Fabig v Photon Group - [2010] NSWSC 358

NEW SOUTH WALES SUPREME COURT

CITATION:
Fabig v Photon Group [2010] NSWSC 358

JURISDICTION:
Equity Division

FILE NUMBER(S):
2009/291698

HEARING DATE(S):
20 April 2010

EX TEMPORE DATE:
20 April 2010

PARTIES:
Janina Helena Fabig (Plaintiff)
Photon Group Limited (ACN 091 524 515)

JUDGMENT OF:
McDougall J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable

COUNSEL:
T J Morahan (Plaintiff)
B R McClintock SC / J O Hmelnitsky (Defendant)

SOLICITORS:
Lawjet (Plaintiff)
Watson Mangioni (Defendant)

CATCHWORDS:
PROCEDURE – dispute resolution procedure in contract – defendant seeking stay of proceedings – where expert determination provision mandatory – where defendant did not engage procedure within fixed time limits – whether dispute still falls within intent of dispute resolution provisions – whether entitlement to stay should be enforced on discretionary grounds – stay not ordered due to delays – application for transfer of proceedings to Commercial List – application to set aside subpoenas for production of documents – where real issues have not yet been narrowed by pleadings – where parties will have opportunity to obtain discovery once issues are defined – subpoenas set aside.

LEGISLATION CITED:

CATEGORY:
Procedural and other rulings

CASES CITED:

TEXTS CITED:

DECISION:
I make orders in accordance with prayers 1 and 3 of the defendant's notice of motion filed on 1 March 2010. I order that the notice of motion otherwise be dismissed.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

20 April 2010 (ex tempore – revised 20 April 2010)

2009/291698 JANINA HELENA FABIG v PHOTON GROUP LIMITED

JUDGMENT

HIS HONOUR: On 3 July 2006, a share purchase agreement was made between a number of vendors, including the plaintiff, Ms Fabig, and the defendant (Photon). The share purchase agreement was varied by a deed of variation made on 2 November 2006. One of the matters effected by the deed of variation was an agreement that Photon should buy shares in the relevant company that the vendors had retained after, and on the terms of, the share purchase agreement.
The consideration payable by Photon for those retained shares included three elements. The third of those elements was described as "the additional amounts provided for in Schedule 1".
Schedule 1 provided for payment of additional amounts on 30 September 2008, 30 September 2009, 30 September 2010 and 30 September 2011. The additional amounts to be paid are calculated by a formula that takes into account the earnings before interest and tax (EBIT) of the group of companies including the company whose shares were sold, as defined in the schedule. There is a "gateway" to any entitlement under Schedule 1. Nothing is payable if the EBIT of the group is less than or equal to a specified figure.
Clause 6 of Schedule 1 reads as follows:
6.Any dispute as to whether or not there is an entitlement under, or as to an amount calculated for the purposes of, this Schedule 1 must be resolved in accordance with…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 358
Decision Date: 20 April 2010

CaseChat Overview and Summary

Fabig v Photon Group involved a dispute between the plaintiff, Fabig, and the defendant, Photon Group. The case pertained to the enforcement of a contractual dispute resolution procedure where the defendant sought a stay of proceedings due to the plaintiff's failure to adhere to the mandatory expert determination provision within the stipulated time limits. The court had to determine whether the dispute resolution provisions were still applicable and if the defendant's entitlement to a stay should be enforced on discretionary grounds.

The court examined the mandatory nature of the expert determination clause and the defendant's failure to engage in the procedure within the fixed time limits. The primary legal issue was whether the dispute still fell within the intent of the dispute resolution provisions and if the court should enforce the defendant's entitlement to a stay despite the delays. The court found that the delays were significant and concluded that the defendant's application for a stay should not be granted.

Additionally, the court addressed an application for the transfer of proceedings to the Commercial List and an application to set aside subpoenas for the production of documents. The court held that, as the real issues had not yet been narrowed by the pleadings, and the parties would have an opportunity to obtain discovery once the issues were defined, the subpoenas should be set aside. The court's decision underscored the importance of adhering to contractual dispute resolution procedures and the consequences of failing to do so.

Orders