Yume Group Holdings v Ashthorn

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0143

S EAPCI 2024 0012

YUME GROUP HOLDINGS PTY LTD (ACN 613 528 475)	Applicant/Cross-respondent
v
ASHTHORN CA PTY LTD (ACN 167 783 128)	Respondent/Cross-applicant

---

JUDGES:	McLEISH and KENNEDY JJA and WALLER AJA
WHERE HELD:	Melbourne
DATE OF HEARING:	14 April 2024
DATE OF JUDGMENT:	14 June 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 134
JUDGMENT APPEALED FROM:	[2023] VCC 1945; [2023] VCC 2419 (Judge Burchell)

---

CONTRACT – Contract to pay fees where capital raising obtained before expiry date – Whether capital raising obtained during term of contract – Trial judge found that transactions occurring before and after contract expiry date constituted single capital raising transaction – Trial judge erred in characterisation of transactions – Terms of agreements indicate capital raising occurred after contract expired – Appeal allowed.

CONTRACT – Construction – Meaning of ‘Potential Counterparty’ in contract for assistance with capital raising – Cross-applicant authorised to solicit commitments for capital raising from parties potentially interested in pursuing transaction ‘(each a “Potential Counterparty”)’ – Whether ‘Potential Counterparty’ as defined must be party solicited by cross-applicant – No such requirement in text of contract or supported by context or purpose identified from contract or relevant surrounding circumstances – Cross-appeal allowed.

Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSCA 201, applied – McVeigh v National Australia Bank Ltd (2000) 278 ALR 429; [2000] FCA 187; Recoveries Corporation Group Ltd v American Express Australia Ltd [2016] NSWSC 771, distinguished.

---

Counsel
Applicant/Cross-respondent:	Mr B Petrie
Respondent/Cross-applicant:	Ms FJ Bentley with Mr L Freckelton
Solicitors
Applicant/Cross-respondent:	K&L Gates
Respondent/Cross-applicant:	Peak Legal

TABLE OF CONTENTS

Engagement Agreement

SUEZ transactions

Strategic Partnership Agreement

First Extension and Variation Agreement

Second Extension and Variation Agreement

Subscription Agreement

Trial judge’s reasons

Proposed grounds of appeal

Yume’s appeal submissions

Ashthorn’s appeal submissions

Consideration of appeal

Salu Folk transaction

Trial judge’s reasons

Proposed grounds of cross-appeal

Ashthorn’s cross-appeal submissions

Yume’s cross-appeal submissions

Consideration of cross-appeal

Conclusion

MCLEISH JA
KENNEDY JA
WALLER AJA:

1. The applicant (‘Yume’) operates an online platform for surplus food management. The respondent (‘Ashthorn’) provides corporate finance advisory services. In late 2018, Yume was looking to raise capital or sell its business. On 16 January 2019, Yume and Ashthorn entered into an engagement agreement (‘Engagement Agreement’), pursuant to which Ashthorn agreed to provide Yume consultancy and advisory services in respect of a possible capital raising or business sale.

2. Under the terms of the Engagement Agreement, Ashthorn was entitled to receive ‘Advisory Retainer Fees’ of $8,800 (including GST) per month (cl 4.1) and, subject to certain conditions being met, a ‘Capital Raising Fee’ (cl 4.2) or a ‘Business Sale Fee’ (cl 4.3). The parties are in dispute as to whether two sets of transactions undertaken by Yume entitle Ashthorn to the payment of the Capital Raising Fee.

Engagement Agreement

1. It is necessary to set out the relevant provisions of the Engagement Agreement:

   1        BACKGROUND

   …

   … Yume is currently seeking to raise…