Ceneavenue Pty Ltd v Martin - [2007] SASC 465

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CENEAVENUE PTY LTD & ORS v MARTIN & ORS
[2007] SASC 465
Judgment of The Honourable Justice Bleby
24 December 2007
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - SUMMARY JUDGMENT
Application for summary judgment for part of plaintiff’s claims – relevant facts not in dispute – interpretation of Shareholder’s Agreement – principles of interpretation of commercial agreement – implication of terms – whether accountant acting as valuer or arbitrator in valuing shares – whether principles of natural justice applied to valuation – whether valuer’s methodology can be challenged – application for summary judgment granted.
Corporations Act 2001 (Cth) ss 181, 182, 1317H; Supreme Court (Civil) Rules 2006 (SA) r 232, 233; Common Law Procedure Act 1854 s 17, referred to.
Elders Limited v Incitec Pivot Ltd & Anor [2006] SASC 99; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206; Zeke Services Pty Ltd & Anor v Traffic Technologies Ltd & Anor [2005] QSC 135; Legal & General Life Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314; Arenson v Arenson [1973] Ch 346; Strang Patrick Stevedoring Pty Ltd v James Patrick & Co Pty Ltd (1993) 32 NSWLR 583; Holt v Cox (1997) 23 ACSR 590; WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489, applied.
Bank of South Australia v SA Health Commission (1996) 65 SASR 409, not followed.
Re Dawdy and Hartcup (1885) 15 QBD 426; Capricorn Inks Pty Ltd v Lawter International (Australasia) Pty Ltd [1989] 1 QdR 8, discussed.
Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336, considered.

CENEAVENUE PTY LTD & ORS v MARTIN & ORS
[2007] SASC 465
Civil

BLEBY J. The plaintiff Ceneavenue Pty Ltd (“Ceneavenue”) owns 75% of the shares issued in seven companies comprising the Renniks Group of companies. It owns the shares as trustee for the Bertram Family Trust. Four of the companies comprising the Renniks Group are also plaintiffs in the action. The Renniks Group trades as a hirer of equipment to major events, corporate exhibitions and private and commercial functions.
Andrew David Martin (“Mr Martin”), the first defendant, was, from 16 January 2004 until 4 October 2006, employed as the Chief Executive Officer of the Renniks Group. Gillmar Holdings Pty Ltd (“Gillmar”), the second defendant, is a company controlled by Mr Martin’s wife, Janine Beverley Martin (“Mrs Martin”), the fourth defendant, although the plaintiffs allege that at all material times since the incorporation of Gillmar, Mr Martin has been a director and the “controlling mind” of Gillmar. The third defendant, Music Men (Aust) Pty Ltd, is a company controlled by Mr and Mrs Martin. It has no relevance for the purpose of this application. Mrs Martin was also an employee of the Renniks Group.
By their statement of claim the plaintiffs claim that each of the defendants is liable to the Renniks Group for substantial sums of money arising out of the conduct of Mr and Mrs Martin when they were employed by the Renniks Group. Ceneavenue claims against Gillmar and Mr Martin the amount outstanding in respect of certain share purchase loans, details of which appear below. In addition, the plaintiffs claim damages against Mr and Mrs Martin for breaches of their respective employment contracts, declarations that they have contravened ss 181 and 182 of the Corporations Act2001 (Cth), compensation orders under s 1317H of that Act, damages against Mr Martin for breaches of fiduciary duties and other incidental declarations.
Finally, the prayer for relief claims an order that Gillmar transfer to Ceneavenue its shares in all the companies comprising the Renniks Group and an order that Gillmar pay Ceneavenue the sum of $397,410.04, being the difference between the balance of a certain share purchase loan of $1,326,885.04 made pursuant to the Shareholder’s Agreement, to which reference is made below, and the market value of Gillmar’s shares in the Renniks Group of $929,475.
On this application Ceneavenue seeks an order for summary judgment pursuant to r 232 of the Supreme Court (Civil) Rules 2006 (SA) (“the Rules”) in the following terms:
1. A declaration that Gillmar is liable to transfer its shares in the Renniks Group of companies to Ceneavenue at a price of $929,475.
2. An order that Gillmar execute such documents as Ceneavenue may present to it to effect a transfer of its said shares to Ceneavenue at a price of $929,475.
The application for summary judgment is accordingly only for part of one of the plaintiff’s claims against one of the defendants. Such an approach is permitted by r 233 of the Rules.
The relevant facts
The Renniks Group of companies presently comprises:
Renniks Trading Pty Ltd (“Renniks Trading”), which is a supplier to major corporate events;
Renniks Exhibitions Pty Ltd (“Renniks Exhibitions”), which is a supplier to corporate exhibitions;
Renniks Assets Pty Ltd (“Renniks Assets”), which owns the equipment that is supplied by Renniks Trading, Renniks Exhibitions and Wavals;
Renniks Employment Services Pty Ltd (“Renniks Employment”), which provides the employment services to other companies in the Renniks Group;
Wavals Trading Pty Ltd (“Wavals”), which is a supplier to smaller private and commercial functions and events;
Party Hire Warehouse Pty Ltd (“PHW”); and
ACN 101163419 Pty Ltd (“Renniks Employment Old”), which used to provide the employment services to other companies in the Group prior to July 2005 when that function was taken over by Renniks Employment.
In January 2004 the Renniks Group comprised only Renniks Assets, Renniks Trading and Renniks Employment Old. At that time Ceneavenue acquired two thirds of the shares issued in each company in the Renniks Group for $2.7M from people called Forster. Ceneavenue already owned one third of the shares in each of the companies in the Group, and so this acquisition resulted in Ceneavenue owning 100% of the shares issued in each of the companies of the Group.
On 16 January 2004 what is known as the Shareholder’s Agreement (“the Agreement”) was entered into. That was an agreement between the three companies then comprising the Renniks Group, Ceneavenue, Gillmar as a nominee of Mr Martin and Mr Martin himself. By that Agreement Ceneavenue agreed to assign 25% of the issued capital in each of the companies in the Renniks Group to Gillmar. The agreed purchase price was the sum of $1,137,500, the whole of which, together with stamp duty on the transaction, was to be advanced to Gillmar by Ceneavenue by way of interest free loan. The Agreement contemplated that the loan would be repaid by deductions from dividends payable to Gillmar upon the shares in the companies. At that stage Wavals was not in the Group, but its acquisition was in contemplation. Clause 2.1.6 of the Shareholder’s Agreement provided:
Notwithstanding any other provision of this Agreement, in the event that prior to repayment of the Purchase Price the Companies shall have acquired the of that company (sic) known as “Wavals” or its assets, Gillmar shall be required to forthwith make an immediate payment of interest upon the Loan in an amount of two hundred thousand dollars ($200,000.00) (“the Interest Payment”).
The expression “the Companies” referred to in that clause is employed in the Agreement as a descriptor of the three parties to the Agreement then comprising the Renniks group, namely Renniks Trading, Renniks Assets and Renniks Employment Old. The interest payment referred to was to be advanced to Gillmar by Ceneavenue upon the same terms and conditions of the loan.
Under the Agreement Gillmar was not able to pledge or otherwise offer as security or encumber the shares in the companies save and except with the express permission in writing of Ceneavenue, and was not able to sell or dispose of the shares in any of the companies to any person or entity other than Ceneavenue or the nominee of Ceneavenue. There were a number of other associated conditions contained in the Agreement which it is not necessary to mention, but they included a restraint of trade clause against Gillmar and Martin upon termination of the Agreement. The most significant clause for present purposes was the provision as to what was to happen if Mr Martin ceased to be employed by the Group. It will be necessary to return to consider that clause in more detail.
Wavals was in fact acquired in about September 2004. The issued shares in Wavals were acquired not by any company in the Renniks Group but as to 75% by Ceneavenue and 25% by Gillmar. No consideration was paid by Gillmar, but the share purchase loan was increased, as agreed, by the interest payment of $200,000 which then became due. The total debt was then $1,337,500.
Mr Martin was never appointed a director of the companies, but he continued to act as the Group’s Chief Executive Officer.
In November 2004 PHW was incorporated by Ceneavenue with the issued shares being held in the same proportions by Ceneavenue and Gillmar. No further payment was made by Gillmar for those shares.
In June 2005 Mr Martin approached the directors of Ceneavenue and suggested a restructure of the Group which involved the incorporation of Renniks Employment to take over the functions previously performed by Renniks Employment Old and the establishment of Renniks Exhibitions, which was to hire equipment to corporate exhibitions. Those plans took effect, and shares in the new companies were allotted to Ceneavenue and Gillmar in the same proportions as their holdings in the other companies. No payment was made by Gillmar for those shares.
Dividends were paid to Ceneavenue and Gillmar as shareholders of the Renniks Group. Gillmar’s loan account was credited with dividend payments of $137,500 in the 2005 financial year and a disputed amount in the 2006 financial year. Those dividends were paid to Ceneavenue in reduction of Gillmar’s loan debt.
Mr Martin’s employment with the Renniks Group was terminated on 4 October 2006. The circumstances of that termination do not matter for present purposes, neither do the plaintiffs’ allegations of misconduct on the part of Mr and Mrs Martin which give rise to most of the monetary claims pleaded in the statement of claim.
Termination of Mr Martin’s employment
Clause 2.2 of the Shareholder’s Agreement provides:
2.2     Transfer and Acquisition of Shares
2.2.1 In the event that Martin, a key employee of [Renniks Employment Old] shall cease to be so employed for whatever reason, Gillmar shall offer to sell all shares held by it in the Companies to Ceneavenue and/or its nominee at the then “market value” thereof.
2.2.2 For the purpose of paragraph 2.2.1, the market value of the shares shall be determined by the Accountant for the Companies for the time being and shall be fixed at the higher of:
2.2.2.1       actual market value;
AND
2.2.2.2(a)    where the EBIT of the Business shall then be One Million, Two Hundred and Fifty Thousand Dollars ($1,250,000.00) or in excess thereof, a figure calculated by reference to that price paid per share by Ceneavenue in the acquisition of the shares from the original shareholders (DARREN WAYNE FORSTER and BRIAN DAVID FORSTER and AILEEN FORSTER);
OR
(b)where the EBIT of the Business shall be less than One Million, Two Hundred and Fifty Thousand Dollars ($1,250,000.00), a figure calculated by reference to the price per share specified in (b) above adjusted pro rata to such EBIT figures.
but shall not, in any event, exceed that sum represented by the price paid per share to the original shareholders by Ceneavenue multiplied by the number of shares held by Gillmar.
2.2.3 In the event that Ceneavenue and/or its nominee does not acquire all the shares of Gillmar (whether at the price specified in paragraph 2.2.2 or otherwise), then notwithstanding any provision herein to the contrary any loan advanced by Ceneavenue (or any person, company or entity in any manner related to Cenavenue) may at the option of Gillmar remain outstanding in accordance with the terms and conditions otherwise applicable thereto and shall be rapid by Gillmar only upon:-
2.2.3.1the sale of the shares to a third party; or
2.2.3.2the expiration of a period of five (5) years from the cessation of the employment of Martin
whichever shall first occur.
Following the termination of Mr Martin’s employment, an audit of the Renniks Group’s financial statements and records was undertaken by Mr H L McPharlin. Following the receipt of the audit report, the Renniks Group’s accountant, Mr Andrew, undertook a valuation of the market value of the shares in the Renniks Group in accordance with the requirements of clause 2.2 of the Shareholder’s Agreement. He reported his determination in a letter to Ceneavenue’s solicitors dated 7 December 2006. Mr Bertram, one of the Directors of Ceneavenue, had instructed Mr Andrew to value the shares, having previously told Mr Martin that Ceneavenue would acquire Gillmar’s 25% shareholding in the Renniks Group.
It is apparent from Mr Andrew’s letter that, in order to arrive at the actual market value of the shares (clause 2.2.2.1), the valuation method used by Mr Andrew involved the capitalisation of future earnings. He took the audited earnings before interest and tax (“EBIT”) figure for the financial year ended 30 June 2006, and applied a multiplier of four to that figure in order to arrive at a value of goodwill, plant and stock. He added debtors and pre-payments to arrive at a figure for total assets, from which he deducted the various liabilities identified in the accounts. That gave a net figure if $911,349, thus fixing a value of Gillmar’s 25% holding at $227,837. Because the EBIT of the business was less than $1.25M, he performed the calculation required by clause 2.2.2.2(b) of the Shareholder’s Agreement, resulting in the market value of $929,475 of the shares held by Gillmar. That being higher than the actual market value became the price Ceneavenue was to pay Gillmar for its shares.
By notice in writing dated 8 December 2006 Ceneavenue gave formal notice of acquisition of the shares and calling in of the loan to Gillmar. The notice stated Ceneavenue’s intention to purchase the shares at a purchase price of $929,475 on Friday 15 December 2006. The notice gave details of how the price had been arrived at. It informed Gillmar that the actual market value of the shares was currently $227,837, that EBIT for the Renniks Group was $1,147,572 and therefore paragraph (b) of clause 2.2.2.2. of the Agreement applied. Gillmar was informed that the “original/Forster shareholder method” valuation of the shares, as defined in clause 2.2.2.2 of the Agreement was $1,012,500 and that the pro rata adjustment to that valuation was $929,475. That being higher than the actual market value, the pro rata adjustment was the price payable pursuant to clause 2.2.2. of the Agreement. A copy of Mr Andrew’s letter of 7 December was attached. The notice also called in the amount of the loan then outstanding.
At no stage was either Gillmar or Mr Martin given an opportunity to make any representations to Mr Andrew as to how he should arrive at the market value of the shares. In an affidavit read on this application Mr Andrew explained his methodology in valuing the shares. He valued the Renniks Group as a whole, including the companies which had been added to it since the date of the Shareholder’s Agreement. He explained that the value of the entities not listed in the Shareholder’s Agreement was nominal. In particular, Renniks Exhibitions was used as a trading company and had no substantial assets or employees of its own, paying fees to Renniks Assets for the equipment hired. The sole function of Renniks Employment was to employ staff, and it had no independent value. Wavals had no assets of its own but was trustee of a discretionary trust which acted only as a trading entity with no substantial assets or employees. PHW no longer conducted any business and had no material assets. In assessing the market value of the Renniks Group for the purpose of clause 2.2.2.1 of the Shareholder’s Agreement, Mr Andrew’s assessment would have been the same regardless of whether those entities were included in the valuation.
He explained that his method of valuation was by way of capitalisation of future maintainable earnings, an accepted method of valuation, and one also recommended by Mr C R Powell, a chartered accountant and an experienced insolvency practitioner retained by the defendants. There was therefore no dispute as to the appropriate method of valuation.
That method of valuation involves an assessment of future maintainable EBIT and the determination of an appropriate multiplier in order to arrive at a capital value of the assets. The assessment of both those factors for the purpose of arriving at an appropriate value of a business involves matters of judgment on which opinions may differ. The assessment of EBIT for the purpose of a valuation involves a projection of future likely EBIT. It may or may not require some adjustment to the historic EBIT as shown in the entity’s most recent accounts, in order to ensure that the calculation is based on earnings that are maintainable. According to Mr Powell, the defendants’ expert, it requires access to the general ledgers for each of the companies, access to source documentation including purchase invoices, budgets, projections and depreciation schedules, and access to appropriate management personnel of the various entities. There are also many factors relating to the nature of the business which determine the appropriate earnings multiplier in order to arrive at the capital value.
In his affidavit Mr Andrew explained how he went about the assessment in relation to the Renniks Group based on the audited accounts of the Group in which the misappropriations and the inappropriate accounting attributable to the actions of Mr Martin had been reversed. In the circumstances it is not necessary to explain in precise detail what he did.
As part of their concern that they were denied natural justice in respect of the preparation of the valuation, the defendants referred to a preliminary valuation contained in a letter of 6 October 2006 from Mr Andrew to the plaintiffs’ solicitors. The letter was apparently in response to an email from the plaintiffs’ solicitors. That showed a calculation of the actual market value[1] of Gillmar’s shares of $974,978. The calculation was based on an EBIT shown in the accounts of $1,674,369 and a multiplier of four. Mr Andrew noted, however, that the “EBIT will most probably reduce as a result of the audit, therefore the value under this method will fall”. Because the EBIT exceeded $1.25M, he went on to do the calculation required by clause 2.2.2.2 (a) of the Shareholder’s Agreement which produced a value of Gillmar’s shares at $1,012,500, a substantially higher figure than the figure ultimately arrived at in his letter of 7 December 2006. However, it is clear that the figures contained in his letter of 6 October 2006 were preliminary figures and were not based on the audited accounts of the companies. He foreshadowed a likely reduction consequent upon that audit. It is also clear that the methodology he adopted was exactly the same as the methodology used to arrive at the figure contained in his letter of 7 December 2006, but because the revised EBIT was less than $1.25M the appropriate calculation was made in accordance with clause 2.2.2.2(b) of the Shareholder’s Agreement.
[1] Shareholder’s Agreement clause 2.2.2.1.

There is no dispute as to the facts I have so far recorded. There is a dispute as to what the appropriate actual market value should be because of the variables involved in the capitalisation of future maintainable earnings. There is no dispute as to the actual EBIT as shown in the audited accounts of the Group for the year ended 30 June 2006. There is a dispute as to the amount of the debt due by Gillmar to Ceneavenue, but there is no dispute that it exceeds the purchase price of $929,475, being the market value of Gillmar’s shares determined by Mr Andrew.
The claim for summary judgment
By its present application as finally formulated, Ceneavenue seeks an order for the transfer of the shares held by Gillmar in all companies included in the Renniks Group to Ceneavenue at the price calculated in accordance with the valuation of Mr Andrew. In substance, Ceneavenue is seeking an order for specific performance of clause 2.2 of the Shareholder’s Agreement. At this stage Ceneavenue does not seek an order for repayment of the monies advanced by way of loan to Gillmar for the acquisition of the shares or any of the other relief claimed in the Statement of Claim. What is sought is a discrete head of relief which, if granted, will not affect the resolution of other issues in the Statement of Claim other than a mathematical calculation of the amount of the balance of the loan said to be repayable by Gillmar to Ceneavenue.
On Ceneavenue’s case for summary judgment the relevant facts are not in dispute. No oral evidence has been called or is necessary. Its case depends only on those undisputed facts and the proper interpretation of the Shareholder’s Agreement. Both parties have had an opportunity to lead evidence of any primary facts on which they rely or from which inferences should properly be drawn. In those circumstances I consider that this is an appropriate case for summary judgment if the criterion specified in r 232 of the Supreme Court (Civil) Rules 2006 can be met, namely that there is no reasonable basis for defending Ceneavenue’s present claim. On the other hand, if Ceneavenue fails in any of the four issues which I have identified below, it will fail in its application either because it has no entitlement to the relief claimed or because the issue gives rise to matters which are inappropriate to be determined by an application for summary judgment.
Issues arising on the application
There are four principal issues which arise on the plaintiff’s application for summary judgment:
1.Whether the accountant of the Renniks Group, in valuing the shares, was acting as a valuer or as an arbitrator. There is no dispute that, if he was acting as arbitrator, Gillmar had a right to be heard and was not afforded that opportunity;
2.If the accountant was acting as a valuer, whether, in the circumstances of the Shareholder’s Agreement, principles of natural justice applied such that Gillmar had a right to be heard on the valuation;
3.If the accountant was acting as a valuer, whether the methodology he adopted can be challenged. In particular, questions arise as to –
(a)     the inclusion of Wavals in the valuation;
(b)    the inclusion in the valuation of other companies added to the group after the date of the Shareholder’s Agreement; and
(c)    whether the accountant’s determination of EBIT and the appropriate multiplier can be questioned;
4.Whether the right of Ceneavenue to acquire Gillmar’s shares under clause 2.2 of the Shareholder’s Agreement includes its shares in companies other than Renniks Assets, Renniks Trading and Renniks Employment Old, being the only companies comprising the Renniks Group at the date of the Shareholder’s Agreement.
Each of these issues will need to be addressed in turn. However, before I do so it is convenient to consider two other preliminary matters.
Interpretation of the Agreement
The resolution of the issues on the application largely turns on the proper interpretation of clause 2.2 of the Shareholder’s Agreement. It is important to identify the principles relevant to the proper interpretation of that Agreement. It must be remembered that this was a commercial contract intended to regulate, in a practical way, the commercial relationship between Ceneavenue, Gillmar and Mr Martin in the conduct of their joint business venture.
In these circumstances the relevant principles were identified by Debelle J in Elders Limited v Incitec Pivot Ltd & Anor.[2] I respectfully adopt what Debelle J then said:
[2] [2006] SASC 99 at [58]-[60].
When determining the rights and liabilities of parties to a contract, the court acts objectively, having regard to the expressed intention of the parties. That principle has been frequently expressed by the High Court and was most recently affirmed in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22] and in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].See also Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at [34]. In Toll at [40] the court said:
What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
The Court must ascertain the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract: Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 per Gleeson CJ, Gummow and Hayne JJ.
Like any other contract, the court must read the contract as a whole: L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235. If the words are clear and fairly susceptible to one meaning only, the court must give effect to those words: Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99, per Gibbs J at 109. Where a clause is open to two constructions, the court will construe it so as to avoid consequences which appear capricious, unreasonable, inconvenient or unjust. Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (supra), per Gibbs J at 109; Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 at 520. The court must give commercial efficacy to the contract and the obligations contained in it. These principles were summarised by Gibbs J in Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (supra) at 109 ‑ 110 in these terms:
It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, “even though the construction adopted is not the most obvious, or the most grammatically accurate”, to use the words from earlier authority cited in Locke v Dunlop, which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley’s Case. Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co Ltd v Arcos Ltd, that the court should construe commercial contracts “fairly and broadly, without being too astute or subtle in finding defects”, should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd). (Citations omitted)
Regard will be had to the surrounding circumstances if the language of the contract is ambiguous or susceptible of more than one meaning but it is not admissible to contradict the plain meaning of the words used: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352 – 353. In Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834 at 837 McGarvie J, with whom Kaye and Ormiston JJ agreed:
A contract is to be construed in the light of the surrounding circumstances existing and known to the parties when the contract was made: Butt v Long (1953) 88 CLR 476, at pp 486 - 7 and 490. This includes the genesis of the transaction, the objective framework of facts within which the contract came into existence and the commercial purpose of the parties, in the objective sense of what reasonable persons would have in mind in their situation: Codelfa (1982) 149 CLR 337, at pp 347 – 53.
The essential question is, what would reasonable business people in the position of the parties have taken the clause to mean: Schenker at 838.
It is well settled that, when interpreting a commercial contract, the court will not adopt a narrow technical or artificial interpretation of the words used in that contract. So in Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 at 300, Isaacs J said:
…the expressions, and particularly any elliptical expressions, in a mercantile contract are to be read in no narrow spirit of construction, but as the Court would suppose two honest business men would understand the words they have actually used with reference to their subject matter and the surrounding circumstances.
In Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 514, Lord Wright said that the court should construe commercial contracts “fairly and broadly” without being too astute or subtle in finding defects. To like effect are the observations of Barwick CJ in Upper Hunter County District v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 437:
In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements.
The interpretation of the contract must accord with business commonsense: Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201 per Lord Diplock, with whom the other members of the House of Lords agreed. Lord Diplock said:
If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.
More recently in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, Gleeson CJ and Kirby J each expressed views on the interpretation of commercial contracts. The court was dealing with a contract of insurance which is but one form of commercial contract. Gleeson CJ said at [22]:
A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure. (Citations omitted).
Kirby J said that questions of meaning are:
…to be answered in a practical and realistic way, not in a way which adopts an overly fine or theoretical approach that is alien to commercial agreements.
To put the position shortly, the interpretation must be commercially sensible and accord with commercial reality or, as was said in Gollin Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 at 464, must accord with “commercial efficacy or common sense”. (Emphasis added).
It is evident that, besides regulating the ongoing business relationship between the parties, the Agreement, and in particular clause 2.2, was intended to provided a practical and efficient way of severing the relationship should Mr Martin, a “key employee” of (then) Renniks Employment Old, cease to be so employed for any reason. The clause was designed to provide a simple, efficient and inexpensive means of disentangling the commercial relationship. Because of its commercial nature and its ongoing effect, not all contingencies could be expected to be provided for. The Agreement must be interpreted to accommodate those unforseen contingencies. This may even mean that some terms of the Agreement cannot be applied literally. For example, clause 2.2.1, if taken literally, required Gillmar to offer to sell all the shares it then held to Ceneavenue when, from 1 July 2005, the employment by Renniks Employment Old of all employees, including Mr Martin, came to an end and they began to be employed by Renniks Employment. No-one suggested that that event should have precipitated action under clause 2.2, although taken literally, that is what the Agreement required. As a matter of commercial practicality it would have been highly inconvenient if clause 2.2 did apply at that time. There was no attempt to amend the Shareholder’s Agreement to recognise that change. In these proceedings there has been no suggestion that clause 2.2 should not take effect when Mr Martin’s employment with the new company, Renniks Employment, came to an end, even though that company is not mentioned in clause 2.2. The clear intention of clause 2.2.1 is that the requirement of Gillmar to offer to sell the shares to Ceneavenue arose when Mr Martin ceased to be the Chief Executive Officer of the group.
I have already referred to provisions of the Agreement restricting Gillmar from disposing of or encumbering the shares without the permission of Ceneavenue. Clause 16.1 provided that a party to the Agreement should not assign or permit a third party to obtain the benefit of its rights and interests under the Agreement except with the prior written consent of the other parties. All those provisions, along with clause 2.2.1, demonstrate a clear intention that Ceneavenue should retain the right to determine whether anyone else should be able to acquire Gillmar’s shares in the Renniks Group.
“The Companies” referred to in clause 2.2.1
The proper approach to the interpretation of the Agreement discussed above and the evident purpose or purposes of the Agreement are relevant to the determination of what is meant by “the Companies” in clause 2.2.1 of the Agreement. That is not an expression which is defined in clause 1 which provides that the terms there defined “will have the respective meaning assigned to them” in that clause. Rather, the expression is used as a descriptor of the companies then comprising the Renniks Group “which are individually and together called ‘the Companies’”. That does not prevent the expression, where used in the substantive parts of the Agreement, from attracting an additional meaning if the circumstances so require.
The defendants argue that the only obligation of Gillmar under clause 2.2.1 is to offer to sell the shares in Renniks Assets, Renniks Trading and Renniks Employment Old, being “the Companies” at the date of the Agreement. They argue that the only shares which can properly be valued for the purpose of clause 2.2 are the shares in those companies. That would exclude any obligation to transfer the shares in Renniks Exhibitions, Renniks Employment, Wavals and PHW.
Recital A to the Shareholder’s Agreement acknowledges that “the Companies” are related companies “engaged (inter alia) in the provision for hire of certain plant and equipment for use in and about domestic, public and commercial functions”. That is an apt description of the business being then carried on by the Companies.
Clause 4.1 of the Agreement provides:
4. COMMITMENT TO COMPANIES AND BUSINESS
4.1 Each Party must:-
4.1.1co-operate and use the Party’s best endeavours to ensure that the Companies successfully conduct the Business;
4.1.2not use Confidential Information in a way which does or is reasonably likely to damage the Companies or any of the other Parties;
4.1.3not unreasonably delay any action, approval, direction, determination or decision which is required of a Party;
4.1.4make approvals or decisions that are required of the Party in good faith and in the best interests of the Companies and the conduct of the Business as a commercial venture;
4.1.5be just and faithful in the Party’s activities and dealings with the other Parties.
(Emphasis added).
Clause 7 of the Agreement provides:
7.     FUNDING OF COMPANIES
7.1     Ceneavenue and Gillmar must ensure that the Companies have sufficient working capital to conduct the Business, such working capital to be drawn either from:-
7.1.1loans by Ceneavenue and Gillmar to the Companies in their Respective Proportions; or
7.1.2borrowings by the Companies supported by the guarantees of Ceneavenue and Gillmar in their Respective Proportions.
7.2     Loans advanced by Ceneavenue and Gillmar to the Companies shall be upon such terms and conditions as may be agreed by Ceneavenue and Gillmar from time to time and as may be required to meet the exigencies of the Business.
7.3     Where Gillmar is required by this clause 7 to contribute to the working capital of the Business, Ceneavenue shall if so requested by Gillmar advance to Gillmar such funds as may be so required which advance shall be treated as a loan between Ceneavenue and/or its nominee and Gillmar and subject to the same terms and conditions as the Loan.
(Emphasis added).
In these clauses it can be seen that the expressions “the Companies” and “the Business” are sometimes used interchangeably. Significantly, in clause 1.5 the expression “the Business” is defined as meaning “the business of the Companies as presently conducted or as may hereafter be conducted”. (Emphasis added). That is not restricted to the business being conducted by the three companies identified by the descriptor. It contemplates other means of carrying on that business. It will also be remembered that clause 2.1.6 of the Agreement, quoted earlier, recognised the prospect of “the Companies” acquiring the business or assets of Wavals. As it happens, the shares in Wavals were acquired by Ceneavenue and Gillmar, but that did not prevent the obligation to make the interest payment under clause 2.1.6 from arising nor the obligation of Ceneavenue to increase its loan to Gillmar accordingly, about which neither party complains.
All this indicates is that it was the clear intention that if Wavals or its business were acquired, they should not be treated under the Agreement differently from the original companies and the business then being carried on by those companies. It is another indication, as the parties have acknowledged, of the need to interpret the Agreement in a way that makes commercial sense where a literal application would not.
The subsequent restructuring of the business and the incorporation of Renniks Exhibitions, Renniks Employment and PHW to give effect to that restructuring all arose on the recommendation of Mr Martin. Together they began conducting “the business of the Companies as presently conducted or as may hereafter be conducted”.

On its proper interpretation I consider that, notwithstanding the use of the expression “the Companies”, that expression as employed in clauses 2.2.1 and 2.2.2 was intended to have an ambulatory meaning to include companies which might be later incorporated into and assist in carrying on “the Business”. Such an interpretation gives business efficacy to the contract which would be lacking if the expression were restricted to the companies as defined.
If necessary I would be prepared to hold that the expression “the Companies” as used in clause 2.2 of the Agreement by necessary implication includes all companies carrying on business at the relevant time within the Renniks Group, whether the shares in those companies be owned entirely by one of the original companies or by Ceneavenue and Gillmar in the manner in which they held the shares in the original companies under the terms of the Agreement. As the majority of the Privy Council said in BP Refinery (Westernport) Pty Ltd v Shire of Hastings:[3]
[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
[3] (1977) 180 CLR 266 at 283.
In relation to the third element their Lordships quoted with approval the well-known dictum of MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd:[4]
Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common, ‘Oh, of course.’
[4] [1939] 2 KB 206 at 227.
In my opinion, each of the five conditions specified by the Privy Council are met. In particular, the inclusion of the companies in the Group is necessary to give business efficacy to the Agreement and to what is to happen on termination of Mr Martin’s employment. Given the nature of the reference to “the Companies” as a non-defined term, there is no contradiction with any express term of the contract. There is room for it to have an ambulatory meaning.
It follows that any obligation on the part of Gillmar to transfer shares to Ceneavenue will include an obligation to transfer its shares in all companies in the Renniks Group at the time when Mr Martin ceased to be an employee of any of the companies. It also follows that the determination of market value of the shares held by Gillmar must also include the market value (if any) of the shares in all those companies.
Whether the accountant was acting as an expert valuer or as an arbitrator
Clause 2.2.2 of the Agreement requires that the market value of the shares shall be determined by “the Accountant for the Companies for the time being”. Clause 1.2 defines “Accountant” as meaning “the Accountant appointed by the Companies for the provision of accounting services to the Companies”. The Agreement contains no provision about how the Accountant is to go about the task other than that it necessarily involves forming an opinion about the actual market value of the shares, without any direction as to how that is to ascertained, and the calculation required by clause 2.2.2.2(a) or (b) as the case may require. That will necessarily involve a knowledge of the accounts of the companies for which the Accountant is responsible and an understanding of the nature of the business conducted and of matters which may affect its value.
The Accountant holding office for the purposes of clause 2.2 of the Agreement at the relevant time was Mr Andrew. He is a partner of Gibson and Partners, chartered accountants. He holds a Bachelor of Arts in Accountancy from the University of South Australia and is a Certified Practising Accountant and Registered Tax Agent. He is an Affiliate of the Institute of Chartered Accountants and a member of the Taxation Institute of Australia. He has acted as the external accountant to the Renniks Group of Companies since 2002. As might be expected, he is very familiar with the accounts and affairs of the companies.
Whether a person is as acting an expert or as an arbitrator depends on the construction of the Agreement. The difference between an arbitrator and a valuer was the subject of consideration in Re Dawdy and Hartcup.[5] That case concerned a covenant in a tenancy agreement of a farm requiring a valuation of covenants upon termination of the tenancy. The landlord and the tenant each appointed valuers who could not agree on the amount of the valuation. They appointed an umpire who held a sitting and heard witnesses and who then published an award. The question was whether the determination could be made a Rule of Court under s 17 of the Common Law Procedure Act 1854. That in turn depended on whether the agreement provided for a submission to arbitration. It was held that the agreement provided only for the appointment of valuers and could not be made a Rule of Court. In the course of his judgment Lord Esher MR said:[6]
The word “arbitration” in s. 17 of the Common Law Procedure Act has been construed as meaning an arbitration to be conducted according to judicial rules, where the person who is appointed arbitrator is bound to hear the parties, to hear evidence if they desire it, and to determine judicially between them. He must have a matter before him which he is to consider judicially. As a consequence of this, it has been held that if a man is, on account of his skill in such matters, appointed to make a valuation, in such a manner that in making it he may, in accordance with the appointment, decide solely by the use of his eyes, his knowledge, and his skill, he is not acting judicially; he is using the skill of a valuer, not of a judge. In the same way, if two persons are appointed for a similar purpose, they are not arbitrators, but only valuers. They have to determine the matter by using solely their own eyes, and knowledge, and skill. We must, therefore, look at the agreement and see whether one or more persons are appointed to value, and in what way they are to act.
[5] (1885) 15 QBD 426.
[6] Ibid at 429-430.
In the agreement in question there was nothing to show the mode in which or the persons by whom the valuation was to be made. The fact that two persons were to be appointed as valuers did not make them arbitrators. There was nothing to show that they were to hear the parties and determine judicially any dispute between them.
Similar views were expressed by members of the Supreme Court of Queensland in Capricorn Inks Pty Ltd v Lawter International (Australasia) Pty Ltd.[7] The question in that case was whether a firm of accountants was engaged as an arbitrator or appraiser, and whether the accountants’ assessment was within the terms of their engagement. At first instance McPherson J held that they were acting as appraisers, not arbitrators and that they were acting within the terms of the agreement. An appeal against that decision to the Full Court was allowed but only on the basis that the accountants’ determination was not within the terms of the agreement. Both the judge at first instance and all members of the Full Court agreed that the accountants were acting as valuers and not as arbitrators. At first instance, McPherson J said:[8]
Ever since the middle of the last century it has been settled that the statutory provisions relating to arbitrations and arbitrators do not apply to the function of a mere appraiser. See Collins v. Collins (1858) 26 Beav. 306; 53 E.R. 916; Re Wallace, Smith & Brightling (1911) 14 G.L.R. 86; Re King & Acclimatisation Society [1913] St.R.Qd 10; AMP Society v. Overseas Telecommunications Commission [1972] 2 N.S.W.L.R. 806. Power under s.32(2) to set aside the award of an arbitrator does not extend to setting aside an appraisal or valuation, as to which the court’s powers are much more limited: Mayne Nickless Ltd v. Solomon [1980] Qd.R. 171.
On behalf of Lawter, Mr Drummond Q.C. submitted that the test of whether or not an agreement involves reference arbitration or a simple appraisement depends upon the presence or absence of a dispute or difference requiring resolution. In that respect he referred to what was said by Lord Simon in Arenson v. Casson Beckman Rutley & Co. [1977] A.C. 405, 423, which was that it was “of the essence of a judicial decision” that it “decides a dispute”. His Lordship was there distinguishing the function of an arbitrator from that of an auditor acting as valuer of company shares. There is no doubt that on occasions courts have selected the existence of a dispute requiring resolution or determination as the feature distinguishing arbitration from appraisement or valuation, which is said to be a process which prevents or precludes disputes from arising: see Bos v. Helsham (1866) L.R. 2 Ex. 72; Re Carus-Wilson & Greene (1886) 18 Q.B.D. 7. But the existence of a “dispute”, although a factor, is not necessarily a decisive factor in determining whether arbitration or appraisement is involved. It is quite possible for parties to become involved in a dispute about something, such as the value of premises or goods, which they agree to submit for appraisal without intending that an arbitration should follow. The distinction depends upon a range of factors of varying importance and weight depending on the circumstances; but generally what must be in contemplation is that there will be “an inquiry in the nature of a judicial inquiry”: see Re Carus-Wilson & Greene (1886) 18 Q.B.D. 7, 9, Lord Esher M.R. His Lordship there went on to say that the intention must be that the arbitrator should “hear the respective cases of the parties and decide upon evidence laid before him …”. That passage in the judgment has been applied in a number of subsequent cases, including Re King & Acclimatisation Society [1913] St.R.Qd. 10, 11, a decision of the Full Court which was reversed on appeal (MacDermott v Corrie (1913) 17 C.L.R. 223), but without, as Pape J. has pointed out, affecting the decision on the point here in question: see Ajzner v. Cartonlux Pty Ltd [1972] V.R. 919, 929.
[7] [1989] 1 QdR 8.
[8] Ibid, 15.
On appeal, Andrews CJ said:[9]
It is necessary to look to the terms of the agreement pursuant to which a submission is made and then to identify the function which the person to whom it is made is called upon to perform. The mere existence of a dispute is not conclusive. A primary function of an arbitrator is to hear and resolve opposing contentions and may be described, for purposes of discussion as to the distinction between his role and that of a valuer or an assessor, as quasi-judicial. Where an appointee is directed to make an appraisal in money terms of property value or loss or damage or the like by the use of some special knowledge or skill possessed by him, without being required to hear parties, his function is that of a valuer or assessor. That function does not become one of arbitration merely because of the existence of a dispute between persons of opposed interests as to value, for example. (See In re Dawdy (1885) 15 Q.B.D. 426, 429, 430 per Lord Esher M.R. See also Sutcliffe v. Thackrah [1974] A.C. 727, 751, 752, 759; Arenson v. Arenson [1973] Ch.346, 370; [1977] A.C. 405, 424).
[9] Ibid, 28. See also ibid, 39, Thomas J.
While the nature of the role of the Accountant depends on the terms of the Agreement, it must be remembered that this is a commercial agreement, one of the purposes of which is to provide for determination of the value of the respective interests in the business venture upon the termination of Mr Martin’s services. The Companies’ accountant can be taken to be familiar with the circumstances of the companies, their affairs and accounts. He can be expected to use his own special knowledge of those affairs, and his skill and professional experience in determining the market value of the shares. It would be contrary to the nature and effect of the Agreement to contemplate that the determination of that market value should be conducted as an arbitration or as a quasi-judicial proceeding. There is nothing in the Agreement to suggest that it should be conducted in that manner. What was expected of the Accountant was an appraisal or assessment, acting as an expert using his eyes, his knowledge and his skill and not acting as a settler of a dispute between parties. As was pointed out in Capricorn Inks, the mere fact that there may be a dispute as to the value of the shares does not require a conclusion that the Accountant was acting as an arbitrator.
Whether Gillmar had a right to be heard on the valuation
The fact that the Accountant was acting as an expert and not as an arbitrator effectively determines the question whether or not procedural fairness should have been afforded to Gillmar. There is nothing in the Agreement to require the Accountant to observe any rules of procedural fairness. He is required to form an opinion based on his own knowledge and expertise. Absence from the Agreement of any procedural rules to be observed is of some importance. As Chersterman J observed in Zeke Services Pty Ltd & Anor v Traffic Technologies Ltd & Anor:[10]
Their absence is unremarkable in a case where the expert relies upon his own senses and learning, but where he is obliged to investigate disputed questions of fact and/or law, and come to a conclusion about them, the lack of a methodology for the inquiry is significant. An expert, unless obliged to do so by the contract or the terms of his appointment, does not have to comply with the requirements of procedural fairness or natural justice. The agreement does not contain such a requirement.
[10] [2005] QSC 135 at [32].
I therefore conclude that in assessing the market value of the shares Mr Andrew was not required to observe any rules of procedural fairness, and Gillmar was not entitled to be heard on any question relating to the assessment.
Whether the Accountant’s methodology can be challenged
In determining whether the Accountant’s determination is binding on the parties, the only relevant question is whether the valuation was made in accordance with the terms of the Agreement. The importance of compliance with the terms of the relevant Agreement was stressed by McHugh JA in Legal & General Life of Australia Ltd v A Hudson Pty Ltd:[11]
A valuation obtained by fraud or collusion can usually be disregarded even in an action at law. For in a case of fraud or collusion the correct conclusion to be drawn will almost certainly be that there has been no valuation in accordance with the terms of the contract. As Sir David Cairns pointed out, it is easy to imply a term that a valuation must be made honestly and impartially. It will be difficult, and usually impossible, however, to imply a term that a valuation can be set aside on the ground of the valuer's mistake or because the valuation is unreasonable. The terms of the contract usually provide, as the lease in the present case does, that the decision of the valuer is “final and binding on the parties”. By referring the decision to a valuer, the parties agree to accept his honest and impartial decision as to the appropriate amount of the valuation. They rely on his skill and judgment and agree to be bound by his decision. It is now settled that an action for damages for negligence will lie against a valuer to whom the parties have referred the question of valuation if one of them suffers loss as the result of his negligent valuation: Sutcliffe v Thackrah [1974] AC 727; Arenson v Arenson [1977] AC 405. But as between the parties to the main agreement the valuation can stand even though it was made negligently. While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless, the mistake may be of a kind which shows that the valuation is not in accordance with the contract. A mistake concerning the identity of the premises to be valued could seldom, if ever, comply with the terms of the agreement between the parties. But a valuation which is the result of the mistaken application of the principles of valuation may still be made in accordance with the terms of the agreement. In each case the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract.
[11] (1985) 1 NSWLR 314 at 335-336.
As McHugh JA observed, provided that the valuer has acted in accordance with the terms of the agreement, it does not matter that the valuation has been made negligently or in a mistaken application of the principles of valuation. It will only cease to be binding if the error is of a type which shows that the valuation was not made in accordance with the contract. As Lord Denning MR said in Arenson v Arenson:[12]
Whenever two persons agree together to refer a matter to a third person for decision, and further agree that his decision is to be final and binding upon them, then, so long as he arrives at this decision honestly and in good faith, the two parties are bound by it. They cannot reopen it for mistake or error on his part or for any reason other than for fraud or collusion.
[12] [1973] Ch 346 at 362.
It is not necessary that the agreement specify that the determination is “final and binding” or that it contain words to that effect.[13] To the extent that Olsson J may have considered otherwise in Bank of South Australia v SA Health Commission[14] I disagree. What he said was not necessary for the decision which addressed a rather different situation. In the end, what matters is the interpretation of the agreement as a whole. Nothing in this Agreement detracts from the conclusion that the parties agreed to accept the Accountant’s determination as final, provided that he performed it in accordance with the requirements of the Agreement.
[13] Strang Patrick Stevedoring Pty Ltd v James Patrick & Co Pty Ltd (1993) 32 NSWLR 583 at 587-588, Giles J; Holt v Cox (1997) 23 ACSR 590 at 605, Mason P.
[14] (1996) 65 SASR 409 at 414-415.
I have already described the valuation method adopted by Mr Andrew. There was no dispute as to the appropriateness of the method. Gillmar’s disagreement with the valuation turns on the inclusion by Mr Andrew of all companies in the Renniks Group, the assessment of EBIT for the purposes of the valuation and the determination of the appropriate multiplier in order to arrive at the capital value of the shares. As Ipp J observed in WMC Resources Ltd v Leighton Contractors Pty Ltd:[15]
Valuations may involve making decisions where no fixed or readily available standard criteria exist. There may be several possible methods of assessing value, each giving widely different results, but each being reasonable. Many subsidiary factors relevant to the valuation may be uncertain, many contingencies may have to be taken into account, wide ranges of legitimate decisions may apply, and opinions may legitimately differ as to virtually all of the relevant issues.
[15] (1999) 20 WAR 489 at 496, [1999] WASCA 10 at [23].
His Honour then referred to a passage from the judgment of Mason J in Commissioner ofTaxation v St Helens Farm (ACT) Pty Ltd[16] in which he said:
As with the assessment of damages, especially in personal injury cases, the valuation of property by a court has many of the characteristics of a discretionary judgment. Valuation is a matter of estimation, not of precise mathematical calculation. It certainly involves the making of a value judgment in the metaphorical as well as the literal sense.
[16] (1981) 146 CLR 336 at 381.

Ipp J concluded:[17]
The valuation of anything, be it property, the undertaking of a business, or engineering or mining work, that requires estimation and value judgments "in the metaphorical sense", is discretionary in the sense referred to by Mason J in Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd….
[17] WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489 at 497, [1999] WASCA 10 at [26].
I have already decided that, on a proper construction of the Agreement, Mr Andrew correctly included all companies of the Renniks Group in his assessment. However, if I am wrong in that, Mr Andrew’s evidence was that their inclusion made no practical difference to the valuation for reasons earlier explained. The valuation is still a valuation in accordance with the requirements of the Agreement.
The selection of the appropriate EBIT and multiplier both involved questions of judgment and discretion. There is nothing to suggest that Mr Andrew’s selection arrived at for the purpose of his valuation was so fundamentally wrong or unreasonable that it could vitiate the determination as not having been made in accordance with the Agreement. Accordingly, I conclude that Mr Andrew’s determination of the market value of the shares is binding on the parties to the Agreement.
Whether Ceneavenue is entitled to acquire Gillmar’s shares in all companies of the Group
I have said enough to indicate that on the proper interpretation of the agreement Ceneavenue is entitled to require Gillmar to transfer to it all the shares held by Gillmar in all companies comprising the Renniks Group, and not merely those specifically mentioned in the Agreement. The obligation under clause 2.2.1 of the Agreement is upon Gillmar to “offer to sell all the shares held by it in the Companies”. Gillmar has no discretion as to whether it will make such an offer. It is required to do so, and accordingly Ceneavenue can require the shares to be transferred at the market value determined in accordance with the Agreement.
Conclusion
Mr Martin’s employment has been terminated. He no longer has any active involvement in the affairs of the Renniks Group. There is no commercial reason why Gillmar should remain as a shareholder of the companies. There is no reason why the transfer of the shares to Ceneavenue should not be effected.
Ceneavenue is entitled to the orders it seeks if “there is no reasonable basis for defending (its) claim”.[18] I am satisfied that that is so. To make an order in the terms now sought by the plaintiffs will not prejudice the proper determination, after trial, of other issues in the action. There will therefore be an order for summary judgment in the terms sought by the plaintiffs.
[18] Supreme Court Civil Rules 2006, r 232(2)(a).