SCHOTT AG	Plaintiff
v
MELTON WILLOWS PTY LTD (ACN 006 965 537) AS TRUSTEE FOR THE WILKINSON FAMILY TRUST	First Defendant
EROL CRAIG HARVEY	Second Defendant
ALISON NICHOLA HARVEY	Third Defendant

S ECI 2022 04320

MELTON WILLOWS PTY LTD (ACN 006 965 537) AS TRUSTEE FOR THE WILKINSON FAMILY TRUST & ORS	Plaintiffs
v
SCHOTT AG	Defendant

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JUDGE:	Stynes J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 April 2023
DATE OF JUDGMENT:	30 June 2023
CASE MAY BE CITED AS:	Schott AG v Melton Willows Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 364

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CONTRACT — Share sale agreement — Interpretation — Dispute resolution clause — Expert accountant appointed by parties to calculate an earn out amount — Whether expert complied with the terms of the agreement — Expert’s task under the agreement — Whether expert made a ‘manifest error’ — Consequences of a finding of ‘manifest error’ — Funtastic Ltd v Madman Film and Media Pty Ltd [2016] VSC 708 considered — Matter remitted to the Expert for re-determination.

WORDS AND PHRASES — Meaning of ‘having regard to’ — Meaning of ‘consideration’ — Conlan v Registrar of Titles [2001] WASC 201 applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff in S ECI 2022 03872 and the Defendant in S ECI 2022 04320	R G Craig with N Moncrief	Lander & Rogers
For the Defendants in S ECI 2022 04320 and the Plaintiffs in S ECI 2022 03872	J P Moore with A J Weinstock	Norton Rose Fulbright

Contents

A.. Introduction

B... Summary of decision

C.. Background

C.1          Background to the sale of Minifab
C.2          The Share Sale Agreement
C.2.1        Clause 11 and Schedule 3
C.2.2        The hierarchy in clause 1.2 of Schedule 3

C.3 The Buyer’s draft Earn Out Statement for FY21
C.4 The Expert Determination

D.. Issues arising for determination

E... Applicable legal principles

E.1 Contract construction
E.2 Review of an expert determination for manifest error

F... Issue 1 — Was the Expert bound to follow the three-tier hierarchy in clause 1.2 of Schedule 3?

F.1          How this issue arises
F.2          Submissions
F.2.1        The Sellers’ submissions
F.2.2        The Buyer’s submissions

F.3 Consideration

G.. Issue 2 - Did the Expert make a manifest error in determining whether or not the Disputed Amount was covered by Tier 1 of the hierarchy?

G.1         How this issue arises: the Expert’s Determination
G.2         Submissions
G.2.1        Buyer’s submissions
G.2.2        Sellers’ submissions

G.3 Consideration

H.. Issue 3 – What is the proper construction of ’consideration’ in clause 1.9(a) of Schedule 3?

H.1         How this issue arises
H.2         Submissions
H.2.1       Buyer’s submissions
H.2.2       Sellers’ submissions

H.3 Consideration

I.... Remedy

HER HONOUR:

A Introduction

This proceeding concerns the enforceability of an expert determination made by an independent accounting expert engaged by the parties under a Share Sale Agreement (‘SSA’).
Pursuant to the SSA, Schott AG (the ‘Buyer’) purchased the entire share…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Schott AG v Melton Willows Pty Ltd

Details

AGLC: Schott AG v Melton Willows Pty Ltd [2023] VSC 364
Case: [2023] VSC 364
Decision Date: 30 June 2023

CaseChat Overview and Summary

Schott AG, a German corporation, brought an action against Melton Willows Pty Ltd, an Australian company, seeking a determination of an earn-out amount under a Share Sale Agreement. The dispute arose from the interpretation of the agreement’s dispute resolution clause, particularly the appointment of an expert accountant to calculate the earn-out amount. The parties appointed an expert accountant who made a determination, which Schott AG argued was incorrect due to a manifest error. The matter was brought before the Supreme Court of Victoria to resolve the dispute.

The primary legal issue was whether the expert accountant had complied with the terms of the agreement in making the earn-out calculation and whether the expert had made a manifest error. The court was also required to interpret the meaning of the phrase "having regard to" and "consideration" within the context of the agreement. The court examined the terms of the agreement and the role of the expert accountant, considering previous cases such as Funtastic Ltd v Madman Film and Media Pty Ltd and Conlan v Registrar of Titles.

The court found that the expert accountant had not complied with the terms of the agreement in making the earn-out calculation. The court interpreted the phrase "having regard to" and "consideration" and determined that the expert had failed to properly consider certain factors. The court held that the expert had made a manifest error in their calculation. Consequently, the matter was remitted to the expert for re-determination in accordance with the terms of the agreement.

The court ordered that the matter be remitted to the expert for re-determination of the earn-out amount, in accordance with the terms of the Share Sale Agreement. The court did not make a final determination of the earn-out amount but instead directed the expert to re-evaluate the calculation, ensuring that all relevant factors were properly considered.

Orders