TX Australia Pty Ltd v Network Ten Pty Ltd; Network Ten Pty Ltd v TX Australia Pty Ltd

1. [1]

   TX Australia Pty Ltd (“TXA”) owns and operates television transmission and retransmission infrastructure in five mainland metropolitan cities.

2. [2]

   On 14 December 1999 each of TXA and the defendants, Seven Network (Operations) Ltd, Nine Network Australia Pty Ltd, and Network Ten Pty Ltd executed a “Shareholders Agreement”.

3. [3]

   By the Shareholders Agreement, each of Seven, Nine and Ten agreed to subscribe for one third of the shares in TXA. They did so, and each of Seven, Nine and Ten has at all material times been the registered owner of one third of the issued share capital of TXA.

4. [4]

   Pursuant to the Shareholders Agreement, each of Seven, Nine and Ten agreed to transfer to TXA the transmission and retransmission facilities that they had hitherto operated separately, together with various licences relevant to those operations.

5. [5]

   Clause 10.3 of the Shareholders Agreement provides that “under no circumstances” is any of Seven, Nine or Ten entitled to a retransfer to it of the assets it transferred to TXA at the outset of the Shareholders Agreement.

6. [6]

   On 14 June 2017 the directors of Ten resolved to appoint voluntary administrators pursuant to s 436A of the Corporations Act 2001 (Cth).

7. [7]

   On 30 June 2017 receivers and managers were appointed to the assets of Ten.

8. [8]

   The administrators and receivers and managers have since retired.

9. [9]

   TXA took the view that by reason of the appointment of the administrators and receivers and managers, events of default had occurred under cl 10.1 of the Shareholders Agreement so as to engage what amounts to a compulsory disposal mechanism in cl 10.2 (a) of the Shareholders Agreement. The effect of the disposal mechanism, if engaged, was that Ten was obliged to sell its shares in TXA to Seven or Nine or a third party if neither Seven or Nine wished to purchase the shares.

10. [10]

    The Shareholders Agreement provides that the “price for the defaulting Shareholder’s” shares would be “a price determined and agreed by the defaulting Shareholder” and TXA or, in the absence of such an agreement (there was none), “a price determined by [TXA’s] auditor” who is to act as an expert and whose decision “will be final and binding” (cl 10.2(b)(i) and (ii)).

11. [11]

    On 13 July 2017 TXA requested its auditor, PricewaterhouseCoopers Australia (“PwC”), to “determine the price of Ten’s relevant shareholding pursuant to the Shareholders Agreement”.

12. [12]

    On 30 August 2017 PwC sent TXA a letter headed “Engagement Letter - valuation of Ten Network shares in [TXA]”. I will refer to this as the Engagement Letter.

13. [13]

    On 10 January 2018 PwC produced a document “Valuation of Network Ten Pty Ltd’s shareholding in TX Australia Pty Ltd as at 30 June 2017”. I will refer to this as the PwC Report.

14. [14]

    Each of TXA, Nine and Seven contend that the PwC Report determined that the value of Ten’s shareholding in TXA was nil as at 30 July 2017.

15. [15]

    On 29 January 2018 TXA, as agent for Ten, offered Ten’s shares in TXA to Seven and Nine for a total price of $1 (50 cents each).

16. [16]

    On 6 February 2018 Seven accepted the offer. On 16 February 2018 Nine accepted the offer.

The issues

1. [17]

   Four questions arise.

2. [18]

   First, was the compulsory disposal mechanism in cl 10.2 of the Shareholders Agreement triggered by the voluntary administration and receivership of Ten?

3. [19]

   Second, was PWC entitled to proceed on the basis that “price” in cl 10.2 refers to the “market value” of Ten’s shares (as TXA, Seven and Nine contend) rather than the “fair and reasonable price” for the shares (as Ten contends)?

4. [20]

   Third, did the PwC Report “determine” the price of Ten’s shares in accordance with cl 10.2(b)(ii) of the Shareholders Agreement and, if so, for what amount?

5. [21]

   Fourth, is cl 10.2(b)(ii) of the Shareholders Agreement void for uncertainty?

Decision

1. [22]

   In my opinion, the answers to those four questions are:

   1. (1)

      Yes;

   2. (2)

      Yes;

   3. (3)

      Yes, $0;

   4. (4)

      No.

First issue – was cl 10.2 triggered?

1. [23]

   Clause 10.1 of the Shareholders Agreement provides:

2. [24]

   Clause 10.2 provides:

3. [25]

   Clause 10.2(a) refers to “a transfer notice pursuant to Clause 9(b)”.

4. [26]

   Clause 9(b) provides:

5. [27]

   Clause 9(f) provides:

6. [28]

   It is common ground that the events in cll 10.1(h) and (i) occurred with respect to Ten.

7. [29]

   Thus, on the face of it, cl 10.2 was engaged. That is because cl 10.1 provides that “if” an event of the kind described in cll 10.1(a) to (j) occurs “then” cl 10.2 applies.

8. [30]

   Correspondingly, cl 10.2(a) provides that “if any one of the events” referred to in cl 10.1 occurs (except cll 10.1(b), (c), (d) and (e), which are events concerning TXA itself) the “defaulting Shareholder” is “irrevocably deemed” to have given to the “non-defaulting Shareholders” and TXA a transfer notice pursuant to cl 9(b).

9. [31]

   However Ten submits that on the proper construction of the Shareholders Agreement, cl 10.2 is only triggered if two requirements are satisfied; namely, first, that an event under cl 10.1 occurs in respect of a shareholder; and second, that shareholder is “in breach of any obligation to be observed and performed by it” under the Shareholders Agreement and that shareholder “fails to rectify that breach within 30 days of receiving notice from the other Shareholders requiring rectification” for the purpose of cl 10.1(a).

10. [32]

    Thus Ten submits that “the preferred construction” of cl 10.1:

11. [33]

    Ten submits that cl 10 of the Shareholders Agreement is infelicitously drafted. In particular, Ten points to cl 10.1(j) which provides that cl 10.2 applies if “the Shareholders agree unanimously in writing to wind up [TXA]”. As Ten points out, in that circumstance the compulsory disposal mechanism in cl 10.2 could not operate as each of Seven, Nine and Ten would necessarily be involved in a unanimous agreement to wind up TXA.

12. [34]

    So much may be accepted. It may be that at this point in the Shareholders Agreement “something has gone wrong with the language” (to adopt the words of Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 at [25]) and that the Court would construe the Shareholders Agreement to endeavour to “avoid absurdity or inconsistency” (as did the High Court in Fitzgerald v Masters (1956) 95 CLR 420, especially per Dixon CJ and Fullagar J at [426]-[427]); for example by including a reference to cl 10.1(j) in the parenthetical exceptions in cl 10.2(a)). But that hypothetical circumstance is not before the Court.

13. [35]

    In any event, I do not see how this infelicity of language compels the conclusion that cl 10, as a whole, should be construed as Ten contends.

14. [36]

    I think TXA is correct to submit that Ten’s argument finds no reflection in – and is contrary to – the text of cl 10.

15. [37]

    Ten’s argument involves reading cl 10.1 as if:

16. [38]

    Thus, for Ten’s construction to be correct, cl 10.1 would have to be read as follows:

17. [39]

    This amounts to a major rewriting of the clause that cannot be justified.

18. [40]

    Ten also points to:

    1. (1)

       the acknowledgment in cl 2.30 of the Shareholders Agreement that each of Seven, Nine and Ten had made initial capital contributions to TXA of an excess of $2.1 million;

    2. (2)

       statements in Ten’s 1999 Annual Report that Ten would “share with the other commercial broadcasters in the benefits of merged transmission and tower facilities” to be managed by TXA; and

    3. (3)

       a statement in Seven’s 2000 Annual Report that the involvement of Seven, Nine and Ten in TXA “allows all three networks to avoid duplication of essential infrastructure and provides economies to the industry as a whole”.

19. [41]

    In those circumstances Ten submits:

20. [42]

    I do not see how the statement in Ten’s 1999 Annual Report or the statement in Seven’s 2000 Annual Report can be received to construe the Shareholders Agreement. Although the statement in Ten’s 1999 Annual Report was made a few days before the Shareholders Agreement, it was a statement made by Ten to its shareholders. The statement in Seven’s 2000 Annual Report was made after the date of the Shareholders Agreement.

21. [43]

    Nor is there evidence before me that “a serious attempt at financial rehabilitation [of Ten] was on foot” when the administrators and receivers were appointed”, although none of TXA, Seven or Nine objected to the submission on that basis; presumably because it is common ground.

22. [44]

    Even if the material is available to construe the Shareholders Agreement, and accepting that each of Seven, Nine and Ten saw a “real commercial importance in the transfer of towers and transmitters to the joint venture company”, I do not see how it could be inferred that the parties intended the compulsory disposal mechanism in cl 10.2 might not operate, in accordance with its terms, in the event one of the parties went into administration or receivership.

23. [45]

    As TXA submits, the appointment of an administrator or receiver would confer a right on those persons to appoint different representative directors to the board of TXA in circumstances where those directors would, by reason of cll 5.3 and 6.1 of the Shareholders Agreement, have a veto power over a range of business decisions to be taken by the board.

24. [46]

    TXA also submits:

25. [47]

    I was not directed to any evidence establishing the matter in the second sentence. However Ten did not object to the submission on that basis; again, presumably because it is common ground.

26. [48]

    Ten also submits that the parties should not lightly be taken to have intended that a shareholder that goes into administration be deprived of the “valuable rights” conferred by cl 2.32 (see [41] above).

27. [49]

    But that clause does not give Ten any right “to the merged transmission and tower facilities” referred to in those submissions. It merely gives Ten a right of access to the relevant “Sites” and “Leasehold Sites” to ensure that its broadcast signal is being transmitted free of technical problems.

28. [50]

    Ten also submits that the phrase “defaulting Shareholder” in cl 2.2 is congruent only with the circumstance described in cl 10.1(a) and not with the other circumstances contemplated by cl 10.1 (especially 10.1(h) (the appointment of a receiver and manager) or cl 10.1(i) (the appointment of an administrator)).

29. [51]

    I see no such incongruity. I accept Nine’s submission that the phrase “defaulting Shareholder” is simply a convenient shorthand description of a shareholder in respect of whom an event in cll 10.1(a), (f), (g), (h) or (i) has occurred. Further cl 10.3(c) refers to each of the events enumerated in cl 10 as being “an event of default”.

30. [52]

    In those circumstances, I see no reason to give cll 10.1 and 10.2 a meaning other than their natural meaning. The appointments of administrators and receivers are events of default. The compulsory disposal mechanism in cl 10.2 is engaged.

Second issue – the meaning of “price”

1. [53]

   The Shareholders Agreement speaks of “the price for the defaulting Shareholder’s” shareholding in TXA.

2. [54]

   TXA, Seven and Nine contend that, in this context, “price” means the “market value” of the shares. Ten contends that “price” means the “fair and reasonable price” of the shares.

3. [55]

   In a sense, the point is moot.

4. [56]

   That is because, by cl 10.2(b)(ii) of the Shareholders Agreement, the parties agreed that “price” would be determined by TXA’s auditor, PwC, who would “act as an expert” and “whose decision would be final and binding”. The parties made no provision in the Shareholders Agreement as to the standard or methodology by which “price” was to be determined. They left that task to PwC.

5. [57]

   PwC expressed its conclusions by reference to “market value” rather than a “fair and reasonable” price. I explain below how that came about. TXA, Seven and Nine contend that, on the proper construction of the Shareholders Agreement, PwC was correct to do so. Ten contends it was not.

6. [58]

   But Ten does not suggest the course PwC adopted was one that was unavailable, let alone irrational. And, provided PwC carried out the task entrusted to it – to “determine” a “price” - the fact that it may have erred or taken irrelevant matters into account does not alone “render the determination challengeable” (Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd (2015) 90 NSWLR 367; [2015] NSWCA 275 at [74] (Bathurst CJ, with whom Beazley P and McColl JA agreed).

7. [59]

   Further, as Cole J said in Triarno Pty Ltd v Triden Contractors Ltd (1992) 10 BCL 305 at p 5, in these circumstances “it is a matter for either agreement between the parties, or determination by the independent experts as to the procedures to be followed” and, “if the parties have not by their deed agreed the procedures to be followed upon an expert determination, that is not a void the court can fill”.

8. [60]

   Where the parties have not directed an expert to adopt a particular methodology, it is not for the Court to interfere in an expert’s decision as to the methodology to be adopted.

9. [61]

   For those reasons, it matters not for practical purposes whether, on the proper construction of the Shareholders Agreement, “price” should be construed as meaning “market value” or “fair and reasonable price”.

10. [62]

    However, in deference to the detailed submissions of the parties directed to this question, I will deal with it. My opinion is that on the proper construction of the Shareholders Agreement, “price” means “market value”. It follows, for what it is worth, that my opinion is that PwC was correct to adopt this construction.

11. [63]

    Ten did not direct attention to any cases dealing with the meaning of “fair and reasonable price”. Indeed, it made no positive case for construing “price” as meaning “fair and reasonable price”. Rather, it advanced the negative proposition that unless the Shareholders Agreement be so construed, cl 10.2(b)(ii) would be void for uncertainty.

12. [64]

    Determination of a “fair and reasonable price” on any given date involves consideration of what price is “fair” or “reasonable” in light of the individual circumstances of the vendor and purchaser.

13. [65]

    Indeed, in its submissions, Ten accepts that in circumstances where cl 10.2 is engaged “it may well be appropriate to consider the value of the shares to the seller as an input (albeit not a determinative input) in to what is fair and reasonable in the circumstances” (emphasis added).

14. [66]

    But what is “fair” and “reasonable” might also involve consideration of the value of the shares to the purchaser.

15. [67]

    In circumstances where the purchasers are the other shareholders in TXA, those circumstances may not be the same for each purchaser.

16. [68]

    If neither of the “non-defaulting Shareholders” wishes to purchase the shares, the “defaulting Shareholder” may sell their shares to a third party. In that instance, the defaulting shareholder must sell those shares “at the same price as that offered to the purchasing Shareholders” (cl 9(f), see [27] above).

17. [69]

    In that event, the circumstances of that third party shareholder would, or at least might, have to be considered.

18. [70]

    This could give rise to a very wide ranging enquiry and lead to a circumstance where the “price” to be paid to the defaulting Shareholder might, on any given day, vary depending upon the individual circumstances of the defaulting shareholder, the non-defaulting shareholders, or the third parties in question.

19. [71]

    It appears to me unlikely that the parties would have intended this result.

20. [72]

    It also appears to me that it would be unlikely that, had the parties intended that “price” have this meaning, they would have chosen TXA’s auditor to make a final and binding expert determination about the matter.

21. [73]

    TXA’s auditor is well suited to determine independently the market value of a defaulting shareholder’s shares in TXA because it would have detailed understanding of the financial position of TXA.

22. [74]

    In contrast, TXA’s auditor is less suited to conducting the more wide-ranging task of determining the “fair and reasonable price” of the shares which, as I have mentioned, would involve having regard to the particular circumstances of the shareholders, and possibly that of a third party; in respect of whom TXA’s auditor may well have no knowledge at all.

23. [75]

    In MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 (Spigelman CJ, with whom Mason P and Hodgson JA agreed) made a similar point in respect of an expert determination by an auditor and chartered accountant of the “fair market value” of the shares in question.

24. [76]

    Spigelman CJ said (at [59]):

25. [77]

    The Chief Justice was dealing with a different expression (“fair market value”) than that under consideration here (“fair and reasonable price”). However the Chief Justice’s point carries even greater weight in the circumstance before me.

26. [78]

    It is far more likely the parties intended TXA’s auditor would apply an objective standard of valuation. The “market value” is such a standard.

27. [79]

    This construction of “price” is consistent with the use made of the word “price” in other clauses of the Shareholders Agreement.

28. [80]

    For example, cl 10.3(b) provides that if any of the events specified in cll 10.1(b) to (e) occurs (being events concerning TXA itself, such as the passage of resolution for its winding up), then cl 10.4 shall apply. In that event, the shareholders must appoint a liquidator to TXA and cause the liquidator to sell TXA’s business “at a price and on terms acceptable to the Shareholders”. What must there be contemplated is that the shareholders cause the liquidator to sell the business. This would occur at whatever price acceptable to the shareholders that could be achieved in the market. This would not necessarily be at a “fair and reasonable price”.

29. [81]

    Further the reference to “price” in cl 9, especially in cl 9(f) which deals with the possible sale to a third party, could only be a reference to an objectively ascertained market price.

30. [82]

    For those reasons, my opinion is that the auditor was correct to determine “the price for the defaulting Shareholder’s Relevant Proportion” on the basis of market value, and not the “fair and reasonable” price that could be attributed to those shares.

Third issue – did PwC “determine” the price of Ten’s shares and, if so, in what amount?

1. [83]

   Ten submits that PwC did not, in the PwC Report, “determine” a “price for the defaulting Shareholder’s Relevant Proportion” and that PwC’s purported determination is open to review on that basis.

2. [84]

   As Bathurst CJ explained in Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd, to which I have already referred, the question of whether a determination is “open to review” depends (relevantly to this case) on “whether or not the expert has carried out the task which he or she was contractually required to undertake”. A determination can only be set aside “if the expert [has] not performed the task contractually conferred on him or her, but rather performed some different task, or carried out his or her task in a way not within the contractual contemplation of the parties, objectively ascertained” (at [74] and [75]).

3. [85]

   Ten submits that PwC has not “carried out the task which it was contractually required to undertake” for a number of reasons:

4. [86]

   Consideration of these points requires examination of some circumstances leading up to the PwC Report. In the correspondence to which I next refer, I have emphasised passages which are relevant to the various points made by Ten.

5. [87]

   As I have mentioned, on 13 July 2017 TXA instructed PwC to “determine the price of Ten’s relevant shareholding pursuant to the Shareholders Agreement.

6. [88]

   On 31 July 2017 PwC provided a draft engagement letter (dated 28 July 2017) which said:

7. [89]

   On 1 August 2017 TXA replied:

8. [90]

   On 7 August PwC wrote to TXA:

9. [91]

   On 21 August 2017 TXA replied:

10. [92]

    On 28 August 2017 TXA wrote to PwC:

11. [93]

    On 30 August 2017 PwC sent TXA the Engagement Letter, which stated:

12. [94]

    On 20 November 2017 TXA wrote to PwC:

13. [95]

    PwC submitted its report to TXA under cover of a letter of 19 January 2018. I will refer to it as the Covering Letter.

14. [96]

    In that letter PwC stated:

15. [97]

    The PwC Report adopts an orthodox definition of market value. PwC assessed such value on a discounted cash flow basis after considering a range of alternative valuation methodologies. There is no dispute that PwC was correct to adopt this methodology. Nor would any such dispute be relevant: see [58] and [59] above.

16. [98]

    Under the heading “[a]t a glance – our view” PwC stated:

17. [99]

    Later in the Report, under the heading “[p]otential scenarios and valuation outcomes” PwC expressed various “value outcomes” depending on a range of “[p]otential ownership structures” and “operating scenarios”.

18. [100]

    Relevantly, that part of the report reads as follows:

19. [101]

    Later in the Report PwC stated:

20. [102]

    Immediately following, PwC stated:

21. [103]

    In appendix 3 to the Report, PwC prepared a “discounted cash flow analysis”.

22. [104]

    In that part of the Report PwC expressed the opinion that the market value of Ten’s shareholding in TXA “as is (Ten retains its shareholding)” and if “Ten exists and does not use the services [of TXA]” as nil, in each case.

23. [105]

    PwC continued:

24. [106]

    I turn now to Ten’s four points (see [85] above).

25. [107]

    Ten submits that PwC had specified two preconditions to their ability to make a determination as to a “price” for Ten’s shares as at 30 June 2017, that neither precondition had been met, and that therefore PwC had not made any determination of price.

26. [108]

    Ten points to the statement in PwC’s letter of 7 August 2017 (see [90] above) that their ability to “undertake this work” would depend upon, first, “receiving legal advice on the appropriate interpretation to be placed upon the term ‘price’” in cl 10.2 of the Shareholders Agreement, and second, receipt of information from TXA “relevant to the application of the methodology upon which [PwC] would rely” including information “as to the cost of any ongoing broadcasting services that would be provided to Ten on an arm’s length basis”.

27. [109]

    As to the obtaining of legal advice, on 21 August 2017 TXA requested PwC to assume that “price” meant market value: see [91] above. The Engagement Letter and the PwC Report itself show that PwC did make this assumption for the purposes of the PwC Report.

28. [110]

    In the Covering Letter, PwC said that it had understood that TXA had obtained legal advice about that matter. That may have been a reasonable assumption for PwC to make. But TXA did not say it had received such legal advice. In any event, as PwC stated in the Covering Letter, on 30 November 2017 TXA “advised [PwC] that this was an assumption [TXA] wanted [PwC] to adopt, rather than being a reflection of any legal advice TXA may have received”.

29. [111]

    I will deal later with the significance of PwC’s adoption of the assumption. But I do not see PwC’s 7 August 2017 statement that its ability to undertake this work was dependent upon legal advice being received, as amounting to an unfulfilled condition precedent to PwC making the determination requested.

30. [112]

    Until 30 November 2017 PwC (wrongly it seems) assumed that TXA had received legal advice about that question. Once the true position emerged, PwC proceeded to produce the PwC Report.

31. [113]

    I see no unfulfilled condition precedent.

32. [114]

    As to PwC’s second request concerning the cost of any ongoing broadcasting services to be provided to Ten, PwC reiterated in the Covering Letter that “the nature of the future arrangements between Ten and TXA is a crucial element in any evaluation”.

33. [115]

    PwC’s point was that, assuming Ten was no longer a shareholder of TXA, the amount (if any) it agreed to pay TXA for the provision of the transmission services would affect the value of its shares in TXA as at 30 June 2017.

34. [116]

    It is common ground that there was no long term commercial contract in place between TXA and Ten at 30 June 2017.

35. [117]

    PwC recorded that fact in the Covering Letter when it stated:

36. [118]

    Indeed, on 24 November 2017 Ten’s solicitors wrote to TXA:

37. [119]

    For that reason, on 20 November 2017 TXA wrote to PwC with an estimate of “the most likely annual fee” that Ten might pay TXA for the transmission services should Ten seek, and TXA agree to provide, them. The estimate was $3.2 million per year plus GST.

38. [120]

    As PwC records in the Covering Letter, it did not use that figure in its calculation because TXA was not able to confirm that that figure “reflect[ed] arm’s-length arrangements”. Instead, PwC used a quotation that TXA had evidently given the Australian Broadcasting Corporation for the provision of transmission services “because it represented the only available evidence of which [PwC was] aware of an arm’s length arrangement involving TXA”.

39. [121]

    I discuss the significance of this below. The point for present purposes is that PwC was not specifying a condition precedent to its ability to express an opinion as to the price of Ten shares. It was explaining why, and on what basis, it ultimately expressed a range of opinions rather than the “single point estimate” that it had foreshadowed in the Engagement Letter; see [123] to [130] below.

40. [122]

    For these reasons, my conclusion is that there were no unfulfilled conditions precedent.

41. [123]

    Ten submits that PwC did not put forward the PwC Report “as a determination”.

42. [124]

    In that regard, Ten relies upon the statement made by PwC at the conclusion of the Covering Letter that:

43. [125]

    PwC did not there state that it had been unable to “provide a valuation” of the kind called for by cl 10.2(b)(ii) of the Shareholders Agreement.

44. [126]

    What it said was that it had not been able to provide a valuation which “satisfies the purpose of our original engagement letter”.

45. [127]

    As I have mentioned, PwC had stated in the Engagement Letter that there is “no indisputable single value and we normally express our conclusions as falling within a likely range” but that:

46. [128]

    I read PwC’s statement at [124] above to mean that, notwithstanding what it had said in the Engagement Letter, PwC did not feel able to provide a “single point estimate”.

47. [129]

    Hence, PwC concluded the Covering Letter:

48. [130]

    I do not read that statement as signifying that PwC had not made a determination in the PwC Report itself.

49. [131]

    Analysis of the PwC Report makes clear that it did.

50. [132]

    Clause 10.2(b)(ii) of the Shareholders Agreement requires PwC to determine “a price” for Ten’s shares.

51. [133]

    Ten submits that a determination of “a price” should be construed to mean “a single price for those shares”. Further, that “from reading the PwC Report, however, there is no objective indication of any single figure which PwC has decided as the price of Ten’s shares”.

52. [134]

    It is true that PwC expressed a number of outcomes as to the market value of Ten’s shares depending on what it described as various “scenarios”.

53. [135]

    The first scenario is on the basis of TXA “as is”. That is, if “Ten ceases to be a customer of TXA and therefore Seven and Nine will bear all the excess operating costs and capital expenditures” of TXA. PwC opined that in that circumstance “given a current negative equity position of TXA no additional value would be received by Seven and Nine in holding the additional shares in TXA” (see [98] above at the fourth bullet point) and that Ten’s shares would have no value (for example see [100] above).

54. [136]

    PwC did consider an alternative “scenario”; namely “if a commercial contract was put in place with Ten as a customer”. In that event PwC opined that Ten’s shares would have a market value of $42.9 million (assuming it paid $7.3 million per annum for 20 years; the ABC figure see [98] above) or $15 million (assuming it paid $3.2 million per annum for 20 years; TXA’s estimate of “the most likely annual fee”, see [94] above).

55. [137]

    I do not think it follows from the fact that PwC put forward a range of “scenarios” that it failed to reach a “determination”.

56. [138]

    The relevant determination will, as it were, self-select depending on the facts.

57. [139]

    It is common ground that the first scenario reflects the facts; namely, the “as is” position.

58. [140]

    On my reading of the PwC Report, that is the relevant “determination” that PwC made.

59. [141]

    As I have described, PwC sought guidance from TXA as to the meaning of “price” in the Shareholders Agreement. Initially it requested that legal advice be obtained as to the meaning of “price” in the Shareholders Agreement. In response, TXA requested PwC to assume that price meant market value (see [91] above).

60. [142]

    Shortly thereafter, TXA emphasised that that request was meant to “assist” PwC but that if PwC was “of the view that any different methodology ought to apply, PwC should adopt that methodology with appropriate reasoning”. PwC made clear in the Engagement Letter that “[TXA] have informed us that Market Value is the basis we should apply” (see [92] and [93] above).

61. [143]

    Consistently with the Engagement Letter, PwC stated in the Covering Letter that it had proceeded upon that basis.

62. [144]

    It was for PwC to select the methodology it would apply in determining “a price”. It sought guidance from TXA about that matter. It was not bound to accept that advice. Any error PwC made in adopting TXA’s suggestion cannot provide a basis to impugn its determination: see [58] and [59] above.

63. [145]

    In any event, in my opinion PwC adopted the correct methodology.

Fourth issue – is cl 10.2(b)(ii) void for uncertainty?

1. [146]

   Ten submits, although without great enthusiasm in oral address, that because cl 10.2(b)(ii) contains no formula and specifies no criteria to enable PwC to carry out the task of determining “a price”, PwC was left to determine “price” in a “contractual vacuum” and that because an “essential machinery provision” was lacking the clause was uncertain; State of New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503; [2002] NSWSC 178 at [70] (Einstein J).

2. [147]

   But here there is no “contractual vacuum”. The parties have left it to PwC to determine the methodology to be adopted.

3. [148]

   In any event, as Nine submits, the mere fact that there is a dispute about the meaning of “price” in cl 10.2(b)(ii) does not render the clause void for uncertainty. The clause is not completely devoid of meaning.

4. [149]

   For the reasons I have outlined, my opinion is that “price” should, in the context in which it appears, be construed as meaning “market value”. So read there can be no suggestion that cl 10.2(b)(ii) is void for uncertainty.

Conclusion

1. [150]

   For those reasons I propose to make a declaration to the effect sought by TXA; namely that TXA is required by cll 9 and 10 of the Shareholders Agreement to register the transfer of the shares of Ten in TXA to the Seven and Nine in their relevant proportions.

2. [151]

   I will hear the parties as to costs.