For the separation of shareholders, a valuation mechanism was agreed and thereafter one party will purchase the other's shares. The experts appointed decided not to apply the Discounted Cash Flow (DCF) system because they set that in this case it will not duly reflect the valuation. One chose to apply the Runoff method and the other the Net Asset Value (NAV) method. One of the parties argued that this construction is against its intent at the time of entering the agreement and the agreement should be construed accordingly.
The Court held that construction of an agreement is made pursuant to the intention of both sides and if such cannot be traced, pursuant to the joint objective purpose of the agreement. Thus, one cannot construe the agreement pursuant to the subjective intent of one of the parties if it was not written in the agreement.
Caselaw sets that the DCF method is the preferred method for valuation, but this is not the only method. Because the experts were aware of the DCF method, applied that method first, but chose a different method, under their discretion and due to the fact that the data of the company justified application of a different method, the Court will not interfere with their discretion.