Meyertran Pty Ltd v TVS-Asianics Australia Holdings Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2019 02101

MEYERTRAN PTY LTD (ACN 065 549 626) (as trustee for the Meyer Family Trust)	First Plaintiff
PHILPTRAN PTY LTD (ACN 129 789 322) (as trustee for the Philp Family Trust)	Second Plaintiff
MORTROIS PTY LTD (ACN 139 840 565) (as trustee for the Sirrom Unit Trust)	Third Plaintiff
v
TVS-ASIANICS AUSTRALIA HOLDINGS PTY LTD (ACN 607 085 496)	Defendant

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	11 September 2019
DATE OF JUDGMENT:	22 May 2020
CASE MAY BE CITED AS:	Meyertran Pty Ltd v TVS-Asianics Australia Holdings Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 287

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PRACTICE AND PROCEDURE – Stay to allow expert determination – Whether Court has inherent jurisdiction to grant such a stay – Whether the expert determination provision ousted the Court’s jurisdiction in respect of accrued rights or was a precondition to the establishment of those rights – Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643; Anderson v GH Michell & Sons Ltd (1941) 65 CLR 543; Huddart Parker Ltd v Ship Mill Hill (1950) 81 CLR 502; Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577 considered and applied – Badgin Nominees Pty Ltd v Oneida Limited [1998] VSC 188; Savcor Pty Ltd v New South Wales (2001) 52 NSWLR 587; New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503; Ipoh v TPS Property No 2 Pty Ltd [2004] NSWSC 289; Dance with Mr D Limited v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332; BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (2008) 168 FCR 169; Onslow Salt Pty Ltd v Buurabalayji Thalanyji Aboriginal Corporation [2018] FCAFC 118 considered.

CONTRACT – Parties agreed that an expert accountant determine a dispute, to be nominated by the President of the Institute of Chartered Accountants or its successor body in default of their agreement – Successor body to the Institute of Chartered Accountants no longer makes such nominations – Term could not operate according to its terms – Whether a term should be implied requiring the parties to agree on an alternative nominating body – Rentiers Pty Ltd v Wingara Wine Group Pty Ltd [2010] VSC 156 considered and distinguished – Interlocutory application – Inappropriate to imply a term.

STAY FOR EXPERT DETERMINATION – Discretion to grant a stay on the basis of contractual provision for determination of a dispute by an expert accountant – Consideration of principles for the exercise of the discretion – Onslow Salt Pty Ltd v Buurabalayji Thalanyji Aboriginal Corporation [2018] FCAFC 118 – Whether dispute properly characterised as an accounting dispute – Whether procedure for expert determination apt – Dispute turns on construction of the contract and factual disputes as well as accounting issues – Savcor Pty Ltd v New South Wales (2001) 52 NSWLR 587 distinguished – Stay refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A J Myers QC with Ms N L Papaleo	Lander & Rogers
For the Defendant	Mr D J Batt QC with Mr J B Masters	King & Wood Mallesons

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 2

Share Sale agreement.................................................................................................................... 2
Shareholders’ Agreement............................................................................................................ 7
Provision of FY18 Audited Accounts and Dispute Notice..................................................... 9
Proceeding and application....................................................................................................... 12

Issues.................................................................................................................................................. 14

Summary of submissions............................................................................................................... 14

Jurisdiction................................................................................................................................... 14
Is the jurisdiction enlivened?..................................................................................................... 15
Discretion..................................................................................................................................... 16

Discussion......................................................................................................................................... 16

Jurisdiction................................................................................................................................... 16
Inherent jurisdiction.......................................................................................................... 16
Statutory jurisdiction......................................................................................................... 25

Is the jurisdiction enlivened?..................................................................................................... 26
Discretion..................................................................................................................................... 32

Conclusion and orders.................................................................................................................... 41

HER HONOUR:

Introduction

This is an application for stay of a proceeding until a dispute between the parties has been determined by an expert accountant, in accordance with what the defendant contends is the proper construction of the contract between the parties.

The defendant accepts that the relevant contractual clause cannot operate according to its express terms. There is no dispute that the process set out in the contract for nomination of an accounting expert, if the parties do not agree on the nomination, cannot take place. However, the defendant submits that on the proper construction of the contract there are bases on which the stay can, and should be, granted.

The plaintiffs oppose the application. They contend that the Court has no inherent jurisdiction to grant the stay. If I am against them on that contention, they submit that construction of the contract is an issue for final relief, and so should not be determined in this interlocutory application. Further, they submit that in its discretion the Court should not grant the stay, largely because the dispute is not suitable for determination by an accounting expert.

In its summons, the defendant initially sought not only a stay but also substantive orders to require the parties to adopt an alternative process for nomination of an accounting expert. At the hearing, the defendant no longer pursued those proposed orders.

I refuse the application for the stay. In short summary, I do so on the following basis. I consider that the Court would have inherent jurisdiction to grant a stay to allow expert determination of the type in question if the contract was able to operate according to its express terms. This is because the expert determination does not purport to oust the jurisdiction of the Court in respect of rights already accrued by the plaintiffs. It is a procedure to be undertaken for those rights to accrue.

However, I do not consider that that jurisdiction is enlivened on these facts. The expert determination procedure cannot operate on the express terms of the contract, and construction of the contract to allow implication of a term to allow it to do so is a matter for relief at trial, and is not appropriate in this interlocutory application. If I am wrong in respect of that conclusion, in the exercise of my discretion I would not in any event grant the stay, given the potential legal and factual issues that may arise in respect of which the expert determination procedure is not appropriate.

I now elaborate those reasons.

Background
Share Sale agreement

Pursuant to a share sale agreement dated 7 August 2015 (‘Share Sale Agreement’), the plaintiffs (in the Sale Agreement the ‘Vendors’) sold to the defendant (in the Share Sale Agreement ‘the Purchaser’) certain shares in TIF Holdings Pty Ltd (‘Company’).[1] The Share Sale Agreement provides that the sale is to occur in two tranches separated by three years, the first being in 2015 and the second in 2018. In respect of each tranche, the Share Sale Agreement provides for a purchase price which is initially to be determined having regard to the management accounts for 2015 and 2018 respectively of the Company and its subsidiaries (together the ‘Group’). The Share Sale Agreement requires the defendant to subsequently procure the auditing of those accounts in a stipulated manner and provide them to the representative of the plaintiffs. The Share Sale Agreement then provides for adjustment of the purchase price having regard to these audited accounts and other matters.
[1]Exhibit JDLR-1 to affidavit of James Douglas Livingstone Russell, affirmed 7 June 2019 (‘Russell Affidavit’).

The first tranche of the sale, including adjustment of the purchase price, has occurred. The dispute that is the subject of this proceeding relates to the purchase price in respect of the second tranche of the sale. It is necessary for the purpose of this application to consider a number of the provisions of the Share Sale Agreement.

The respective obligations of the plaintiffs and the defendants prior to ‘Second Completion’, i.e. the second sale tranche, are set out in clause 8, and their obligations at Second Completion are set out in clause 9. Those obligations require, by clause 9.6, payments by the Purchaser of two amounts, each calculated as a percentage of the ‘Second Completion Amount’. The Purchaser is required to pay 90% of the Second Completion Amount to the Vendors, and to pay the remaining 10% into an escrow account. The Second Completion Amount is defined to be an amount equal to 45% of the total arrived at having regard to seven elements. Six of those elements, the Second Completion Value, Second Completion Cash, Second Completion Financial Debt, Second Completion Working Capital, Accounting Prepayments and Accounting Accruals, each separately defined, are required to be included as separate line items in the ‘FY18 Management Accounts’. The ‘FY18 Management Accounts’ are defined to mean:

the unaudited management accounts for the Group for the financial year ending 30 June 2018 (including separate line items for the Second Completion Value, Second Completion Cash, Second Completion Financial Debt, Second Completion Working Capital the Accounting Prepayments and the Accounting Accruals).

The seventh element in the definition of Second Completion Amount is the ‘Second Completion Average Working Capital’, which is an amount to be notified by the Vendors to the Purchaser pursuant to clause 8.5. The definition of the Second Completion Amount requires that the amount be adjusted, up or down as the case requires, after comparison between the Second Completion Working Capital, i.e. broadly the amount at the conclusion of the year as per the FY18 Management Accounts, with the Second Completion Average Working Capital, which is broadly the average monthly working capital for the preceding 18 month period.

Clause 10 of the Share Sale Agreement then provides for adjustment of the Second Completion Amount by preparation of the ‘FY18 Audited Accounts’, agreement or resolution of any dispute in relation to the FY18 Audited Accounts, and calculation of the final purchase price for the second sale tranche.

Clause 10.1 begins the process. It provides as follows:

Within 3 months after Second Completion, the Purchaser must procure that, subject to clause 10.2, the FY18 Audited Accounts are prepared, at the Company’s cost, in accordance with the EBITDA Calculation Principles, and provide a copy, together with copies of the working papers relating to the preparation of the FY18 Audited Accounts, to the Vendors’ Representative.

Clause 10.2 is not currently relevant. At the heart of the adjustment are the ‘FY18 Audited Accounts’. They are defined as follows:

collectively, the following financial statements and management accounts (as applicable) for the Group, (including separate line items in respect of the estimated value of the Group as at the Second Effective Date, to be determined by multiplying the EBITDA of the Group by a multiple of 7 or 8.5 (as applicable, depending on whether the Second Completion EBITDA is $4,000,000 or more), Second Completion Cash, Second Completion Financial Debt, Second Completion Working Capital, the Second Completion Average Working Capital, the Accounting Prepayments and the Accounting Accruals):
(a)(in respect of Group Companies that are incorporated in Australia, New Zealand, Hong Kong and China) audited financial statements for the financial year ending 30 June 2018; and
(b)(in respect of Group Companies that are incorporated outside of countries referred to in (a) above) management accounts for the financial year ended 30 June 2018,

as consolidated for the Group and such consolidation subject to a special purpose audit by the Group’s auditor.

What this definition shows is that the FY18 Audited Accounts are not just the management accounts as audited, but a particular creature calculated having regard to the ‘EBITDA of the Group’ and other matters, including matters required in the FY18 Management Accounts, and following a special purpose audit.

‘EBITDA’ is defined to mean

the earnings before interest, taxes, depreciation and amortisation of the Group, normalised in accordance with the EBITDA Calculation Principles.

Both this definition and clause 10.1 requires that the FY18 Audited Accounts be prepared ‘in accordance with the EBITDA Calculation Principles.’ Those Principles are defined to mean ‘the principles, policies and procedures set out in Schedule 2’.

Schedule 2 is headed ‘EBITDA Calculation Principles’. The relevant portions state as follows:

The parties acknowledge and agree that for the purposes of determining the First Completion EBITDA and the Second Completion EBITDA, the following principles, policies and procedures shall apply:
Normalised Adjustments for First Completion EBITDA
1.1Any determination First Completion EBITDA must be made in accordance with the Accounting Standards applied consistently with past practice of the Group and take proper account of the following normalised adjustments:
(a)-(d)(not here relevant)

Normalised Adjustments for Second Completion EBITDA
1.2Any determination of Second Completion EBITDA must be made in accordance with the Accounting Standards applied consistently with past practice of the Group and take proper account of the following normalised adjustments:
(a)-(c)(not here relevant)
(d)the EBITDA impact of the Purchaser not complying with or not procuring that the Company acts in accordance with any requirement under the Shareholders’ Agreement to obtain a Special Majority Director’ [sic] Resolution in respect of any matter affecting the Business following First Completion;
(e)-(h)(not here relevant)

Schedule 2 requires that both the adjustments for the First Completion and for the Second Completion adhere to ‘the Accounting Standards applied consistently with past practice of the Group’. I take it that the plaintiffs’ case will be that there are two elements to this requirement. The first would require an understanding of the content of the defined term ‘Accounting Standards’. The term ‘Accounting Standards’ is defined in the Share Sale Agreement to mean:

(a)the accounting standards applicable for the purposes of the Corporations Act;
(b)the requirements of the Corporations Act for the preparation and content of financial statements, directors’ reports and auditor’s reports; and
(c)generally accepted and consistently applied accounting principles and practices in Australia (including Australian equivalents to the International Financial Reporting Standards), except those inconsistent with the standards or requirements referred to in paragraphs (a) or (b).

I agree with the defendant that this element is a matter within the expertise of an accountant.

An arguable second element would require that the phrase ‘applied consistently with past practice of the Group’, means that the accounting standards, principles and practices applied to calculate the Second Completion EBITDA be those that were previously consistently applied by the Group. It appears from the argument before me that the defendant would, or may, disagree with this construction.[2] While comparison of the Accounting Standards applied for FY15 and those applied for FY18 would be a matter within the expertise of an accountant, the proper construction of Schedule 2 is a question of law.
[2]Transcript of Proceedings, 11 September 2019, 26-27 (‘Transcript’).

Clauses 10.3 to 10.8 of the Share Sale Agreement set out the process for agreement of the FY18 Audited Accounts, or resolution of dispute in relation to those accounts. Those provisions are as follows:

10.3The Vendors’ Representative or the Purchaser may at any time within 21 days after receipt of the FY18 Audited Accounts give notice to the other specifying any items in the FY18 Audited Accounts with which it disagrees. If no such notice is given by either the Vendors’ Representative or the Purchaser, the Vendors and the Purchaser will be deemed to have agreed with the FY18 Audited Accounts.
10.4If a notice is given under clause 10.3, the Vendors’ Representative and the CEO of the Purchaser must meet in an effort to resolve the dispute.
10.5If the Vendors’ Representative and the CEO of the Purchaser fail to resolve the dispute within 21 days of the Vendors’ Representative giving notice under clause 10.3, then either of them may request that an Independent Expert be appointed to make a decision on the disagreement as soon as practical after receiving any submissions from the Vendors and the Purchaser. Those submissions must be made in writing within 14 days (or such other time as may be agreed) after the Independent Expert is appointed (and copied simultaneously to the other party).
10.6The decision of the Independent Expert is, in the absence of fraud or manifest error, conclusive and binding on the parties for the purposes of this Agreement.
10.7The Vendors and the Purchaser agree to each pay one half of the Independent Expert’s costs and expenses.
10.8The Independent Expert will be appointed as an expert and not as an arbitrator. The procedures for determination are to be decided by the Independent Expert in its discretion.

If the parties fail to resolve a dispute between themselves, clause 10.5 requires the appointment of an ‘Independent Expert’. ‘Independent Expert’ is defined in the Share Sale Agreement to mean:

the person appointed as an expert jointly by the Vendors’ Representative and the Purchaser, or if they do not agree on the person to be appointed within seven days of either requesting appointment, an appropriately experienced accountant appointed by the President of the Institute of Chartered Accountants Australia at the request of either the Vendors’ Representative or the Purchaser.

Thus the Share Sale Agreement envisages that if the parties cannot resolve a dispute in relation to ‘any items in the FY18 Audited Accounts’ between themselves, and cannot agree on the Independent Expert to be appointed, then the appointment will be made by the President of the Institute of Chartered Accountants.

Once the FY18 Audited Accounts are either agreed or determined pursuant to provisions 10.3 to 10.8, the remaining provisions of clause 10 of the Share Sale Agreement set out how the amount paid to the Vendors (the plaintiffs) is to be adjusted having regard to the FY18 Audited Accounts.

Shareholders’ Agreement

On the same date that they entered into the Share Sale Agreement, the parties also entered (with the Company) into a shareholders’ agreement (‘Shareholders’ Agreement’).[3] Recital A records how the issued share capital of the Company will be comprised from the First Completion Date. The effect of Recital A is that the issued share capital will be 450,000 shares, held as to 55% by the Purchaser, and as to the remaining 45% by the Vendors.[4] As noted in paragraph 10 above, the Second Completion Amount in the Share Sale Agreement is defined to be 45% of the amount arrived at by reference to the seven elements described, and so presumably reflect an intended 55/45% division of shareholding. Recital B in the Shareholders’ Agreement records that the purpose of the Shareholders’ Agreement is ‘for the parties to record their agreement about the operation of the Company, and the control, management and funding of the Shareholders’ rights and obligations’.
[3]Exhibit JDLR-2 to the Russell Affidavit.
[4]This compares with the plea at paragraph 4 of the statement of claim that the defendant alone holds 450,000 shares in the Company.

The Shareholders’ Agreement makes detailed provision in clause 6 in relation to the appointment, role and voting rights of directors. The effect of the first tranche of the Share Sale Agreement was to substantially increase the shareholding of the defendant and substantially decrease the respective shareholdings of the plaintiffs. Clause 6.3 provides that, as is normally the case, a director is entitled to voting rights equivalent to those of the shareholder appointing him or her but sub-clause 6.3(a) imposes a minimum percentage of voting rights for the first plaintiff. Clause 6.4 provides that on and from the First Completion Date the Board, defined to mean ‘all or some of the Directors acting as a board’, would comprise four directors appointed by the plaintiffs and three by the defendant, but clause 6.5 enables the defendant to appoint up to six directors in total, i.e. three more. The evidence before me does not establish if the defendant appointed more directors after the First Completion Date. By clause 6.6 the Chair of the Board was to be appointed by the defendant, but does not have a casting vote.

Clause 6.2 of the Shareholders’ Agreement provides as follows:

6.2 Directors’ resolutions
Subject to clause 6.12, each of the matters listed in Schedule 1 must be determined by the Board by a Special Majority Directors’ Resolution. All other Directors’ Resolutions must be decided by Ordinary Directors’ Resolution.

‘Special Majority Directors’ Resolution’ is defined to mean:

a resolution of the Directors which is approved by Directors who together comprise not less than 75% of the votes cast on that resolution.

Schedule 1 to the Shareholders’ Agreement lists the matters requiring a Special Majority Directors’ Resolution. Relevantly, paragraph (e) provides as follows:

(accounting policies and methods) any changes to the accounting policies and methods used by the Group from those used in preparing the FY15 Management Accounts (defined in the Share Sale Agreement), excluding any changes which are required by law or necessary to comply with the Accounting Standards;

The plaintiffs submit that the practical effect of these provisions in the Shareholders’ Agreement is that if the Group wished to employ different accounting policies and methods to those used for the FY15 Management Accounts, which in turn would affect the calculation of the amount to be paid to the plaintiffs on completion of the second tranche of the purchase of their shares, then a Special Majority Directors’ Resolution was required, and such a Resolution would have to be approved by directors appointed by both the plaintiffs and the defendant.[5] This is because, if there were seven directors, then to achieve a 75% passage, six of the seven would need to vote for it, i.e. all but one of the plaintiffs’ appointed directors, if all of the defendant’s appointed directors voted in favour. If there were ten directors, to achieve a 75% passage, eight would need to vote for it, i.e. at least two of the plaintiffs’ appointed directors, if all the defendant’s appointed directors voted in favour.
[5]Outline of the Plaintiffs’ Submissions dated 4 September 2019, [20].

The plaintiffs further submit that the purpose of the adjustment for Second Completion specified in sub-paragraph 1.2(d) of Schedule 2 of the Share Sale Agreement (as set out at paragraph 18 above) was to the same effect. Its intention was to protect the Vendors from diminution of the price payable to them at the second tranche of the purchase of their shares arising from changes made unilaterally by the Purchaser to, amongst other things, the accounting policies of the Company once the Purchaser gained control of the Company.[6]
[6]Ibid [34]-[36].

Provision of FY18 Audited Accounts and Dispute Notice

Counsel for the defendant in oral argument said that the process undertaken by the defendant in respect of the FY18 Audited Accounts was first to procure the preparation of the FY18 Management Accounts, which were then audited by the Group auditor, Ernst & Young. The Company or the Group then prepared its own provisional FY18 Audited Accounts, which were sent to Ernst & Young for review. Ernst & Young prepared a report, which appears as a confidential exhibit, in which they indicated any changes that should be made to the provisional FY18 Audited Accounts, for the purpose of calculation of any adjustments to be made to the Second Completion Amount.[7] The Ernst & Young report is dated 7 November 2018 (‘EY Report’).[8] It states that it was prepared in accordance with ‘Specified Procedures’ agreed as between the Company, the plaintiffs and the defendants and set out in terms of engagement dated 28 August 2018.
[7]Transcript 55-58.
[8]Confidential Exhibit JDLR-5 to the Russell Affidavit.

The plaintiffs were provided with a copy of the EY Report. On 21 December 2018 they provided a document headed ‘Dispute Notice’, dated that day, to the solicitors for the defendant.[9] The Dispute Notice states in paragraph 2 that it is given ‘pursuant to clause 10.3 of the [Share Sale Agreement]’. In paragraph 5 of the Dispute Notice the plaintiffs dispute that they agreed that the Specified Procedures be the basis of the engagement of Ernst & Young.
[9]Exhibit JDLR-4 to the Russell Affidavit.

Paragraph 6 of the Dispute Notice alleges breach of clause 10.1 and Schedule 2 of the Share Sale Agreement. A specific alleged breach is that the Company, in preparation of the FY18 Management Accounts and the FY18 Audited Accounts, adopted changes to the accounting policies and methods used by the Group in preparing the FY15 Management Accounts that were not authorised by a Special Majority Directors’ Resolution. The Dispute Notice states in paragraph 6(e) that the Vendors (the plaintiffs):

[d]ispute each of the changes adopted by the Company in the FY18 Management Accounts and the FY18 Audited Accounts, which result in different accounting policies and methods being used by the Group from the accounting policies and methods used in preparing the FY15 Management Accounts and which were not authorised by a Special Majority Directors [sic] Resolution.

Paragraphs 7-9 of the Dispute Notice then set out items that are disputed by identification of items in attachments to the EY Report. Paragraph 7 lists disputed items in relation to the Management Accounts Completion Calculation and Management Accounts Normalisation Adjustments (Attachments A and B to the EY Report). Paragraph 8 lists disputed items in relation to FY18 Audited Accounts and Second Completion Amount Calculation (Attachment C to the EY Report). Paragraph 9 lists disputed items in relation to the FY18 Audited Accounts Normalisation Adjustments Schedule (Attachment D to the EY Report).

The parties had a telephone conference on 11 January 2019 in an endeavour to resolve the Dispute Notice, but were unable to do so. There is no dispute that the parties regarded this conference as a meeting required by clause 10.4 of the Share Sale Agreement. On that same day, the solicitors for the plaintiffs requested that an Independent Expert be appointed to determine the dispute, pursuant to clause 10.5 of the Share Sale Agreement.[10] Correspondence between the solicitors followed in relation to the identity of such an expert or experts, but the parties were unable to agree.
[10]Exhibit JDLR-7 to the Russell Affidavit.

On 15 February 2019 the solicitor for the plaintiffs sent an email to the solicitor for the defendant, relevantly in these terms:[11]

Given the parties inability to agree to the appointment of a suitably qualified IE to determine the disputed issues, the remainder of the dispute resolution mechanism in clause 10.5 is engaged.
As you know the definition of Independent Expert as set out in clause 1 of the [Share Sale Agreement] is a person appointed jointly by the Vendor and Purchaser, or if they do not agree on the person to be appointed within 7 days of either party requesting the appointment, an appropriately experienced accountant appointed by the President of the Institute of Chartered Accountants. The 7 day period in that definition has long expired.
We have made enquiries of the Institute of Chartered Accountants but they have advised that they no longer provide the service of appointing Independent Experts. This is confirmed on the website (see I have also called and spoken with the ICAA and they confirmed that this service is no longer provided.
Without a process to select the IE in the absence of agreement, the process in clause 10.5 no longer applies.
Absent any mechanism for the dispute to be determined under the SSA and given the Purchaser’s refusal to pay the amount properly owing to the Vendors, the Vendors are left with no alternative but to commence legal proceedings to recover the amount properly payable to them under the [Share Sale Agreement].
[11]Part of Exhibit JDLR-9 to the Russell Affidavit.

Proceeding and application

The plaintiffs commenced this proceeding by writ and statement of claim filed 13 May 2019 (‘SOC’). The allegations pleaded broadly correspond to the grievances identified in the Dispute Notice and the inability to utilise the nomination mechanism for an Independent Expert, as set out in the correspondence that followed the Dispute Notice.

The nub of the plaintiffs’ grievance as pleaded in the SOC is the allegation that neither the FY18 Management Accounts nor the FY18 Audited Accounts were prepared in accordance with the requirements of the Share Sale Agreement.[12] Stepping through the process required by the Share Sale Agreement, the plaintiffs allege that for the preparation of the FY18 Management Accounts the Company adopted changes to the accounting policies and the methods used by the Group in preparing the FY15 Management Accounts that were not authorised as required by the Shareholders’ Agreement.[13] As a consequence, so the plaintiffs allege, the amount the defendant paid as the Second Completion Amount was incorrect.[14] The SOC in paragraphs [39]-[97] then pleads a number of specific respects in which it is alleged that the FY18 Audited Accounts were not prepared in accordance with the Share Sale Agreement, in most instances by reason of an unauthorised departure from the accounting policies and methods used by the Group in preparing the FY15 Management Accounts.[15] These allegations correspond to the disputes identified in the Dispute Notice.
[12]SOC [32], [38].
[13]Ibid [33].
[14]Ibid [36].
[15]The alleged errors relating to Accounts Payable, Accounts Receivable, the TVS Management Fee Adjustment and Second Completion Cash, SOC [84]-[97], are pleaded on a different basis.

The plaintiffs plead[16] that when they asked the President of the Institute of Chartered Accountants in February 2019 to appoint an appropriate expert to resolve the dispute between them and the defendant, they were informed by the successor to the Institute, Chartered Accountants Australia and New Zealand (‘Chartered Accountants ANZ’) that that body ceased providing an independent expert nomination service for contractual disputes in 2015. It transpires from the evidence filed by the defendant in this application that the firm of solicitors who act for the defendant were informed of this change by Chartered Accountants ANZ much earlier, by email from that body dated 9 October 2018. It appears from that email that it may have been in response to a general enquiry from the solicitors for the defendant, rather than in relation to this dispute in particular.[17] It is not apparent from the evidence when the particular solicitors in the firm who act for the defendant became aware of the change. On subsequent enquiry after the commencement of this proceeding, Chartered Accountants ANZ informed the solicitors for the defendants that they stopped accepting applications for nomination from 30 June 2015.[18] That was, of course, prior to the date of the Share Sale Agreement.
[16]SOC [103].
[17]Exhibit JDLR-10 to the Russell Affidavit.
[18]Exhibit JDLR-11 to the Russell Affidavit.

The primary relief that the plaintiffs seek in the SOC is that the Court determine the FY18 Audited Accounts in accordance with clause 10.9 of the Share Sale Agreement, as an Independent Expert cannot be appointed. The plaintiffs seek an interlocutory order for delivery up of the working papers for the FY18 Audited Accounts, and orders consequential on the primary relief to compel the defendant, as Purchaser, to pay to them the necessary adjustment to the amount claimed by the defendant to be the Second Completion Amount. In the alternative the plaintiffs seek damages.

The defendant filed a Notice of Conditional Appearance on 27 May 2019, followed by the summons the subject of these reasons on 7 June 2019. The summons sought orders directed to two ends. The first, sought by paragraph 1 of the summons, seeks a stay of the proceeding until the dispute the subject of the Dispute Notice has been determined pursuant to clauses 10.5-10.8 of the Share Sale Agreement. The balance of the summons seeks orders directed to substituting a different body to nominate an accountant as the Independent Expert envisaged in the Share Sale Agreement. At the hearing, the defendant did not press the orders sought in paragraphs 2-4.

Issues

The parties each provided written submissions in advance of the hearing, but each departed from those submissions to some degree at the hearing. Critically, at the hearing the plaintiffs raised a new ground of objection to the application, being that the Court did not have inherent jurisdiction to grant the stay.

The issues as they emerged in argument are, in my formulation, as follows:

i) Does the Court have jurisdiction to grant the stay of a proceeding regularly commenced for the purpose of expert determination pursuant to contract ?

ii) If so, is that jurisdiction here enlivened?

iii) If so, should the Court grant or refuse the stay in its discretion?

Summary of submissions
Jurisdiction

The defendant submits that the Court has inherent jurisdiction to stay a proceeding to enforce a contractual bargain that a dispute will be determined by an expert.

In the alternative, the defendant submits that s 48(2)(c) of the Civil Procedure Act 2010 (Vic) (‘CPA’) confers a statutory jurisdiction on the Court to grant a stay to facilitate alternative dispute resolution.

The plaintiffs submit that there is no such inherent jurisdiction, as it would amount to an ouster of the Court’s jurisdiction. They contrast a contractual provision for expert determination with a contractual provision requiring the parties to first submit to an alternative dispute resolution process before court process. The plaintiffs do not dispute that the Court has inherent jurisdiction to grant a stay on the basis of the latter type of provision, but submit that this is not the case in respect of a provision that substitutes the determination of an expert for that of the Court. They submit that the expert determination procedure stipulated in the Share Sale Agreement is an instance of substitution of an expert for the Court, and so the Court has no inherent jurisdiction to grant a stay to require it.[19]
[19]Transcript 131-132.

Is the jurisdiction enlivened?

If I am against the plaintiffs in relation to the existence of inherent jurisdiction, the plaintiffs contend that the jurisdiction is not here enlivened. The expert determination clause in question here is inoperative and so does not provide a foundation for the exercise of the jurisdiction. In particular, the plaintiffs submit that clause 10.5 and the accompanying definition of Independent Expert are void for uncertainty, frustration or mistake.

The defendant does not accept that the provisions are void, but concedes that the express terms of clause 10.5 are not operative. The defendant contends that this difficulty can, and should be cured, by a purposive construction of the provision. The defendant puts this proposition of two bases. First, the general implied obligation on parties to do what is needed to effectuate their bargain. On this approach, no particular implied term is necessary.[20] Second, by satisfaction of the tests for implication of a term. The proposed implied term was not set out in writing prior to the hearing, and in argument counsel for the defendant initially appeared to propose the implication of a good faith obligation.[21] The defendant later settled on the following proposed implied term:

If the President of the Institute will not make the appointment, the parties will determine an alternative appointor, acting reasonably to do so.[22]

[20]Transcript 151.20-26.

[21]Transcript 6.24-31.

[22]Transcript 106.4-7, 151.4-7.

In response, the plaintiffs submit that it is not appropriate in an interlocutory application for the Court to imply such a term, as that would require construction of the contract that should only be undertaken at trial. Further, that the Court should not, in any event, imply a term that would be inconsistent with the express terms of the contract.[23]
[23]Transcript 115-116, relying on New South Wales v Banabelle Electrical Pty Ltd (2002) 54 NSWLR 503.

Discretion

In the event that I find there is jurisdiction which is here enlivened, the parties rely on a range of discretionary factors for their respective positions.

One particular factor is the appropriate characterisation of the dispute. The defendant contends that it is properly characterised as an accounting dispute, and so properly determinable by an accountant. The defendant submits that there is a heavy onus on the plaintiffs to show why a stay should not be granted, and also relies on the fact that the plaintiffs initially sought to proceed by way of determination by an accounting expert.

The plaintiffs contend that the greater part of the dispute concerns legal issues that are not appropriately determined by an accountant.

Discussion
Jurisdiction
Inherent jurisdiction

The defendant relies on a series of decisions of the Supreme Courts of Victoria and New South Wales, in which inherent jurisdiction to grant a stay to enforce a contractual agreement for expert determination has been assumed, although not always exercised. In Badgin Nominees Pty Ltd v Oneida Limited (‘Badgin Nominees’)[24] Gillard J of this Court granted a stay on the application of the defendant to enforce a contractual provision for determination of a dispute by a valuer. It is not entirely clear whether the plaintiff had contended that the Court lacked jurisdiction, but Gillard J turned his mind to this issue in the absence of relevant Court of Appeal authority in Australia. He concluded that the Court had such a jurisdiction on the simple basis that “a contract is a contract” and the parties should abide by it.[25]
[24][1998] VSC 188.
[25]Ibid [36].

In reaching his conclusion Gillard J relied on remarks by Dixon J in Huddart Parker Ltd v Ship Mill Hill (‘Huddart Parker’),[26] a number of English authorities, and two single instance decisions of the Supreme Court of New South Wales. Huddart Parker concerned an arbitration agreement, but Gillard J was of the view that the same approach should be taken to an application for stay where the parties have agreed to expert determination of a dispute. He did so notwithstanding that he noted the differences between arbitration and expert determination, principally being that an arbitrator must act judicially, but an expert may not be required to do so.
[26](1950) 81 CLR 502.

In New South Wales v Banabelle Electrical Pty Ltd (‘Banabelle’)[27] Einstein J of the New South Wales Supreme Court accepted, apparently without objection, that the Court has inherent jurisdiction to order a stay of a proceeding to allow for expert determination. He considered that the jurisdiction derives from the Court’s inherent jurisdiction to prevent abuse of its process.[28] As will be seen, while Banabelle assists the defendant in relation to jurisdiction, it assists the plaintiffs in relation to the exercise of that jurisdiction.
[27](2002) 54 NSWLR 503.
[28]Ibid 517.

First instance judges of the New South Wales Supreme Court granted stays on the basis of expert determination clauses in two further decisions to which I was taken, Ipoh v TPS Property No 2 Pty Ltd (‘Ipoh’)[29] and Dance with Mr D Limited v Dirty Dancing Investments Pty Ltd (‘Dance with Mr D’).[30] In Ipoh, the parties agreed that the Court had jurisdiction, and the Court concurred.[31] Similarly, in Dance with Mr D, there was no dispute that the Court had jurisdiction, Ipoh amongst other cases being cited in support of that proposition.[32]
[29][2004] NSWSC 289(McDougall J).
[30][2009] NSWSC 332(Hammerschlag J).
[31]Ipoh, (n 29), [30], [32].
[32]Dance with Mr D, (n 30), [43].

The defendant also referred me to Savcor Pty Ltd v New South Wales (‘Savcor’).[33] That case concerned the interplay between a contractual provision that a dispute must be initially referred to an expert for determination, but could then in certain circumstances be referred to arbitration, and the Commercial Arbitration Act1984 (NSW). One of the defendants sought a stay pursuant to s 53 of that Act. Thus the case does not turn on inherent jurisdiction. One question was whether the dispute between the parties fell within the scope of expert determination (and so, potentially, arbitration) as it may involve legal issues. I will return to this issue in relation to the proper characterisation of the dispute in this case.
[33](2001) 52 NSWLR 587.

It is apparent from the cases discussed above that with the exception of Badgin Nominees the relevant Supreme Court in these cases was not required, or otherwise minded, to consider in detail whether it had inherent jurisdiction to order a stay. Inherent jurisdiction was not put in issue. It is put in issue in this case. In Badgin Nominees, Gillard J principally relied on remarks by Dixon J in Huddart Parker and some English cases to reach his conclusion that the Court could grant a stay to enforce a contractual bargain for expert determination. The plaintiffs submit that he was incorrect in his analysis of Huddart Parker. They rely on the analysis by Finkelstein J of the Federal Court of Huddart Parker and High Court decisions to the same effect, as contrasted with the English authorities, in BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (‘BHPB Freight’).[34]
[34](2008) 168 FCR 169.

Like Huddart Parker, BHPB Freight concerned an arbitration clause, not an expert determination clause. Finkelstein J held that the defendant did not fall within the categories of persons who could seek a stay pursuant to s 7 of the International Arbitration Act 1974 (Cth). He also held that a stay could not be granted pursuant to the Court’s inherent jurisdiction. To reach that conclusion, he examined High Court authority, including Huddart Parker, concluding that the High Court had consistently held that the only power to stay a proceeding for arbitration, or for submission to the jurisdiction of a foreign court, arises under statute. In other words, Finkelstein J drew the opposite conclusion to Gillard J from Huddart Parker. Finkelstein J then contrasted the position in Australia with that in England, concluding that the English cases establish that in that jurisdiction ‘a foreign jurisdiction clause and an arbitration clause will be enforced by appeal to the court’s inherent jurisdiction’.[35]
[35]Ibid 182.

Finkelstein J concluded that:

For reasons that are not readily apparent the position in Australia as regards the inherent power to grant a stay in favour of an arbitration or a foreign jurisdiction is unsettled. There are cases that have followed the rule laid down by the High Court in [cases including Huddart Parker, amongst others]…
On the other hand, there are cases that have followed the English authorities... [citing Savcor, Badgin Nominees, Banabelle amongst others].[36]

[36]Ibid 182-183.

Finkelstein J noted that those cases which refer to Huddart Parker and the High Court cases to similar effect principally do so by reference to what Dixon J said about the discretionary considerations to be taken into account in deciding whether or not to grant a stay, not his earlier observation that the power can only arise from statute. Finkelstein J concluded that he was bound to follow the approach of Huddart Parker and High Court cases to the same effect, that there is no inherent power to grant a stay to enforce an agreement to arbitrate. If he was wrong in that conclusion, he did not consider that the power should be exercised.[37]
[37]Ibid 183.

BHPB Freight, Huddart Parker, Badgin Nominees, Dance with Mr D, and Savcor were considered together with other cases by the Full Court of the Federal Court in Onslow Salt Pty Ltd v Buurabalayji Thalanyji Aboriginal Corporation (‘Onslow Salt’).[38] Onslow Salt appealed the refusal of a stay of a proceeding it claimed was commenced in breach of a dispute resolution clause. The provision in question in that case provided for an advisory opinion by an expert, not a final determination or adjudication of the dispute. The Full Court noted that there may be an important difference as to the jurisdiction of the Court to grant a stay to require determination by an external body, as opposed to a provision designed to facilitate resolution by agreement. The Court continued:

The former may be seen to operate as an ouster of the jurisdiction of the Court to determine the rights and obligations of the parties. The latter only suspends access to the Court until the agreed process has been followed….
… as to a stay granted to require a party to submit to a determination outside the courts there remains an issue as to whether the Court has an inherent jurisdiction to grant a stay (there being a statutory jurisdiction to do so in the case of an agreement to arbitrate). On several occasions the High Court has ruled that the jurisdiction to grant a stay to refer a matter to arbitration is only statutory…[39]

[38][2018] FCAFC 118.

[39]Ibid [24]-[25].

The Court cited with apparent approval the analysis by Finkelstein J in BHPB Freight in support of this statement. The Full Court concluded that the same concerns as to ouster do not arise where, as in that case, the dispute resolution mechanism does not result in a determination. It was thus not necessary for it to determine the issue as to inherent jurisdiction in relation to a mechanism that is expressed to result in a determination.

The provision in the case before me is for determination by an expert, not by an arbitral process. As noted earlier, there are important distinctions between the two, but both Finkelstein J and the Full Federal Court in Onslow Salt equated the two for the purpose of their respective discussions of the lack, or potential lack, of jurisdiction by reason of ouster. Indeed, if the concern in relation to ouster is the lack of judicial type processes in external determination of a dispute, it could be thought that expert determination, which may not require a quasi-judicial process, is even more objectionable than arbitration, which does. I do not consider that there is a relevant distinction to be drawn between a contractual agreement to refer to expert determination and one to refer to arbitration, for current purposes.

The plaintiffs have taken me to a series of High Court cases which they contend stand for the proposition that the Court has no inherent jurisdiction to grant a stay based on a contractual provision requiring determination of a dispute by an external body, whether as an expert or by arbitration. In their submission, this is because such a provision, in the absence of a statutory power to stay, is objectionable as ousting the jurisdiction of the Court.

The first of the cases to which the plaintiffs take me is Dobbs v National Bank of Australasia Ltd (‘Dobbs’).[40] That case concerned the validity of a provision in a guarantee that a certificate signed by a bank official would be conclusive evidence of the principal debtor’s indebtedness. The appellant contended that the provision was void because it purported to oust the jurisdiction of the Court and substitute for the judgment of the Court the determination of the bank official. The High Court rejected the argument.
[40](1935) 53 CLR 643.

In the joint judgment of Rich, Dixon, Evatt and McTiernann JJ, their Honours noted that:

negative restrictions upon the right to invoke the jurisdiction of the Courts…have always been invalid. No contractual provision which attempts to disable a party from resorting to the Courts of law was ever recognised as valid. It is not possible for a contract to create rights and at the same time to deny to the other party in whom they vest the right to invoke the jurisdiction of the Courts to enforce them.[41]

[41]Ibid 652.

The joint judgment contrasted such an objectionable provision with one that makes the acquisition of rights under the contract ‘dependent upon the arbitrament or discretionary judgment of an ascertained or ascertainable person’. In that case, ‘no cause of action can arise before the exercise by that person of the functions committed to him. There is nothing to enforce; no cause of action accrues’. In such a case, the contract does not attempt to oust the jurisdiction.[42]
[42]Ibid.

The Court then noted that a contract providing for arbitration did not, apart from statute, prevent the commencement of a court proceeding, even though commencing the proceeding may amount to breach of contract. If, however, the parties agreed to submit the dispute to arbitration, and an award was made before any proceeding was instituted, then the cause of action would be extinguished by the award and the court would enforce the award. By analogy, their Honours reasoned that the law did not prevent parties giving contractual conclusiveness to a third person’s certificate of some matter upon which their rights and obligations may depend.[43]
[43]Ibid 653-654.

The distinction drawn in Dobbs between a contractual provision that purports to require a form of alternative dispute resolution after a right has arisen, and one which requires the determination of an external body to complete the accrual of the right, and so cause of action, is further illuminated in the joint judgment of Rich A-CJ, Dixon and McTiernan JJ in Anderson v GH Michell & Sons Ltd (‘Anderson’).[44] Their Honours observed that absent statutory power, the first would not be enforced at common law by the grant of a stay, although refusal to abide by it may sound in damages for breach of contract. The Court discussed the latter in these terms:

Such a contract is considered not as attempting either to impose a restraint upon the enforcement by legal process of actionable rights or to exclude the jurisdiction of competent courts, things bad on grounds either of repugnancy or of public policy, but as doing no more, and no less, than deferring the conditions under which a contractual right shall arise, a matter governed by the intention of the parties. The obligation undertaken by a contracting party may be to pay a sum ascertained or fixed by a specified person or upon his certificate that certain events have happened or certain conditions have been fulfilled, or it may be to pay only when, if there be a dispute, it has been settled in some appointed manner, as by arbitration. In all such cases, since the jurisdiction of the courts is to enforce rights and obligations according to their tenor, and since without a complete cause of action no action will lie, the intention of the parties is carried into full effect, and no question is regarded as arising as to the principle that the jurisdiction of the courts may not be ousted by agreement or the principle that an agreement to refer to arbitration is not enforced specifically but only by an action for damages for breach.[45] (emphasis in italics added)

[44](1941) 65 CLR 543.

[45]Ibid 549.

The plaintiffs rely on two further High Court cases in support of their contention that the Court has no inherent jurisdiction to grant a stay to enforce a provision for expert determination of a dispute. The first is Huddart Parker.[46] That was the principal case relied on by Gillard J in Badgin Nominees in support of his conclusion that the Court had such a jurisdiction. I accept the submission of the plaintiffs that his Honour was in error in so doing. The defendants in Huddart Parker based their application for a stay on two statutory provisions, s 79 of the Judiciary Act 1903 (Cth) as importing the statutory power to grant a stay conferred by the Arbitration Act 1928 (Vic). It was on that statutory basis, and not on the basis of inherent jurisdiction, that Dixon J held that the Court had power to grant a stay, and made the observations relied upon by Gillard J in Badgin Nominees. As noted by Finkelstein J in BHPB Freight, those observations related to the exercise of the discretion to grant a stay, not to jurisdiction to do so. Earlier in the judgment, again as correctly observed by Finkelstein in BHPB Freight, Dixon J had observed in relation to the power to stay that ‘[i]t is not a power that can arise otherwise than from statute’.[47]
[46](n 26).
[47]BHPB Freight, (n 34), 180-181.

The final High Court case to which the plaintiffs have taken me, Compagnie des Messageries Maritimes v Wilson,[48] also concerned an application for a stay based on a statutory provision. The Court dismissed an appeal against refusal of the stay, on the basis of an overriding statutory provision rendering the particular clause in question void. Dixon CJ, with whom the balance of the Court agreed, observed consistently with the earlier authority discussed above that ‘[a]t common law no contract could oust or lessen the jurisdiction of the courts of the Crown’.[49]
[48](1954) 94 CLR 577.
[49]Ibid 582.

I am conscious of the caution the Full Federal Court in Onslow Salt expressed in relation to reliance on older cases which regarded provision for determination outside the courts as unenforceable, on the basis that those cases may not reflect the more modern approach of the courts, which is to recognise the advantages of alternative dispute resolution, either before or in substitution for court determination.[50] I have not considered it necessary for this application to undertake my own researches as to any more recent High Court authority. That is because even on review of the older High Court authorities to which I have been taken, I am satisfied that the Court would have jurisdiction to grant the type of stay sought in this application on the basis of the type of expert determination clause here in question. In essence, while I accept the plaintiffs’ analysis of the cases to which I have been referred on jurisdiction, I disagree with their characterisation of the expert determination provision here in question.
[50]Onslow Salt, (n 38), [20].

The cases to which the plaintiffs have taken me, in particular Dobbs and Anderson, show that the question whether the Court has inherent jurisdiction to grant a stay of a proceeding on the basis of an expert determination clause will depend on whether the clause is properly construed as ousting the jurisdiction of the Court to determine a right already accrued under the contract, or whether, by contrast, the expert determination clause is a precondition to the creation of the right, and so cause of action to enforce it. Assuming for the moment that clauses 10.5-10.8 of the Share Sale Agreement are capable of operation, i.e. the President of Chartered Accountants ANZ was prepared to nominate an expert accountant, the question is whether that accountant’s expert determination was intended to determine already accrued rights of the plaintiffs as Vendors, or was it to be a step in the establishment of those rights?

In my view, it is the latter. Clause 9.6 confers a right in the Vendors to payment by the Purchaser of the Second Completion Amount. That right accrues prior to any dispute which can arise in relation to the FY18 Audited Accounts. If the expert determination clause related to a dispute about the Second Completion Amount, it may have been objectionable as seeking to oust the jurisdiction of the Court. It does not relate to that amount, however. It relates to a dispute about items in the FY18 Audited Accounts. The right of the Vendors to the adjusted and final sale price for the second tranche of the share sale is established by clause 10.10, headed ‘True-up following FY18 Audited Accounts’. That clause provides for the determination of a final figure, following agreement or expert determination of the FY18 Audited Accounts. In other words, adopting the distinction made plain in Anderson, the expert determination provision is a step in the establishment of the Vendors’ rights, and the Purchaser’s obligation to pay, and not an attempt to oust the jurisdiction of the Court to enforce those rights.

The distinction flows through to the stay as sought by the defendant’s summons. The defendant does not seek a permanent stay of the proceeding. What it seeks is a stay ‘until the subject of the plaintiffs’ dispute notice dated 21 December 2018 …has been determined pursuant to clauses 10.5 to 10.8 of the …Share Sale Agreement’. In other words, a suspension of the proceeding, not a permanent stay of it.

For these reasons, I conclude that the Court would have inherent jurisdiction to grant a stay of the proceeding until the expert determination procedure had taken place, if clauses 10.5-10.8 were effective.

Statutory jurisdiction

The defendant also relies, although without much elaboration or reference to authority, on the powers conferred on the Court by s 48(2)(c) of the CPA. Section 48 provides as follows:

48       Court's power to order and direct pre-trial procedures
(1)In addition to any other power a court may have, a court may make any order or give any direction it considers appropriate to further the overarching purpose in relation to pre-trial procedures.
(2)Without limiting subsection (1), a court may give any directions or make any orders it considers appropriate with respect to—
(a)       the conduct of proceedings;
(b)timetables or timelines for any matters to be dealt with, including—
(i)        the conduct of any hearing; and
(ii)the time within which specified steps in a civil proceeding must be completed;

(c)the use of appropriate dispute resolution to assist in the conduct and resolution of all or part of the civil proceedings;

(d)the attendance of parties and legal practitioners at a case management conference with a judicial officer to consider the most cost effective and efficient means of bringing the civil proceeding to trial and of conducting the civil proceeding, including giving further directions;
(e)defining issues by pleadings or otherwise, including requiring parties or their legal practitioners to exchange memoranda, or take other steps to clarify questions;
(f)the attendance of parties or their practitioners before a judicial officer for a conference for the purposes of—
(i)satisfying the judicial officer that all reasonable steps to achieve resolution of the issues in dispute have been taken; or
(ii)otherwise clarifying the real issues in dispute to enable appropriate directions to be given for the further conduct of the dispute or civil proceeding; or
(iii)otherwise shortening the time taken in preparation for the trial and at the trial;

(g) any other matter specified in rules of court.

In my view, the powers conferred by s 48 are intended to be exercised in respect of a proceeding in which both plaintiff and defendant are engaged, i.e. the defendant has submitted to the jurisdiction of the Court, and the proceeding is moving towards trial, unless earlier determined or resolved. This is apparent from the wording of s 48(1). Some of the potential orders envisaged by s 48(2) may be relevant at an early stage of such a proceeding, for example s 48(2)(e) assumes that pleadings are not complete. However, the powers conferred by the section are inappropriate to a proceeding such as this, where the defendant has not at this stage submitted to the jurisdiction of the Court, and indeed contests that the Court has jurisdiction at this stage to determine the dispute. I do not consider that s 48 confers a statutory power to stay such a proceeding.

Is the jurisdiction enlivened?

It follows that the defendant must rely on the inherent jurisdiction of the Court to ground the stay it seeks. The difficulty it faces is that the expert determination clauses on which it relies are not capable of operation according to their terms.

It is not just the case that the body envisaged as appointing the Independent Expert, in default of agreement by the parties, is no longer in existence. If that were the sole difficulty, then it could be cured by the provision in clause 1.2(a)(ix) of the Share Sale Agreement that would substitute for the Institute of Chartered Accountants its successor body, here Chartered Accountants ANZ. The real problem is that that successor body no longer provides the function of appointment envisaged by the definition of Independent Expert.

The defendant seeks to overcome this difficulty by submitting that the Share Sale Agreement properly construed requires the parties to do what is required to effectuate their bargain. The defendant relies on cases such as Mackay v Dick[51] in support of this proposition.
[51](1881) 6 App Cas 251.

The relevant bargain here, so it is contended, is that a dispute in respect of an item or items in the FY18 Audited Accounts will be resolved by an expert accountant, not the Court. The particular process expressed in the contract to give effect to this bargain, that is, nomination by the President of the Institute of Chartered Accountants, or its successor body, is not capable of operation, and in fact never was as that service ceased prior to the date of the Share Sale Agreement. The defendant submits, however, that a purposive construction of the contract would require the parties to agree on an alternative nomination body. The defendant has put into evidence that there are two such alternative bodies it contends are suitable to nominate an appropriate expert accountant, being the Resolution Institute and the Australian Disputes Centre.[52]
[52]Russell Affidavit [19]-[25].

In the alternative to the Mackay v Dick approach, the defendant submits that the tests for implication of an additional term are satisfied, the proposed term being:

If the President of the Institute will not make the appointment, the parties will determine an alternative appointor, acting reasonably to do so.

For these submissions, the defendant principally relies on the approach taken by Pagone J in Rentiers Pty Ltd v Wingara Wine Group Pty Ltd (‘Rentiers’).[53] In that case, the plaintiffs, who owned certain vineyards, made claims against the defendants arising out of the first defendant’s management of the vineyards. Part of the determination of those claims at trial before Pagone J required construction of a contractual clause for the determination of price. The clause provided that if the parties could not agree on the relevant price, it was to be determined by ‘an expert nominated by the Coonawarra Grape Growers Association (or the successor to that association)’. The parties did not agree on the relevant price, but the Coonawarra Grape Growers Association declined to nominate an expert to do so. The Association took this approach because a dispute resolution procedure had been developed for the wine industry as a whole by which the Chairman of a different body, the Wine Industry Relations Committee of the Winemakers’ Federation of Australia, would nominate an appropriate expert if the parties could not agree on such a person.
[53][2010] VSC 156.

Pagone J observed that the mechanism in the contract for determination of price by an expert had ‘failed on its terms’ because the nominated body ‘has said that it will not do what it was asked to do’.[54] The same difficulty is present in this case. Each of the parties in Rentiers invited the Court to imply a term to resolve the difficulty. In the case of the plaintiffs in that case, the proposed implied term was that the price would be a reasonable one, to be determined by the Court. The plaintiffs in this case also seek that the Court determine the issue that the contractual mechanism is unable to determine on its express terms, although they do not, at least in this application, seek to imply a term to resolve that contractual difficulty. The first defendant in Rentiers proposed the implication of a term that the parties must co-operate in the selection of an alternative nominating body. This is similar to, although different in one respect, to the approach taken by the defendant in this application. The defendant proposes a term that requires the parties to agree on an alternative nominating body, but subject to an overriding obligation to act reasonably.
[54]Ibid [22].

Pagone J applied the test for implication of a term, as stated by the House of Lords in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (‘BP Refinery’),[55] to evaluate the competing contentions before him. He concluded that a proposed term that the parties must co-operate in the selection of an appropriate nominating body ‘more aptly’ fitted the test than the implication of a term that a reasonable price would be determined by the Court. This was because the latter term would potentially contradict the express agreement of the parties that the price would be determined by an expert.[56]
[55](1977) 180 CLR 266.
[56]Rentiers, (n 53), [25].

In his orders, which are set out at the conclusion of the judgment, Pagone J declared that a term be implied into the relevant contract that ‘each party do all things necessary to agree upon an appropriate body, in substitution of the Coonawarra Grapegrowers Association, to nominate an expert to determine [the relevant price]’.[57] He regarded this term as supported by the Mackay v Dick principle. He stated this principle as being that the parties implicitly agreed to do all that is necessary to be done for the carrying out of that which they agreed would be done. Pagone J observed that on the evidence before him, that implied obligation would seem to be satisfied by acceptance of the Wine Industry Relations Committee as the appropriate nominating body.[58]
[57]Ibid [50], order D.
[58]Ibid [25].

Pagone J explained his reasons as follows:

It seems to me that the proper construction of the agreement in this respect requires an implication that the parties cooperate in the selection of an appropriate body to appoint an expert rather than an implication that [the first defendant] pay a reasonable price to be determined other than by an expert. It may be assumed for these purposes that the parties have agreed for the payment of an amount ultimately to be determined by an expert to be reasonable in the opinion of the expert. Critical to that determination, however, is that the parties evinced an intention that the determination of what was reasonable was to be made by an expert with all of the qualifications and knowledge that goes into that process rather than by a court of law. The parties specifically provided that the expert was to act as an expert and not an arbitrator (by specifying that clause 11(b) would apply to the expert). The exercise of expert determination is potentially different from judicial determination and the standard may produce different outcomes.[59] (emphasis in italics added)

[59]Ibid [24].

Implication of a term to cure the failure of a default expert nomination provision was also considered in Banabelle, discussed earlier in relation to inherent jurisdiction.[60] The term sought in that case was not that the parties agree on an alternative nominating body, but that they agree on an expert. The outcome in that case was the reverse of that in Rentiers. In Banabelle, a series of construction contracts provided that the expert to determine disputes, if the parties did not agree on the expert, be a person nominated by a person prescribed in an annexure to the contract. There was no such person prescribed in the annexure. After a dispute arose and the contractors sued the principals, the principals sought a stay, arguing that the default nomination mechanism could be severed and a term should be implied that the parties co-operate to agree on an expert. The validity of the expert determination clause was considered first as a separate question.
[60]Banabelle, (n 27).

In the trial of that separate question, Einstein J of the New South Wales Supreme Court examined at length the requirements for implication of a term and the Mackay v Dick ‘duty to co-operate’ principle, and the relationship between them.[61] He held that the expert determination clause before him was uncertain, with the uncertainty affecting the whole clause. The default nomination mechanism could not be severed from the requirement for expert determination. He declined to imply a term that the parties co-operate to agree on an expert on the basis that it was inconsistent with the introduction of a default nomination provision applicable when they did not agree.
[61]Ibid 520-528.

The defendant does not press in this application the orders sought in paragraphs 3 and 4 of its summons that the Court nominate one or other of the alternative bodies they propose. Nor does it seek the order sought in paragraph 2 of the summons, that the parties do all things necessary to agree on an alternative nomination body, which is in similar terms to the implied term found appropriate by Pagone J in Rentiers. Counsel for the defendant did not articulate why these orders were abandoned, but it may have been in response to the submissions by the plaintiffs that implication of a term is a matter for final relief. Nevertheless, the defendant invites me in my reasons for granting a stay to indicate that such an implied term would be appropriate.[62]
[62]Points in the transcript where this submission was made include Transcript 6.10-7.23, 76.1-11, 104.1-21, 152.23-153.10.

I do not consider that I should do so. I take this view for several reasons. First, the defendant cannot have it both ways. If a stay is sought that depends for its basis on the implication of a term, then a precondition is the implication of that term. Implication of the term is now not sought, and I do not accept the defendant’s submission that construction of the contract to imply the term is part of the discretionary exercise. The discretionary exercise only arises once there is a basis in the contract on which a stay may be granted. It follows further that it would be inappropriate for me to express a view as to whether, and if so, what term should be implied. Accordingly, I do not further discuss that issue.

Second, the defendant has made its application for stay on a summons consequent on conditional appearance. It does not submit to the jurisdiction of the Court. This sits awkwardly with the defendant on the other hand seeking that the Court correct a deficiency in the contract.

Finally, and critically, the contrast in outcomes between Rentiers and Banabelle illustrates that the resolution of the question as to whether a term will be implied to cure a failure of an express term of a contract will depend on detailed examination of the proposed term, and of the contract in question. Not dissimilar difficulties may give rise to quite different outcomes. Yet this is an interlocutory application, and one without the benefit of any joinder of issue as to the implication of a term. It follows from the approach taken by the defendant that there is no defence filed, and so no articulation in pleaded form as to the term that should be implied, with a pleaded response. Further, there is little evidence before me that may assist in construction of the contract, other than the contract itself, and the parties did not engage in detailed submissions as to whether a term should be implied, and what the term could be. This is unsurprising given that the defendant only articulated the proposed term in oral argument, after abandoning orders 2-4 in the summons and the written submissions in support of them.

I conclude that the issues in relation to construction of the contract are not sufficiently exposed in this application for it to be appropriate for any view to be expressed as to the implication of a term, assuming for the moment that as an associate judge I otherwise had power to determine that issue. I agree with the plaintiffs that construction of the contract so as to arrive at any implied term is a matter for final relief, after necessary pre-trial procedures, and at trial where necessary evidence can be adduced and tested.

The defendant could have chosen to follow this path. Such a trial could, for example, have been a trial of a preliminary question, as in Banabelle, whether by route of defence to this proceeding or by institution of a separate proceeding by originating motion. The trial of a preliminary question potentially can come on earlier and at less cost than a full trial on the merits of a proceeding. The defendant chose not to take such an approach, and in my view cannot avoid the consequences of the approach it did take.

It follows that although the Court would have, in my view, inherent jurisdiction to grant a stay based on an implied term to give efficacy to the expert determination clause, that jurisdiction is not in this application enlivened.

Discretion

If I am wrong in that conclusion, and the term proposed by the defendant satisfies the test for implication of a term in BP Refinery, or is otherwise appropriate on the Mackay v Dick principle, then there are nevertheless reasons why, in my discretion, I would refuse the stay.

Where there is jurisdiction, either statutory or inherent, to grant a stay to require parties to adhere to an agreed dispute resolution procedure, the Court has a discretion whether or not to grant it. There is no dispute in this application as to the principles that apply to the exercise of that discretion, although there is as to the outcome that should result. Although the discretion is a wide one, the starting point is that the parties should ordinarily be held to their bargain to resolve their dispute in the agreed manner. As a consequence, good reason is required to depart from that agreement, and the onus of showing that good reason is on the party opposing the stay. A stay will be refused if it would be unjust to deprive a party of judicial determination. Each case is to be determined on its own facts and circumstances.[63]
[63]These principles were crisply summarised in Onslow Salt, (n 38), [15]-[16].

Matters that may be relevant in the exercise of the discretion in the case of an expert determination include:

i) The ‘weighty consideration against refusal of a stay’ that parties should be held to their bargain;[64]
[64]Onslow Salt, (n 38), [19]; Huddart Parker, (n 26), 509.

ii) Whether the agreed process would deal with the whole, or only part of the dispute;

iii) Whether there would be duplication of effort if the agreed process was to be followed in the particular case;

iv) Whether the refusal of a stay would result in multiplicity of proceedings;

v) Whether the dispute is apt for determination by the proposed category of expert;

vi) Whether the agreed procedures are appropriate and adequate for the nature of the dispute; and

vii) Whether there is a wider public interest in the dispute being dealt with in a court.[65]

[65]Summarised in Onslow Salt, (n 38), [16]-[17], [19].

In my view, all of these factors with the exception of the last are here relevant. Further, all with the exception of the first tend towards refusal of the stay, and the first, that parties should be held to their bargain, does not stand in the way of a stay once the bargain is properly understood. I explain this conclusion as follows.

The bargain that the parties struck by clauses 10.3-10.8 was to submit any dispute in relation to the items in the FY18 Audited Accounts to determination by an accounting expert, if they were unable to resolve the dispute themselves. I accept the distinction drawn by the plaintiffs between a dispute in relation to one or more items in the FY18 Audited Accounts and any dispute in relation to the FY18 Audited Accounts.[66] The former, which is what the parties agreed, is focused on the granular, and so more likely to involve matters of accounting only. The choice of accountant as the type of expert reinforces this conclusion.
[66]Plaintiffs’ Written Submissions [60].

The bargain that the defendant seeks to enforce did not require the parties to submit any dispute in relation to the FY18 Audited Accounts to an accountant. Such a dispute could involve questions of fact and law beyond the expertise of an accountant. In Savcor,[67] Barrett J of the New South Wales Supreme Court held that a dispute that potentially involved both questions of fact and of law fell within the bounds of an expert determination clause, but the clause in that case was very broadly expressed, to relate to any claim ‘under, arising out of or in any way related to [the relevant contract]’. Here, by contrast, there is no general alternative dispute resolution clause in the Share Sale Agreement by which the parties agreed to submit disputes generally to determination other than by a court. This supports my conclusion that it was intended to be accounting issues only that were to be resolved by the accounting expert to be appointed pursuant to clause 10.5.
[67]Savcor, (n 33).

The question then becomes whether the dispute the subject of the Dispute Notice and the SOC is properly characterised as an accounting one. This is a principal point of difference between the parties. The defendant contends that the dispute in the Dispute Notice as adopted in the SOC is pre-eminently an accounting one, and so it follows that an expert accountant is appropriate to resolve it. The defendant accepts that resolution of that dispute may require resolution of some questions of law, including construction of the agreements between the parties, but submits that this will often be the case in respect of agreements to resolve disputes by expert non-legal determination. If the origin of a dispute in a contractual framework were always to make such a procedure inapt, then the scope for such expert determination clauses would be heavily circumscribed. The defendant accepts that in some cases the necessity to resolve questions of law will make expert determination inappropriate, but submits that this is not that case – the questions of law here are not so difficult or complex that they would make determination by an accountant inapt. If necessary, the defendant submits that the accountant could obtain legal advice to assist in resolving such questions.

The plaintiffs, by contrast, contend that the dispute initially and principally turns on questions of law, with some related questions of fact, only some of which questions of fact are suitable for resolution by an accountant.

I consider the plaintiffs’ characterisation of the dispute to be the more accurate. In reaching this conclusion, I acknowledge that determination by a subject matter specialist who is not a lawyer may be appropriate even though it is to take place within a legal framework established by the relevant contract, and so may tangentially involve legal issues. The potential factual disputes and consequential legal issues in this case, however, go to the heart of the disagreement between the parties – they are not merely the framework for an accounting disagreement. While they are not necessarily complex issues, they are fundamental to the resolution of the dispute. I elaborate this conclusion as follows.

My starting point is that it is plain that a number of provisions in both the Share Sale Agreement and the Shareholders’ Agreement appear intended to protect the Vendors against unilateral reduction of the purchase price for the second tranche of the sale of their shares, after they have lost control of the Company and as such the preparation of its accounts. The calculation of the second purchase price is not stated to be simply an accounting matter – it was intended to operate within a carefully calibrated set of protections for the Vendors.

Alleged departure from those protections is at the heart of the Dispute Notice. The disputes in paragraphs 7-9 of the Dispute Notice are expressed to relate to particular items in the Ernst & Young Report, and so could appear at first blush to be disputes of an accounting nature. However, the Dispute Notice places these specific items in the broader context of the disputes identified in paragraphs 4-6. The assertion at the heart of paragraph 6 of the Dispute Notice, replicated in paragraphs 32 and 33 of the SOC, is that the FY18 Management and Audited Accounts have not been prepared in accordance with the contractual framework in two principal respects, both of which turn on the assertion of fact that a necessary Special Majority Directors’ Resolution was not obtained. Sub-paragraph 6(b) asserts that the EBITDA impact of such a failure has not been properly taken into account. Sub-paragraph 6(d) asserts that the Company has prepared the FY18 Management and Audited Accounts utilising different accounting policies and methods than those used by the Company in its FY15 Management Accounts, without the necessary Special Majority Directors’ Resolution.

These contentions involve both questions of law and questions of fact. Potential questions of law and fact include the following:

i) The proper construction of clause 1.2 of Schedule 2 to the Share Sale Agreement and the definition of Accounting Standards, to determine which accounting policies and methods were required to be applied for the determination of the Second Completion EBITDA (a question of law);

ii) Whether the required accounting policies and methods were in fact so applied (a question of fact);

iii) If not, whether a Special Majority Directors’ Resolution was required to change the accounting policies and methods applied (a question of law);

iv) If the answer to iii) is yes, whether such a Special Majority Directors’ Resolution was passed (a question of fact);

v) If the answer to iv) is no, the effect on the calculations in the FY18 Management and Audited Accounts (a question of fact).

I set out the questions above as examples only. Other legal issues are identified in the plaintiffs’ letter of 29 January 2019 and email of 6 February 2019 to the defendant’s solicitors, and in the plaintiffs’ written submissions. The potential questions of fact identified in paragraphs ii) and v) above would be apt for determination by an expert accountant, and indeed may require accounting expertise, as they turn on the ability to identify and apply particular accounting policies and methods. The questions of law, however, turn on construction of the Share Sale and Shareholders Agreements, rather than accounting knowledge. Further, the question of fact identified in paragraph iv) is not an accounting question. It follows that expert determination by an accountant would deal with only part of the dispute.

I agree with the plaintiffs that if the accountant were to seek to resolve this difficulty in relation to legal issues by obtaining legal advice, that would take his or her determination outside the realm of what is contemplated by the Share Sale Agreement. It would no longer be a determination by an accountant alone, as is contemplated.

In respect of those questions of fact that do require accounting expertise, the Court process allows for this, through various possible procedures such as expert evidence, expert conclaves, the appointment of a single expert, or appointment of an accountant as a special referee in respect of those questions. By contrast, the expert determination process as envisaged by the Share Sale Agreement does not allow for the proper determination of contested factual and legal questions.

This inaptness of determination by an expert accountant of this dispute is made evident by consideration of the procedure required by clause 10.5 of the Share Sale Agreement. That procedure only envisages the supply and exchange of written submissions. The expert can, pursuant to clause 10.8, add further procedures, but as he or she is to determine the dispute as an expert, not as an arbitrator, it is unlikely that these could include the taking of evidence, let alone evidence on oath, and the testing of that evidence. Yet if the factual issues are hotly contested, these usual judicial procedures may well be required.

It may transpire that these legal and factual questions are not contested. However, it is not possible on the material before me to determine whether or not they will be contested, because the defendant has not joined issue with the SOC by filing a defence, having entered only a conditional appearance. Nor did counsel for the defendant in argument make it clear, which, if any of the plaintiffs’ allegations are disputed.[68] In particular, it remains entirely opaque as to whether or not it is disputed that a Special Majority Directors’ Resolution was required, yet not passed. Although an expert accountant would be able to determine if the accounting standards used in FY18 were different to those used for the FY15 Management Accounts, resolution of the factual and legal issues that may then arise may require judicial or arbitral expertise and procedures to that end, and so make the expert determination process inapt.
[68]This was evident on numerous occasions in oral argument, including at Transcript 26.30-27.22, 29.21-30.3, 37.7-8, 40.21-23, 48.2-4, 155.29-30.

The expert determination by an accountant pursuant to clause 10.5-10.8 is in any event only a precondition to the calculation of the adjusted purchase price for the second tranche of the sale pursuant to clause 10.10. The plaintiffs would retain the right to contest that calculation in the Court, and may well do so if they disagree with the expert’s determination. It follows that refusal of a stay will not lead to a multiplicity of proceedings, and indeed the grant of a stay may result in duplication of effort. If the factual and legal issues that arise in the Dispute Notice and SOC are not appropriately determined, then the grant of a stay is very unlikely to finally resolve the dispute, and may in fact lead to complication of it, by collateral attack on the expert’s determination.

In my view, even if the jurisdiction to grant a stay had been enlivened, the defendant has shown good reason having regard to the factors identified as ii)-vi) in paragraph 103 above why a stay should be refused.

For completeness, I will also briefly address additional discretionary matters raised by each of the parties.

The defendant relies on the fact that until the parties reached an impasse as to agreement on the expert or experts, the plaintiffs themselves sought to utilise the dispute resolution procedure in the Share Sale Agreement, or a variation of it by agreement. These steps include the issue of the Dispute Notice in accordance with clause 10.3; the meeting between representatives of the Vendors and the Purchaser in accordance with clause 10.4; and the request by the solicitors for the Vendors for appointment of an expert accountant made by email on 11 January 2019. That request specifically invoked clause 10.5 of the Share Sale Agreement.

In subsequent correspondence the plaintiffs articulated their view that many of the disputed items related to legal, rather than accounting, issues.[69] Nevertheless, they were still initially disposed to a process of determination outside the court system, proposing that the parties retain an expert lawyer and then an expert accountant to determine the dispute.[70] Had this proposal been accepted, it would have constituted a variation by agreement to the expert determination provision in the Share Sale Agreement. It was only after the defendant declined to accept this proposal, proposing instead that the expert accountant source his or her own legal support,[71] that the plaintiffs expressed the view that the independent expert process was inoperative and foreshadowed this proceeding.[72]
[69]Letter dated 29 January 2019 from the solicitors for the plaintiffs to the solicitors for the defendant, being Exhibit JDLR-8 to the Russell Affidavit; email of 6 February 2019 from the solicitors for the plaintiffs to the solicitors for the defendant, part of Exhibit JDLR-9 to the Russell Affidavit.
[70]Ibid.
[71]Email dated 13 February 2019 from the solicitors for the defendant to the solicitors for the plaintiffs, part of Exhibit 9 to the Russell Affidavit.
[72]Email dated 15 February 2019 from the solicitors for the plaintiffs to the solicitors for the defendant, part of Exhibit 9 to the Russell Affidavit.

I do not consider the fact that the plaintiffs initially sought to engage the contractual dispute resolution process, or a variation of it, should carry any substantial weight against them now. It is not unusual for a party to change positions as more facts or circumstances emerge, or further advice is obtained, and here there is no suggestion in the evidence that the plaintiffs were aware that the nomination process was ineffective until on or shortly before 15 February 2019, when they noted that fact in their email of that date.[73] Indeed, the proposal the plaintiffs advanced before that time for a dual expert determination could suggest a good faith exploration of the possibility of appropriate dispute resolution outside the court system. In any event, even if questions of estoppel, or similar discretionary considerations against the party opposing the stay, are relevant to the exercise of the discretion, I do not consider that in this instance they carry as much weight as the other considerations that tend against the grant of the stay.
[73]Paragraph 103 of the SOC implies that this is when the plaintiffs became aware that the process could not operate.

Had I been of the view that a term could be implied to the effect that the parties agree on an appropriate alternative nomination body, then the plaintiffs submit that a further discretionary consideration against the grant of a stay would be the likely futility of requiring parties already in significant dispute to agree.[74] That submission was put on the basis that the obligation to be implied was to act in good faith, when the proposed implied term was to act reasonably to agree.[75] I accept the defendant’s submission that an obligation to act reasonably would make the implied term enforceable, but nevertheless it would seem cumbersome to add an obligation to agree, that may require enforcement, given that the plaintiffs have not accepted the suitability of the proposed alternative nomination bodies to date.[76]
[74]Transcript 112.
[75]Transcript 152.5-7.
[76]Plaintiffs’ Written Submissions [71(b)].

A final matter that tends against the grant of a stay, if, contrary to my view, the jurisdiction to grant it could in this application appropriately be enlivened by the implication of a term, is the dispute in relation to supply of working papers to the Vendors. The plaintiffs contend that not all working papers for the FY18 Audited Accounts have been supplied to them as required by clause 10.1 of the Share Sale Agreement.[77] The defendant contends that this dispute could be dealt with by the expert, and, if need be, by the Court after the expert determination.
[77]SOC [107].

This latter submission in fact tends against the grant of a stay. It reflects yet another respect by which the grant of a stay will not necessarily resolve the dispute, and may in fact lengthen it, if the Vendor plaintiffs disagree with the expert’s approach in relation to the working papers. Further, the defendant’s submissions in this regard do not pay sufficient heed in my view to the placement within the Share Sale Agreement of the obligation to supply the working papers to the Vendors. The obligation is imposed by clause 10.1, prior to the ability of the Vendors to disagree with any item in the FY18 Audited Accounts pursuant to clause 10.3. It seems plain that it was intended that the working papers be supplied to facilitate the consideration by the Vendors of the FY18 Audited Accounts, not as part of the process of resolution of a dispute about those Accounts. If all the working papers have not been supplied (and the material does not allow me to express a view on that question) then that can be addressed by interlocutory processes in this proceeding, prior to determination by the Court at trial.

For these reasons, even if I am incorrect in my approach to the proposed implication of a term to cure the defect in the default nomination provision and there is a basis for the Court to invoke its jurisdiction to grant a stay, I would refuse it in my discretion.

Conclusion and orders

I will refuse the stay sought by paragraph 1 of the summons. Subject to submission to the contrary, I will order the defendant to pay the plaintiffs’ costs of the summons on the standard basis. I ask the parties to prepare agreed orders to give effect to these reasons, including a timetable for the future progress of the proceeding. If they are unable to agree on the form of those orders, I will make directions for further hearing or submissions.

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[2020] VSC 287

22 May 2020