Tafemo Pty Ltd v Acoustica Pty Ltd

Tafemo Pty Ltd brought a claim against Acoustica Pty Ltd for monies due arising from historic commercial arrangements. Between 1997 and 2001, the parties negotiated a proposed merger of Tafemo's business into Acoustica's business and the employment of Tafemo's sole director. The parties executed an Income (Non-Capital) Redeemable Preference Share Agreement and an Employment Agreement, which were to be exchanged in early April 2001. A dispute arose regarding whether anyone from Tafemo attended the exchange. Tafemo's director was subsequently employed by Acoustica, and part payments were made by Acoustica referable to an initial $200,000 Redemption Amount over a 15-year period. The dispute centred on whether Acoustica was liable for the non-payment of the full Redemption Amount, dividends during the redemption period, and interest on the dividend sum under the RPS Agreement. Acoustica disputed liability and claimed that alternative oral arrangements were made in November 2003 and that the parties conducted their business affairs on the basis of assumptions consistent with those oral arrangements. Acoustica further asserted that Tafemo's claims were statute barred.

The court was required to decide several legal issues, including the competence of a witness with a form of dysphasia to give evidence and be cross-examined, the exchange of counterparts, the requirements for issuing redeemable preference shares, the means of passing and recording of resolutions, and the application of estoppel and limitation defences. The court had to determine whether the parties intended to be bound by their contractual arrangements and whether the plaintiffs' claims were statute barred. The court also had to consider whether the plaintiffs' claims were barred as being out of time by operation of s 14(1)(a) of the Limitation Act 1969 (NSW) and whether the cause of action was confirmed under s 54 of the Limitation Act 1969 (NSW).

The court found in favour of the plaintiffs, rejecting the defences raised by Acoustica. The court held that the plaintiffs' claims succeed and dismissed the defences. The court found that the witness with dysphasia was competent to give evidence and be cross-examined. The court held that the parties intended to be bound by their contractual arrangements and that the plaintiffs' claims were not statute barred. The court rejected Acoustica's estoppel and limitation claims and held that the plaintiffs were entitled to the full Redemption Amount, dividends during the redemption period, and interest on the dividend sum under the RPS Agreement. The court ordered Acoustica to pay the plaintiffs the outstanding amount due, including interest and costs.

The court made an order that Acoustica pay Tafemo the sum of $398,810.50, plus interest at the rate of 6% per annum from 29 March 2012 until payment, and costs of the proceedings. The court also ordered that the costs be paid on an indemnity basis. The court held that the plaintiffs' claims were not statute barred and that the defendants' estoppel and limitation claims were rejected. The court held that the parties intended to be bound by their contractual arrangements and that the plaintiffs were entitled to the full Redemption Amount, dividends during the redemption period, and interest on the dividend sum under the RPS Agreement.