//
[2026] NSWSC 128
General information, not legal advice.
Supreme Court of NSW
2026-02-27
Rees J
Original judgment source is linked above.
Zoe will write a short plain-English brief of this judgment and email it to you: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: FX Group Holdings Pty Ltd v Perpetual Trustee Co Ltd as trustee of the CPEC 8 Trust A (formerly the CHAMP IV Trust A) (No 5) (quantum) [2026] NSWSC 128
Hearing dates: 9 February 2026, further submissions 26 February 2026
Date of orders: 27 February 2026
Decision date: 27 February 2026
Jurisdiction: Equity - Commercial List
Before: Rees J
Decision: Judgment in the amount of $96,897,121, noting that $77,012,702 was paid on 24 December 2025 in anticipation of, and in partial satisfaction of, this sum.
Catchwords: CONTRACT — share sale agreement construed in earlier judgment, in respect of which the parties had sought declaratory relief and rectification — amount plaintiff is required to pay given that construction — effect of side letter on operation of share sale agreement — different parties to each contract — side letter to be construed harmoniously with share sale agreement — side letter does not alter obligations under share sale agreement.
QUANTUM — calculation of amounts for period post-dating expert reports — parties proceeded on a particular basis in the conduct of the litigation and quantification methodology — plaintiff now contends that vendors should have gone about it differently — parties must plead a matter which might take their opponent by surprise — this is one such matter — assessment of damages on available evidence.
INTEREST — pre-judgment interest — s 100(1) Civil Procedure Act 2005 (NSW) — principles at [89]-[92] — whether interest to be awarded at contractual rate — whether interest clause applied to debt but not damages — whether interest should be at rate actually earned — whether interest should cease on offer to pay substantial portion of anticipated judgment sum — offer to pay conditional on vendors not using funds —contractual rate appropriate until payment.
Legislation Cited: ASIC Class Order [CO 12/752]
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Practice Note SC Gen 16
Cases Cited: Australian Beverage Distributors Pty Ltd v The Redrock Co Pty Ltd [2007] NSWSC 966
Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd (No 2) [2024] VSC 262
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653; [1986] HCA 81
Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54
Coughlan v George [2003] NSWSC 512
Degmam Pty Ltd (in liq) v Wright [1983] 2 NSWLR 348
Dixon v Clark (1848) 5 CB 365
Falkner v Bourke (1990) 19 NSWLR 574
Fink v Fink (1946) 74 CLR 127; [1946] HCA 54
FX Group Holdings Pty Ltd v Perpetual Trustee Co Ltd as trustee of the CPEC 8 Trust A (formerly the CHAMP IV Trust A) (No 3) [2025] NSWSC 1055
Hexiva Pty Ltd v Lederer (No 2) [2007] NSWSC 49
Heydon v NRMA Pty Ltd (2001) 53 NSWLR 600; [2001] NSWCA 445
Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350
Maestrale v Aspite [2014] NSWCA 182
MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657; [1991] HCA 3
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79
Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari (No 2) [2024] NSWSC 684
Ruby v Marsh (1975) 132 CLR 642; [1975] HCA 32
Se.ven Global Investments Pty Ltd v Global Loan Agency Services Australia Nominees Pty Ltd (2024) 60 WAR 367; [2024] WASC 424
Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336
Wenham v Ella (1972) 127 CLR 454; [1972] HCA 43
Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 51
Texts Cited: Ritchie’s Uniform Civil Procedure NSW (LexisNexis, looseleaf)
Category: Consequential orders
Parties: FX Group Holdings Pty Ltd (Plaintiff)
Perpetual Trustee Company Ltd as trustee of the CPEC 8 Trust A (1st Defendant)
PT Ltd as trustee of the CPEC 8 Trust B (2nd Defendant)
Perpetual Corporate Trust Ltd as trustee of the CPEC 8 Trust C (3rd Defendant)
The Trust Company (Australia) Ltd as trustee of the CPEC 8 Trust D (4th Defendant)
David Swinden (5th Defendant)
Georgina Gane (6th Defendant)
Natalie German (7th Defendant)
Sheldon Chapman (8th Defendant)
Toby Tan (9th Defendant)
Vincent Gross (10th Defendant)
Xiaohong Yan (11th Defendant)
Xingjia Zhang (12th Defendant)
Daniel Poon (13th Defendant)
Fiona Lock Rimmer (2nd Cross-Defendant)
Vishal Ahuja and the other persons also named in Schedule A t/as King & Wood Mallesons (12th Cross-Defendant)
Representation: Counsel:
M Izzo SC, C Hamilton-Jewell (Plaintiff/1st, 2nd cross-defendants)
PD Herzfeld SC, AG Willoughby (1st - 4th Defendants)
Solicitors:
Minter Ellison (Plaintiff)
Arnold Bloch Leibler (1st - 4th Defendants)
File Number(s): 2022/311060
HER HONOUR: I gave judgment in this matter last year, construing a share sale agreement: FX Group Holdings Pty Ltd v Perpetual Trustee Co Ltd as trustee of the CPEC 8 Trust A (formerly the CHAMP IV Trust A) (No 3) [2025] NSWSC 1055. What remains is to finalise the amount that the plaintiff is obliged to pay to the vendors in light of that construction. The plaintiff took the running on these issues, which it fairly described as “complex”.
The Share Sale Agreement provides that the plaintiff is to pay an Uplift Amount to the vendors each calendar quarter. There are three issues:
(a) Does a side letter to the Share Sale Agreement affect these calculations? (b) How should amounts be calculated for quarters post-dating those considered by the experts? (c) Should pre-judgment interest be awarded at the contractual rate, and should interest cease to run given the plaintiff’s offers to pay monies after my primary judgment was delivered?
To resolve the first issue, it is necessary to return to some of the facts, where the plaintiff relied on the negotiation of an earlier heads of agreement, as well as post-contractual conduct, in support of its argument.
In reprise, the vendors had a majority shareholding in FX Holdco Pty Ltd (the Company), which owns the “Pepperstone” foreign exchange and financial products trading business. The vendors’ investment was managed by a manager, for whom Fiona Lock worked. The vendors wanted to sell the investment and Ms Lock wanted to buy it. As I detailed in my primary judgment at [42]-[67], the manager and Ms Lock negotiated a Heads of Agreement over seven weeks and 15 drafts.
The broad structure of the deal was that the shares would be sold to Ms Lock’s special purpose vehicle, with the price to be wholly funded by vendor finance (referred to in the Heads of Agreement as the Acquisition Loan and later, in the Share Sale Agreement as the Vendor Loan Note Deed Poll (Loan Note)). The Loan Note would be repaid from the sale of the Pepperstone shares or dividends received on those shares. Ms Lock would then split ‘super returns’ with the vendors, being profits in excess of a specified threshold for a specified period.
In the fourth draft provided to Ms Lock on 16 July 2018, the Heads of Agreement proposed that the purchaser would receive Loan Fees in respect of the Acquisition Loan. Specifically, the purchaser would be entitled to retain a fee of between $500,000 and $1 million at various milestones in repayment of the Acquisition Loan. These fees – which were then proposed to total $4 million – would be added to the Acquisition Loan and repaid with interest by the end of the loan term. It is not easy to compare the ‘super returns’ arrangement at this stage of negotiations with what was ultimately agreed. But, viewed broadly, where the sharing of ‘super returns’ would not begin until the Acquisition Loan was repaid, adding the Loan Fees to the Acquisition Loan would have the result that the sharing of ‘super returns’ would not begin until the Loan Fees had been repaid.
In the various iterations of the Heads of Agreement which followed, the amount of the Acquisition Loan went from $150 million to $145.3 million and back to $150 million before oscillating between that figure and $154.5 million. The difference between the last two amounts appears to have been whether the Loan Fees were included in the Acquisition Loan or not.
Ms Lock was then in negotiations with Pepperstone’s chief executive officer, Tamas Szabo, to invest in the special purpose vehicle. On the evening of 1 September 2018, the manager’s general counsel, Jeremy Stevenson, emailed his colleagues after a call from Ms Lock:
“5. She wants the loan fee to be paid to her direct and not Buyer (as Tamas must be in there) – I said propose some words but would depend on tax and legal advice and wondered what Tamas thought about rise in purchase price – he is not aware of loan fee. She implied he just got told the price had gone up …
6. She was very concerned about where her deal with CHAMP gets recorded AND when. I said side letter and same timing as all docs.”
“… we think the best approach is:
1. Reduce price back to $150m
2. Fee sits in side letter only. Not referenced in tag notice.
I'll adjust the term sheet now.”
“We have reflected on the request that your loan fee be added to the loan / purchase price.
This doesn’t work as anyone who tags will get $154.5 equivalent – and need to pay you a fee.
Attached is a cumulative mark up and a mark up showing just changes to version from last night. What we have done is return price to $150m and moved the fee to your side letter. It is expressed as an advance and its repaid per the current deal out of proceeds.
This approach saves money, limits us having to disclose and gives the same result.”
“Fiona Lock will pay (or cause the Buyer to pay) the first $4.5m from any proceeds received by the Buyer from the Pepperstone Group after repayment of the Acquisition Loan to CHAMP. For the avoidance of doubt, this amount is included in the $25m to be retained by the Buyer before the calculation of the super return above.
Structuring of these arrangements remains subject to tax and legal advice.” (Emphasis added.)
“Acquisition Documentation to include a sharing of any “super return” to the Buyer by providing for sharing of any returns from the investment in [Company] shares (including dividends retained by the Buyer post repayment of the Acquisition Loan …) in excess of $25m … between the Buyer and the [vendors] 50-50 …”
“… the side letter will provide for the following amounts to be advanced to Fiona Lock in recognition of her personal contribution to ensuring the repayment of the … Acquisition Loan.”
“Fiona Lock will pay (or cause the Buyer to pay) the first $4.5m from any proceeds received by the Buyer from [the Company] after repayment of the Acquisition Loan to CHAMP. For the avoidance of doubt, this amount is not included in the $25m to be retained by the Buyer before the calculation of the super return above.
Structuring of these arrangements remains subject to tax and legal advice.” (Emphasis added, underlining in original.)
The contemporaneous records do not reveal why the “For the avoidance of doubt” sentence changed from including the Loan Fees in the $25 million to not including that amount.
Nine days’ later, Ms Lock and the manager signed the side letter, which was expressed to be “strictly confidential”. The side letter stated:
“8. Advance on future Pepperstone amounts
In recognition of her personal contribution to ensuring the repayment of amounts outstanding under the Vendor Loan Note Deed Poll (“Vendor Loan Notes”) issued as part of the Transaction, [the manager] agrees to pay the following amounts to Lock by way of advance against future potential indirect gains for Lock from the Transaction: …”
“Lock will pay or procure the Purchaser to pay to [the manager] the first $4.5m from any Equity Proceeds received by the Purchaser from the [Company] after repayment (in full) of all Vendor Loan Notes. For the avoidance of doubt, this amount is not included in the $25m to be retained by the Purchaser before the calculation of the Uplift Amount in the SSA.
Defined terms in this clause 8 (not otherwise defined in this Side Letter) have the same meaning as given in the SSA.”
The same day, the Share Sale Agreement was executed between the plaintiff as purchaser and the first to fourth defendants as vendors. The contract was signed by third-party trustees under the arrangements described in my primary judgment at [16]-[22]. Specifically, the Share Sale Agreement was signed by Aaron Tran and Anthony Lee, who were provided with the transaction documents and a Direction Letter. These gentlemen were not provided with the side letter. The side letter was not referred to in the Direction Letter. The Share Sale Agreement did not refer to the side letter.
As for the ‘super return’, the plaintiff agreed to pay Uplift Payments in accordance with cl 10. This was the clause construed in my primary judgment. Clause 10.1 provides that each time the plaintiff “receives Equity Proceeds … (each, a “Trigger Time”)”, the plaintiff is to calculate the Uplift Amount and notify the vendors accordingly. The Uplift Amount is to be paid within 5 business days of the Trigger Time: cl 10.1(b). Equity Proceeds is defined as (cl 1.1):
“Equity Proceeds means all (pre-tax) amounts or consideration received (whether directly or indirectly) by the Purchaser … in connection with the Company … including:
(a) by way of:
(i) a dividend or other distribution; and/or
…
and in the case of (i) …, to the extent retained by the Purchaser following repayment of the Vendor Loan Note Deed Poll; …”
**“**Purchaser Net Equity Proceeds means (at each relevant Trigger Time under clause 10):
(a) the Purchaser Total Equity Proceeds; less
(b) the aggregate of:
(i) amounts paid under the Vendor Loan Note Deed Poll (including principal and interest paid); and
(ii) amounts outstanding under the Vendor Loan Note Deed Poll (including principal and accrued but unpaid interest), if any; less
(c) an amount equal to $25,000,000; …”
Purchaser Total Equity Proceeds means “the aggregate of all Equity Proceeds received by the Purchaser … at the Trigger Time and all previous Trigger Times”: cl 1.1.
There is nothing in cl 10 of the Share Sale Agreement, or its embedded definitions, which indicates that Loan Fees of $4.5 million would be deducted from Purchaser Net Equity Proceeds before ‘super returns’ began to be shared with the vendors.
The parties to the Share Sale Agreement gave various warranties in cl 12, including by the plaintiff in cl 12.5(b):
“12.5 No action
…
(b) The Purchaser must not … make a Claim of any kind which the Purchaser would not be entitled to make under this document or that is otherwise inconsistent with the Purchaser's entitlement to make a Claim under this document …”
“Claim means any allegation, debt, cause of action, action, dispute, Liability, claim, proceeding, investigation, inquiry, prosecution, litigation, arbitration, mediation, audit or dispute resolution, suit or demand of any nature howsoever arising and whether present or future, fixed or unascertained, actual or contingent, whether at law, in equity, under statute or otherwise.”
The Share Sale Agreement had an entire agreement clause: cl 22.11.
I was taken to post-contractual communications with Mr Szabo and Pepperstone’s chief financial officer, Andrew Defina, who was also interested in acquiring shares in the plaintiff. During negotiations, they came to know that Ms Lock would receive $4.5 million via the side letter. There was some confusion as to how the $4.5 million would be paid and how it would operate in conjunction with the ‘super return’ provisions of the Share Sale Agreement. I considered these communications in my primary judgment, as it was post-contractual conduct by Ms Lock which may have shed light on what she understood the Share Sale Agreement to mean when she executed the document, this being relevant to the vendors’ alternative rectification suit. These communications are not, however, relevant to a proper construction of the side letter and I have put these communications to one side.
I was also taken to post-contractual conduct, when the $4.5 million was repaid. On 4 May 2022, Ms Lock emailed Mr Stevenson and others, advising that the Loan Note was about to be repaid, following which the plaintiff expected to have $6.3 million in hand. Further:
“Per my Consultancy Agreement with CPE, I am required to procure that FX Group Holdings pays to CPE the first A$4.5m of distributions that FX Group Holdings receives once the Vendor Loan Note is repaid in full. To satisfy this requirement tomorrow, FX Group Holdings intends to (on behalf of my shareholder vehicle) direct FX Holdco to pay A$4.5m (out of the ~A$6.3m) to the 4 CPE entities outlined below (in the allocations set out below), with the remaining balance of ~A$1.8m to be received by FX Group Holdings and its shareholders.”
Ms Lock sought confirmation of the vendors’ bank account details and proportional split of the $4.5 million. Malcolm Lucas, the manager’s chief financial officer, replied, amending the payment amounts slightly, where the manager had recorded the Loan Note in whole dollars, “Unless [Mr Stevenson has] any objections I am happy for you to proceed on the basis set out below.” Whether Mr Stevenson had any objections is not known. One objection comes to mind: Ms Lock was proposing to repay the $4.5 million to the vendors and not the manager.
I note from Mr Stevenson’s evidence at trial that Mr Lucas was Director – Financing Portfolio Operations when the Share Sale Agreement was being negotiated. Mr Lucas spoke to the manager’s tax advisors on the transaction (Deloitte) with Mr Stevenson at the time. Beyond this, Mr Lucas did not feature in my primary judgment. It seems doubtful that Mr Lucas was aware of the interstices of the side letter. But even if he was, how Mr Lucas and Ms Lock thought it operated is of no assistance to me.
On 5 May 2022, the Loan Note was repaid. On 10 May 2022, Ms Lock emailed a Notice of Uplift Amount to Mr Stevenson, which was calculated on her asserted interpretation of the definition of Equity Proceeds. In addition to twice deducting the principal and interest paid in respect of the Loan Note (which occupied my primary judgment), Ms Lock also deducted $4.5 million before arriving at a figure for Equity Proceeds.
Mr Stevenson disagreed, correcting Ms Lock’s double deduction of the Loan Note, “This properly reflects the agreed deal between us – namely you repay the loan, take the next $25m and then we split everything from that point on 50-50 until the end of the fund.” Mr Stevenson did not specifically engage with the deduction of the $4.5 million. Maybe Mr Stevenson agreed with that deduction. Or maybe he was focussed on the prospect that the plaintiff was proposing to calculate the Uplift Amount in a way which saw the vendors receive some $100 million less in ‘super returns’ than they may have been expecting. Either way, it is irrelevant.
By their Summons and Cross-Summons, the parties sought competing declarations as to the proper construction of the Share Sale Agreement. Neither party sought declaratory relief in respect of the side letter. That document was relied upon as supporting the parties’ competing constructions of the Share Sale Agreement. In addition, the vendors contended that the Notice of Uplift Amount was incorrect as the plaintiff was required to, but did not, include $4.5 million paid under a side letter in its calculations. That is, in performing its obligations under the Share Sale Agreement, as properly construed, the plaintiff was said to not be entitled to deduct that amount.
The plaintiff submitted that there was an issue as to what the side letter meant and, further, how to give it legal effect when it was in a side letter and not in the Share Sale Agreement. It was submitted that the side letter and the Share Sale Agreement should be construed harmoniously as evincing an objective intention that the $4.5 million ‘sit outside’ the profit sharing arrangement. This was said to be consistent with the initial inclusion of the $4.5 million in the Acquisition Loan in earlier versions of the Heads of Agreement, before this subject was moved to the side letter. This was also said to be consistent with the treatment of certain other fees and costs, which were each excluded from the calculation of Equity Proceeds. When concerns were raised as to the accuracy of the Notice of Uplift Amount, no concern was raised that the $4.5 million was not included in Purchaser Total Equity Proceeds. The end result was said to be that $4.5 million was deducted before the profit-sharing began and was to be treated as another deduction under the definition of Purchaser Net Equity Proceeds. The proffered construction was said to make commercial sense.
This brings us to the second issue, which is how Uplift Amounts should be calculated for quarters post-dating those considered by the experts. In order to understand and resolve this issue, it is necessary to recall how the parties conducted this litigation, in the context of an ongoing contractual regime. In doing so, I have included the material referred to by the plaintiff in respect of its ‘query’.
The initial controversy between the parties – as to the proper construction of the Share Sale Agreement – came to light once the Loan Note was repaid. The vendors could now hope to receive Uplift Amounts calculated in accordance with cl 10. But the plaintiff’s interpretation of how that clause worked was revealed when Ms Lock issued a Notice of Uplift Amount in May 2022 and then August 2022. The manager disputed the notices. (Even if the vendors’ construction of the Share Sale Agreement had been used, no Uplift Amount would have been payable for these quarters.) On 18 October 2022, the plaintiff commenced these proceedings, seeking a declaration that the notices were validly prepared in conformity with the terms of the Share Sale Agreement.
On 9 November 2022, Ms Lock issued a Notice of Uplift Amount for the 2022 financial year, using the same methodology as previously. (An Uplift Amount would have been payable if the vendors’ construction of the Share Sale Agreement had been used.) On 1 December 2022, the vendors filed a Commercial List Response and Cross-Summons, the latter seeking declaratory relief in respect of the Share Sale Agreement or, alternatively, rectification. The notices provided by the plaintiff in May and August 2022 were said to contain incorrect calculations of the amount of Equity Proceeds. Further, a debt claim was made in respect of the November 2022 Uplift Amount. If properly calculated, the November 2022 Notice of Uplift Amount would have resulted in an Uplift Amount of $7,893,966. Demand was made, and judgment sought against the plaintiff for this amount.
A second controversy then emerged. The Uplift Amount critically depends on the amount of dividends received by the plaintiff on the Pepperstone shares. To this end, the plaintiff had a ‘dividend sweep’ obligation under the Share Sale Agreement to procure that the Company distribute to its shareholders all cash “to the extent permitted by law” subject to an agreed capital retention: cl 2.6(a), Sch 3. There was a contractual mechanism to increase the capital retention: cl 9.7. But the mechanism had not been used.
Outside the contractual mechanism, on 31 January 2023, the Company resolved to maintain a minimum total liquidity requirement (TLR) of $29.2 million having regard to a report obtained from financial advisory firm, Rochford Capital. This increased the Company’s capital reserves substantially from $17,685,842. The dividend declared by the Company on 3 February 2023 was reduced accordingly, from $12,337,963 to $848,408. This dividend was recorded in a Notice of Uplift Amount issued on 8 February 2023.
“… this is not about the actual mandatory reg cap (as required by a regulator). Its about the “prudent” capital the Pepperstone board think they need to hold over and above that reg capital to protect against unforeseen issues. Under our deal they can keep $10m. The rest needs to be paid out as a dividend.
… what we need is … your views on what you’d recommend they keep in reserve (ie is $10m over reg cap enough or how much do they need?).
Also, would be good to get a view on de risking business … What could they do less of or not do and therefore be more comfortable with reg cap + $10m.”
As it turned out, Andrew Brown of Chatham Financial was ultimately engaged by the vendors as an expert. On 28 August 2023, the vendors’ solicitors sent a letter of instruction to Mr Brown, setting out the details of the two increases in capital retention by the Company in February 2023 and July 2023. The solicitors advised that they had corresponded with the plaintiff’s solicitors to ascertain the basis upon which the Company had retained this additional cash, and been told that the additional cash was required under s 254T of the Corporations Act 2001 (Cth).
In light of this, Mr Brown was asked to provide his opinion “as to the minimum amount of cash (by way of regulatory capital or collateral) that [the Company] was required to hold … in accordance with s 254T(1)” on three dividend payment dates, being 3 February 2023, 5 May 2023 and 3 August 2023. Further, “If, on future dividend distribution dates, [the Company] retains additional cash in reliance upon s 254T of the Corporations Act 2001 (Cth), we will require your opinion to address the necessary amount of cash to be held by [the Company] at each such future time.”
On 8 December 2023, Mr Brown provided his report, opining that the minimum amount of cash that the Company was required to hold on each dividend payment date was $16 million.
The vendors then retained forensic accountant Dawna Wright to calculate the Uplift Payment at each Trigger Time on the basis of the vendors’ construction of the Share Sale Agreement. This was to be calculated for two scenarios: first, on the basis of the dividend distributions actually made; and, second, on the basis that the plaintiff had also complied with its ‘dividend sweep’ obligation. For the second scenario, Ms Wright was asked what the Uplift Amount would be assuming that on each of 3 February 2023, 5 May 2023 and 3 August 2023, the Company was required to hold cash equal to the greater of:
(a) $16 million, being the amount of capital retention calculated by Mr Brown; or (b) Agreed Assets as defined in the Share Sale Agreement plus amounts referable to other buffers referred to in Pepperstone’s internal materials, being “UK reg cap” and “New licence reg cap & buffer”. (While the vendors then reserved their rights as to whether the Company was entitled to hold these amounts, it has since been agreed that these amounts should be included.)
On 11 December 2023, Ms Wright produced her report, calculating the Uplift Amounts owing on the basis of the dividend distributions actually made by the Company on Trigger Times up to 2 November 2023 in the amount of $21,432,269. For the second scenario, Ms Wright calculated Uplift Payments up to a Trigger Time of 3 August 2023 in the amount of $23,862,276.
In May 2024, the plaintiff put on its expert evidence in reply. Huseyin Sahin considered an appropriate capital retention for Pepperstone based on a review of the Rochford, KPMG and Mr Brown reports, but not by reference to any particular Trigger Times.
Forensic accountant Owain Stone checked Ms Wright’s calculations of the Uplift Amounts. He agreed with Ms Wright’s calculation for the first scenario. Mr Stone was asked to calculate the Uplift Amount under the second scenario for November 2023 on the same instructions and assumptions as provided to Ms Wright, but making other assumptions which are not presently relevant. Mr Stone updated Ms Wright’s calculations for the second scenario to 2 November 2023, being an additional $4.33 million. Noteworthy, Mr Stone was instructed to update the calculations for the second scenario without a further opinion from either Mr Brown or Mr Sahin as to the appropriate capital retention for the Company for that period.
In July 2024, Ms Wright and Mr Brown provided supplementary reports. Mr Brown responded to Mr Sahin’s report but did not consider any further dividend payment dates. Ms Wright responded to Mr Stone’s report but also, as instructed, updated her analyses to account for further Trigger Times of 2 November 2023, 6 February 2024 and 3 May 2024. Having done so, the total Uplift Amounts owing on the basis of the dividend distributions that had been made was now $39,874,721 but, on the basis of the capital retention assumptions that she had been asked to make, was $46,630,329. Noteworthy, Ms Wright did so without a further opinion from Mr Brown as to the appropriate capital retention for the Company for these later periods.
In March 2025, Ms Wright and Mr Stone prepared a joint report. Their calculations were not progressed beyond 3 May 2024. The experts agreed on the methodology and calculations. In April 2025, Mr Brown and Mr Sahin prepared a joint report, which did not update the appropriate capital retention amount beyond the Trigger Times already considered.
The trial began on 26 May 2025. That day, the defendants’ solicitors wrote, referring to the various pleadings that they had filed in 2023, “For the avoidance of doubt, the [vendors’] debt claims extend to all Uplift Amounts in respect of each Trigger Time since the commencement of the proceeding.”
During the expert conclave for the capital retention experts, the plaintiff’s senior counsel had the following exchange with Mr Brown:
“MR IZZO: Is this right: that your assumption, in arriving at a TLR figure, the total liquidity requirement, is that that is going to be retained as a buffer by Pepperstone?
MR BROWN: Yes.
MR IZZO: In addition to any regulatory capital?
MR BROWN: No, I didn't make any assumption on that.
MR IZZO: You don't know one way or another?
MR BROWN: I didn't make a conclusion on it.”
Mr Stevenson’s email to Mr Brown of 26 July 2023 was then drawn to his attention. Mr Brown was asked whether, when preparing his report, he assumed that he was dealing with an amount of capital to be held over and above the regulatory capital, to which Mr Brown replied, “I didn’t make any assumption.”
On 6 June 2025, I heard closing submissions. Relevantly, there was disagreement as to whether the capital retention assessed by Mr Brown was in addition to or included regulatory capital. The plaintiff submitted that the figure was in addition to regulatory capital, where the figure recommended by Rochford and KPMG was in addition to regulatory capital, given Mr Stevenson’s initial email to Mr Brown, and where all the experts were said to be undertaking the same task. The vendors submitted that Mr Brown made no assumption either way as to what regulatory capital the Company was required to keep and was correct to take a global approach to s 254T. I reserved.
Whilst reserved, the Company increased its capital retention again on the basis of a further report from KPMG. On 5 August 2025, the Company resolved to maintain a minimum TLR of $54.8 million. The vendors complained that this was a further breach of the ‘dividend sweep’ obligation and reserved the vendors’ rights, including to commence proceedings in respect of this suggested new breach.
On 18 September 2025, I gave judgment, declaring that the Share Sale Agreement operated as contended by the vendors. As to how much the plaintiff was now obliged to pay, I noted that, if the Uplift Payment was calculated based on the dividends declared by the Company until May 2024, then Ms Wright and Mr Stone agreed that the total Uplift Payment was $39.875 million.
I also found that the plaintiff had breached its contractual obligation under cl 2.6(a) of Sch 3 to the Share Sale Agreement. As to the appropriate capital retention at the time when dividends were declared, I preferred Mr Brown to Mr Sahin but made some allowance for the possibility that Mr Brown’s calculations may be slightly low. I considered that a figure of $20 million was appropriate, where that figure was not in addition to the regulatory capital amount: at [467], [473]. I noted Ms Wright’s calculations for the second scenario until May 2024, being:
I noted that the parties had asked for an opportunity to confer and, if necessary, make further submissions on the appropriate capital retention amount in light of my findings, interest and costs. I otherwise dismissed the Summons and Cross-Summons.
The plaintiff submitted that the $20 million capital retention amount only applied to the Trigger Times considered by Mr Brown, being February, May and August 2023. As for subsequent Trigger Times, the question was what assumption should be made as to how much capital was retained by the Company. One could assume that the Company retained only the amount of Agreed Assets plus regulatory capital or, alternatively, assume that the Company retained the amount which it in fact retained on those dates. The plaintiff favoured the latter. The vendors were said to have confined their claim for breach of cl 2.6(a) of Sch 3 of the Share Sale Agreement to the February, May and August 2023, with the claim for subsequent Trigger Times being in debt alone. As there was no breach alleged beyond February, May and August 2023, there was no basis for the Court to determine the appropriate figure that the Company was permitted by law to retain thereafter as the issue did not arise on the pleadings. Alternatively, if the issue did arise for determination, then no finding had been made as to the amount permitted by law after August 2023. There was no evidence from the capital retention experts as to that amount. My conclusion (at [473]) should be understood as a finding of the amount required at the three points in time with which Mr Brown’s calculations were concerned.
The plaintiff has raised an issue as to what I meant by my primary judgment in respect of Mr Brown’s opinion. I note that the plaintiff has already suggested that this portion of my primary judgment contains an error or omission, with which I have not agreed. In any event, the plaintiff submitted that regulatory capital was added to the $20 million capital retention amount. Properly understood, Mr Brown made no assumption as to regulatory capital, while Mr Sahin said the figure he arrived at was in addition to regulatory capital.
The plaintiff further submitted that the Company was permitted to retain an amount of cash equal to the greater of $20 million plus regulatory capital or Agreed Assets plus regulatory capital. Regulatory capital requirements were amounts which the Company was required by law to maintain and are thus "permitted by law" within the meaning of cl 2.6(a) of Sch 3. Adding the amount required by s 254T of the Corporations Act to the assets required to comply with the regulatory capital requirements minimised the risk of a failure to hold adequate capital, consistently with the Share Sale Agreement's contemplation that such compliance will be "ensured". The plaintiff repeated the submissions made at trial: see [61].
The plaintiff has largely re-put a submission which I have already rejected at trial. But the argument that the proper construction of cl 2.6(a) is that regulatory capital is added to the appropriate capital retention or Agreed Assets is new.
As to the former, the plaintiff submitted at trial that the Rochford report, KPMG report and Mr Sahin had proceeded on the basis that the TLR amount was in addition to regulatory capital. This approach was said to correspond with the calculations in fact undertaken by Pepperstone in the ordinary course of its business. So much may be accepted. My focus was on whether the plaintiff had performed its obligation under cl 2.6(a) of Schedule 3 of the Share Sale Agreement, which depended on the terms of that obligation rather than on what the Company, its consultants or expert witness did. The plaintiff then relied on Mr Stevenson’s email of 26 July 2023 to Mr Brown. Mr Stevenson’s outline of a different task – which does not seem to have been tied to the precise wording of the ‘dividend sweep’ obligation – is of no moment. Of more interest was the formal letter of instruction from the vendors’ solicitors. Mr Brown’s answers in cross-examination on this topic were consistent with the instructions he had been given by the vendors’ solicitors and his report.
As to the new point, cl 2.6 of Sch 3 provides that, for each calendar quarter, the plaintiff “must, to the extent permitted by law for that period, procure” that the Company distribute to its shareholders all cash or cash equivalent amounts “exceeding the Agreed Assets at the time of the distribution”. As I noted in my primary judgment at [438], the plaintiff (as the majority shareholder) is thereby obliged to ensure that the Company declares dividends exceeding the Agreed Assets “to the extent permitted by law”.
(a) Ascertain what cash or cash equivalents the Company holds. (b) Calculate Agreed Assets (NTA Requirements plus Buffer Amount). (c) Deduct (b) from (a), with the result being the amount available for distribution as dividends. (d) If the result is a positive amount, then consider whether there is any other legal restriction which would prevent some or all of this amount being distributed to shareholders.
Ms Wright undertook steps (a) to (c) for each quarter from February 2023 to May 2024 and calculated that there was a positive amount for each quarter: primary judgment at [441].
Mr Brown undertook step (d) for the three distribution dates which had passed at the time of his report. As is apparent from his letter of instruction, the only other legal restriction which the plaintiff had pointed to as justifying the Company’s increase in its capital retention was s 254T of the Corporations Act. Mr Brown considered whether the Company was required to keep more cash by reason of this legal constraint and concluded that the Company should keep $16 million on that account. Mr Brown was not instructed to, and did not, fix upon that figure as being in addition to NTA Requirements or the Buffer Amount or Agreed Assets but as a ‘standalone’ amount that the Company should retain in order to satisfy the requirements of s 254T.
Step (d) requires a comparison between the figure arrived at by Mr Brown, on the one hand, and Agreed Assets on the other hand. If the appropriate capital retention as assessed by Mr Brown, having regard to s 254T, was more than Agreed Assets, then the Company should retain the s 254T amount. If not, the plaintiff should procure that the Company distribute dividends as calculated by Ms Wright. In terms of the supplementary joint experts reports, Assumption One – Retained Amounts, I consider Alternative Assumption A to govern the position.
The issues are whether interest should apply at the contractual rate, under the Civil Procedure Act 2005 (NSW) or be the interest actually earned on the disputed funds whilst these proceedings were underway. Further, when should interest stop running in light of the plaintiff’s offers to pay at least part of the judgment sum after judgment was handed down?
Section 100(1) of the Civil Procedure Act provides:
100 Interest up to judgment
(1) In proceedings for the recovery of money (including any debt or damages …), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit—
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. (Emphasis added).
The purpose of an award of pre-judgment interest is to compensate a successful claimant for the loss suffered by being deprived of the use of their money during the relevant period: MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663, 666 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ); [1991] HCA 3. Whilst the Court has a discretion to award interest, the circumstances in which interest will be refused are rare: Falkner v Bourke (1990) 19 NSWLR 574 at 576 (Priestley JA, Samuels and Clarke JJA agreeing); Ruby v Marsh (1975) 132 CLR 642 at 644 (Barwick CJ); [1975] HCA 32.
There is no prescribed rate of interest that may be awarded. But Practice Note SC Gen 16 provides that the litigants should expect that the Court will have regard to a rate that is 4% above the cash rate published by the Reserve Bank of Australia. Using this rate is desirable in the interests of uniformity “whereby interest is calculated according to pre-determined rates that the parties can take into account in their dealings during the litigation and in their endeavour to avoid wasteful disputation concerning its outcome”: Heydon v NRMA Pty Ltd (2001) 53 NSWLR 600; [2001] NSWCA 445 at [30] (Mason P); Maestrale v Aspite [2014] NSWCA 182 at [135]-[136] (Beazley P, Macfarlan and Barrett JJA agreeing). Where the parties have already agreed on interest “as a result of the exercise by parties of their freedom to contract”, then that rate will be used instead: Degmam Pty Ltd (in liq*)* v Wright [1983] 2 NSWLR 348 at 353 (Holland J).
“22.13 Default interest
A party which is required to pay one or more other parties an amount under this document and fails to do so within any required time limit expressed in this document must pay to the relevant payee parties, on demand, interest on the unpaid amount due and payable under this document (including interest payable under this clause 22.13). Interest under this clause 22.13:
(a) accrues on each unpaid amount from and including the due date for payment to the date of actual payment at 10% per annum;
(b) accrues from day to day;
(c) is calculated on the basis of the actual number of days elapsed (including the first day but excluding the last) and a 365 day year;
(d) is an additional and independent obligation, after any judgment or other thing into which the liability to pay the amount becomes merged; and
(e) may be compounded by the relevant payee parties at quarterly intervals from the due date for payment.”
The plaintiff submitted that interest should not be paid under the contractual rate as it had not been pleaded: r 6.12(1), UCPR; Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336 at [12] (Parker J) cf Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari (No 2) [2024] NSWSC 684.
I reject this submission. A summons or statement of claim must specifically state the relief claimed, including an order for interest up to judgment: r 6.12(1) and (6), UCPR. The vendors did specifically state that relief in the form of interest was sought. The vendors did not state that interest was sought on the basis of cl 22.13. But where the accompanying Commercial List Cross-Claim Statement delved deeply into the construction and proper operation of the Share Sale Agreement, the fact that interest would be sought on the basis specified by that contract was probably implicit but certainly unsurprising. As much was confirmed by the letter from the vendors’ solicitor of 30 May 2025, while the trial was underway and now nine months ago. The solicitors provided an interest calculation payable on the vendors’ cumulative debt claims in accordance with cl 22.13 of the Share Sale Agreement. The interest calculation stood at $8,712,239. The plaintiff does not suggest that it is surprised that interest is sought at the contractual rate, nor suggest that it cannot meet this allegation or would have called additional evidence on this subject.
The plaintiff submitted that cl 22.13 did not apply. The contractual rate of interest should not be awarded on the damages component of the judgment, as such damages arose from the breach of cl 2.6(a) on 3 February 2023, 5 May 2023 and 3 August 2023. The plaintiff did not fail to pay these amounts within the time limit under the Share Sale Agreement. The only debt under the Share Sale Agreement was the amount that came out of the profit share, which depended on what the plaintiff actually received. That was all that could give rise to a debt. A debt could not be produced from something that the vendors should have received, which was damages. Otherwise, the vendors would be over-compensated for the breach of cl 2.6(a).
Precisely why the vendors would be over-compensated was not explained, and I do not accept that this would necessarily follow. The “ruling principle” is that contractual damages are assessed at the date of the breach: Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56 at [109]-[110] (Keane J). Awarding interest on damages from the date of breach would be part of the compensation ordinarily awarded by the Court.
The amount that the party was required to pay under the Share Sale Agreement was the Uplift Amount. The required time limit expressed in the Share Sale Agreement for payment of the Uplift Amount was within 5 business days of the Trigger Time: cl 10.1(b). The Uplift Amount was not paid on the due date for two reasons. First, the plaintiff did not calculate the amount in accordance with the contract. Second, the plaintiff did not perform the ‘dividend sweep’ obligation such that a critical input into the formula – Equity Proceeds – was less than it should have been. The vendors sued in debt for the former and sought damages in respect of the latter.
As to the interest actually earned on the disputed funds, the manager’s solicitor wrote to Ms Lock on 30 September 2022, noting that the next quarter was expected to result in the first Uplift Amount becoming payable to the vendors, if calculated correctly. If the plaintiff maintained its erroneous interpretation of Equity Proceeds, then the vendors required the purchaser to refrain from distributing the dividend pending the resolution of the dispute. The plaintiff was asked to hold any dividend in a separate escrow account and not to use the monies until the dispute was resolved. Confirmation was sought that the plaintiff would do so.
On 9 November 2022, after these proceedings had been commenced, the plaintiff advised that it had taken steps to ensure that the sums which would be payable to the vendors based on their construction had been sequestered and placed in a separate account pending the outcome of the proceeding. Further, the plaintiff would ensure that this was done every time a dividend was paid. This was said to ensure that the vendors’ position was protected. But where the sums to be sequestered under this regime would be significant, and likely to increase each quarter, the plaintiff pressed for the proceedings to be resolved expeditiously.
The plaintiff submitted that, given the parties’ agreement that the funds be sequestered, the Court should award interest at the rate applicable to the sequestered funds account. The fact that these funds were not available to be used by the plaintiff was said to be a factor in the exercise of the Court’s discretion.
I reject this submission. Whilst the plaintiff was unable to use these funds, it is implicit in the parties’ correspondence that the vendors would have sought interim injunctive relief if the contested funds were not satisfactorily preserved. Presumably, the establishment of the separate account was preferred by the plaintiff to whatever interlocutory arrangement the Court may order. More importantly, the plaintiff did not suggest in its letter of 9 November 2022 that the vendors’ entitlement to interest on the monies should be confined to the interest earned in the escrow account. The vendors did not agree to limit their right to interest in this fashion.
The vendors are third-party trustees of unit trusts or “funds”, which hold money invested by institutional and high net worth investors: primary judgment at [17]. It is these investors who bought and sold the majority stake in Pepperstone and entered into the complex transaction the subject of my primary judgment. A bank statement in evidence for Commonwealth Bank of Australia Business Online Saver account into which the contested funds were deposited indicates that the interest rate was 0.65% per annum, albeit it looks like some of the funds were placed on term deposit. I can see from the joint accounting report that the funds earned between some 3.1% and 4.5% per annum. I do not know the return that the investors would have earned on the monies if the Uplift Amounts had been paid when due, but I venture that it would have been more than a Commonwealth Bank term deposit. It was open to the plaintiff to call evidence to show that, in the particular circumstances, the interest earned on the funds was appropriate: [2007] NSWSC 49 at [18] (Brereton J as his Honour then was). The plaintiff has not done so.
As to the plaintiff’s offers to pay, I gave judgment on 18 September 2025. On 14 October 2025, the plaintiff proposed to bring the interim regime to a close and to pay the funds held in the account to the vendors. The funds in the account then stood at $79,485,224.04. The plaintiff offered to pay these funds to the vendors on their written undertaking that they would not distribute or deal with the funds such the funds could not be repaid in the event of a successful appeal by the plaintiff. On 16 October 2025, the plaintiff added that it was content to keep the funds in the bank account including any interest on the vendors’ behalf, or alternatively transfer the funds to the vendors on their undertaking, “Either way, … if any additional interest is ultimately ordered by the Court, then it should only be up to and including today given our … offer to make the funds available from today.”
On 23 October 2025, the vendors’ solicitor advised that it was considered to be premature for the interim regime to be brought to an end. Rather, the payment of the funds should await the making of final orders, which was then thought to be imminent. Once these orders were made, then the funds should be transferred to the vendors in accordance with the orders, noting that the vendors intended to seek interest up to the date for payment as they were entitled to under the terms of the Share Sale Agreement or the Civil Procedure Act. The basis for the requested undertaking was said to be unexplained.
On 31 October 2025, the plaintiff’s solicitors pressed to pay the sequestered funds to the vendors in advance of final orders being made. Any delay in payment since 14 October 2025 was said to be attributable solely to the vendors’ refusal to provide the “uncontroversial undertaking”. It was said that the plaintiff should not have to bear liability for interest accrued whilst a joint supplementary accounting expert report was prepared, together with submissions and further judicial consideration, in circumstances where the plaintiff had offered to transfer the funds. The requested undertaking was said to be reasonable and necessary given that the plaintiff intended to appeal. It was said to be appropriate to ensure that the sequestered funds remained available for repayment should the appeal be upheld and not dissipated in the interim, including to the vendors’ investors. The undertaking was again sought. There was no reply.
Ms Wright and Mr Stone produced a joint report on 5 December 2025, calculating the amount payable to the vendors on the basis of alternative assumptions, giving rise to 48 permutations. On 17 December 2025, the plaintiff lodged a Notice of Appeal and wrote to the vendors again. In light of the joint supplementary expert report, the plaintiff accepted that it would have to pay at least $77,012,702. The plaintiff offered to pay this amount. Confirmation that this was acceptable was sought by noon on 19 December 2025, together with the details of the bank account into which it should be paid. Any refusal was said to have no reasonable basis.
For these reasons, I make the following orders:
Judgment against the plaintiff in the amount of $96,897,121.
NOTE that the plaintiff has paid $77,012,702 on 24 December 2025 in anticipation of, and in partial satisfaction of, the judgment sum.
FURTHER NOTE that the parties have agreed that the Uplift Amount payable from 7 August 2025 on is not included in the judgment sum but may be the subject of agreement or further legal proceedings.
Parties to notify any error or omission within 7 days.
**********
Typographical amendments at [36], [56], [66], [68], [72], [83], [84], [104], [105]. [59]: 2nd and 3rd sentences deleted. [77]: 2nd sentence deleted.
FX Group Holdings Pty Ltd
Perpetual Trustee Co Ltd as trustee of the CPEC 8 Trust A
(1986) 161 CLR 653
(2013) 253 CLR 1
(1991) 174 CLR 64
(1990) 19 NSWLR 574
(1946) 74 CLR 127
(2001) 53 NSWLR 600
(1991) 171 CLR 657
(1951) 84 CLR 377
(1975) 132 CLR 642
(2024) 60 WAR 367
(1972) 127 CLR 454
(1956) 99 CLR 560
At trial, the vendors argued (and I agreed) at a level of principle that the Court could have regard to the side letter when construing the Share Sale Agreement, even though the manager was a party to the side letter but not the Share Sale Agreement: at [216]-[227]. I further considered that the side letter was executed contemporaneously and should be construed harmoniously with the Share Sale Agreement: at [228]. Ultimately, in construing the contentious provisions which were the subject of my primary judgment, the side letter did not advance matters: at [229].
As to what the side letter means, the side letter is a little clearer than the Heads of Agreement. Ms Lock would invoice the manager for the fees, which would be paid by the manager and then repaid by the plaintiff in due course. The side letter identifies when Ms Lock’s loan was to be repaid and the source of the funds with which it would be repaid. Specifically, the loan would be repaid using Equity Proceeds as that term is defined in the Share Sale Agreement.
Does the “For the avoidance of doubt” sentence mean that the ‘super return’ arrangement only began once the plaintiff had received $29.5 million in Pepperstone dividends (after the Loan Note was repaid)? Such a construction would be inconsistent with the clear terms of the Share Sale Agreement. Relevantly, Equity Proceeds are all Pepperstone dividends received after the Loan Note has been repaid. The Share Sale Agreement also makes plain that Equity Proceeds – save for some clearly defined exceptions, of which the $4.5 million is not one – are to be fed into the ‘super returns’ formula. Taking this approach does not avoid doubt but creates quite the conundrum.
Or does the “For the avoidance of doubt” sentence make clear that the loan arrangement between Ms Lock and the manager should not be taken as excluding the $4.5 million from the definition of Equity Proceeds or affecting the calculation of the Uplift Amount? That is, the fact that the first $4.5 million in Pepperstone dividends received after the Loan Note was repaid would be used to repay Ms Lock’s loan did not prevent the inclusion of that sum in Purchaser Total Equity Proceeds or the formula in cl 10.2 of the Share Sale Agreement. Such a construction would be consistent with the Share Sale Agreement.
The fact that the parties to the side letter adopted the definitions used in the Share Sale Agreement indicates that the parties intended to be consistent with that document, including by using the defined term Equity Proceeds and referring to the calculation of the Uplift Amount in the Share Sale Agreement. Further support for such a construction comes from the fact that the $4.5 million is acknowledged to be Equity Proceeds.
The latter construction is preferable, given that the parties to various transaction documents signed contemporaneously presumably intended that these agreements would operate harmoniously. It may be the case that the drafting of the side letter was not, in fact, intended to achieve that result, but Ms Lock did not seek rectification of the side letter.
At this point in time, I am not being asked to construe the Share Sale Agreement. I am being asked by the plaintiff to give effect to the side letter notwithstanding the proper construction of the Share Sale Agreement. And in this context, the fact that the parties to the Share Sale Agreement are different to the parties to the side letter does matter. The plaintiff and vendors are obliged to perform their respective obligations under the Share Sale Agreement as construed. The manager and Ms Lock are obliged to perform their respective obligations under the side letter and, on the plaintiff’s argument, have already done so. But whatever the manager and Ms Lock have done in performance of their “strictly confidential” side deal cannot bind the parties to a separate contract by altering those parties’ obligations, at least, not as a matter of contract law. The plaintiff did not seek any other remedy, at least not in its pleading, and is further precluded by cl 12.5(b) from maintaining the present contention. In terms of the supplementary joint experts reports, Assumption Three – Side letter payment, I consider Alternative Assumption B to govern the position.
In April 2023, the vendors amended their pleadings, adding a further debt claim in respect of the February 2023 Uplift Amount and a new topic in respect of “Capital retention”. The vendors contended that the Company’s resolution on 3 February 2023 and the associated reduction in dividends meant that the Company was retaining more than the amount of cash in addition to the Agreed Assets which it was strictly obliged by law to retain. The plaintiff was said to have thereby breached cl 2.6(a) of Sch 3 to the Share Sale Agreement. The defendants sought damages, being the difference between the amount payable to them in accordance with the Share Sale Agreement and the amount actually paid.
Attention turned to the preparation of evidence. On 2 June 2023, Ball J made directions for the parties to serve lay and expert evidence. The following week, the manager contacted Chatham Financial to see whether the firm would be able to assist as an expert. The firm was unable to assist.
On 4 July 2023, the Company resolved to increase the TLR again, to a minimum of $32 million, having regard to a Capital Adequacy Review completed by KPMG. As I understand it, the parties’ legal representatives agreed that it was not necessary to continue to amend the pleadings each time a Notice of Uplift Amount was issued or the Company retained additional capital. The plaintiff continued to issue a Notice of Uplift Amount each quarter, at least until May 2024. But there were no further increases in capital retention.
On 18 July 2023, Mr Stevenson contacted Chatham Financial again, advising that it looked like they had located an expert for the case but sought to engage the firm on a different task, “We … want some assistance looking at what levers can be pulled to de-risk the business such that there is no need for more reg capital than it has. … this is now a priority workstream.” Further emails passed as to the scope of this task. On 26 July 2023, Mr Stevenson emailed Chatham Financial and clarified:
The plaintiff further submitted that there was no evidence on which such findings could now be made. The appropriate amount to retain on any subsequent date depended on the Company’s exposure for that period and its operating costs. Things would be different on different dates. It would not be safe to determine the s 254T amount for points in time not considered by Mr Brown, who noted that the amount he assessed in his first report "may not be true on a forward basis, especially if the business undergoes changes". But the onus was on the vendors, who only contended that there was a breach on February, May and August 2023. There was no onus on the plaintiff to plead and prove that there was no breach on any other relevant date.
I do not think this issue is necessarily resolved by considerations of onus. But I agree that the subject of pleadings does come into it. Whilst the Commercial List does not observe strict rules of pleading, it remains the case that a party must plead specifically any matter that, if not so pleaded, might take their opponent by surprise, or that a party alleges makes any claim not maintainable, or raises matters of fact not arising out of the preceding pleading: r 14.14(2), Uniform Civil Procedure Rules 2005 (NSW). Such a rule is designed to refine the matters in issue and promote the “just, quick and cheap” disposal of proceedings, where the interests of justice are best served by ensuring that the real issues in dispute are litigated in a proper, timely and efficient manner: Ritchie’s Uniform Civil Procedure NSW (LexisNexis, looseleaf) at [14.14.5] and the authorities there cited.
And that is the mischief in the plaintiff’s argument. As I have endeavoured to describe, the second controversy in respect of capital retention came to light when the Company increased its capital retention twice, in quick succession, shortly after these proceedings were commenced. The parties agreed that, rather than amend their pleadings each time such things occurred, they would proceed to trial so that both controversies could be resolved, presumably, so that the parties could perform their obligations for the balance of the contractual term without further controversy.
The parties put on evidence based on the two increases in capital retention which had then occurred. Mr Brown provided his report on the basis of the three dividend distribution dates that had passed at the date of his report. Ms Wright calculated the amount owing under the second scenario for those three dates. The plaintiff’s expert, Mr Stone, updated those calculations for the next quarter without the need for a further opinion on the appropriate capital retention amount for that quarter. Ms Wright followed suit for subsequent quarters. Mr Stone agreed with both the methodology and the calculations. Mr Sahin’s views were not directed to any particular dividend distribution date.
Calendar quarters continued to pass after the expert reports relevant to the quantification of the Uplift Amounts were completed. As it turned out, the Company did not increase its capital retention again until after judgment was reserved. The plaintiff now contends that the vendors should have – for each quarter after August 2023 – obtained a further opinion from Mr Brown as to the appropriate capital retention amount for the Company to then hold. Apparently, the vendors should have done this notwithstanding the directions made by the Court for the parties to complete the service of their evidence on particular dates and notwithstanding that both forensic accountants were instructed, and able, to update their calculations without a further opinion from Mr Brown. Is the plaintiff’s argument something which may take the vendors by surprise? Indeed it is.
Turning then to the assessment of damages for subsequent quarters, the general measure of damages is the amount, so far as money can provide, necessary to put the plaintiff in the position they would have been in if the contract had been performed: Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350; Wenham v Ella (1972) 127 CLR 454 at 460 (Barwick CJ); [1972] HCA 43; Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653; [1986] HCA 81. This requires the Court to compare the actual position of the party who sustains a loss by reason of the breach to what that party’s position would have likely been in a counterfactual scenario in which the contract was performed: Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd (No 2) [2024] VSC 262 at [74] (Matthews J).
The Court must do the best it can in assessing damages notwithstanding the difficulties in doing so, where estimation, if not guesswork, may be necessary in assessing the damages to be allowed: Fink v Fink (1946) 74 CLR 127 at 143 (Dixon and McTiernan JJ); [1946] HCA 54; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 411-412 (Dixon and Fullagar JJ); [1951] HCA 79; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 (Mason CJ and Dawson J); [1991] HCA 54.
In assessing damages for quarters post-dating the Trigger Times considered by Mr Brown, being February, May and August 2023, Ms Wright and Mr Stone have proceeded up to May 2024 on the basis that the capital retention amount in the counterfactual (where the plaintiff performed its ‘dividend sweep’ obligation) was the figure assessed by Mr Brown. I have increased that figure to $20 million. By my primary judgment, I have already awarded damages up to the end of Ms Wright’s calculations, with which Mr Stone agreed, that is, to May 2024.
Another year passed before the trial in May 2025. There was no suggestion that the Company was contemplating increasing its capital retention. As earlier noted, the vendors planned to ask Mr Brown to prepare a further report if that occurred: see [52]. But the Company increased its capital retention after both parties had closed their case and judgment was reserved.
Doing the best I can on the basis of the evidence before the Court, I assess damages for the quarters post-May 2024 on the basis that, in the counterfactual, the plaintiff would have procured that the Company retain the greater of Agreed Assets or $20 million on each Trigger Time, with the balance to be distributed as dividends. On receipt of these dividends, the plaintiff would then have issued a Notice of Uplift Amount in accordance with cl 10 of the Share Sale Agreement, as construed. The capital retention amount on which damages should be calculated for each quarter post-May 2024 is $20 million. In terms of the supplementary joint experts reports, Assumption Two – Distribution Adjustment, I consider Alternative Assumption A to govern the position.
Agreed Assets means the aggregate of the assets required to ensure that the Group complies with the Net Tangible Assets (NTA) Requirements and the Buffer Amount: cl 1.1. NTA Requirements are the requirements set out in ss (4) and (5) of s 912AB of the Corporations Act, as declared in cl 4 of the ASIC Class Order [CO 12/752]. These requirements are imposed by the Australian Securities and Investments Commission (ASIC) on participants in the market for derivatives, to ensure that the Company can satisfy its obligation to have adequate financial resources under s 912A(1)(d) of the Corporations Act: primary judgment at [32]. The Buffer Amount is $10 million.
As such, cl 2.6(a) requires the following tasks to be undertaken at the time of distribution:
Clause 22.13 is concerned with amounts that are “due and payable”, suggesting known and ascertained amounts as at the payment date. To the extent that the amounts which the plaintiff is now required to pay to the vendors are damages, being the amount which the vendors would have received if the plaintiff had performed its ‘dividend sweep’ obligation in the first place, then cl 22.13 is not a perfect fit. I accept the plaintiff’s submission. I also agree with the vendors that the fact that the parties agreed the rate in cl 22.13 may indicate that it is a suitable rate for the Court to fix under s 100, as a matter of discretion, in respect of any damages component.
On 19 December 2025, the vendors’ solicitors advised that, given the upcoming holiday period and the fact that their instructors were then overseas, the vendors required further time beyond the short time frame given to consider the offer of payment and to get instructions. It was expected that a reply would be given in the New Year. The plaintiff advised that test payments had been made to each of the vendors’ bank accounts, which confirmed that these were open accounts capable of receiving funds. The vendors’ consent was sought to payment of the offered amount into their bank accounts or their solicitor’s trust accounts. This request was repeated on 22 December 2025.
On 23 December 2025, the vendors’ solicitor advised that they did not have instructions in relation to the matter as their instructors were travelling overseas, their office was closed and did not re-open until 12 January 2026 and all staff were on annual leave (including their instructors and the finance team). The vendors had not been in a position to consider or obtain appropriate advice in respect of the offer and therefore had been unable to provide instructions. The solicitors advised that they would revert as soon as instructions were to hand after the client’s office re-opened in the New Year. The solicitors did not propose to engage further until instructions were received.
On 24 December 2025, the plaintiff’s solicitor advised that they intended to make the payment nonetheless and confirmed at 5.11 pm on Christmas Eve that the payments had been transferred. According to the bank statement, $77,012,702 was transferred from the plaintiff’s bank account to the vendors’ respective bank accounts. The vendors accept that interest ceased to run on the amount paid by the plaintiff on 24 December 2025, but not on any additional sum which the Court concludes is payable.
The plaintiff submitted that interest should not be awarded after 15 October 2025 on the amount offered to be paid to the vendors. Alternatively, the Court should find that the offer made on 17 December operates as a bar to interest accruing: Australian Beverage Distributors Pty Ltd v The Redrock Co Pty Ltd [2007] NSWSC 966 at [27] (White J) (referring to Dixon v Clark (1848) 5 CB 365 at 377 and Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 568 (Dixon CJ, McTiernan and Taylor JJ); [1956] HCA 51). The plaintiff was then ready, willing and able to pay: Coughlan v George [2003] NSWSC 512 at [15] (Hamilton J); Se*.*ven Global Investments Pty Ltd v Global Loan Agency Services Australia Nominees Pty Ltd (2024) 60 WAR 367; [2024] WASC 424 at [159]-[160] (Hill J). There was said to be no reason for the vendors not to accept payment.
I do not agree that interest should stop on 14 October 2025. The condition on which payment was offered was that the vendors could not then use the funds. It was not unreasonable for the vendors to respond as they did, where the plaintiff had no right to impose this condition.
I do not agree that interest should stop on 19 December 2025. Throughout the period after my primary judgment was delivered and part-payment made, the parties were engaged in formulating complex letters of instruction to Ms Wright and Mr Stone, appearing at various directions hearings and preparing written submissions in respect of the final orders. Having lost, the plaintiff had an understandable sense of urgency to pay the funds, even before the final amount was determined, presumably to keep its interest bill as low as possible. But while the plaintiff was making test payments, the parties were appearing before me on the last day of Court term, to canvass a range of problems. The plaintiff’s request was not necessarily a top priority for the vendors to accommodate, and not on the last day of court term when the people who needed to be given advice and to give instructions on this subject were overseas on holidays.
Having regard to the principles earlier outlined, the plaintiff is a sophisticated, well-advised, commercial entity. The plaintiff has held on to the disputed funds for three years. The sums involved are very large. The vendors’ investors have been deprived of the returns that they would otherwise have expected to enjoy on their investment through a private equity firm. Notwithstanding that the judgment sum, insofar as it includes damages for breach of contract, does not fit precisely within cl 22.13 of the Share Sale Agreement, I consider that the contractual rate is nonetheless appropriate in order to compensate the investors for the loss of their money during the last three years.
Given the assumptions which I have earlier chosen as governing the position, this brings the experts’ joint calculation within “Scenario 2” such that the total Uplift Payment up to 7 August 2025 is $80,893,255. In terms of the first supplementary joint experts report, I consider Interest Alternative Assumption One to be appropriate**.** This takes me to “Interest calculation 5.1A” in the second supplementary joint experts report. Having regard to the spreadsheet, interest to 27 February 2026 is $16,003,866.