Re Venture Capital Group Pty Ltd (No 2) - [2015] VSC 319

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE

Not Restricted

COMMERCIAL COURT
CORPORATIONS LIST

S CI 2012 03857

IN THE MATTER OF VENTURE CAPITAL GROUP PTY LTD (ACN 111 119 914)
(in its own right and as trustee of the VCG Trust)

BETWEEN:

ALPHATER CONSULTING ENGINEERS PTY LTD (ACN 107 954 629)	Plaintiff
v
MILES ROZMAN & ORS	Defendants

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JUDGE:	Robson J
WHERE HELD:	Melbourne
DATES OF HEARING:	11 & 12 May 2015
DATE OF JUDGMENT:	15 July 2015
CASE MAY BE CITED AS:	Re Venture Capital Group Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2015] VSC 319

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CONTRACT – Repudiation – Parties entered into a dispute resolution agreement for the plaintiff to sell to the defendants the plaintiff’s interest in a business run by the plaintiff and the defendants – Under the dispute resolution agreement an independent expert was appointed to resolve differences between two valuers of the business, appointed respectively by each party – The plaintiff unilaterally terminated the appointment of the independent expert on the basis that the independent expert breached the terms of his appointment – Whether independent expert had breached the terms of his appointment – Whether plaintiff had repudiated the dispute resolution agreement in unilaterally terminating the appointment of the independent expert – Whether defendant entitled to accept the termination of the appointment of the valuer by the plaintiff as a termination of the dispute resolution agreement – Held the dispute resolution agreement was validly terminated.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D B Clough	Lennon Mazzeo
For the Defendants	Mr R A Heath with Mr K R Hickie	B2B Lawyers

TABLE OF CONTENTS

Introduction and background............................................................................................ 1
The defendants’ cross‑claim............................................................................................... 9
The issues in dispute.......................................................................................................... 9
The evidence...................................................................................................................... 10
Engagement of Mr Stout................................................................................................... 28
Conclusion on Mr Parisi’s attitude................................................................................. 29
The use of hindsight in the valuations........................................................................... 29
Changes in circumstances................................................................................................ 30
Court’s power to intervene.............................................................................................. 33
Was the independent expert in breach of the terms of his engagement?................. 35
The proposed meeting...................................................................................................... 36
Opinionated or argumentative material........................................................................ 37
Irrevocably infected........................................................................................................... 38
Did Alphater repudiate the dispute resolution agreement?...................................... 39
Honest misapprehension................................................................................................. 44
Conclusion.......................................................................................................................... 46

HIS HONOUR:

Introduction and background

This matter is the continuation of a dispute that first came before me in 2012. The background facts may be conveniently adopted from the introduction of the interlocutory judgment I previously gave in the matter.[1]
[1]Re Venture Capital Group Pty Ltd [2012] VSC 654.

Mr Parisi is the sole director and sole shareholder of the plaintiff, Alphater Consulting Engineers Pty Ltd (Alphater). Although Mr Parisi was not a party to the this proceeding in his own right, it was pursuant to his instructions and evidence that Alphater’s claim was brought; as such, these reasons refer to Mr Parisi’s involvement in relevant matters, acting on behalf of Alphater. Alphater holds an interest in a group of companies and trusts that owns and operates the Moderno Café business and the Bite franchise business. In January 2010, Mr Parisi was…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2015] VSC 319
Decision Date: 15 July 2015

CaseChat Overview and Summary

In the matter of Re Venture Capital Group Pty Ltd (No 2), the parties were involved in a dispute regarding the sale of the plaintiff's interest in a business to the defendants. The plaintiff and the defendants had entered into a dispute resolution agreement which included provisions for resolving any disagreements between valuers appointed by each party. An independent expert was appointed to arbitrate any differences in the valuations provided by the respective valuers. The plaintiff terminated the appointment of the independent expert, asserting that the expert had breached the terms of his appointment. The court was required to determine whether the independent expert had indeed breached the terms of his appointment and whether the plaintiff's termination of the expert's appointment constituted a repudiation of the dispute resolution agreement.

The court examined the terms of the dispute resolution agreement and the circumstances under which the plaintiff terminated the appointment of the independent expert. It was necessary to ascertain whether the plaintiff's actions amounted to a repudiation of the agreement, thereby allowing the defendants to terminate the agreement. The court also needed to determine whether the defendants were entitled to consider the termination of the expert's appointment by the plaintiff as a termination of the entire dispute resolution agreement.

The court found that the independent expert had not breached the terms of his appointment. However, the court concluded that the plaintiff's unilateral termination of the expert's appointment constituted a repudiation of the dispute resolution agreement. As a result, the defendants were justified in treating the plaintiff's actions as a termination of the agreement. The court held that the dispute resolution agreement was validly terminated.

No further orders were made by the court beyond determining the validity of the termination of the dispute resolution agreement.

Orders