Yaem Pty Ltd as trustee for R & R Discretionary Trust v MMP Industrial Pty Ltd

By an agreement dated 18 February 2022, the plaintiffs sold their business to the defendants with effect from 8 April 2022 for $42 million. $39 million less adjustments was paid on that day, with the remaining $3 million put into escrow and to be payable twelve months later if certain conditions were met.

The agreement defined the $3 million as the “deferred payment”. It is the plaintiffs’ position that they are now entitled to the $3 million payment. That is disputed by the defendants.

The defendants have made a cross claim, the kind commonly seen in cases such as this, for alleged breach of warranty and alleged misleading or deceptive conduct and damages.

The critical clause in the contract is cl 5.4(a)(i) which provided:

The date “12 months after the Completion Date” was 8 April 2023, which was Easter Saturday.

Clause 1.4 of the agreement provided:

One of the plaintiffs’ contentions is that the effect of cl 1.4 was that the relevant date for the purposes of cl 5.4(a)(i) was 6 April 2023, being the day before Good Friday.

It is also the plaintiffs’ contention that cl 5.4(a)(i) has been enlivened. That is said to be because although it is said to be common ground that Mr Stewart was not actively working in the business, as specified in cl 5.4(a), he was, in effect, prevented from doing so by the defendants’ conduct.

In those circumstances, the plaintiffs seek to have determined, as a separate question, [1] the following issues:

As to the issue in (a), I can see that that is an issue which may well able to be resolved as a pure question of the proper construction of the contract.

However, the issue in (b) appears to me potentially to involve a range of disputed facts.

In support of the contention that that second question will be decided separately, the plaintiffs point to two matters which it is said will not be in dispute.

The first is that on 12 April 2022, Mr Stewart said to the sole director of the defendants, Mr Andrew King:

I am informed that Mr Stewart will not dispute that that conversation took place.

The second undisputed fact is that on that same day, Mr King sent Mr Stewart an email saying:

It is the plaintiffs’ position that it follows from those two matters that by operation of what was described as the “prevention principle”, the defendants have caused cl 5.4(a)(i) not to be engaged and that is a question that is apt to be determined separately because of the undisputed matters to which I have referred.

As is well known, the Court is reluctant to order the determination of a separate question if there is any potential for there to be a dispute as to the facts. In this case, there is no statement of agreed facts as to the matters that I have referred. I am told there that will be a number of factual disputes including, as to whether or not, it will be necessary for Mr Stewart to show he remained ready, willing and able to perform work throughout the relevant period, and whether he was so ready, willing and able.

I think the defendants have correctly characterised the position by saying:

In those circumstances, I am not satisfied that it is appropriate to order the separate question proposed and the Notice of Motion is dismissed with costs.