Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 201 Hearing dates: 28-29 July 2023 Date of orders: 30 August 2023 Decision date: 30 August 2023 Before: Leeming and Mitchelmore JJA at [1];
Stern JA at [2].Decision: (1) The appeal is allowed.
(2) The notice of contention is dismissed.
(3) Orders 2 and 3 of the orders of the Supreme Court on 2 December 2022 are set aside.
(4) The issue of damages or other relief, and subject to order 6 below, the issue of costs at first instance, is remitted to the primary judge for determination.
(5) The respondents pay the appellants’ costs of the appeal.
(6) If either side wishes this Court to determine costs at first instance, then the appellants file and serve written submissions, limited to two pages, within seven days of these orders, as to whether and to what extent they are entitled to the costs of the hearing before the primary judge, and the respondents file and serve responsive submissions, again limited to two pages, within fourteen days of these orders, as to the costs of the hearing before the primary judge.
Catchwords: CONTRACTS – construction – share purchase agreement to be understood objectively having regard to commercial purpose and object
CONTRACTS – construction – meaning of business revenue for purpose of determining whether second performance conditions satisfied – business revenue includes revenue from internal supply – internal supply calculated by transfer price as agreed by the parties
CONTRACTS – breach of share purchase agreement – where respondents prepared NPAT statements on the basis of incorrect contractual premise
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6; (2023) 97 ALJR 194
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35
Category: Principal judgment Parties: Daniel Flynn (First Appellant)
PPK Mining Equipment Pty Ltd (First Respondent)
Flynfam Pty Ltd as trustee for the Flynn Family Trust (Second Appellant)
PPK Group Limited (Second Respondent)Representation: Counsel:
Solicitors:
Mr A Justice and Mr A Ionita (Appellants)
Mr T Faulkner SC and Mr A Bulley (Respondents)
MRM Lawyers (Appellants)
Moray & Agnew (Respondents)
File Number(s): 2022/384592 Publication restriction: Nil Decision under appeal
- Court or tribunal:
- Supreme Court
- Jurisdiction:
- Equity
- Citation:
- Date of Decision:
- 2 December 2022
- Before:
- Rees J
- File Number(s):
- 2019/11615
HEADNOTE
[This headnote is not to be read as part of the judgment]
The appellants entered into a Share Purchase Agreement (“SPA”) with the respondents on 15 October 2014, pursuant to which the first and second appellants (“Mr Flynn” and “Flynfam” respectively) sold their shares in Exlec Pty Ltd (“Exlec”) and Exlec Holdings Pty Ltd (“Exlec Holdings”) to the…
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- Case
- [2023] NSWCA 201
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the Court of Appeal were: (1) how the share purchase agreement should be construed, particularly in light of its commercial purpose and object; and (2) the correct interpretation of "business revenue" for the purpose of determining whether the second performance conditions were satisfied, specifically whether revenue from internal supply should be included and how it should be calculated.
The Court of Appeal allowed the appeal, finding that the respondents had incorrectly calculated business revenue by excluding revenue derived from internal supply. The Court held that the agreement, when construed objectively and having regard to its commercial purpose, required the inclusion of revenue from internal supply. This internal supply was to be calculated based on the transfer price as agreed by the parties. The Court determined that the respondents had prepared their Net Profit After Tax (NPAT) statements on the basis of this incorrect contractual premise. Consequently, the Court set aside the Supreme Court's previous orders and remitted the issue of damages or other relief, and potentially costs at first instance, back to the primary judge for determination. The appellants were awarded their costs of the appeal, with a provision for further submissions if either party wished the Court of Appeal to determine the costs of the first instance hearing.
Orders
Orders of the court
(1) The appeal is allowed.
(2) The notice of contention is dismissed.
(3) Orders 2 and 3 of the orders of the Supreme Court on 2 December 2022 are set aside.
(4) The issue of damages or other relief, and subject to order 6 below, the issue of costs at first instance, is remitted to the primary judge for determination.
(5) The respondents pay the appellants’ costs of the appeal.
(6) If either side wishes this Court to determine costs at first instance, then the appellants file and serve written submissions, limited to two pages, within seven days of these orders, as to whether and to what extent they are entitled to the costs of the hearing before the primary judge, and the respondents file and serve responsive submissions, again limited to two pages, within fourteen days of these orders, as to the costs of the hearing before the primary judge.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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