QBT Pty Ltd v Wilson

: [2023] NSWSC 1255 Date of Decision: 26 September 2023 Before: Ball J File Number(s): 2022/33374

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The respondents together held all the shares in TravelEdge Pty Ltd. TravelEdge held 40% of the shares in STA Travel Academic Pty Ltd. STA Travel Holding AG held the remaining 60%. A shareholders' agreement between the two required a party to notify the other of any change in their "Control". A failure to notify enlivened a right in the non-defaulting shareholder to compulsorily acquire the other's shareholding in STA Travel Academic by payment under an agreed calculation. In 2019, the appellant, QBT Pty Ltd, executed a share sale agreement with the respondents, for the sale to the appellant of the respondents' entire shareholding in TravelEdge. The purchase price consisted of three amounts, one of which was a "Deferred Amount" of $4,000,000. Clause 4.4 of the share sale agreement determined when the Deferred Amount would be payable, as follows: "(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", and "(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)". But STA Travel Holding AG soon entered into administration and did not exercise its right to acquire TravelEdge's shareholding in STA Travel Academic. As a result, STA Travel Holding AG's "consent in writing" was not obtained, but TravelEdge still retained its shareholding, so neither sub-clause of the definition of the Deferred Amount applied in terms. At trial, the primary judge held that the Deferred Amount was payable even though STA Travel Holding AG did not expressly give its consent in writing. It was held that clause 4.4 was intended to apply depending only on whether TravelEdge retained its shareholding. In any event, the primary judge held that a transfer under a deed of company arrangement, whereby STA Travel Holding AG transferred its shares in STA Travel Academic to TravelEdge (thereby terminating the shareholders' agreement), constituted "consent in writing". On appeal, the appellant argued that the primary judge erred in (a) its construction of clause 4.4 which overlooked the plain words, turning as they do upon the existence of "consent in writing", (b) holding that evidence of the STA Travel Holding AG's knowledge of its right to acquire shares was relevant to determine whether the share transfer form constituted "consent in writing", and (c) finding that the share transfer form constituted "consent in writing". The Court held, dismissing the appeal: (1) Clause 4.4 was intended to provide for a binary outcome. The drafting of clause 4.4 evidently miscarried the parties' intention, which was that $4,000,000 be payable if TravelEdge retained its shareholding in STA Travel Academic, and that the amount calculated under clause 4.4(b) be payable otherwise. Many textual and contextual considerations favoured that conclusion. A literal construction would lead to the absurd outcome that clause 4.4, which was a definition, would fail to attribute an amount to the "Deferred Amount", and would mean that the purchaser would receive a windfall by failing to pay for a shareholding which it indirectly receives: [58]-[82]. Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53; Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11, applied. (2) Obiter: Although the execution of the share transfer form under the deed of company arrangement brought the shareholders' agreement to an end, that did not mean that it constituted "consent in writing" for the purposes of clause 4.4 of the shareholders' agreement. The clause requires a document in which the occasion for consent is clearly contemplated or acknowledged: [89]-[90].

JUDGMENT

1. BELL CJ: I agree with Leeming JA.
2. WARD P: I agree with Leeming JA.
3. LEEMING JA: The appellant, QBT, executed a share sale agreement (SSA) dated 24 September 2019 with the five respondents who between them held all of the shares in TravelEdge Pty Ltd. One of the assets of TravelEdge was 40% of the shares in STA Travel Academic Pty Ltd. The other 60% was held by a Swiss company, STA Travel Holding AG. In order to avoid confusion and so as to be consistent with the primary judge's reasons, I shall refer to STA Travel Academic as the JV Company and its Swiss majority owner as STA. The shareholders' agreement between TravelEdge and STA contained provisions addressing a "Change of Control" of a shareholder which, speaking generally, entitled the other shareholder to acquire its shares in the JV Company. Simplifying slightly, the consideration paid by QBT to acquire all the shares in TravelEdge was (a) the "Completion Amount", defined as $24,000,000 subject to certain adjustments, plus (b) the "Deferred Amount", which was defined in cl 4.4 of the SSA as $4,000,000 if STA gave its consent in writing to the change in control, and a different, lesser amount if STA acquired TravelEdge's stake in the joint venture, plus (c) an "Earn-Out Amount" in certain circumstances.
4. QBT appeals from a decision of the Equity Division of this Court holding that it was required to pay the $4,000,000 "Deferred Amount": Grant Reid Wilson atf G&L Wilson Family Trust v QBT Pty Ltd [2023] NSWSC 1255.
5. The primary judge held that cl 4.4, properly construed, was directed in substance to whether TravelEdge retained its 40% shareholding in the JV Company. Because TravelEdge had done so, the Deferred Amount was payable, even in the absence of STA's written consent. Alternatively, his Honour held that STA had in fact given its "consent in writing" for the purposes of the clause, by reason of a share transfer executed by STA under s 444GA(1)(a) of the Corporations Act 2001 (Cth) by which STA sold its 60% stake in the JV Company to TravelEdge.
6. The issues at trial included whether QBT had contravened s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) or s 21(1) of the Australian Consumer Law in secretly negotiating with STA to acquire its remaining shareholding in the JV Company, rather than obtaining STA's consent. That claim failed at trial and was not agitated on appeal.
7. By its appeal, QBT submitted that the primary judge had been wrong (1) to construe cl 4.4 as being satisfied by TravelEdge retaining its shareholding in the JV Company; (2) to grant leave to the respondents to amend their List Statement to allege that a share transfer form between STA and TravelEdge constituted STA's "consent in writing", and (3) to find that the share transfer form constituted "consent in writing" to the change of control effected by the SSA. QBT accepted that, in order to succeed on appeal, it needed to establish both ground 1 and at least one of grounds 2 and 3.
8. By their notice of contention, the respondents contended that there was an implied term in the SSA to the effect that where there was no "consent in writing" but Mr Wilson retained the shareholding, the $4,000,000 would be payable.

Facts

1. STA conducted a global student travel business. In 2018, it entered into a joint venture with TravelEdge, which specialised in corporate travel. TravelEdge held 40% of the shares in the JV Company; STA held the remaining 60% shares.
2. TravelEdge and STA executed their shareholders' agreement on 30 May 2018. Clause 11.5 required a party to notify the other if an Event of Default occurred. "Event of Default" was defined in cl 1.1 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". "Change of Control" was defined in the same clause to include, "in relation to any entity (the first mentioned entity): (a) a change in the entity that directly or indirectly Controls the first mentioned entity (other than if the Ultimate Holding Company of the first mentioned entity remains the same following the change)". The sale of shares effected by the SSA was a "Change of Control".
3. An Event of Default enlivened a right on the part of the non-defaulting party to compulsorily acquire the defaulting party's shareholding in the JV Company. The primary judge aptly called this a "right of pre-emption". Clause 11.6 stated: 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.
4. Clause 11.7 provided that the value of the shares would be the higher of $1 and a price determined by a valuer appointed under cl 11.8. Clause 11.8 identified the valuation principles to be applied and provided that the determination was conclusive and binding in the absence of manifest error.
5. It will be seen that if the Non-Defaulting Shareholder were to exercise its entitlement to acquire the shares, then there would be an Exercise Notice, following which a value would be determined, and then a Notice to Proceed. When the Event of Default was a Change in Control, it would be difficult and perhaps impossible to rectify, and it is not entirely clear whether sub-cll 11.6(a) and (b) would invariably apply or whether the other shareholder could proceed directly to issuing an Exercise Notice. It is unnecessary to express any concluded view on this, because it is plain that a Default Option Notice could be given, followed 30 days later by an Exercise Notice.
6. Mr Grant Wilson (the first respondent) and Ms Susan Hollis (the second respondent) were founders and directors of TravelEdge. They were approached in late 2018 by Mr Andrew Burnes, the Chief Executive Officer of QBT's parent company Helloworld, concerning the potential acquisition of Mr Wilson's shares in TravelEdge. The SSA was executed on 24 September 2019.
7. Clause 4.1 of the SSA provided: 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).
8. The Purchase Price was to be paid in accordance with cl 4.3: 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.
9. The "Deferred Payment Date" was defined in cl 1.1 as … 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.
10. STA's "consent in writing" to the Change of Control effected by the SSA was originally a condition precedent to the completion of the agreement. But after negotiations with Helloworld's representatives, and in light of a perceived difficulty in obtaining consent from the Swiss company within the 7 day period contemplated between execution of the SSA and completion, that requirement instead became a contingent payment. That was the genesis of the critical clause for the purposes of this appeal, namely, cl 4.4: 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.
11. "STA JV Stake Purchase Price" was defined in cl 1.1 as the amount payable under cl 11.7 for the compulsory acquisition of TE's shares in the JV Company, and "STA Earnings Amount" was "$2,970,000". The primary judge noted at [16] that the $2,970,000 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.
12. There was no challenge to that summary of the effect of the way the Deferred Amount was created.
13. It is readily apparent that cl 4.4 does not on its face exhaust the universe of possibilities. Rather than presenting binary alternatives of STA giving or not giving its "consent in writing", sub-clause (b) imposes the further condition that STA had failed to exercise its right of pre-emption under cl 11.6 of the shareholders' agreement. The result is that the clause leaves unaddressed a number of foreseeable possibilities. STA might give its consent but subject to conditions, and it might not be known for some time whether those conditions were satisfied. It is not necessary to express a concluded view on that possibility, but it might be resolved by construing cl 4.4 such that the Deferred Amount was only determined when it was known that the conditions had or had not been satisfied. But another class of possibilities is more problematic. STA might not have given "consent in writing" to the Change of Control but might also not have exercised its rights under cl 11.6. That might occur inadvertently (for example by a defective Exercise Notice or Notice to Proceed) or by a deliberate waiver of its rights (for example if an Exercise Notice were served, but no Notice to Proceed followed, perhaps because the valuation was too high).
14. The Earn-Out Amount was calculated pursuant to cl 4.7. It turned on a calculation based on a multiple of EBITDA for the financial year ended 30 June 2020, and was only payable if that multiple exceeded a certain threshold. Clause 4.7(b) provided that the Earn-Out Amount was capped at $7,000,000 and cl 4.7(c) provided that if the calculation resulted in a negative number, the Earn-Out Amount was nil. There could be no doubt that the third component of the consideration of the shares, being the "Earn-Out Amount", might be nil.
15. The SSA was completed on around 1 October 2019. QBT became registered as owner of all of the issued shares in TravelEdge, the Completion Amount was paid, and $4,000,000 was placed in a quarantined bank account pursuant to cl 4.3(b).
16. After completion, Mr Burnes began negotiating directly with Mr Urhammer, the Chief Executive Officer of STA's parent entity, concerning the acquisition of STA's 60% shareholding in the JV Company or, alternatively, for STA's acquisition of the 40% shareholding held by TravelEdge. The primary judge recorded at [26] his acceptance of Mr Burnes' evidence that he expected that STA's consent would form part of the transaction by which Helloworld acquired the remaining 60% of the shares in the JV Company. But these negotiations fell flat in March 2020, presumably because of the effect of the COVID-19 pandemic on the travel industry.
17. In late 2019, Helloworld's representatives were asked for an update on STA's consent. The response was that consent was forthcoming but that Helloworld and Mr Urhammer were still engaged in ongoing negotiations. It appears that Mr Wilson was not made aware of the precise basis for these negotiations, which was to secure a transfer of STA's 60% shareholding in the JV Company to Helloworld, until December 2019.
18. In December 2019, Mr Burnes informed Mr Wilson that he was having discussions with STA to buy STA's interest in the JV Company. In a later email to his representatives, Mr Wilson suggested that, contrary to Mr Burnes' view summarised above, "that bidding is not consistent with getting consent". From May 2020, Mr Wilson decided instead to contact STA and its related parties directly. After direct communications with Mr Urhammer spanning some months, Mr Wilson provided Mr Urhammer with a draft letter on 11 August 2020 for STA to send to TravelEdge. That draft read: 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.
19. Although Mr Urhammer replied the next day indicating that he would confirm the position within the week, STA filed for insolvency in Switzerland on 20 August 2020 and the JV Company was placed into voluntary administration the next day. Although Mr Wilson asked if it was possible instead to seek consent from STA's administrator, Mr Urhammer indicated that the administrator, being a Swiss state official, was not willing to share contacts.
20. The upshot was that although "consent in writing" had not been obtained, neither had STA, as the Non-Defaulting Shareholding, issued an Exercise Notice or a Notice to Proceed. STA had not exercised its rights of pre-emption under cl 11.6 of the shareholders' agreement.
21. On 11 November 2020, the administrators of the JV Company sent a letter to TravelEdge demanding payment of $413,037.36, which was said to be the net amount payable by TravelEdge following analysis of its liabilities. As a result, TravelEdge, the JV Company and its administrators entered into a deed of company arrangement dated 18 December 2020. Under that deed, TravelEdge was to make an "initial contribution" of $318,000 for distribution to the JV Company's creditors on condition that STA transfer its shares in the JV Company to TravelEdge. The share transfer form was executed by the "Official Bankruptcy Administrator" of STA in Zurich on 13 January 2021. The result was that TravelEdge obtained a 100% shareholding in the JV Company, as well as obtaining a piece of paper which, so it was contended, amounted to written consent for the purposes of cl 4.4 of the SSA.

The reasons of the primary judge

1. Counsel for the respondents had contended at trial that the "real intention of the parties as gathered from the instrument as a whole" was that the Deferred Amount had to be paid pursuant to cl 4.4, one way or another. Their preferred construction of cl 4.4 was one that contemplated only two possibilities. It was submitted that cl 4.4 was directed in substance not to obtaining consent but to whether TravelEdge ultimately "retained" its shareholding in the JV Company. The concern of the clause was to distinguish between two, and only two, scenarios: (1) where STA exercised a right of pre-emption arising from a failure to give consent (or some other Event of Default) such that TravelEdge forfeited its shareholding in return only for a liquidated sum, and (2) where STA kept its shareholding (meaning that no right of pre-emption was exercised).
2. The primary judge accepted that submission, finding that it was supported by the following indications in surrounding provisions.
3. The first was that the third component of the Purchase Price defined in cl 4.1, the Earn-Out Amount, which was manifestly contingent, was qualified by the phrase "(if any)", language which was not found in cl 4.1(b).
4. Secondly, the primary judge placed some weight on the fact that cl 4.3 said that 'the Purchaser must pay…' the Deferred Amount, and that an amount of $4,000,000 (which is the most that could be claimed as the 'Deferred Amount') was held indefinitely in escrow until it became payable. A construction of cl 4.4 which presented a binary choice between retaining and not retaining the shareholding was therefore one which gave appropriate paramountcy to the payment obligation in cl 4.3: 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.
5. Thirdly, the primary judge considered that a literal construction of the conditions in cl 4.4, especially cl 4.4(b), would not cover a case where there was no consent in writing but the Non-Defaulting Shareholder elected not to purchase the shares.
6. Fourthly, a construction that gave primacy to "consent in writing" in circumstances where TravelEdge had retained its shareholding in the JV Company would produce commercially absurd results. As the primary judge put it at [59]: 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.
7. Fifthly, the primary judge reasoned that cl 4.4 "appears to provide for a binary outcome" - an intention which evidently miscarried: "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 "appear[ance]" or intention needed to have been accommodated, because "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".
8. The primary judge acknowledged that that "appear[ance]" or intention could not be accommodated "without doing some violence to the language". The effect of the primary judge's construction of cl 4.4 was practically to omit the conditions "if STA Travel Holding AG consents in writing to the change in control of the Company triggered by Completion" in sub-cl 4.4(a) and "if STA Travel Holding AG does not consent in writing to change of control of the Company triggered by Completion" in sub-cl 4.4(b). Similar omissions were made to the conditions in the definition of 'Deferred Payment Date' in cl 1.1. The primary judge said at [64]: 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.
9. Another consequence of the primary judge's construction was to read the word "retains" as meaning "retains free of STA's right of pre-emption". That seems implicit in the primary judge's statement at [65] that 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. (emphasis added)
10. The remainder of the appeal concerned a separate aspect of the reasons of the primary judge, which was a result of a late amendment. At trial, the respondents seem initially to have accepted that STA had not given its "consent in writing" for the purposes of the SSA. However, on the second day of the hearing, they sought leave to amend so to allege that the share transfer contemplated by the DOCA and executed by STA's Swiss administrator constituted "consent in writing". Judging from the exchanges made on that application, this seems to have been prompted by an exchange with his Honour on the previous day which was not recorded in the transcript.
11. QBT resisted leave being granted on the basis that it would unfairly prejudice the appellant. One of the propositions QBT advanced at trial was that "consent in writing" for the purposes of cl 4.4 "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". QBT emphasised that if leave were granted, it would have lost its opportunity to investigate and, if appropriate, lead evidence on QBT's knowledge of what the Swiss administrators of STA knew about the requirement of consent for the Change of Control effected by the SSA.
12. The primary judge took the pragmatic course of hearing submissions on the contested application, and on the further issues which would arise if the amendment were permitted, and reserved on all those issues in addition to the question of the construction of cl 4.4.
13. On the construction upheld by the primary judge in reasons delivered the following month, it was unnecessary to rule on the late application to amend. However, his Honour addressed it in the event that he was wrong about the correct construction. The primary judge rejected the submission that QBT's knowledge was relevant: 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.
14. Accordingly, his Honour granted leave, which in turn led to the need to determine whether the share transfer form executed pursuant to the DOCA constituted "consent in writing" for the purpose of cl 4.4 of the SSA. The primary judge mentioned cases dealing with the common contractual requirement of notice on another party before a non-defaulting party exercises their contractual rights, e.g. to terminate, against the other party. In those circumstances, "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", referring to Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303.
15. That situation was distinguished from what the primary judge saw to be the correct construction of "consent in writing" under cl 4.4. The primary judge reasoned broadly from the purpose which the requirement of consent fulfilled in the shareholders' agreement as a whole. The purpose was to provide for a "mechanism by which the party not in default abandoned any rights it had arising from the Change of Control". Viewed at that level of abstraction, conduct in writing by STA which "manifested an intention to abandon any rights it had arising from the Change of Control" would constitute "consent in writing". That was satisfied where the effect of the share transfer form was to transfer STA's entire shareholding in the JV Company to TravelEdge and thereby terminate the joint venture.
16. The result was five judgments in favour of each respondent in the amount of the proportion of the $4,000,000 plus interest to which each was entitled.

Submissions on the construction of cl 4.4

1. QBT's counsel, Mr Herzfeld SC, who had not appeared at first instance, took issue with the primacy given to the retention of TravelEdge's shareholding in the JV Company in the primary judge's construction of cl 4.4. That construction was said to deny any force to the express requirement in sub-cll 4.4(a) and 4.4(b) of "consent in writing". The overall effect was said to be a "radical rewriting" of the contract. As was said in address when it comes to construction there are limits, and the construction must be one that the words actually used by the parties can reasonably bear. Of course, the words have to be construed in context and as a whole, but the ultimate question is the words actually used by the parties is the first point.
2. QBT submitted that written consent not having been obtained, and no election having been made by STA as Non-Defaulting Shareholder, neither sub-cl (a) nor (b) within cl 4.4 was enlivened. There was therefore no "Deferred Amount" for the purposes of cl 4.3. Similarly, as there was no 'written consent' and no 'payment of the STA JV Stake Purchase Price', there was no 'Deferred Payment Date' as defined in cl 1.1. Therefore, no obligation to pay a Deferred Amount could have arisen under cl 4.3.
3. QBT then pointed to textual indications which suggested that the expression "consent in writing" had real work to do. The first was that subclause 4.4(a), which enlivened the obligation to pay $4,000,000, referred only to consent in writing as a condition. Secondly, the requirement of consent in writing was significant because it extinguished the party's pre-emption right, thereby permitting it to be established definitively that TravelEdge's shareholding was no longer subject to an option to purchase. This is in contrast with a vaguer condition such as "TravelEdge retaining its shares".
4. Thirdly, QBT placed weight on the use of the word "accordingly" in subclause 4.4(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" (emphasis added). That wording was said to indicate that the fact of TravelEdge retaining its shareholding was but an expression of the giving of consent. The "prescribed event" was the giving of consent.
5. Fourthly, as a matter of the evolution of the SSA, cl 4.4 had originally been a condition precedent.
6. QBT also called in aid the requirement that the literal construction be "absurd" (Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In Liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [8]) or "opposed to reason" (HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296 at [51]-[52]). QBT took issue with the assumption that the text in cll 4.3, 4.4 and the definition of 'Deferred Payment Date' in cl 1.1 miscarried the parties' apparent intentions. The appellant submitted that the possibility of not giving consent and yet not exercising the option under cl 11.6 of the shareholders' agreement was simply one not evidently contemplated by the parties; "the two 'binary outcomes' mutually contemplated by the parties were that STA would either (a) give the requisite consent or (b) exercise the rights of pre-emption", or as it was put in oral argument, Your Honours would have to reach the conclusion not only that the parties actually reached an agreement about what to do in this circumstance, but that their agreement was that we would pay $4,000,000 and that conclusion would have to be reached with a very high degree of certainty and a critical problem, apart from the textual surgery, is that one has to think, well, what have the parties agreed on this view where there's no consent but no buyout.
7. On that basis QBT embraced the primary judge's observation that the words "if any" only qualified the Earn-Out Amount in cl 4.1 and not the Deferred Amount: We accept that, and, indeed, we embrace it because it is yet a further evidence of the fact that the parties, when drafting this document, proceeded on the binary view of the world that one or other of these events would happen, either consent in writing and no buyout or a buyout and that's evidence, as I said, by 4.3(ii), which clearly assumes there will be a deferred amount and, without going to it, also cl 18.2.
8. Unlike in Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53, it was not irresistibly clear that the parties had agreed that QBT pay $4,000,000 where TravelEdge retained its shareholding but no consent was given. That was probably because such a circumstance was "a possibility [that] could readily have been foreseen to have involved termination of the JV Agreement" or at least some dissatisfaction by one joint venturer in respect of the other. The imperative that the meaning given to the words must accommodate such an intention to pay $4,000,000 in every case where TravelEdge retained its shareholding was therefore misplaced.
9. The respondents' submissions need only be summarised briefly. They supported the reasoning of the primary judge. They submitted that QBT had incorrectly sought to characterise the parties' bargain as one for the purchase of consent rather than the purchase of shares. They eschewed the literalistic approach of QBT, and emphasised the need to construe the contract as a whole, and that "the words of every clause must if possible be construed so as to render them all harmonious one with another": Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36. They said that it was clear that the parties intended that the Deferred Amount, whatever it was, was to be paid, as was expressly provided in cll 4.3(a) and 18.2. They said that QBT's approach required "some of the key provisions of the SSA to be rewritten", although the only example given was the need to insert "if payable" in cl 4.1(b) and elsewhere. In contrast to QBT's reliance on the significance of the first "conjunct" in cl 4.4(a) dealing with consent, the respondents submitted that "the syntactical structure of cl 4.4(a) suggests that primacy should be given to the second conjunct (being the retention of the shares)", saying: The elements of cl 4.4(a) are: If [event], and accordingly, [result], then the Deferred Amount is $4,000,000 The ordinary meaning of "accordingly" is "in accordance" and "correspondingly". Its use here does not suggest the former [event] is more important than the latter [result], but rather indicates that the [result] is an independent reason for the Deferred Amount being $4m. Clause 4.4(a) provides that the [result] accords with, or corresponds with, the occurrence of the [event], but it is not "caused by", a "result of" or "by reason of" the [event].
10. In the alternative to upholding the primary judge's construction of the SSA, the respondents pursued their notice of contention by submitting that either one of the two terms below should be implied in cl 4.4: If STA [being STA Travel Holding AG] ceases to have, or be able to exercise, any right to purchase the JV Shareholding [being the 40 percent shareholding in STA Travel Academic Pty Limited owned by TravelEdge Pty Ltd since 30 May 2018] and TravelEdge Pty Ltd retains the JV Shareholding, the Deferred Amount is $4 million and is payable within 10 Business Days of that occurring. If STA does not exercise any right to purchase the JV Shareholding within a reasonable time after Completion and TravelEdge Pty Ltd retains the JV Shareholding, the Deferred Amount is $4 million and is payable within a reasonable time after Completion.
11. Seeking to apply the test for the implication of a contractual term in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, the respondents submitted that the first of those terms was so obvious that it went without saying because in the case to which the Term applies, QBT would have received precisely what it had bargained for under the SSA - receipt of the shares in the JV Company, through TravelEdge. For similar reasons, the implication of that term was also "reasonable and equitable" because it would be unfair for QBT to receive a company with that shareholding without having to pay for it. The alternative formulation was said to be obvious to prevent the obligation to pay the Deferred Amount from being postponed indefinitely. Both were said to facilitate business efficacy because, but for either of those terms, the $4,000,000 would be "quarantined" indefinitely despite QBT receiving ownership of the shares in the JV Company. Finally, the implied term was said not to be inconsistent with any express contractual term, noting that "means" or "is equal to" should not be regarded as exhaustive.
12. QBT's response largely mirrored its submissions in support of Ground 1. As the first implied term turned on whether STA "ceases to have, or be able to exercise" its pre-emption rights, payment of the Deferred Amount could depend on "highly contestable" questions of waiver, estoppel and acquiescence arising from STA's conduct more generally. That undercuts what QBT submitted (see [36] above) was the apparent commercial reason for including written consent as a, though perhaps not the, criterion for payment. Much the same was said in respect of the alternative term; the introduction of the vagaries associated with 'a reasonable time' were said to be "inconsistent with the hard-edge nature of the express terms which were agreed which turned on precise dates and precise amounts".

The construction of cl 4.4

1. Clause 4 of the SSA goes to the heart of the parties' bargain, which was to buy ownership of a company whose assets were treated as separately contributing to the price. One of the company's assets was a stake in an incorporated joint venture which was subject to an option in the event of a Change of Control. The parties had to, and did, turn their minds to an essential aspect of their bargain, namely, the price to be paid if the joint venture partner consented to the new ownership of its co-venturer, and the price to be paid if the joint venture partner bought out the stake in the joint venture owned by the company which was being sold to QBT.
2. The commerciality is readily understood. If the joint venture partner bought out TravelEdge's stake, then it would have turned out that QBT had bought a company which owned an amount of money rather than a 40% stake in the Joint Venture Company. The mechanism in cl 4.4 reflected those options.
3. But the parties' written agreement, at least if it is read literally, failed to attend to all of the possibilities, including the possibility that STA did not give consent in writing but also failed to exercise its right to acquire TravelEdge's shares in the JV Company.
4. The primary judge regarded cl 4.4 as providing for a "binary outcome". By that his Honour meant that one or other limb of the definition of Deferred Amount would be satisfied. I agree with his Honour's conclusion. Many considerations support it.
5. First, the structure of the clause suggests that there are precisely two eventualities, one of which is applicable.
6. Secondly, the clause is a definition, and unlike many of the defined terms in this definition-heavy contract, it is a definition of a term which goes to the heart of the parties' bargain, namely, a component of the price. It is decidedly unlikely that cl 4.4 would fail to attribute a dollar amount to the "Deferred Amount".
7. Thirdly, the conclusion that cl 4.4 would, one way or another, produce a non-zero dollar amount for the "Deferred Amount" is confirmed by the words "(if any)" in cl 4.1(c) which are absent from cl 4.1(b) as well as by the placing of $4,000,000 in a quarantined bank account. I would add that this is a written contract which elaborately (and indeed unnecessarily) made explicit provision for payments which might not eventuate. The words "if any" in cl 4.1 are quite otiose in light of the elaborate provision in cl 4.7(c).
8. Fourthly, cl 4.4 also defines two further terms, "STA Consent Event" and "STA Non-Consent Event". The labels used are suggestive of a clause which exhausts the universe of possibilities.
9. Fifthly, cl 4.7 defines the Earn-Out Amount, doing so in terms which proceed on the basis that either the STA Consent Event occurs or the STA Non-Consent Event occurs.
10. Sixthly, another clause which addresses the STA Non-Consent Event is cl 10.1(a): Pass through payments post-Completion (a) The Purchaser acknowledges and agrees to pay to the Vendors in their Respective Proportions (or as otherwise directed by the Vendors by giving written notice to the Purchaser no later than 2 Business Days before the due date for payment) amounts received by Group Companies (if applicable) after the Cut-Off Time (and therefore not included in the Completion Accounts) as follows: (i) any Qantas or Virgin Overrides earned in the period from 1 July 2018 to 30 June 2019, to the extent such Overrides are received in cash by the Group from CT Partners; (ii) if a STA Non-Consent Event occurs, amounts received in cash by the Group from STA Travel Academic or STA Travel Holdings AG in satisfaction of the STA Loans.
11. It will be seen that cl 10.1(a)(ii) on its natural meaning is drafted on the basis that if a STA Non-Consent Event occurs, amounts will be received in cash from STA or the JV Company in repayment of certain loans. Once again, that reflects an understanding that the absence of STA's consent in writing will inevitably produce the result that STA will buy out TravelEdge's 40% stake and TravelEdge will receive an amount of money - which is to say that cl 4.4 provides for a binary outcome, such that one or other of its limbs will be satisfied.
12. Seventhly, there is the commercial context. The Deferred Amount is for a variable component of the consideration, which will be neither known nor payable until after completion. Immediately after completion, TravelEdge will be a wholly owned subsidiary of QBT, and it will at that time continue to own the 40% stake in the JV Company. Thereafter, TravelEdge will either continue to own that stake, or else STA will exercise its rights and acquire it for an amount of money calculated in accordance with the shareholders' agreement between STA and TravelEdge. It is true that there will be a time when it is uncertain what STA will do. But the ultimate choice is binary - either TravelEdge will continue to own its stake in the JV Company or it will own the amount paid to it by STA. That binary choice is reflected in cl 4.4.
13. The question then is how should the parties' bargain be construed to apply to the circumstances which obtained, where (putting to one side the transfer executed by STA's Swiss administrator) there was neither consent in writing from STA nor an acquisition of the 40% stake by STA.
14. There is obviously an error in the parties' written contract. It is not a typographical error, but a conceptual one. To reiterate, the SSA proceeds on the basis that an absence of written consent by STA will entail SSA exercising its rights to acquire TravelEdge's shares in the JV Company. To that end it provided that QBT would pay $4,000,000 if STA consented to the change in control, such that TravelEdge continued to hold its stake in the JV Company, and an amount reflecting the money paid by STA for that stake if STA acquired it. It is self-evident that this component of the consideration for the shares in TravelEdge reflected the assets owned by TravelEdge, and was determined depending on whether TravelEdge owed a 40% stake in the JV Company or money received from STA for that stake.
15. If cl 4.4 bears its ordinary literal meaning, there is at least to my mind a windfall which cannot be something to which the parties are to be taken to have agreed. It is commercially absurd for QBT to have agreed to pay $4,000,000 as a component of the consideration for shares in TravelEdge if it retained the 40% stake in the JV Company, and to have paid an amount reflecting the price paid by STA for that stake if it had been acquired by STA, but to pay nothing in respect of this component of the consideration if TravelEdge did not obtain STA's consent in writing but nonetheless retained the 40% stake. Courts should be cautious in accepting submissions that a construction is absurd; one reason is that courts are far from being well placed to assess what is or is not commercially sensible. But even so, I am comfortably satisfied that "absurdity" (or the synonymous description "opposed to reason") is a fair description of the operation of cl 4.4 if it bears its ordinary literal meaning.
16. Sometimes obvious errors in written contracts can be resolved by construction. But there are limits to courts' powers to do so. It is necessary not merely to identify the obvious error, but also to be clear how the absurdity is to be resolved. It must be "self-evident what the objective intention is to be taken to have been": Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [8]. As was said by Latham CJ in Tatham v Huxtable (1950) 81 CLR 639 at 645; [1950] HCA 56, applying the principle to a will: It often happens, however, that the misuse of some word or phrase is so palpable on the face of the will, as that no difficulty occurs in pronouncing the testator to have employed an expression which does not accurately convey his meaning. But this is not enough: it must be apparent, not only that he has used the wrong word or phrase, but also what is the right one; and, if this be clear, the alteration of language is warranted by the established principles of construction.
17. Sometimes a court may be confident that the literal meaning contains an absurd mistake, but cannot be confident of what the parties are to be taken to have intended in that eventuality. James Adam Pty Ltd v Fobeza Pty Ltd (2020) 103 NSWLR 850; [2020] NSWCA 311 is one example, and others are given at [63]-[65] of that decision. If it is unclear how the absurdity is to be resolved, then the principles of construction where there is an obvious error are not available to authorise a departure from the ordinary literal meaning.
18. Hence the force of the conclusion by the primary judge that cl 4.4 provided for a binary outcome. To reiterate, by a "binary outcome", the primary judge meant that a component of the consideration to be paid by QBT was either the $4,000,000 in the quarantined account if TravelEdge continued to own the 40% stake in the JV Company, or an amount which reflected the money paid by STA for that stake. I think that conclusion must be correct. Either QBT was acquiring shares in a company which owned a 40% stake in the JV Company or it was acquiring a company which owned the proceeds of sale of that 40% stake. There was no third alternative.
19. I cannot accept QBT's submission that the "binary outcomes" were STA's giving of consent or its acquisition of the 40% stake. That is a fair description of the effect of cl 4.4 on its ordinary literal meaning. But the gravamen of the reasons of the primary judge, with which I agree, is that the binary outcome was one which exhausted the universe of possibilities, namely, TravelEdge retaining its 40% stake after acquisition by QBT, or TravelEdge being paid out by STA for its 40% stake after acquisition by QBT.
20. Once it is appreciated that the price to be paid for the shares reflected a binary choice between an acquisition of TravelEdge as an owner of a stake in the JV Company or as an owner of the proceeds of the sale of that stake, cl 4.4 is to be construed as the primary judge found. That involves doing some violence to its language. But as the primary judge with respect correctly observed at [49]: 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 Fullagar 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".
21. QBT labels the construction applied by the primary judge as a "radical rewriting" of the clause. The force of the adjective is unclear, although the submission was cognate with that deprecating the "textual surgery" performed by the primary judge. I do not accept QBT's criticisms. In one sense it is less "radical" than familiar examples of rewriting "John" for "Mary" in Wilson v Wilson (1854) 5 HL Cas 40; 10 ER 811 or "consistent" for "inconsistent" in Fitzgerald v Masters where the legal meaning is the opposite of the literal meaning. It also is in a sense less "radical" than rewriting the clause in the fashion contended by QBT, which is to replace its binary structure with a ternary structure, to the effect that "The Deferred Amount is equal to (a) [paragraph] or (b) [paragraph] or (c) nil if neither (a) nor (b) is satisfied". But the real answer to QBT's submissions is that if the literal meaning of a written contract is absurd and the court can confidently identify how the absurdity should be resolved, then the process of construction can omit words or insert new words or alter the existing language.
22. The foregoing does not rely on the respondents' submission based on the word "accordingly". To the contrary, rather than indicating that primacy should be given to the retention of the shares, the ordinary meaning of the word is that the retention of the shares is a consequence of providing STA's consent in writing.
23. QBT maintained that obtaining a document confirming STA's written consent had real work do to, so as to make it clear beyond argument that the 40% stake was no longer the subject of any right of pre-emption. But this is unpersuasive. That does not undermine the basic proposition that the contract reflected a binary choice. As noted above, even if a written consent were produced by STA, it might be conditional, and there might be doubts about whether the conditions had been satisfied. Ultimately, it would be open to the parties to resolve such doubts by obtaining declaratory relief from a court. The simple point is that while it may be accepted that there would be commercial advantages in securing written consent, that does not mean that the contract should not be construed as the primary judge construed it.
24. Although they are expressed differently in order to address the submissions made on appeal, my reasons do not differ substantively from those of the primary judge. In short, this is a case where it is clear that the literal meaning of cl 4.4 is absurd, and it is also clear what the parties should be taken to have intended, which is a binary definition of "Deferred Amount" reflecting the fact that a component of the consideration to be paid by QBT for the shares was one limb of the definition or the other, and not nil. Their written contract is to be construed accordingly.
25. I conclude that this ground is not made out.

Remaining issues

1. The failure of ground 1 is sufficient to resolve the appeal. The notice of contention does not arise. However, I shall address the remaining grounds of appeal, although I shall do so concisely.

Ground 2 of appeal: Leave to amend

1. QBT said that the primary judge had erred in holding that the grant of leave would not prejudice QBT insofar as it was denied the opportunity to explore and if necessary adduce evidence of the state of STA's knowledge about the Change of Control and the effect of executing the share transfer on the basis that STA's knowledge was irrelevant. QBT contended that as a matter of substance, the submission belatedly made by the respondents and accepted by the primary judge amounted to the proposition that STA's "consent in writing" was an election by STA, between exercising and not exercising its right of pre-emption. The final proposition in the submission was the trite one that whether the conduct of a party constitutes an election in the strict sense depends on whether the party has knowledge of the facts giving rise to the election: Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 648-649 and 657-658; [1974] HCA 40; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [56]. QBT candidly conceded that this had not been raised before the primary judge, but said that did not matter if House v The King error were established.
2. I would accept QBT's submission that an error about the relevance of STA's knowledge was a material error sufficient to engage House v The King (1936) 55 CLR 499 at 505; [1936] HCA 40. But I am disinclined to accept the underlying submission. It is true that STA has a choice whether or not to consent to a Change in Control. But this is not a case where a party's conduct must be characterised as answering either of two alternative inconsistent legal conclusions (such as affirmation or terminating a contract following the other side's repudiatory conduct). The only question is whether a document answers the description of "consents in writing" for the purposes of the definition of Deferred Amount in cl 4.4.
3. Another way of putting this is that there is a multitude of cases where a party to a contract has rights which may fairly be said to be inconsistent. Examples include put and call options, options to renew, rights to terminate, rights to apply for a rent review, rights to extend a warranty period, notices to complete, and so on. But when those rights turn upon the service of a piece of paper, identified in some way by the contract, the question is whether there has been compliance with the contractual provisions. The fact that it may in many or most cases be possible to characterise the choice of the party as one between two inconsistent rights does not bring into play questions of election.
4. To the foregoing there is a possible qualification. The "consent in writing" from STA was not a document such as a notice exercising an option or renewing a lease. It was consent in writing, and it is perhaps arguable that as a matter of construction, that imports a requirement that not only must the document accord with what the contract specifies, but it must also reflect STA's state of mind. I am more than a little sceptical of this approach, in part because of the analogy with provisions concerning landlords' consent to an assignment of a lease, but I am also conscious that this Court did not hear full argument on it. I am also conscious that nothing turns on this ground, not merely for the reasons already given in answer to ground 1, but also for the further independent reasons about to be given in respect of ground 3, because if indeed there was any error in permitting the respondents to advance a new case by way of late amendment, it was a case which should have failed on the merits. In those circumstances, there is no utility in pursuing this ground to any final conclusion, and I shall refrain from expressing a concluded view on ground 2.

Ground 3 of appeal: Was the share transfer "consent in writing"

1. Assuming contrary to the views expressed above concerning the construction of cl 4.4, I would uphold this ground. QBT contended that the share transfer form executed pursuant to the DOCA had nothing to do with the Change of Control effected by the SSA. The surrounding communications indicated that the form was executed in order to discharge cl 4.1 of the DOCA, which made the execution of the transfer a condition of the DOCA's completion. The purpose of the share transfer pursuant to the DOCA was to avoid the stigma of a member of Helloworld's corporate group becoming insolvent and unable to pay back its creditors, and to address TravelEdge's indebtedness to the JV Company. None of this speaks to the Change of Control effected by the SSA.
2. True it is that the transfer of shares brought the joint venture to an end (if it had not previously been brought to an end) and made it clear that QBT would not exercise any right to acquire the 40% stake owned by TravelEdge. But I respectfully disagree that those considerations permit the conclusion that the share transfer should be regarded as "consent in writing" for the purposes of the SSA.
3. Clause cl 4.4 determines whether QBT is required to pay $4,000,000 (subject to adjustments) or some lesser amount dependent upon the price paid by STA for the stake. Applying the construction of the clause favoured by QBT, "consent in writing" is essential to determine whether any amount of money is paid at all. I would accept the submission of junior counsel for QBT, who advanced this aspect of the case in this Court, that the clause required a document in which the occasion for consent is clearly contemplated or acknowledged, and that while the effect of the transfer may have been to terminate the shareholders' agreement and thereby preclude any opportunity to engage the acquisition mechanism under cl 11.6, "the subject matter [of the share transfer form] is not directed to the consent or the subject matter of the consent". The most that can be said is that the form constituted a consent implied by conduct, but that nonetheless falls short of being "consent in writing".

Conclusion and orders

1. For those reasons, I doubt that the primary judge was wrong to permit the respondents belatedly to rely on the share transfer as "consent in writing", but even if his Honour were wrong about the amendment, nothing turns on the error because the respondents should have failed on that issue. But all of this is beside the point, because on the main issue fought out between the parties, namely, the construction of cl 4.4, the primary judge was right, essentially for the reasons his Honour gave.
2. Accordingly, the appeal should be dismissed. As presently advised, there is no reason for costs not to follow the event. I propose that the appeal be dismissed with costs.

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