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McGrath v McGrath

McGrath v McGrath

Case [2012] NSWSC 578 1 June 2012

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Supreme Court

New South Wales

Medium Neutral Citation: McGrath v McGrath [2012] NSWSC 578
Hearing dates: 21 and 22 May 2012
Decision date: 01 June 2012
Jurisdiction: Equity Division
Before: Pembroke J
Decision:
See paragraph [50]

Catchwords: CONTRACT - expert determination clause - general principles - expert's discretion regarding process of valuation
BIAS - expert determination clause - actual bias - heavy onus on party alleging bias - communications prior to formal appointment
BIAS - expert determination clause - apprehended bias - necessity for connection between relevant conduct and likelihood that decision-maker might not decide question on merits
BIAS - expert determination clause - apprehended bias - principle of apprehended bias will rarely apply to experts - policy and principle
PRACTICE & PROCEDURE - advisory opinion - theoretical issue - dispute not yet crystallised - not appropriate to determine
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Andrews v Queensland Racing Ltd [2009] QSC 364
Barclays Bank v Nylon Capital [2011] EWCA Vic 826; [2012] Bus LR 542
Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334
Beevers v Port Phillip Sea Pilots Pty Ltd [2007] VSC 556
Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd [2004] 2 Lloyd's Rep 352
Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1
Candoora No 19 Pty Ltd v Freixenet Australasia Pty Ltd (No 2) [2008] VSC 478
Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2001) 205 CLR 337
Holt v Cox (1997) 23 ACSR 490
Kenros Nominees Pty Ltd v Tipperary Group Pty Ltd [2009] VSC 524
Lahoud v Lahoud [2010] NSWSC 1297
Legal & General Life of Australia v A Hudson Pty Ltd (1985) 1 NSWLR 314
Macro v Thompson (No 3) [1997] 2 BCLC 36
Minister for Immigration v Jia Lengeng [2001] HCA 17; (2001) 205 CLR 507
SCII v Minister for Immigration [2002] FCA 688
Shoalhaven City Council v Firedam Civil Engineering Pty Ltd [2011] HCA 38
Stanislawa Bahonko v Moorfields Community [2012] VSCA 89
Straits Exploration (Australia) Pty Ltd v Murchison United NL [2005] WASCA 241
TX Australia Pty Ltd v Broadcast Australia Pty Ltd [2012] NSWSC 4
TXU Electricity Ltd v Commonwealth Custodial Services Ltd [2003] VSC 8
Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; [2005] 2 Qd R 563
Category: Principal judgment
Parties: Adrian Robert McGrath - plaintiff
John Albert Bruce McGrath - defendant
Representation: Counsel:
C R C Newlinds SC with M A Izzo - for the plaintiff
A P Spencer - for the defendant
Solicitors:
Hunt & Hunt - for the plaintiff
Matthews Folbigg Pty Ltd - for the defendant

File Number(s): 2011/00231229

Judgment

Introduction

This is a dispute between two brothers who are the parties to a Shareholders Agreement. It relates to the process by which they agreed that the defendant's shares in the holding company of a group of companies known as the McGrath Group should be bought out.…

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.

Continue reading McGrath v McGrath

Details

AGLC: McGrath v McGrath [2012] NSWSC 578
Case: [2012] NSWSC 578
Decision Date: 01 June 2012

CaseChat Overview and Summary

The case of McGrath v McGrath was heard in the Supreme Court of New South Wales. The dispute between the parties centred around the interpretation and application of an expert determination clause within a contract. The core issue was whether the process followed by the expert in valuing a property was compliant with the clause, and if not, whether the expert's determination could be set aside due to alleged bias.

The legal issues the court was required to decide included the extent of the expert's discretion under the determination clause, the burden of proof for establishing actual bias, and the principles governing apprehended bias. Specifically, the court had to determine if the appellant had met the heavy onus of proving actual bias, and whether the principle of apprehended bias applied to the expert. The court also considered whether the expert's preliminary communications with one of the parties constituted bias.

The court held that the expert had discretion in determining the process of valuation under the clause, and that the burden of proving actual bias was substantial. The court found no evidence of actual bias and concluded that the principle of apprehended bias rarely applied to experts, as it would undermine the policy and principle behind such clauses. The court also ruled that the expert's preliminary communications did not amount to bias. Given that the dispute had not yet crystallised, the court declined to provide an advisory opinion on a theoretical issue.

The court dismissed the appeal and ordered the respondent to pay the appellant's costs of the appeal.

Orders