cogency of the matters put in relation to the Allison options, given that they were not canvassed with Allison when he gave evidence and Ugrinovski has had no proper opportunity to consider or respond to them.

59 For present purposes, it suffices to say that, notwithstanding that the judge expressed the view that the Allison options appeared to resolve the problem represented by clause 23, the orders he made did not embody or reflect that conclusion. Ugrinovski had specifically asked for an order requiring the parties to perform Allison option 2 in the absence of agreement. The judge did not make that order. Leave to appeal should not be granted in relation to orders which do not determine the relevant issue.

[1] For ease of reference we refer to persons by their surnames only.

[2] This determination was sought under Order 47 of the Rules.

[3] Transcript of Proceedings, Ugrinovski v Naumovski (Supreme Court of Victoria, Almond J, 9 May 2016) 72.

[4] Transcript of Proceedings, Ugrinovski v Naumovski (Supreme Court of Victoria, Almond J, 10 May 2016) 111.

[5] Transcript of Proceedings, Ugrinovski v Naumovski (Supreme Court of Victoria, Almond J, 9 May 2016) 61.

[7] Further affidavit of Daniel Allison, 21 March 2016, 3 [8]-[10] (emphasis in original).

[8] Transcript of Proceedings, Ugrinovski v Naumovski (Supreme Court of Victoria, Almond J, 9 May 2016) 29.

[11] [2016] VSC 555 ('Reasons').

[12] Ibid [26], [34], [39], [49], [65], [72], [74], [77]-[78].

[13] This is a reference to the Heads of Agreement.

[32] Not the senior counsel who appeared for the applicant below.

[33] [2015] VSCA 68; (2015) 105 ACSR 325.

[34] Ibid 348 [143] (citations omitted).