CMC Property Pty Ltd v Rankin Investments (Qld) Pty Ltd

The applicants, CMC Property Pty Ltd and Peter Thomas Kendall, sought declarations as to the proper construction of the terms of a contract styled “Property Agreement” with Rankin Investments (Qld) Pty Ltd and Bradley John Rankin. The Property Agreement constituted a joint venture between the parties to develop the Big Pineapple tourist attraction near Nambour. The central issue before the court was how an expert ought to value the interests held by the Rankin parties in the joint venture for the purposes of a compulsory buy-out by the Kendall parties. The parties jointly appointed Steven Sorbello, a chartered accountant, to value the Rankin parties’ interest in the joint venture. However, they disagreed on the date to be used to strike the valuation. The court had to decide whether the appropriate valuation point was to be determined by the expert or whether a specific date should be set and, if so, what that date should be.

The court considered various precedents to determine the correct approach to the interpretation of the Property Agreement. It concluded that the meaning of the terms of the contract was to be determined by what a reasonable businessperson would have understood those terms to mean. The court noted that the Property Agreement outlined the procedure for determining the valuation of the joint venture interest in the event of a default by one party. If the parties could not agree on a valuation, a chartered accountant would be appointed to determine the value. The court held that the chartered accountant appointed by the board to undertake a valuation of the joint venture interest held by the first and second respondents in accordance with clause 9.2, was to value that interest as at the date of the chartered accountant’s valuation report.

The court declared that, on the proper construction of the Property Agreement, the chartered accountant appointed by the board to undertake a valuation of the joint venture interest held by the first and second respondents in accordance with clause 9.2, was to value that interest as at the date of the chartered accountant’s valuation report. The court also noted that the parties would be heard on the question of costs.