Pauls Trading P/L & Anor v Norco Co-operative Ltd [2006] QCA 128
[2006] QCA 128
Court of Appeal (Qld)|2006-04-21|Before: McMurdo P, Williams JA and Jerrard JASeparate reasons for judgment of, each member of the Court, each concurring as to the order made
McMurdo P, Williams JA and Jerrard JASeparate reasons for judgment of, each member of the Court, each concurring as to the order made
Catchwords
CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS –
OTHER MATTERS – where the first and second appellants
entered into a joint
venture agreement with the respondent – where events occurred that altered
Source
Original judgment source is linked above.
Catchwords
CONTRACTS – CONSTRUCTION AND INTERPRETATION OF CONTRACTS –OTHER MATTERS – where the first and second appellantsentered into a jointventure agreement with the respondent – where events occurred that alteredthe effective control of eachof the appellant companies and in consequence theyboth became Defaulting Participants under clause 9.1(a)(15) of the joint ventureagreement – where the agreement provides that a ‘DefaultingParticipant upon becoming a Defaulting Participant grantsto the otherparticipants an option to purchase its interest’ – whether theoption to purchase an interest comes intoeffect each and every time there is analteration in the effective control of a participant, with reference to theCommencement Date– whether a change of ownership in the holding company(October 2005) constituted an alteration in the effective control ofeach of theappellants’ companies and subsequently enlivened the option provisions of
the joint venture agreement
Corporations Act 2001 (Cth), s 11, s 46, s 49, s 50
Australian Broadcasting Commission v Australasian Performing Right
Dominions Corporation Limited v Brian Proprietary Limited and Ors
[1985] HCA 49
(1985) 157 CLR 1, considered
Judgment (73 paragraphs)
[1]
[1] McMURDO P: I agree that the appeal should be dismissed with costs for the reasons given by Williams JA.
[2]
[2] Clause 9.1(a)(15) of the joint venture agreement set out in Williams JA's reasons is ambiguous when read on its own. The clause could have the effect that whenever effective control of a participant in the agreement is altered without the prior written consent of the other participants, the altered participant becomes a Defaulting Participant so that the other participants in the agreement are granted a default option exercisable within the time specified in clause 9.3(e). Alternatively, the clause could have the effect that, once effective control of a participant in the agreement has been altered from that subsisting at 1 July 1996 and the other participants have not exercised their option to purchase the altered participant's interest within the time allowed under the agreement,[1] the clause has no application because any subsequent change in effective control of the altered participant is not a change from that subsisting on 1 July 1996 but only from that subsisting at the time of the previous change in effective control.
[3]
[3] The learned primary judge considered that the first interpretation of the clause was the plain and unambiguous one. The appellants contend that the judge was wrong both in his conclusion and in his reasoning: he should not have had regard to the commercial purpose of the contract unless the contract was itself ambiguous and the plain meaning of the clause is the second construction.
[4]
[4] The judge heard the matter on 2 February 2006 and gave his reasons on 8 February 2006, no doubt mindful of the fact that the parties were then, as now, pressing for a timely judgment. A few weeks later in his reasons in the related matter, Norco Co-Operative Ltd v Parmalat Australia Ltd & Ors,[2] the judge set out in greater detail the applicable legal principles in construing an agreement such as this,[3] adding that in his earlier judgment[4] (the subject of this appeal) he expressed the principles applicable to the construction of commercial contracts succinctly and his compressed mode of expression gave rise to a slight inaccuracy but his understanding of the appropriate principles was as set out in his subsequent judgment.[5]
[5]
[5] A clause in a contract should not be considered in isolation from the whole contract; the meaning of any one part of a contract may be revealed or clarified by other parts and, where possible, clauses should be construed harmoniously: Australian Broadcasting Commission v Australasian Performing Right Association Ltd.[6]
[6]
[6] A number of other clauses in the joint venture agreement support the interpretation given to the clause by the primary judge. Williams JA has referred to clause 8.[7] Other examples include clauses 7.3 and 7.4. Clause 7.3 sets out circumstances where a Non-Defaulting Participant in the joint venture agreement may assign its interest to permitted assignees, that is, to a wholly owned subsidiary, parent company or wholly owned subsidiary of the parent company.[8] Clause 7.4 requires a participant who ceases to be a wholly owned subsidiary of its parent company to immediately transfer its interest to its former parent or to a wholly owned subsidiary of its former parent within 20 business days or it will become a Defaulting Participant bringing into play clause 9. Provisions such as these suggest the objective intent of the parties to the joint venture agreement was to give a participant who was not happy to continue in the joint venture with another participant, because of changes in that participant's effective control, a right to buy the changed participant's interest in the joint venture as provided in clauses 9.2 and 9.3. When clause 9.1(a)(15) is read together with the contract as a whole, it becomes less ambiguous and the construction adopted by his Honour seems more likely than the alternative suggested by the appellants.
[7]
[7] Nevertheless, the appellants' contention is sufficiently meritorious to raise an ambiguity in the meaning of clause 9.1(a)(15) even when it is read in context with the whole contract so that it was proper for the primary judge to consider commercial reality in construing the clause: Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd.[9] The primary judge rightly identified the commercial purpose of clause 9.1(a)(15) in the context of the whole joint venture agreement as being to protect one participant in the joint venture from the risk that the effective control of another participant might move to a third party unacceptable to another joint venture participant. When clause 9.1(a)(15) is read in the context of the whole contract and together with the clear commercial purpose of this contract and of joint ventures generally, the slight remaining ambiguity is clarified. The construction given by the primary judge is plainly right.
[8]
[8] WILLIAMS JA: This is an appeal from a decision of Chesterman J heard as a commercial cause on 2 February 2006. Certain rights depending on the outcome of the litigation will be affected if not exercised by 22 April 2006. Because of that, the matter has been dealt with urgently. The decision at first instance was given on 8 February 2006, and the appeal heard on 3 April 2006. Against that background it is important that the decision of this Court be delivered promptly.
[9]
[9] The only real issue in the appeal, as was the case at first instance, is as to the proper construction of a clause in a joint venture agreement. On 27 June 1996 the first and second appellants, Pauls Trading Pty Ltd and Dairyfields Pty Ltd, entered into a joint venture agreement with the respondent, Norco Co-Operative Ltd. The contentious clause is 9.1(a)(15) and relevantly it is in these terms:
[10]
(15) Effective control of a Participant ... is altered without the prior written consent of the other Participants from that subsisting at the Commencement Date and in this paragraph effective control alters where any person or any person together with their Associates:
[11]
(a) becomes entitled to exercise (directly or indirectly) voting power at any general meeting of a Participant ... in excess of 50% of the votes which may be cast thereat; or
(b) acquires the capacity to appoint at least half of the number of directors of a Participant ...,
....
[12]
THEN that Participant will become a Defaulting Participant ..."
[13]
[10] Each of the three parties to the Agreement is defined as a "Participant". The "Commencement Date" is stated to be 1 July 1996.
[14]
[11] It is necessary also to note that the Agreement goes on to provide that each "Defaulting Participant upon becoming a Defaulting Participant grants to the other Participants an option to purchase its Interest" in accordance with other provisions of the Agreement.
[15]
[12] The contention of the appellants is that the clause may become operative only once with respect to each Participant. Their contention is that once a Participant has become a Defaulting Participant and the option to purchase has not been enforced, then the option does not arise on any subsequent occasion when circumstances again exist which would render the original Defaulting Participant a Defaulting Participant at that later point of time. That is said to result from the fact that there can only be one alteration in the effective control of a Participant "from that subsisting at the Commencement Date". On that approach any second alteration would be a change from that existing immediately beforehand, not a change from that existing at the Commencement Date.
[16]
[13] The contrary contention advanced by the respondent is that the option comes into play each and every time there is an alteration in the effective control of a Participant which results in a situation where the control as then altered is different from that which subsisted at the Commencement Date. The submission is that such a situation is encompassed by the words of the clause; after each and every alteration the position must be that there has been an alteration from that which subsisted at the Commencement Date.
[17]
[14] The judge at first instance concluded that the proper construction of the provision accorded with the submission of the present respondent.
[18]
[15] The reasons for judgment at first instance stated that the approach adopted to the construction of the clause was as follows:
[19]
"The principles governing the construction of commercial contracts are clear. One starts with the words chosen by the parties to express their bargain and gives them their ordinary, grammatical, natural meaning. If the words, giving that meaning, produce a result that is unreasonable in a business sense some adjustment to the meaning must be made. To determine whether the result is unreasonable in a business sense the court may have regard to the commercial purpose of the contract, and the purpose to be served by the particular clause."
[20]
[16] It is clear that the judge at first instance was affected by what he regarded as the commercial purpose of the Agreement in arriving at the preferred construction of the clause in question. For example, he said:
[21]
"The commercial purpose of cl 9.1(a)(15) is, I think, clear. I accept the defendant's submissions in this regard. It is to protect a participant in the joint venture against the risk that its partners might change, against its wish, by the acquisition of their shares by a third party, or by a third party acquiring control over the joint venturer by acquiring the shares in its holding company. The continuing participant is not obliged to accept its new partner. It is given the option of acquiring the defaulting participant's interest in the joint venture.
...
The defendant's submission also accords with the commercial purpose of the clause."
[22]
[17] The challenge made by the appellants on the hearing of the appeal is that the judge at first instance did not first reach the conclusion that the clause was ambiguous and then resort to the perceived commercial purpose of the Agreement in order to resolve the ambiguity. As counsel put it in his submission, the judge "approached the construction of the clause with a bias toward that which makes most commercial sense" rather than first considering whether there was a clear and plain meaning which ought to be applied regardless of its commercial effect.
[23]
[18] When giving judgment in the associated matter ([2006] QSC 038) which was heard on 2 March, some three weeks after delivering judgment in this matter, the learned judge said:
[24]
"In my earlier judgment ([2006] QSC 015 para [37]) I expressed the principles applicable to the construction of commercial contracts succinctly. The compressed mode of expression gave rise to a slight inaccuracy. My understanding of the appropriate principles is set out in the previous paragraph."
[25]
[19] In that previous paragraph of that judgment the judge set out what all parties accepted was an accurate formulation of the approach to the construction of a commercial contract. Critically in that passage it was stated that if "the words are plain and unambiguous the court must give effect to them even though the result may appear one sided or even unreasonable". But, as was also recognised in that passage, "[i]f the language of the contract is ambiguous ... the court should resolve the ambiguity ... by adopting a construction which accords with 'business common sense' or the commercial purpose of the agreement which appears from its terms and the knowledge, common to the parties, which formed the background to the formation of their agreement". Finally, as was also recognised in that passage, it is only where the plain and unambiguous meaning produces a result which is not only unreasonable but absurd that the court can rely on considerations such as the commercial purpose of the agreement in order to avoid the absurdity.
[26]
[20] The approach at first instance to the construction of clause 9.1(a)(15) was, on a strict reading of the reasons, inaccurate. Regardless of whether or not the judge properly appreciated, when formulating his reasons now under review, the correct approach to construction as stated in his subsequent judgment, the express reasoning in the judgment under review indicates that, without first finding there to be an ambiguity, regard was had to the commercial purpose of the Agreement in order to construe the clause. Indeed his Honour considered that the "plain meaning of these words" accorded with the respondent's contention.
[27]
[21] In the circumstances it is for this Court to apply its mind to the question of construction, and the first matter to be considered is whether or not the appellants' proposition is correct that the plain and unambiguous meaning of the words used in the clause is that there can only be one occasion on which an alteration in the effective control of a Participant from that existing at 1 July 1996 enlivens the option clause.
[28]
[22] To my mind, if nothing else, the very carefully prepared outlines of argument submitted by each side demonstrates that there is an obvious ambiguity in the clause. If one concentrated on the words of the clause alone, not placing it in the context of the overall agreement, it would, in my view, be possible to write a logical and reasoned judgment supporting either of the proposed constructions. The most telling submission made on behalf of the appellants is that on the construction propounded by the respondent the words "from that subsisting at the Commencement Date" have no work to do. It is true that the respondent's construction is not critically dependant upon the presence of those words; indeed its construction would be the plain and unambiguous meaning of the clause if those words were omitted. But the presence of that phrase does not necessarily mean, in my view, that the construction contended for by the appellants is plain and unambiguous. The use of the words in question is akin to stating the obvious - every alteration (with one possible exception) will always constitute a change from that originally existing. But that does not mean that the patently obvious consequence should be ignored in favour of a much more restricted construction. If anything, the patently obvious meaning, where there is also available a limited or more restricted meaning, demonstrates the inherent ambiguity. It cannot be said that the phrase has no relevance, or does no work, if the respondent's contention is adopted.
[29]
[23] I mentioned a possible exception where the expression may have even more significance. If one accepts that there may be a series of alterations in the effective control of a participant, then it is not impossible to envisage a situation where a change reverts that control to that which existed as at the Commencement Date. In those circumstances the option clause would not be enlivened because of the effect of the words "from that subsisting at the Commencement Date". If for no other reason than that, those words are of some significance.
[30]
[24] Against that background the provision is, in my view, ambiguous, and it becomes necessary to resort to the commercial purpose of the agreement in order to resolve that ambiguity.
[31]
[25] The agreement in question is entitled "Joint Venture Agreement", and throughout the document the expression Joint Venture is regularly used. Clause 3.1 provides: "Subject to the further provisions of this Agreement, each of the Participants agrees to form and engage in an unincorporated Joint Venture to conduct the Business Operations". That latter expression "Business Operations" is defined in the agreement as "the business to be operated by the Participants utilising the Assets which business entails", namely, in broad terms, the processing, packaging, marketing and sale of milk within the territory. In the course of argument the Court was told that the relevant territory extended from Beenleigh in South East Queensland to Newcastle in New South Wales. Without going into detail, each of the Participants was obliged to make a significant contribution to the business venture and it is obvious that it was a very major undertaking.
[32]
[26] The relationship between joint venturers is fundamentally governed by the contract pursuant to which the business undertaking is conducted. As was said by Mason, Brennan and Deane JJ in United Dominions Corporation Limited v Brian Proprietary Limitedand Ors[1985] HCA 49; (1985) 157 CLR 1 at 10 - 11:
[33]
"The term 'joint venture' is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture ... will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred. ... One would need a more confined and precise notion of what constitutes a "joint venture" than that which the term bears as a matter of ordinary language before it could be said by way of general proposition that the relationship between joint venturers is necessarily a fiduciary one ... The most that can be said is that whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken. If the joint venture takes the form of a partnership, the fact that it is confined to one joint undertaking as distinct from being a continuing relationship will not prevent the relationship between the joint venturers from being a fiduciary one. In such a case, the joint venturers will be under fiduciary duties to one another, including fiduciary duties in relation to property the subject of the joint venture, which are the ordinary incidents of the partnership relationship, though those fiduciary duties will be moulded to the character of the particular relationship"
[34]
[27] Submissions were not addressed to the Court on the issue whether or not the parties to this agreement were in a fiduciary relationship, but nevertheless the passage just quoted from UDC v Brian demonstrates that in any major commercial undertaking being conducted pursuant to a joint venture agreement there will ordinarily be a relationship of trust between the parties. If the parties cannot work together harmoniously then the venture must be doomed to fail. That philosophy was reflected in the judgment under appeal where it was said with respect to the clause in question that it was designed "to protect a participant in the joint venture against the risk that its partners might change, against its wish, by the acquisition of their shares by a third party, or by a third party acquiring control over the joint venture by acquiring the shares in its holding company." For that reason such agreements usually contain a provision, and this is no exception, to the effect that a participant in a joint venture is not obliged to accept a new partner.
[35]
[28] Clause 9.1 of this Agreement specifies 17 situations in which a participant might become a Defaulting Participant giving rise to the right of the other participants to exercise the option to acquire the interest of the Defaulting Participant. Clause 9.1(a)(15) is designed to deal with the situation where control of a participant changes either because of a change in its major shareholding or a change in the major shareholding of its holding company. In those situations there is effectively a change in the identity of the participant so that the other participant is given the option either to accept the new participant or to buy out the Defaulting Participant.
[36]
[29] Clause 8 of the Agreement deals with the analogous situation where a participant wishes to sell its interest in the joint venture to another party. In that situation a pre-emption right is conferred on the other participants which may be exercised in accordance with the terms of that clause. That again is clearly a provision designed to ensure that a participant is not forced against its will to continue the joint venture where there has been a change in the identity of another participant.
[37]
[30] That is the commercial context in which the clause in question must be construed. If it is designed to ensure that a participant is not forced to work with an entity whom it does not trust or whom for whatever reason does not want to work with, then clause 9.1(a)(15) must be construed so that the option is enlivened every time there is a change in the effective control of a participant. The commercial purpose of the provision would be defeated if it could only operate on the first occasion there was a change from the control existing at the Commencement Date.
[38]
[31] Whilst, in my view, there was an error at first instance in that it was not held that the clause was ambiguous before recourse was had to the commercial purpose of the agreement, the reasoning at first instance was sound if one assumed that the preliminary step had correctly been made. On that basis it can be said that the reasoning at first instance supports the conclusion I have reached.
[39]
[32] It follows that the conclusion reached at first instance as to the proper construction of the clause was correct.
[40]
[33] That construction of the clause is important at the present time because it is accepted by all parties that the appellants became Defaulting Participants in 1998. As at 1 July 1996 all of the shares in Pauls Trading Pty Ltd were held by Pauls Limited which subsequently changed its name to Parmalat Australia Limited; then in August 1998 all of the shares in Parmalat Australia Limited were required by Parmalat Australia Pty Ltd which subsequently changed its name to Parmalat Pacific Holdings Pty Ltd. Since 1998 Parmalat Pacific Holdings Pty Ltd has held all the shares in Parmalat Australia Limited. It should also be noted that in 1998 when those changes occurred, Pauls Trading Pty Ltd acquired all of the shares of Dairyfoods Pty Ltd.
[41]
[34] It is clear that the changes which occurred in 1998 altered the effective control of each of the appellants and in consequence each then became a Defaulting Participant. Due notice of that was given to the respondent, and initially the respondent was requested to give its written consent to that alteration. There followed extensive negotiations between the parties which resulted in a series of agreements being entered into. The Joint Venture Agreement was amended in some respects (for example, the respondent's interest was increased to 50 per cent), Pauls Trading Pty Ltd paid some money to the respondent, and other related agreements were entered into. It is not necessary to refer in detail here to those agreements.
[42]
[35] It is sufficient to say that it is now agreed between all the parties that the respondent did not give formal written consent accepting the 1998 alterations and it did not exercise the option then conferred on it by clause 9 of the agreement. Those are the alterations to effective control of the appellants which, if the appellants' contentions on the proper construction of the clause were accepted, would be the only alterations to their effective control which would enliven the option provisions in favour of the respondent.
[43]
[36] Events then occurred in 2005 which the respondent contends again constituted an alteration in the effective control of the appellants from that which subsisted at the Commencement Date. Given the construction placed by this Court on the clause, if that alteration is established, the respondent would be entitled to exercise the option clause in accordance with the terms of the agreement. As already foreshadowed, that option would have to be exercised, given the terms of the agreement, by 22 April 2006.
[44]
[37] The appellants also disputed the contention of the respondent that there had been a change in the effective control of the appellants in or about October 2005.
[45]
[38] Since August 1998 all of the ordinary shares in Parmalat Pacific Holdings Pty Ltd have been held by Parmalat Belgium SA, and nearly all of the shares in that company since that time have been held by a company called Dalmata SrL. In turn from August 1998 to 1 October 2005 all of the shares in Dalmata SrL were held by Parmalat Finanziaria SpA. Pursuant to a decree of the Italian Government in December 2003 an Extraordinary Administrator was appointed of Parmalat Finanziaria SpA. Then on 1 October 2005 pursuant to an order of a court in Parma in Italy a composition was approved by which the assets of Parmalat Finanziaria SpA (including its share in Dalmata SrL and Parmalat Belgium SA) were transferred to a new and separate company called Parmalat SpA. The consequence of that was Parmalat SpA replaced Parmalat Finanziaria SpA as the ultimate holding company of Parmalat Australia Limited and each of the appellants. Share transfers effecting those changes were duly made.
[46]
[39] At first instance it was held that the change in ownership of the holding company constituted an alteration in the effective control of each of the appellants and enlivened the option provisions of the agreement. In consequence at first instance a declaration was made "that on or about 22 October 2005 each plaintiff became a Defaulting Participant within the meaning of cl 9.1(a) of the joint venture agreement dated 27 June 1996 between the plaintiffs and the defendant by reason of the transfer of shares in Dalmata SrL and Parmalat Belgium SA to Parmalat SpA by Parmalat Finanziaria SpA on or about 1 October 2005". In this Court the appellants challenged that finding of fact.
[47]
[40] At the outset it is important to note that in cl 9.1(a)(15) effective control is said to have altered "where any person or any person together with their Associates" acquires the power to do something. In the present context, that means that the Court must consider the position of Associates of the entity having an entitlement to vote at a general meeting of each of the appellants or to appoint directors of the appellants. Further, insofar as the court is concerned with the exercise of voting power pursuant to (15)(a), direct or indirect entitlement to exercise voting power is relevant; to that extent the provision in (15)(a) is different to the requirement found in (15)(b).
[48]
[41] At the time this agreement was made the Corporations Law was in force; in the Agreement the term "Associate" was said to have the meaning ascribed to it under the Corporations Law. That Law has now been superseded by the
[49]
Corporations Act 2001 (Cth), ("the Act") but the relevant provisions are substantially the same, if not identical. The reasons at first instance refer to the provisions of the Act and that was the course followed in argument.
[50]
[42] Section 11 of the Act (also s 11 of the Law) provides essentially that a reference to an "associate" includes a reference to "a related body corporate". Section 50 of each statute then provides:
[51]
(b) a subsidiary of another body corporate; or
(c) a subsidiary of a holding company of another body corporate;
[52]
the first-mentioned body and the other body are related to each other."
[53]
[43] "Subsidiary" is then defined in s 46 of each statute relevantly as follows:
[54]
"A body corporate (in this section called the first body) is a subsidiary of another body corporate if, and only if:
. . .
[55]
(b) the first body is a subsidiary of a subsidiary of the other body."
[56]
[44] Then s 49 of each statute provides an extension of that definition; it is in the following terms:
[57]
"A reference in paragraph 46(b) . . . to being a subsidiary . . . includes a reference to being a subsidiary . . . of the first-mentioned body by virtue of any other application or applications of this Division."
[58]
[45] At first instance it was held that s 49 provided for the process referred to in s 46(b) to be repeated, so that where one has a situation where there is a chain of companies, all the shares in each being held by the company immediately above it in the chain up to the ultimate holding company, then each of the companies in that chain is a subsidiary not only of the company immediately above it but also of the ultimate holding company. I can see no other way of construing s 49; and it was noted at first instance that Professor Ford in his text book Principles of Corporations Law at paragraph 4.330 also places that construction on the section.
[59]
[46] Particularly given the words "directly or indirectly" in (15)(a) there is, in my view, no doubt that in October 2005 there was an alteration in the effective control of each of the appellants upon Parmalat SpA acquiring all the shares in Dalmata SrL and Parmalat Belgium SA on transfer from Parmalat Finanziaria SpA. The reasoning of the learned judge at first instance was clearly correct in this regard.
[60]
[47] The question whether or not (15)(b) was also engaged was argued at first instance but not specifically dealt with in the reasons for judgment. As already noted the position may be different because the expression "directly or indirectly" does not appear therein. It is not strictly necessary to resolve that matter as it is sufficient to conclude that (15)(a) is engaged. However, there is force in the submission of senior counsel for the respondent that the use of the term "capacity" in (15)(b) leads inevitably to the conclusion that (15)(b) was also engaged by the alteration in the effective control of each of the appellants which came about in October 2005.
[61]
[48] It follows in my view that there is no substance in any of the issues raised by the appellants on the hearing of the appeal and the appeal should be dismissed with costs.
[62]
[49] JERRARD JA: In this appeal I have read the reasons for judgment of Williams JA and respectfully agree with those and the orders proposed by his Honour. I add that the appellant's construction of clause 9.1(a)(15) is the more obvious and natural one, but not the only construction. The respondent's construction is open, and the phrase "[i]f .....[e]ffective control of a Participant....is altered.....from that subsisting at the Commencement Date...." is accordingly ambiguous. As explained by Williams JA and the learned trial judge, the respondent's alternative construction accords considerably more with the commercial purpose of the Agreement and with the essential nature of a joint venture.
[63]
[50] The respondent's construction is open because it is common enough to use the phrase "altered from" in the sense in which the learned trial judge construed it and for which the respondents argue, namely to identify the state against which any subsequent alteration is to be compared.[10] For example, one might write that the design and degree of mechanical sophistication of a standard Ford sedan has been altered many times from that subsisting as at the period of production of the Model T. The comparison made in the sentence is between each altered version of a standard Ford sedan and the Model T. I accordingly agree that the appeal should be dismissed.