Solicitors: Buchanan Rees Dispute Lawyers (Plaintiffs) Minter Ellison (Defendant) File Number(s): 2022/33374 Publication restriction: None

Introduction

1. By a share sale agreement dated 24 September 2019 (the SSA), the plaintiffs agreed to sell to the defendant, QBT Pty Limited (QBT), 100 percent of the shares in two companies, TravelEdge Pty Ltd (TravelEdge) and Quay Services Pty Ltd. One of the assets owned by TravelEdge was 40 percent of the shares in a company known as STA Travel Academic Pty Limited (the JV Company). The other 60 percent of the shares in the JV Company were held by STA Travel Holding AG (STA).
2. It was a term of the shareholders agreement between TravelEdge and STA relating to the JV Company (referred to by the parties as the Joint Venture Agreement or JVA) that a Change of Control (as defined in the agreement) in one of the shareholders in the JV Company was an Event of Default which triggered a right in the other shareholder to acquire the defaulting shareholder's shares at a price determined in accordance with the JVA. With that right in mind, it was a term of the SSA that an amount of $4,000,000 of the purchase price (the Deferred Amount) was to be placed in an escrow account. The whole of the $4,000,000 was to be released to the plaintiffs if STA consented in writing to the Change of Control of TravelEdge resulting from the completion of the SSA. A different amount calculated in accordance with a formula set out in cl 4.4(b) of the SSA was payable if STA did not consent in writing to the Change of Control and exercised its rights to acquire TravelEdge's shares in the JV Company.
3. The principal question in this case is whether, in the events that have happened, the plaintiffs are entitled to be paid the $4,000,000. The plaintiffs claim that they are. They also bring an alternative claim for damages for breach of the SSA or for unconscionable conduct in contravention of s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) or s 21(1) of the Australian Consumer Law (ACL).

The relevant companies

1. TravelEdge was, at the time it was acquired by QBT, a travel agency specialising in corporate travel. QBT was, prior to its sale to Corporate Travel Management Limited, a wholly owned subsidiary of Helloworld Travel Limited (Helloworld), a travel agency listed on the Australian Securities Exchange. QBT was the company through which Helloworld provided corporate travel services. STA was a global student travel business based in Switzerland which, among other things, had contracts with universities across Australia to manage academic travel arrangements.

The JVA

1. TravelEdge and STA had for a number of years worked together to provide travel services to Australian universities. In January 2016, they commenced negotiations for a formal joint venture agreement which resulted in the establishment of the JV Company and, on 30 May 2018, entry into the JVA.
2. Clause 6.2 of the JVA gives each shareholder a right to appoint one director for each 20 percent of the shares it held, with the result that STA was entitled to appoint three directors to the board of the JV Company and TravelEdge was entitled to appoint two.
3. Clause 11.5 of the JVA states: Notices of Default (a) If any Event of Default occurs in respect of a Shareholder (Defaulting Shareholder), any person (including that Shareholder) must, as soon as practicable after it becomes aware of that Event of Default, notify the other parties to this Agreement of the Event of Default. (b) Failure of a person to give such notice will not release the Defaulting Shareholder from any of its obligations under this Agreement.
4. "Event of Default" is defined to include an event in which "a Change of Control of the Shareholder occurs and the other Shareholder has not consented in writing to such Change of Control". It is common ground that the acquisition by Helloworld of TravelEdge resulted in a Change of Control for the purposes of the JVA.
5. Clause 11.6 of the JVA relevantly provides: Option to acquire Shares of Defaulting Shareholder (a) Upon the occurrence of an Event of Default, and until such Event of Default has been rectified, the Shareholder other than the Defaulting (Non-Defaulting Shareholder) may give a notice to the Defaulting Shareholder (Default Option Notice) giving the Defaulting Shareholder 30 days to rectify the Event of Default. (b) If the Defaulting Shareholder fails to rectify all outstanding Events of Default within 30 days after receiving the Default Option Notice, then the Non‑Defaulting Shareholder will have the option to acquire all of the Shares of the Defaulting Shareholder. (c) Such option may be exercised by notice in writing (Exercise Notice) given to the Defaulting Shareholder at any time during the 30 day period immediately following the expiry of the 30 day period specified in the Default Option Notice (Option Exercise Period), provided the Event of Default giving rise to such option remains unremedied as at the date of the Exercise Notice. (d) Within 14 days after the value of the Shares of the Defaulting Shareholder has been determined in accordance with clause 11.7, the Non‑Defaulting Shareholder who had given an Exercise Notice may, by notice in writing (Notice to Proceed) given to the Defaulting Shareholder advise that the Non-Defaulting Shareholder wishes to proceed with the acquisition of the Shares of the Defaulting Shareholder. (e) If a Non-Defaulting Shareholder gives a Notice to Proceed, the Defaulting Shareholder and the Non-Defaulting Shareholder will be deemed to have entered into a contract for the sale to the Non-Defaulting Shareholder of the Defaulting Shareholder's Shares.
6. Clause 11.6(f) sets out how completion is to occur. Clauses 11.7 and 11.8 set out how the shares are to be valued, which in substance is the greater of the amount determined by a valuer appointed in accordance with cl 11.8 and a multiple of 5 times the annual average EBIT of the JV Company over the preceding 3 years less the debt owed by the JV Company. The value of each share is that amount divided by the total number of issued shares.
7. Under cl 25.8 of the JVA, the governing law of the agreement is the law of Victoria.

The SSA

1. Mr Grant Wilson, the first plaintiff, who together with Ms Susan Hollis, the second plaintiff, was one of the founders of TravelEdge and a director of it, was introduced to Mr Andrew Burnes, the chief executive officer of Helloworld, in November 2018. Mr Wilson and Mr Burnes commenced negotiations for the sale of TravelEdge to Helloworld in April 2019. The agreement was entered into on 24 September 2019.
2. Under cl 2.1 of the SSA, it was a condition precedent to completion of the agreement that: 6. The Vendors providing evidence satisfactory to the Purchaser (acting reasonably) that the Vendors have taken all reasonable steps (subject to the proviso below) to obtain all necessary consents or approvals (including in relation to change in control) required under the STA JV Agreement to the Proposed Transaction on terms satisfactory to the Purchaser (acting reasonably) provided that the Purchaser has complied with its obligations under clause 5.10(b) in respect of the STA JV Agreement.
3. Clause 4.1 of the SSA provides: Amount The Purchase Price for the Shares is: (a) the Completion amount, subject to adjustment under clause 4.2; plus (b) the Deferred Amount; plus (c) the Earn-Out Amount (if any).
4. Clause 4.3 of the SSA provides: Payment of the Purchase Price (a) The Purchaser must pay the Purchase Price to the Vendors: (i) by paying on Completion, the Completion Amount in accordance with clause 6.3(a); (ii) by paying on the Deferred Payment Date, the Deferred Amount in accordance with clause 18.2; (iii) by paying on the Earn-Out Payment Date, the Earn-Out Amount in accordance with clause 18.2; and (iv) on the Determination Date, the Vendors and/or Purchaser (as applicable) must pay any amounts required to be paid under clause 4.2 (if any) as an adjustment to the Completion Amount. (b) On the Completion Date, the Purchaser must deposit $4,000,000 of the Deferred Amount into a separate and quarantined account held by the Purchaser and not use the funds for any reason other than as contemplated by this agreement. On a regular basis, the Purchaser must provide evidence satisfactory to the Vendors (acting reasonably) to confirm that the $4,000,000 of the Deferred Amount is being retained in a separate and quarantined account held by the Purchaser and not use the funds for any reason.
5. Clause 4.4 of the SSA provides: Calculation of Deferred Amount The Deferred Amount is equal to: (a) if STA Travel Holding AG consents in writing to the change in control of the Company triggered by Completion (STA Consent Event) and accordingly, the Company retains its shareholding in STA Travel Academic in accordance with the STA JV Agreement, Deferred Amount = $4,000,000; or (b) if STA Travel Holding AG does not consent in writing to change of control of the Company triggered by Completion and elects to purchase the STA JV Stake (STA Non-Consent Event), Deferred Amount = STA JV Stake Purchase Price + $4,000,000 - STA Earnings Amount "STA JV Stake Purchase Price" is defined to mean the price payable by STA if it exercises its rights to acquire the shares in the JV Company. "STA Earnings Amount" is defined to mean the sum of $2,970,000. That amount represented the parties' estimate of the amount payable by STA for TravelEdge's shares in the JV Company (that is, 5 times average earnings). The effect of the formula in cl 4.4(b) is that if that estimate proved to be correct, QBT would still be required to pay an additional $4,000,000. If TravelEdge received more than $2,970,000, QBT would, through an adjustment to the purchase price, have to account to the plaintiffs for that additional amount. If TravelEdge received less than the $2,970,000, the amount payable by QBT would reduce by a corresponding amount, again through an adjustment to the purchase price.
6. "Deferred Payment Date" is defined to mean: … the date 10 Business Days after the earlier of: (a) receipt of written consent from STA Travel Holding AG to the change in control of the Company triggered at Completion for the purposes of the STA JV Agreement; and (b) payment of the STA JV Stake Purchase Price by STA Travel Holding AG to the Company.
7. Clause 5.10 of the SSA relevantly provides: Change of control rights (a) As soon as practicable after the date of this agreement, the Purchaser and the Vendors will seek to identify any change of control or similar provisions in the Sublease, the contracts with the Key Customers, the contracts with Serko Limited and Concur Holdings (Netherlands) B.V., the Amadeus Contract, the Tramada Contract, the STA JV Agreement and the Material Licences which may be triggered by the Proposed Transaction. (b) In respect of those contractual arrangements outlined in clause 5.10(a), the parties agree as follows: (i) the Vendors and the Purchaser will as soon as practicable after the date of this agreement agree a reasonable proposed course of action and then jointly (and promptly) initiate contact with the relevant counterparties and request that they provide any consents required. Neither of the Purchaser nor any of its Representatives may contact any counter-parties without the Vendors' prior written consent (which consent must not to be unreasonably withheld or delayed); (ii) the Vendors must (within and to the extent of each Vendor's power) and the Purchaser must reasonably cooperate with, and provide support and reasonable assistance to, each other to obtain such consents as expeditiously as possible, including by promptly providing any information reasonably required by counterparties. The parties acknowledge that in the case of the STA JV, Amadeus and Tramada, the Purchaser also has an existing relationship with those counterparties and therefore "reasonable assistance" will be read in that context, meaning that a greater degree of support and involvement by the Purchaser must be provided in order to obtain the consents (if deemed required by the Vendors); and (iii) … (c) …
8. Clause 18.2(b) of the SSA relevantly provides "If on the Deferred Payment Date … there are no Unresolved Claims, the Purchaser must pay the Deferred Amount to the Vendors in their Respective Proportions …". It is common ground that at no relevant time was there an Unresolved Claim.

Events immediately following signing of the SSA

1. On the day the SSA was signed, Ms Kim Wethmar, the CEO of TravelEdge, at the request of Mr Wilson, notified Ms Monika Rieker, the country manager of STA, of the change in control resulting from the SSA. Ms Wethmar's email did not make it clear that TravelEdge was seeking STA's consent to the Change of Control. Consequently, on 28 September 2019, Mr Wilson, at the suggestion of Minter Ellison, QBT's solicitors, sent an email to Ms Rieker making it clear that TravelEdge sought that consent.
2. By an amending agreement entered into on 30 September 2019, the parties agreed relevantly that condition 6 of the conditions precedent had been satisfied. They completed the agreement the following day. On the same day, Mr Wilson resigned as a director of TravelEdge.
3. It appears that neither the plaintiffs nor QBT complied with their obligations under cl 5.10 of the SSA. They did not agree or attempt to agree a course of action for obtaining consent or make a joint approach to STA. Instead, following completion, Mr Wilson sent a follow up email to Ms Rieker on 7 October 2019 asking about consent. Mr Wilson asked Ms Wethmar to send a further follow up email on 14 October 2019, which she did. It appears that Ms Rieker was preoccupied at that time with an office move. Mr Wilson says that following his resignation as a director of TravelEdge he no longer thought it was appropriate that he contact STA directly. Instead, he asked his solicitors, KPMG Law, to follow up the question of consent with Minter Ellison, QBT's lawyers.

Negotiations between Mr Burnes and Mr Urhammer

1. On 16 October 2019, Mr Burnes, the CEO of Helloworld, sent an email to Mr Casper Urhammer, who had just been appointed the CEO of DK Travel Group, the parent entity of STA, suggesting that they have a call to discuss the TravelEdge business. That call occurred on 21 October 2019. There is no evidence that Mr Burnes raised the question of consent to the Change of Control during the call. However, during the conversation the possibility of Helloworld acquiring the remaining 60 percent of the JV Company was raised and from then on there were negotiations between Mr Burnes and Mr Urhammer concerning that possibility. The principal issue between them was price. The negotiations on that issue were complicated because there were differences of opinion on the true financial position of the JV Company. During the discussions, the possibility of STA acquiring QBT's 40 percent interest in the JV Company also came up, although Mr Urhammer indicated that that was not his preference.
2. The negotiations between Mr Burnes and Mr Urhammer continued until about mid‑March 2020, when they were put on hold because of COVID-19. At that time, Mr Urhammer sent Mr Burnes an email setting out the steps he thought needed to be taken to "get the JV operational". The list was in the following terms:

Action Who

1 Sign a Letter of Intent to operationalise the JV incl. negotiation and agreement of the services agreement, transfer of employees, the trading name and commercial contracts, agreement on governance going forward - We would recommend to do so as chances are that we will get distracted from completing everything that's needed to fully set up the JV in these uncertain times. That said, we aim to have the JV fully operational as soon as possible TE, STA 2 Update and sign the services agreement, which outlines who does what in the JV - The draft document we discussed two years ago has now expired and costs would need to be reviewed as to whether they reflect actual effort involved TE, STA 3 Sign employee transfer deed and transfer staff from STA (6 FTE) and Helloworld (23 FTE) into the JV - Pending agreement on transfer of employee rights accumulated due to duration of services TE, STA 4 Transfer registered trading name "Business Travel by STA" into the JV TE 5 Transfer commercial contracts into the JV / amend contract to JV trading entity - Today, some contracts sit with the JV, STA and TE, we need to transfer them all to the JV ABN TE, STA 6 Agree on governance of the JV such as frequency of Board meetings going forward. Update the directors on the JV TE, STA 7 Board to review and formally sign-off profit share for 2019 and budget 2020 for the JV TE, STA 8 TE to sign 2019 loan agreement and both to agree on plan beyond June 2020 TE, STA 9 Sign confirmation letter regarding 2019 financials requested by EY and support STA audit review of the 2019 financials of the JV TE 10 Oversight on the JV bank account reinstated for STA TE

1. Mr Burnes replied on 21 March 2020 saying "[w]e are not in a position to action any of this at present". Mr Burnes says, with some justification, that from about mid‑March 2020 he was preoccupied with the fall-out for the travel industry of the pandemic.
2. Mr Burnes concedes that during the negotiations with Mr Urhammer, he did not specifically raise the question of STA's consent to the Change of Control. He says, and I accept, that he expected that that consent would form part of the transaction by which Helloworld acquired the remaining 60 percent of the shares in the JV Company.
3. The next substantive conversation between Mr Burnes and Mr Urhammer occurred on 6 July 2020, when Mr Urhammer asked Mr Burnes whether Helloworld was interested in buying the entire STA travel business. Mr Burnes replied that he was not.
4. On 20 August 2020, STA Travel Holding filed for insolvency in Switzerland. The following day, the directors of the JV Company resolved to place the company into voluntary administration.

Mr Wilson's attempts to obtain consent to the change in control

1. Between 7 October 2019 and May 2020, neither Mr Wilson nor, so far as the evidence goes, did any of the other vendors approach STA directly about obtaining its consent to the Change of Control. On 24 October 2019, KPMG Law, at Mr Wilson's request, asked Minter Ellison for an update relevantly on "obtaining the … STA change of control consents (and expected timing)".
2. There was an exchange of emails in which Minter Ellison originally suggested that Mr Wilson obtain an update directly from Mr Nick Sutherland, the group manager of QBT and, in response to further queries, said in an email dated 5 November 2019 that they were "instructed that discussions are ongoing with STA". It appears from internal Helloworld communications that Mr Burnes did not want to reveal to Mr Wilson that he was having discussions with Mr Urhammer about acquiring STA's 60 percent interest in the JV Company whilst negotiations were ongoing.
3. KPMG Law sent a further follow up email to Minter Ellison on 26 November 2019. Minter Ellison replied saying that they were instructed that "Andrew [Mr Burnes] is continuing discussions with STA but I don't have any further information on the status at this time". When pressed for "a bit more granularity as to what is holding up STA providing its consent", Minter Ellison said that if Mr Wilson would like further information he would "need to call Andrew Burnes directly" and that Minter Ellison "is not engaged on this post-completion workstream and [Helloworld] is managing it internally".
4. On 29 November 2019, Mr Wilson sent Mr Burnes an email stating: Minters asked that we come to you for an update on the progress with getting consent from STA for change of ownership re deferred payment. As I understand under the JV, STA either need to consent or start process to acquire TravelEdge 40%.
5. Mr Burnes replied on 2 December 2019 saying "I am in discussions with the new MD of STA but it has not been resolved as yet". Mr Wilson then sought additional information from Mr Michael Burnett, the then CFO of Helloworld. That approach appears to have prompted Mr Burnes to call Mr Wilson on 19 December 2019 to tell him that he was having discussions with STA about a proposal to buy its interest in the JV Company. Following that conversation, Mr Wilson sent Mr Thomas Eade, a partner with KPMG, an email which relevantly said: Received call from Burnes today. He covered at length his proposal to buy out STA from JV. … Said he would up his offer. … Once I get his email to STA I would like to talk through merita [sic] of pushing back a bit harder that he should be seeking STA consent BEFORE bidding and that bidding is not consistent with getting consent ... Notwithstanding that email, it appears that, until the beginning of May 2020, Mr Wilson was largely content to wait to see what the outcome of the negotiations for the acquisition by Helloworld of the remaining 60 percent of the JV Company were.
6. On 1 May 2020, Mr Wilson through an exchange of text messages arranged to speak to Ms Rieker on 4 May 2020. It is not entirely clear what happened during that conversation, except that it is apparent from a subsequent text message that Ms Rieker agreed to "[reach] out to global" in relation to the question of consent and to get back to Mr Wilson.
7. On the same day Mr Paul Wentworth of KPMG Law sent Minter Ellison an email in which he said: We refer to previous correspondence regarding the STA consent under the Share Sale Agreement relating to TravelEdge dated 24 September 2019. You advised that our client should make contact directly with Helloworld, which was done before Christmas and our client was advised that discussions with STA were 'ongoing'. Subsequently, neither our client nor Andrew McConnell at KPMG has been able to obtain satisfactory responses to their enquiries of Helloworld regarding progress with obtaining consent. When our client agreed, for the purposes of clause 5.10(b), that Helloworld would take responsibility for following up with STA to seek and obtain the consent, it was understood that it would do so as 'expeditiously as possible' and our client has relied on Helloworld taking those steps with a view to seeking and obtaining consent. That was in early October 2019. It is now May 2020. Accordingly, we are instructed to ask that Helloworld promptly: (a) confirm that it has sought the consent of STA required under the STA JV Agreement to the change in control of TravelEdge; (b) advise STA's response; (c) provide copies of all correspondence between Helloworld and STA regarding the request for consent; (d) explain the reason for the delay. Despite what is said in this email, there is no evidence that KPMG's client agreed that Helloworld would take responsibility for following up with STA to seek and obtain the consent.
8. Mr Burnes replied to that email on 7 May 2020 in which he said: 1. We sought the consent and it has not been forthcoming. 3. We have no intention of sharing our correspondence on this matter with you. 4. Re the reason for the delay, you may have noticed a small virus has impacted the world recently however you might like to ask STA about that as well.
9. Mr Wilson sent a follow up email to Ms Rieker on 14 May 2020. Ms Rieker replied that she had not had much luck and suggested that Mr Wilson contact Mr Urhammer directly, which Mr Wilson did. They arranged to have a Zoom meeting on 26 May 2020. During that meeting, Mr Urhammer suggested that STA was waiting for QBT to complete the list of things that Mr Urhammer had identified in March 2020 "to get the JV operational".
10. Mr Wilson had a further conversation with Mr Urhammer on 22 June 2020 during which he provided some basic information to Mr Urhammer in relation to the JV Company (such as the composition of the board). They had a further conversation on 10 August 2020. The day after that conversation, Mr Wilson sent Mr Urhammer a draft letter for STA to send to TravelEdge which relevantly said: We hereby consent to the change in control of TravelEdge Pty Limited which was triggered by completion of the sale and purchase of the shares in TravelEdge Pty Limited to QBT Pty Limited (the Purchaser) subject only to the following matters being promptly attended to by TravelEdge Pty Limited: 1. TravelEdge paying to STA Travel Holding AG its share of the profits of STA Travel Academic in respect of the 2019 financial year being from 1 January 2019 to 31 December 2019 after allowing for any losses in the 2020 financial year; and 2. Agreement by TravelEdge to enter into a new Services Agreement between STA Travel Academic and TravelEdge in respect of the period from 1 January 2020 due to the fact that the initial services agreement expired on 31 December 2019.
11. The email enclosing the draft letter observed: You have not been able to get movement on the key issues of your profit share from 2019 or on the development of an updated Services Agreement. By providing us with the attached letter, we will be able to pursue Helloworld to do these things and thereby get the ball rolling for you.
12. Mr Urhammer replied the following day saying that he would have a position the following week. In fact, on 19 August 2020, Mr Urhammer announced that STA was "filing for insolvency" and that he would be "handing over to an external administrator in the coming days".
13. The day after that announcement there was an exchange of emails between Mr Wilson and Mr Urhammer in which Mr Wilson still indicated that he required STA's consent to the Change of Control. Mr Urhammer replied on 21 August 2020 saying that he was no longer able to give it. On the same day, the JV Company was placed into voluntary administration.
14. On 31 August 2020, Mr Wilson asked Mr Urhammer to introduce him to the Swiss administrator, but was informed by Mr Urhammer that the administrator, who was a State official, did not wish to share contacts.
15. On 16 September 2020, TravelEdge served a notice of default on STA under the JVA.
16. By a deed of company arrangement (DOCA) dated 18 December 2020, made between the JV Company, the administrators and TravelEdge, TravelEdge agreed to make an initial contribution of $318,000 to the amount available for distribution to creditors of the JV Company. That payment was conditional on STA agreeing to transfer its shares in the JV Company to TravelEdge. The relevant transfer was signed by STA on 13 January 2021, with the result that TravelEdge obtained 100 percent of the shares in the JV Company.

A preliminary issue

1. Prior to the commencement of the hearing, the plaintiffs accepted that STA had not given its consent to the Change of Control of TravelEdge. Their primary position was that, on the proper construction of cl 4.4 of the SSA, an amount of $4 million was payable to them because TravelEdge retained its shareholding in the JV Company, or a term was to be implied in the SSA which had a similar effect. It advanced two alternative cases. One was that if consent from STA to the Change of Control of TravelEdge was necessary to trigger a right to the payment of the Deferred Amount, then QBT had breached its obligations under cl 5.10(b)(ii) of the SSA to obtain the consent of STA as expeditiously as possible. The other was that it had engaged in unconscionable conduct within the meaning of s 12CB(1) of the ASIC Act or s 21(1) of the ACL.
2. On the second day of the hearing, following questions raised by the Court on the first day, the plaintiffs sought leave to file a further amended commercial list statement alleging that the share transfer signed by STA constituted written consent to the Change of Control for the purposes of the SSA. QBT opposed that amendment. I reserved the question whether the amendment should be permitted to this judgment. I return to that question below.

Relevant legal principles

1. The basic principles relating to the interpretation of a commercial contract were stated in these terms by French CJ, Hayne, Crennan and Kiefel JJ in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]: The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". (footnotes omitted)
2. The contract must be construed as a whole. As Gibbs J explained in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109: It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. See also Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510 per Mason, Wilson, Brennan, Deane and Dawson JJ; Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16] per Gleeson CJ, McHugh, Gummow and Kirby JJ; HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 at [134] per Leeming JA; Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370 at [89] per Leeming JA.
3. Where the provisions are apparently inconsistent, courts have developed various techniques for resolving the inconsistency, which may include reading one provision down or as subject to another: see Re Media Entertainment and Arts Alliance; ex parte Hoyts Corporation Pty Ltd (1993) 178 CLR 379 at 386 per Mason CJ, Brennan, Dawson, Toohey, Gaudron and McHugh JJ. In some cases, it may be necessary to ignore words in a particular provision or supply or correct particular words: see, for example, Fitzgerald v Masters (1956) 95 CLR 420 at 426 per Dixon CJ and Fullager J; Taylor v Dexta Corporation Limited [2006] NSWCA 310. In each case, as Beazley JA explained in Taylor at [1], quoting Chitty on Contract (29th ed), vol 1 at para 12-078, the object of the court is to "carry into effect the real intention of the parties as gathered from the instrument as a whole".

The parties' competing contentions

1. The plaintiffs contend that on the correct construction of the SSA, it requires QBT to pay the Deferred Amount and contemplates only two possibilities. The first is that STA does not exercise its rights of pre-emption, in which case, TravelEdge retains its 40 percent interest in the JV Company and QBT must pay the plaintiffs $4,000,000. The second is that STA exercises its rights of pre‑emption and acquires TravelEdge's shares in the JV Company for the price calculated in accordance with the JVA, in which case QBT must pay the amount calculated in accordance with cl 4.4(b). Although the clause does not expressly say so, presumably on this interpretation if the Deferred Amount is less than $4,000,000, QBT is entitled to retain the balance for itself. A term to that effect could readily be implied into the contract. The parties could not have intended that the balance would be held in the "quarantined account" in perpetuity once the plaintiffs had been paid the amount due to them under the SSA.
2. QBT, on the other hand, contends that the language of the contract is clear. Clause 4.4(a) provides for the payment of $4 million if written consent is given. Clause 4.4(b) provides for the payment of the amount calculated in accordance with that clause if STA acquires TravelEdge's shares in the JV Company. The contract is silent in all other cases. In those, the purpose for which the quarantined account was established in accordance with cl 4.3 will have failed, with the result that the money held in that account should be returned to QBT.

The correct construction of the JV Agreement

1. Before addressing the parties' competing contentions directly, it is desirable to say something about the correct construction of the JVA, which forms part of the context in which the SSA is to be interpreted.
2. Under the terms of the JVA, following a Change of Control, TravelEdge is entitled to retain its shares in the JV Company unless and until STA exercises its rights under cl 11.6(a). Those rights are expressed to continue until the Event of Default is rectified. One way in which the Event of Default may be "rectified" is if the Non‑Defaulting Shareholder consents to the Change of Control in writing (in which case the Change of Control ceases to be an Event of Default).
3. Clause 11.6 of the JVA should not be interpreted as conferring rights to serve multiple Default Option Notices. Rather, it confers on the Non‑Defaulting Shareholder a right to serve one such notice and to exercise the rights arising from that notice. Once the notice is served, the right conferred by cl 11.6 is spent and, unless the shares are acquired as a consequence of the exercise of the rights arising from service of that notice, the right to acquire the shares is lost.

The correct construction of the SSA

1. In my opinion, the interpretation of the SSA advanced by the plaintiffs is the preferable one. There are several reasons for that conclusion.
2. First, although taken in isolation, the language of clause 4.4 appears to be clear, it is difficult to reconcile that language with other terms of the SSA.
3. The primary obligation to make payment under the SSA for the shares that were acquired is contained in cl 4.1, which states that the Purchase Price for the Shares is "the Completion Amount … plus … the Deferred Amount … plus … the Earn-Out Amount (if any)". It is noteworthy that the reference to "the Deferred Amount" is not qualified by the words "if any", which suggests that the parties intended that an amount in respect of the Deferred Amount would be paid, and that the only question was how much would be paid and when it would be paid. That conclusion is reinforced by the provisions of the contract dealing with those issues. Clause 4.3(b) requires the $4,000,000 to be paid into the quarantined account and states that the Purchaser must "not use the funds for any reason other than as contemplated by this agreement". The only use for the money contemplated by the agreement is payment of the Deferred Amount. Clause 4.3 relevantly states that the Purchaser (QBT) "must pay the Purchase Price … by paying on the Deferred Payment Date, the Deferred Amount in accordance with clause 18.2" (emphasis added). Clause 18.2 relevantly provides that if on the Deferred Payment Date there are no Unresolved Claims "the Purchaser must pay the Deferred Amount to the Vendors …" (emphasis added). These provisions strongly suggest that the parties intended that an amount would be paid in respect of the Deferred Amount. Understood in that way, they cannot be reconciled with the literal meaning of cl 4.4.
4. Second, the literal meaning of cl 4.4 advanced by QBT means that the SSA contains substantial gaps. It does not address what happens if TravelEdge retains its shareholding in the JV Company other than as a consequence of STA giving its written consent to the Change of Control. That could happen if STA, having served a Default Option Notice, elects not to purchase the shares. Similarly, it could happen if STA, although failing to give its consent in writing to the Change of Control, never serves a Default Option Notice. Those possibilities were not obviously unlikely at the time the SSA was entered into. Yet it is QBT's case that the SSA does not deal with them. The Court should not readily reach that conclusion.
5. Third, and related to the second point, the interpretation advanced by QBT produces commercially absurd results. Its case is that if neither of the requirements of cl 4.4 is satisfied, then the plaintiffs receive nothing by way of the Deferred Amount and the $4,000,000 held in the quarantined account can be retained by QBT and used in any way it chooses. But it makes no commercial sense for the plaintiffs to receive nothing if TravelEdge retains its shares in the JV Company other than as a consequence of written consent from STA, when the obvious purpose of the Deferred Amount was to compensate the plaintiffs for the value of the shares TravelEdge held in the JV Company. The parties are to be taken to have agreed that the value of those shares was $4,000,000, so that if they were retained, the plaintiffs would be paid that amount and if they were lost the plaintiffs would be paid a different amount calculated by reference to the expected price that STA would have to pay for those shares. Moreover, it is difficult to see how QBT could become entitled to use the $4,000,000, when the SSA provides no mechanism for its return and specifically states that it is not to be used for any purpose other than one contemplated by the agreement.
6. QBT seeks to answer the first of these points by saying that the value of TravelEdge's interest in the JV Company would be different depending on whether STA gave its consent to the Change of Control, since, if the shares were retained without consent, there was a risk that the joint venture would operate less harmoniously, which would affect the value of the shares. However, why that should be so is unclear, particularly since the SSA requires written consent. STA may have been content with the Change of Control even if it did not give written consent to it. In any event, the parties could not possibly have contemplated that the shares would have no value unless written consent was given.
7. QBT seeks to answer the second point by saying that the position is analogous to the decision in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, where the House of Lords held that an advance by a bank to a company in serious financial difficulties for a specific purpose (to pay a dividend) was held on trust for the bank when the purpose for which the advance was made could no longer be achieved because the company went into liquidation. But in that case, the money was a loan and it was clear that it had to be repaid. The only question was whether in the circumstances it was impressed with a trust. The present case is not analogous. The $4,000,000 was not a loan. It could only be dealt with "as contemplated by [the SSA]". But the SSA makes no provision for the return of the money to QBT.
8. It is true that the same point can be made in relation to any balance remaining if STA elected to acquire the shares in the JV Company and that, as a result, less than $4,000,000 was payable under cl 4.4(b) of the SSA. But it is one thing to imply a term in the contract to the effect that the balance of the $4,000,000 is to be returned to QBT once the plaintiffs have been paid the amount due under the agreement. It is another thing to imply a term in the agreement that the whole of the money is to be returned to QBT if TravelEdge retains its shares in the JV Company without the written consent of STA.
9. Fourth, cl 4.4 is not as clear as on its face it might appear to be. The clause appears to provide for a binary outcome. That is true of the first conjunct of each antecedent. Either STA gives its consent in writing (para (a)) or it does not (para (b)). In each alternative, the Deferred Amount is the amount specified. The same is true of the second conjunct of each paragraph. Either TravelEdge retains its shareholding in the JV Company (para (a)) or it does not because the shares are acquired by STA (para (b)), again with the consequence that the Deferred Amount is the amount specified. The difficulties arise because the drafter of the clause appears to have treated the two conjuncts of each paragraph as referring to the same set of circumstances when they do not. That error is repeated or exacerbated by the definition of "Deferred Payment Date", which states that that date is the date on which the earlier of two events occur. The difficulty is that the first of the two events corresponds to the first conjunct of the antecedent of cl 4.4(a) (written consent being given) whereas the latter date corresponds to the second conjunct of the antecedent of cl 4.4(b) (STA paying the purchase price for the JV Company shares), with the result that neither event may occur.
10. Once it is accepted, as I think it should be, that cl 4.4 provides for a binary outcome, effect cannot be given to the clause and the definition of "Deferred Payment Date" without doing some violence to the language. That is best achieved by ignoring the first conjunct in each of paras (a) and (b) of clause 4.4 and treating the reference to the events in the definition of "Deferred Payment Date" as a reference respectively to the two events identified in cl 4.4. That interpretation gives paramountcy to the payment obligation in clause 4.1, it avoids the commercial absurdity I have referred to and it is consistent with the context in which the clause operates. Clause 4.4 was plainly intended to provide for an adjustment to the Purchase Price depending on whether TravelEdge retained its shares in the JV Company or not. In that context, what was important to the parties to the SSA was whether STA exercised its right to acquire the shares, not whether it gave its consent. Accepting that, the first conjunct of the antecedent in each of the conditionals contained in cl 4.4 appears to be largely unnecessary. To give paramountcy to those clauses would be to permit the tail to wag the dog.
11. It is true that this interpretation does not overcome all the difficulties with the drafting of cl 4.4. If STA never gives its consent in writing and never exercises its pre-emptive rights, it may not be possible to say whether TravelEdge retains its shareholding in the JV Company or not, with the result that the $4,000,000 would have to be held in the quarantined account indefinitely. But that problem arises on QBT's interpretation of the SSA as well. Moreover, other events may occur which make it clear that TravelEdge is entitled to retain its shareholding even if it is accepted that written consent is not given. Assuming that the share transfer was not notice of consent in writing, the facts of this case provide an example. Other examples may include conduct by STA which gives rise to an estoppel or election in relation to its right to serve a Default Option Notice under the JV Agreement. Whatever the position, these difficulties do not provide a reason for preferring the interpretation advanced by QBT.

Should the amendments be allowed?

1. Having regard to the conclusions I have reached, it is strictly unnecessary for me to deal with the other issues raised in the case. However, I should say something about them in the event that I am wrong in relation to the correct construction of the JVA.
2. In my opinion, leave should be given to the plaintiffs to file their amended list statement. QBT objected to leave being given because it claimed that it would be prejudiced by the amendments. That was so for two broad reasons. First, it submitted that it has lost the opportunity to investigate evidentiary matters relevant to that claim and to lead evidence on those matters if it thought it was appropriate to do so. Second, it submitted that it has lost the opportunity to investigate positive defences that it might have raised to the claim and plead those defences.
3. It is common ground that the amendments should not be permitted if QBT would be prejudiced in the way that it alleges. However, I am not satisfied that it would be.
4. As to the first of QBT's contentions, it submits that: 1. The claim sought to be raised by the amendment raises the question whether the signed share transfer was an effective communication of STA's consent in writing; 2. That question turns on whether a reasonable recipient of the share transfer would have understood it as a communication of STA's consent to the change in control having regard to the context in which it was provided: see Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 at [148]-[151] per McColl JA with whom Ipp and Tobias JJA agreed; 3. The relevant context included what it knew about the knowledge of STA's Swiss administrator concerning the requirement of consent; 4. it has not had an opportunity to investigate that matter.
5. Accepting for the moment that (b) correctly characterises the test that should be applied, I cannot see how QBT's knowledge of what the Swiss administrator knew about the requirement of consent could affect the application of that test to the circumstances of this case. The answer to the question whether the share transfer amounted to the communication of consent depends on what a reasonable person would understand from the share transfer and the circumstances in which it was signed. What the Swiss administrator knew or intended in relation to the requirement of consent is irrelevant to that objective question. Consequently, what QBT knew about the Swiss administrator's knowledge or intention is also irrelevant.
6. QBT identifies three positive "defences" it might have investigated had the amendments been made earlier. The first is that, on the correct construction of cl 4.4 of the SSA, the consent contemplated by that clause could only be given while the JV Company remained in the control of its shareholders or at least was not in external administration. That is said to be a plausible interpretation because the parties could not have intended that QBT would pay $4,000,000 for shares in a company in administration. Relevant to that question was the parties' assessment of the value of the JV Company under certain scenarios. Second, it submits that it has lost the opportunity to investigate a claim for rectification of the SSA so that the $4,000,000 was not payable if the JV Company was placed in external administration. Third, it has lost the opportunity to investigate a case that the plaintiffs would engage in unconscionable conduct if they were to rely on the transfer form as the communication in writing of consent.
7. In my opinion, each of these contentions is purely speculative and does not provide a reason for refusing leave to amend. The first two would equally have been available as defences to the claim as pleaded prior to the amendment. It is to be expected that if they had any merit, they would already have been investigated by QBT. The first defence raises a question of construction which QBT is able to advance without any additional evidence. It is not plausible that, at the time the parties were negotiating the terms of the SSA, they contemplated or would have considered the possibility that the JV Company might be placed into external administration and agreed to include a clause (that did not find its way into the SSA) to deal with that possibility. As the plaintiffs point out, the evidence before the Court already includes extensive evidence of the negotiations between the parties. There is not a hint in that evidence that the parties considered the question what would happen if STA or the JV Company were placed in external administration. Consequently, it is purely speculative that further investigations would have turned up evidence relevant to a claim for rectification.
8. As to the third possible defence, that defence appears to be that the strict enforcement of contractual rights in unforeseen circumstances may amount to unconscionable conduct. How that could be so is unclear. To take s 12CB(1) of the ASIC Act as an example (the same analysis applies to s 20(1) of the ACL), that section provides that "a person must not, in trade or commerce, in connection with … the supply or possible supply of financial services to a person … engage in conduct that is, in all the circumstances, unconscionable". Section 12CB(3) provides that in determining whether there has been a contravention of s 12CB(1), the court "must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention". The financial services were supplied at the time that the SSA was entered into or settled. What seems to be suggested is that it may have been unconscionable for the plaintiffs to insist on the payment of the Deferred Amount in circumstances where the company in respect of which that payment was to be made was in external administration. However, the fact that the JV Company would be in external administration at the time the payment became due was not something that was reasonably foreseeable at the time the SSA was entered into or settled. For that reason alone, there is no basis for thinking that QBT would have been able to advance a positive case based on unconscionable conduct.
9. QBT also submits that the plaintiffs have not provided an adequate explanation for the delay in seeking leave to make the amendments. But I do not think that the absence of an explanation provides a sufficient reason for refusing the amendment if QBT suffers no real prejudice if the amendment is allowed. As the plaintiffs frankly conceded, the amendment was only made when the issue was raised by the Court.

Did the share transfer amount to consent in writing to the change in control?

1. I have concluded that in the particular circumstances of this case, the signed share transfer did amount to consent in writing to the Change of Control.
2. The question of what amounts to a notice given in accordance with a contract depends on the proper construction of the relevant contract. In the present case, that depends on the proper construction of the SSA which, in turn, picks up the wording of the JVA. The requirement of consent in writing to the Change of Control of TravelEdge was included in the SSA because the amount of the Deferred Payment could not be ascertained until it was known whether STA intended to exercise its rights under the JVA, which in turn depended on whether the Event of Default triggering STA's rights under that agreement had been "rectified" by the giving of consent in writing. Consequently, the issue must be whether the share transfer signed by STA had that effect.
3. Normally, a requirement to give notice under a contract (or under legislation) is a precondition to the exercise of a right given to the notice-giver by the contract (or legislation). In cases of that type, courts have held that whether the notice is effective or not depends on whether a reasonable person in the position of the recipient would have understood the document as giving notice for the purpose triggering that right. The decision in Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 is an example. There, the question was whether a notice complied with the requirements for a notice of default under a building contract.
4. The issues raised by the question of consent in this case are somewhat different. The SSA does not specify any form in which consent must be given, other than that it must be in writing. Consent is the mechanism by which the party not in default abandons any rights it had arising from the Change of Control. What amounts to consent must be understood in that context. Although the question of consent is an objective one, there is no reason to judge it from the perspective of the party in default. Indeed, the JVA does not expressly provide that the consent must be communicated to the party in default, although as a practical matter it is to be expected that it would be. Instead, the focus is on the conduct of the party not in default and whether that conduct objectively amounts to consent (in writing) to the Change of Control.
5. In my opinion, STA consented to the Change of Control of TravelEdge from the plaintiffs to Helloworld when, at a time when TravelEdge was controlled by Helloworld, it (STA) signed a transfer transferring its own shares in the JV Company to that company. By transferring its own shares to the Helloworld-controlled TravelEdge, STA manifested an intention to abandon any rights it had arising from the Change of Control and must be taken to have accepted that Helloworld would be entitled to control not only the shares originally held by TravelEdge in the JV Company, but all the shares in the JV Company. That was sufficient to amount to consent to the Change of Control, even though the consent was not express.
6. I do not think the conclusion of the previous paragraph is altered by the fact that STA and the JV Company were both in external administration at the time the transfer took place. There is no question that the Swiss insolvency administrator had power to transfer the shares and that his conduct in that respect was the conduct of STA. The transfer was executed in the name of STA by the administrator. It did not matter what the administrator knew or intended in relation to the question of consent, since the question is an objective one to be determined in accordance with the governing law of the JVA, which is the law of Victoria. As I have explained, the effect of the transfer was to abandon any rights in respect of the Change of Control and to accept control by Helloworld. That was sufficient for consent.
7. Although the JV Company was controlled by the administrators, the shares in the JV Company continued to be controlled by TravelEdge and STA. It was the change in the (indirect) control of the shares held by TravelEdge that gave rise to the pre-emptive right. It was that right that was abandoned by STA through its administrator by transferring its shares in the JV Company to TravelEdge. None of that was affected by the fact that the JV Company itself was in external administration. The fact that the JV Company was in external administration no doubt greatly affected the value of the shares in it. But TravelEdge still retained those shares and STA abandoned any rights it had to acquire them.

Breach of cl 5.10(b) of the SSA

1. I do not accept that QBT breached its obligations under cl 5.10(b) of the SSA. That clause required the parties to "agree a reasonable proposed course of action and then jointly (and promptly) initiate contact with [STA]". Clause 5.10(b)(ii) requires them to co-operate in obtaining consent. Instead, Mr Wilson arranged for Ms Rieker, a director of the JV Company to ask for consent, and then left it to QBT to obtain consent. There was nothing in the SSA to prevent QBT (or Helloworld) from negotiating to acquire STA's shares in the JV Company, and once those negotiations commenced it was logical for the question of consent to be wrapped up with the acquisition of the shares. Those negotiations took longer than expected. Eventually Mr Wilson was told about those negotiations. It appears that he was content to leave them to continue. Events were then overtaken by the pandemic and Mr Wilson again attempted to obtain consent himself.
2. Two points follow from this short outline of the facts. First, it is not clear how QBT could be said to have breached the terms of cl 5.10(b) of the SSA. That clause required the parties to formulate a proposed course of action to be implemented jointly and required them to co-operate in giving effect to that course of action. But neither party asked the other to do that. It is doubtful that either party breached that obligation at least until the other had made a request of it to do what the clause required. But neither party ever made such a request. The plaintiffs cannot complain that QBT failed to formulate a proposed course of action with them when equally they failed to do the same thing. Nor can it be said that QBT failed to co-operate with the plaintiffs in pursuing a jointly formulated course of action when none existed.
3. Second, assuming that QBT was in breach of the clause, I am not satisfied that the plaintiffs suffered any loss as a consequence of that breach. The plaintiffs appear to contend that had QBT specifically asked for consent, STA would have given it. But I do not accept that contention. Once Helloworld and STA had embarked on negotiations for Helloworld to buy STA out of the JV Company, it was natural for STA to wait to see what the outcome of those negotiations would be before determining whether to give its consent. It is unclear whether STA or Helloworld first raised the question of the latter buying out the former. But even if it was Helloworld, I cannot see how the mere raising of that issue was a breach of cl 5.10(b).

Unconscionable conduct

1. Conduct is unconscionable for the purposes of the statutory provisions if it is "so far outside societal norms of acceptable commercial behaviour as to warrant condemnation as conduct that is offensive to conscience": see Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 at [92] per Gageler J. It often involves one party taking unconscientious advantage of some characteristic or quality of another that prevents that person from being able effectively to look after his or her own interests: see Kobelt at [14]ff per Kiefel CJ and Bell J; see also at [115] per Keane J.
2. The pleading of the case based on unconscionable conduct is lengthy. In essence, though, the plaintiffs appear to make two complaints. First, they claim that QBT engaged in unconscionable conduct by refusing to pay the $4,000,000 in circumstances where TravelEdge retained the shares in the JV Company. Second, they claim that QBT engaged in unconscionable conduct because of its decision to negotiate to acquire the remaining 60 percent of the shares in the JV Company rather than to obtain STA's consent to the Change of Control and because it misled the plaintiffs about what it was doing.
3. There is a question whether the relevant conduct was in connection with the supply of goods or services (if the ACL applies) or financial services (if the ASIC Act applies). The relevant conduct appears to be more appropriately described as conduct in connection with the exercise of contractual obligations. The fact that those contractual obligations arise under a contract for the supply of financial services does not mean that that conduct is necessarily conduct in connection with that supply.
4. It is not, however, necessary to explore that question any further. Even accepting that the relevant conduct was conduct in connection with the supply of goods or services or financial services, I do not accept that QBT's conduct was unconscionable. Its conduct must be considered against the terms of the SSA. That agreement was negotiated between sophisticated parties who each had the benefit of extensive legal advice. If the true position is that the agreement, on its correct construction, does not provide for the payment of the Deferred Payment in the events that have happened, it is difficult to see why it would be unconscionable for QBT to refuse to pay that amount.
5. Nor do I think it was unconscionable for QBT to have acted in the way that it did in connection with its negotiations with STA. There is a suggestion in the plaintiffs' case that it was unconscionable for QBT to seek to acquire the balance of the shares before asking for consent. But it is unclear why that is the case, particularly when the plaintiffs could have sought consent themselves. Moreover, QBT might reasonably have thought that the best way of obtaining consent was to conclude the negotiations to acquire the shares. The fact that the negotiations were overtaken by events that could not have been anticipated at the time negotiations to acquire the balance of the shares commenced does not make QBT's conduct unconscionable.
6. For a period of time, Helloworld and QBT did not reveal to the plaintiffs that the reason the obtaining of consent was taking longer than expected was because it was wrapped up with the negotiations to acquire the balance of the shares. On 7 May 2020, Mr Burnes said that in response to an email from KPMG Law that "We sought the consent and it has not been forthcoming", which was a misleading statement. But Mr Wilson was aware from December 2019 of the reason for delay and chose to do nothing about it until May 2020. Although Mr Burnes' statement may have been misleading, it is apparent that Mr Wilson did not rely on it because he approached STA himself to obtain consent at that time. The true position was that QBT adopted an approach to the obtaining of consent that suited its own commercial purpose. It was also open to the plaintiffs to seek consent themselves. Even when Mr Wilson knew the strategy that QBT was adopting he chose to do nothing until it became clear that that strategy was no longer viable because of the pandemic. None of this could be described as conduct falling short of societal norms for acceptable commercial behaviour.

Interest

1. The plaintiffs are entitled to judgment in their favour in the sum of $4,000,000. It is common ground that they are entitled to interest on that amount in accordance with s 100(1) of the Civil Procedure Act 2005 (NSW). That section provides: (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), 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. The question is from when that interest should run.
2. There is no reason why the plaintiffs should not be entitled to interest from the date on which the relevant cause of action arose, which is the date on which the plaintiffs were entitled to be paid the $4,000,000 in accordance with the SSA.
3. In supplementary written submissions provided after the conclusion of the hearing, QBT advanced various reasons why interest should only run from a later date based on the fact that it could not have appreciated until after proceedings were served that the plaintiffs might succeed on their construction argument or until after the amendment was made that it might succeed on an argument that STA gave its consent to the transfer when it signed the transfer. I do not accept those submissions. The question from when interest runs should not depend on when the defendant appreciated or ought reasonably to have appreciated that the money was payable. The purpose of an award of interest is to compensate a plaintiff for being out of pocket for the amount it is entitled to recover. Generally, interest should run from the date that gives effect to that principle. An exception may exist where the plaintiff has caused the delay in payment: see Spotlight Pty Ltd v Fatseas Investments Pty Ltd [2020] NSWCA 132 at [103]-[104] per Gleeson JA with whom White JA and Emmett AJA agreed. In this case, the plaintiffs have been out of pocket for the $4,000,000 from the time it was payable in accordance with the SSA. They did not demand payment until 10 January 2022 and did not commence proceedings until 7 February 2022. But the mere fact that they did not demand payment or commence proceedings immediately does not mean that they caused or contributed to the delay. On the findings I have made, the delay was caused because QBT adopted an incorrect interpretation of the SSA and what was required to give consent under the JVA. It was obliged to and could have made the payment but did not do so.
4. The plaintiffs were entitled to be paid 10 Business Days after the date on which STA was no longer able to exercise its rights of pre-emption. STA ceased to be able to exercise its rights of pre-emption either on the date it gave its consent to the transfer (13 January 2021) or on the date it lost its rights of pre-emption (with the consequence that TravelEdge retained its shareholding in the JV Company). That latter date was the date that STA's shares in the JV Company were transferred to TravelEdge, which was 22 January 2021. There is little difference between the two dates. In circumstances where the plaintiffs' primary argument turned on the correct construction of the SSA and I have accepted that argument, it seems appropriate to use that date. Accordingly, the plaintiffs were entitled to be paid 10 Business Days after 22 January 2021, which was 8 February 2021. Interest should run from that date. On that basis, the plaintiffs are entitled to interest in the amount of $571,178.08. The total amount payable to the plaintiffs, therefore, is $4,571,178.08.

Orders

1. There is no apparent reason why the defendant should not pay the plaintiffs' costs.
2. Under the terms of the SSA, the plaintiffs are entitled to be paid their "Respective Proportions" of the Deferred Amount. Those proportions are: 1. First plaintiff, 50.28570% 2. Second plaintiff, 37.34125% 3. Third plaintiff, 7.79295% 4. Fourth and fifth plaintiffs, 2.29005% The judgment should reflect those entitlements.
3. The plaintiffs also seek an order that the defendant cause the amount held in the quarantined account to be paid to them. In my opinion, that order is unnecessary. It is plain that the amount held in that account can be used to discharge the judgment given in favour of the plaintiffs, since the judgment is given in respect of the obligation to pay the Deferred Amount. However, there is no reason to make an order specifically to that effect.
4. Accordingly, the orders of the Court are: 1. Judgment for the first plaintiff in the sum of $2,298,648.90; 2. Judgment for the second plaintiff in the sum of $1,706,935.04; 3. Judgment for the third plaintiff in the sum of $356,229.62; 4. Judgment for the fourth plaintiff in the sum of $104,682.26; 5. Judgment for the fifth plaintiff in the sum of $104,682.26; 6. The defendant to pay the plaintiffs' costs as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 October 2023