DTS Succession Pty Ltd v Survco Pty Ltd

DTS Succession Pty Ltd brought an action against Survco Pty Ltd in the Supreme Court of Victoria seeking a declaration that the valuation of the respondent’s shares in the company was correctly carried out. The parties had settled their dispute through a mechanism whereby the applicants bought the respondents’ shares in the company, which was recorded in a Deed of Separation and Release. The deed set out how the valuation of the shares was to be undertaken, including appointing a valuer. The respondents argued that the valuation was incorrect, and the court should set it aside. The applicants argued that the deed provided that the valuation was to be final and binding on the parties and the respondents were bound by the valuer’s decision.

The court was required to determine whether the valuation complied with the terms of the contract and if it was made honestly and impartially. The court held that a valuation obtained by fraud or collusion could be disregarded, and it is easy to imply a term that a valuation must be made honestly and impartially. However, it is difficult 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 critical question is whether the valuation complies with the terms of the contract. The court found that the valuation complied with the terms of the contract, and the applicants were entitled to the declarations sought.

The Supreme Court of Victoria declared that the valuation of Brian McDonald of Pilot Partners dated 26 May 2021 was prepared in accordance with clause 4 of the Deed of Separation and Release dated 1 March 2021. The court ordered that the deed ought to be specifically performed and carried into execution. The parties were to be heard on the form of the orders and on costs.