Flynn v PPK Mining Equipment Pty Ltd (No 3)

The case of Flynn v PPK Mining Equipment Pty Ltd (No 3) involved a dispute between the plaintiffs, who were to receive $500,000 worth of shares in a publicly listed company upon the satisfaction of an earnout, and the defendants, who breached the contract by denying a variation that changed the earnout to $1 million revenue in 2016. The dispute arose from the defendants' refusal to issue shares despite the plaintiffs' achievement of the required revenue threshold. The case was before the court to determine the plaintiffs' entitlement to the shares, compensation for the increase in share price and dividends over the intervening years, and other equitable remedies.

The court was required to decide several legal issues, including whether the plaintiffs were entitled to the shares plus compensation for the increase in share price and dividends over the intervening eight years, considering the counterfactual and the loss of chance. The court also had to determine whether damages were an adequate remedy in the contract for the share issue and whether specific performance could be back-dated. Additionally, the court had to consider the applicability of equitable damages under the Lord Cairns' Act and whether the plaintiffs' delay in claiming the share issue constituted laches.

The court found that the plaintiffs were entitled to the shares plus compensation for the increase in share price and dividends over the intervening eight years, considering the counterfactual and the loss of chance. The court determined that the frustration of the share calculation clause did not discharge the accrued rights, and specific performance could not be back-dated. The court held that damages were not an adequate remedy in the contract for the share issue, and specific performance could be compelled. The court also found that equitable damages could be sought in substitution or addition to specific performance, and the plaintiffs' delay in claiming the share issue did not constitute laches.

The court ordered the defendants to issue the number of shares equal to $500,000 divided by the volume-weighted average price (VWAP) calculated on share trades on the ASX over the 30 days on which trading in PPK Shares took place immediately preceding the share issue date. The court also ordered the defendants to compensate the plaintiffs for the increase in share price and dividends over the intervening eight years.