BL-2025-000377 - [2025] EWHC 2976 (Ch)

Even if Mr Gerbi’s hearsay suggestions regarding Mr Dekel’s state of mind are to be taken to be true, we are concerned with the intentions of the actual parties to the Management Agreement (GMG Real Estate and CLL BVI) objectively considered. Mr Dekel’s subjective considerations can do no more than provide background context. However, the difficulty is that matters were actually structured in terms of investors such as Mr Dekel subscribing for shares in CLL BVI by way of investment in that company so as to enable it to raise the funds to be used to finance the Property and the Project. As has been demonstrated in considering the reflective loss issue, what was envisaged was not that Mr Dekel would be repaid his money with some sort of return, but rather that, as the holder of “Participating Shares” in CLL BVI he would, if the Project was successful, receive dividends and distributions in that capacity by way of a return on his investment.

In this context, and considering the matter objectively, I consider it difficult to see that the parties to the Management Agreement can properly be considered to have intended that such holders of “Participating Shares” CLL BVI should be regarded as “providing finance” for the Property or Project within the meaning of clause 20.1.2 of the Management Agreement for, essentially, the reasons advanced by the Defendants.

To the extent that the relevant wording of clause 20.1.2 of the Management Agreement does admit of ambiguity, I am satisfied that the interpretation suggested by the Defendants more readily lends itself to commercial common sense, than that suggested by Mr Dekel. I see a real practical difficulty in a situation where the shareholders of the company that is the contractual promisee themselves have a personal right to sue upon the contract in question. As has been seen when considering the reflective loss issue, this is a practical consideration behind the rule in Foss v Harbottle – see Marex at [37].

I have considered whether there is anything further by way of factual background that might subsequently emerge to put a different complexion on matters at trial, but I am satisfied that this is unlikely.

I therefore conclude that, as a matter of proper interpretation thereof, clause 20.1.2 of the Management Agreement does not extend to apply to Mr Dekel on the basis that he is not a party that “provided finance” within the meaning of that clause. Consequently, I do not consider that it is open to Mr Dekel to rely upon s. 1 of the 1999 Act so as to enforce the terms of the Management Agreement in his own right.

Consequently, even apart from my decision in relation to the question of reflective loss, I am satisfied that the Defendants are entitled to summary judgement on the claim given my determination of the proper interpretation of clause 20.1.2 of the Management Agreement.