ThoughtWare Australia Pty Limited v IonMy Pty Ltd

The evidence 6 As at the date of the hearing of this application, ThoughtWare had filed a Concise Statement and several affidavits, all of which were relied upon for the purposes of the application. Objection was taken on various grounds by Mr O'Brien, Counsel for IonMy, to certain passages in two of the affidavits. None of those objections was stubbornly resisted. Ultimately, the passages to which objection was taken were of relatively limited importance and the hearing proceeded on the basis that they would be treated as submissions, or evidence of certain things having been said in correspondence, rather than evidence of the truth of the matters concerned. 7 IonMy's position at the time of the hearing was somewhat difficult to discern. On 29 March 2023, this Court made orders by consent of the parties, timetabling a number of procedural steps in relation to the present application and the overall proceeding. By paragraph 4 of those orders, IonMy was directed to file and serve the following documents by 4:00 pm on 12 April 2023: a. A response to the Concise Statement of 5 pages or less setting out, in summary: i. What, if any, of the facts indicated in the Concise Summary are in dispute; ii. What parts, if any, of the relief are not in dispute; iii. What parts, if any, of the relief are in dispute and why; and, b. Any Affidavit material upon which it wishes to rely for the hearing of the balance of the interlocutory application; and, c. Any objections to any of the Applicant's Affidavit material (including a description of the basis and reasons for each objection). 8 IonMy filed a Concise Statement in Response on 17 April 2023, several days after the date set in the orders. It put on no affidavit evidence prior to the hearing of the application, and its objections to ThoughtWare's affidavit material (to which reference is made above) were received only on 26 April 2023, the day prior to the hearing. There was no particular explanation for any of these delays, or the decision not to put on any evidence.

The sale of ThoughtWare's business and the BSA 9 ThoughtWare carried on business developing and supplying governance, risk and compliance software, under the business name "IonMy" (the Business). At all relevant times, its directors have been Ms Sonja Bernhardt and Mr Robin Craig. 10 On 30 June 2020, Ms Bernhardt and Mr Craig, on behalf of ThoughtWare, executed the BSA, pursuant to which the Business and certain associated assets were sold to IonMy, "for the Purchase Price and on the terms and conditions of this agreement as at Completion, effective on and from the Effective Date": BSA cl 2.1. 11 Presently, the sole director of IonMy is Mr Kevin Zammitt. Until 27 September 2022, Mr Constandinos Kostakis was also a director. 12 "Completion" of the sale was to occur in accordance with cl 4 of the BSA. In particular, cl 4.1 provided that Completion was to occur on the "Completion Date", being seven days after the satisfaction of the condition in cl 4.2, which related to ThoughtWare's receipt of certain tax advice in connection with the sale. That advice was duly obtained, and the condition in cl 4.2 fulfilled by about 15 December 2020. 13 The expression "Effective Date" was defined in cl 1.1 of the BSA to be 24 February 2020. On that date, in accordance with cl 6 of the BSA, ThoughtWare ceased to operate the Business and IonMy began to do so in its place. 14 The "Purchase Price" was defined in cl 1.1 to be $7.5 million. However, that amount was to be paid in the specific manner set out in cl 3 of the BSA, which was headed "Consideration". That clause is important for the present purposes, and it is convenient to set out its material parts as follows: 3.1 Consideration The consideration for the sale of the Assets and the Business is: (a) the payment of the Purchase Price to the Seller; and (b) the issue of the Buyer Shares to the Seller. … 3.2 Payment of the Purchase Price Subject to the terms of this agreement, the Buyer must pay the Purchase Price to the Seller as follows: (a) $500,000.00 (five hundred thousand dollars) on or before 30 June 2021; (b) $750,000.00 (seven hundred and fifty thousand dollars) on or before 30 June 2022; (c) $1,250,000.00 (one million, two hundred and fifty thousand dollars) on or before 30 June 2023; (d) $2,000,000.00 (two million dollars) on or before 30 June 2024; and (e) $3,000,000.00 (three million dollars) on or before 30 June 2025, (each of the foregoing payments being an Instalment). 3.3 Interest In addition to payment of the Instalments referred to in clause 3.2, the Buyer shall pay to the Seller, interest on the relevant Instalment calculated at the Prescribed Rate from the due date of the Instalment until the actual date of payment of the relevant Instalment. … 3.5 Reduction of Instalments (a) The Buyer and the Seller agree that if the average annual gross profit of the Business for the two financial years immediately preceding the date that any Instalment is due for payment under clause 3.2 is less than $1,000,000.00 (one million dollars), the amount of the Instalment may be reduced on a pro rata basis by the Buyer and such reduced amount paid by the Buyer to the Seller in satisfaction of the Buyer's obligation to pay the relevant Instalment to the Seller pursuant to clause 3.2. Schedule 3 sets out working examples of how the reduction of any Instalments will be calculated. (b) The Buyer and the Seller further agree that if a licence fee payment is paid by the Buyer to the Seller pursuant to clause 3.6 during the financial year immediately preceding the date that any Instalment is due for payment under clause 3.2, then the amount of such Instalment payable by the Buyer to the Seller shall be reduced by an amount equal to 75% (seventy five percent) of the total amount of licence fee payments paid or payable to the Seller by the Buyer in respect of that financial year. Schedule 3 sets out working examples of how the reduction of any Instalments will be calculated. 15 The manner in which this clause was intended to operate to apportion the Purchase Price is relatively uncomplicated. By cl 3.2, IonMy was to pay the specified "Instalments" of the "Purchase Price" to ThoughtWare by the corresponding dates. The amounts of those Instalments could be reduced by either of the two mechanisms set out in cl 3.5: the mechanism in cl 3.5(a) allowed the Instalments to be reduced on a pro rata basis if the "average annual gross profit" of the Business for the two financial years preceding the date for the Instalment was less than $1 million; and the mechanism in cl 3.5(b) allowed the Instalments to be reduced if ThoughtWare received certain "licence fee payments". 16 Clause 13.3 of the BSA provided that if, before full payment of the Purchase Price was completed, IonMy was unable for any reason to pay the Instalments as per cl 3.2, then the BSA would terminate on that date, and the sale of the Business would essentially be reversed. ThoughtWare would repay any amount of the Purchase Price already paid to it by IonMy, and would receive in exchange an immediate transfer of ownership of all intellectual property, software, goodwill, and certain other assets of the Business. 17 The first Instalment of $500,000 and the second Instalment of $750,000 were not paid by IonMy on or before the relevant dates in cl 3.2. 18 It seems that ThoughtWare, after not receiving the first Instalment, drew to IonMy's attention the effect of cl 13.3 in the circumstance of non-payment, but no particular action was taken to give effect to that clause. Instead, ThoughtWare appeared to regard the first Instalment as a sum owed to it by IonMy. The second Instalment was treated similarly, and ThoughtWare has approached this proceeding on the primary basis that the sums should be treated as sums outstanding, notwithstanding the effect of cl 13.3. IonMy also adopted that approach. 19 It was acknowledged in the affidavit of Ms Bernhardt dated 17 March 2023, filed in this proceeding, that ThoughtWare had received certain licence fee payments that it was prepared to apply against the first Instalment, in accordance with cl 3.5(b) of the BSA, such that the amount said to be owing in respect of that Instalment was reduced to $368,903.59. The total amount said by ThoughtWare to be outstanding was therefore $1,118,903.59.

The dispute as to the payment of the Instalments 20 After the first Instalment was not paid by IonMy on 30 June 2021, considerable correspondence passed between the parties in relation to the reasons for non-payment. From that, it is apparent that the parties were in disagreement as to how "average annual gross profit" was to be determined for the purpose of applying the reduction mechanism in cl 3.5(a). That disagreement had seemingly arisen some months before the date for payment of the first Instalment. 21 On the material that has been produced to date, there is some difficulty in identifying the precise scope of the disagreement and the respective positions taken by each of the parties. This difficulty might be regarded as stemming, at least to some extent, from IonMy's decision not to put on any evidence at this stage of the proceeding. 22 ThoughtWare has contended, in paragraph 5 of its Concise Statement, that IonMy "varied the prior accounting methodologies adopted in relation to the Business, matching the processes it assert[ed] that it applied in its businesses prior to the BSA", with the result that additional expenses were identified as being "cost of goods sold". As the gross profit was to be determined by the revenue of the Business less cost of goods sold, the allocation of the additional expenses to the latter category had the effect of diminishing the gross profit. The consequence was that the average annual gross profit as it appeared in IonMy's accounts was less than $1 million and, so IonMy asserted, the Instalments were to be reduced in accordance with cl 3.5(a). 23 Consistent with this explanation of the disagreement, there was some suggestion in the evidence that the parties had been in correspondence with one another, at the relevant times, about whether certain items were properly to be characterised as "cost of goods sold". 24 Nevertheless, in its Concise Statement in Response, IonMy has denied paragraph 5 of the Concise Statement and added that it "does not know of the additional expenses … that it is alleged to have varied". As noted, it has put on no evidence and it is therefore unclear how it would prefer to characterise the disagreement between the parties in relation to the calculation of gross profit. 25 Whatever the case, the disagreement persisted for long enough that steps were taken to engage the BSA's dispute resolution provisions. They are contained in cl 19, and relevantly provide as follows: 19.1 If a dispute (Dispute) arises between parties, either party may notify the other in writing of the nature and details of the Dispute. 19.2 The parties agree that, following the giving by either party of a Dispute notice under clause 19.1: (a) the parties will within fourteen (14) days (time being of the essence) of the giving of a Dispute notice under clause 19.1 take reasonable steps to resolve the Dispute; (b) if the parties cannot resolve the Dispute within twenty one 21 days of receipt of a Dispute notice under clause 19.1 (time being of the essence) then either party will be entitled to give notice to the other of an intention to appoint an expert to make an expert determination of the Dispute; such notice to nominate the relevant professional body, of which the expert is to be a member of not less than 5 years' standing; and (c) if either party gives a notice of an intention to appoint an expert pursuant to clause 19.2(b) and the party to whom the notice was given does not, within seven (7) days of receipt of that notice (time being of the essence), notify an objection to expert determination of the Dispute, then the party which has given a notice under clause 19.2(b) will be entitled to request the President of the nominated professional body to appoint a member of not less than 5 years' standing to determine the Dispute. 19.3 If a Dispute is referred to an expert pursuant to clause 19.2(b): (a) the expert acts as an expert and not as an arbitrator; (b) the expert's decision is final and binding; (c) the expert must be instructed to: (i) accept written submissions made by the parties in dispute; (ii) give a written decision setting out what was taken into account, what was disregarded and the respective weighting of those matters; and (iii) make the decision no later than seven (7) days after the date of appointment. … 19.5 If either party gives a notice proposing appointment of an expert pursuant to clause 19.2(b) and the other party notifies an objection to proceeding to expert determination, such notice to be given no later than seven (7) days after the giving of the notice of proposal to seek expert determination (time being of the essence), then the Dispute will not be referred to an expert and either party to the Dispute may take such other steps as they consider appropriate in connection with the Dispute including, but not limited to, commencing action in the courts provided that the parties will not rely upon or give in evidence or produce in any such proceedings any information, documents or other material concerning the Dispute which was disclosed in the context of an attempted settlement of the Dispute under this clause 19 unless that information, document or facts are or would otherwise be discoverable in judicial or other proceedings. 26 In accordance with cl 19.1, on 26 October 2021, the solicitors for IonMy wrote to ThoughtWare's solicitors, identifying that a "Dispute" had arisen in relation to the BSA. It was described in that letter as concerning, in part, the calculation of the gross profit of IonMy for the period ending 30 June 2021 for the purposes of cl 3.5 of the BSA. 27 In accordance with cl 19.2(a), the parties' solicitors proceeded in late October and early November 2021 to arrange for a conference to take place between them with a view to resolving the Dispute. It was ultimately agreed that the conference would be held on 8 November 2021. 28 However, on that date, IonMy's solicitors wrote by email to the solicitors for ThoughtWare, advising that, having considered a "position paper" which had been sent to them on behalf of ThoughtWare, their client was of the view that further discussions would not be helpful. The conference was therefore abandoned, and it was proposed by IonMy that the matter be referred to an expert.

The referral to the expert 29 ThoughtWare agreed to IonMy's proposal and, on 7 March 2022, an email was sent on behalf of both parties to the Resolution Institute, requesting that a member of the Institute with professional accounting experience of not less than 5 years' standing be appointed to determine the Dispute. That email attached a copy of the BSA. 30 Thereafter, the parties continued to correspond with one another and with the Resolution Institute in relation to the expert's appointment. In the course of that correspondence, the parties jointly submitted a form to the Resolution Institute in which the Dispute between them was described as follows: On 30 June 2020 Party 1 and Party 2 entered into a Business Sale Agreement. Pursuant to that agreement the sale price was to be paid over several years with the payment amounts to be determined based on the gross profit of the business totalling a maximum of $7.5M, with the first $500K payment due June 2021. Party 1 was also to become 25% shareholder of Party 2. Party 2 has calculated Gross Profit for the periods ending 30 June 2020 and 30 June 2021. Party 1 disputes the method of calculation of Gross Profit used by Party 2. 31 On 14 April 2022, the parties were notified that the Chair of the Resolution Institute had nominated Mr Troy Peisley, a lawyer and chartered accountant, as the expert. Neither party objected to this nomination. 32 On 9 May 2022, Mr Peisley was formally appointed by a letter of appointment prepared jointly by the solicitors for both parties. That letter relayed to Mr Peisley the procedural matters set out in cl 19.3 of the BSA. It also set out an explanation of the Dispute between the parties, as follows: Pursuant to clause 3.2 of the BSA, IonMy agreed to pay a purchase price of $7,500,000.00 to TW, by way of five instalments. Pursuant to clause 3.5 of the BSA, TW and IonMy agreed that if the average annual gross profit of the Business for the two financial years immediately preceding the date that any instalment is due for payment under clause 3.2 is less than $1,000,000.00, the amount of the instalment may be reduced on a pro rata basis. Schedule 3 of the BSA sets out an example of how the reduction of any instalments will be calculated. TW and lonMy are in dispute as to how 'gross profit' is to be calculated (the Dispute). The scope of the Dispute for your determination is therefore: - (a) the proper basis for calculation of 'gross profit' for the business sold; and (b) what is the gross profit of the business for the 2021 financial year. 33 The letter of appointment requested that Mr Peisley send through a written agreement, into which the parties would enter as a final formal step to commence the expert determination process. That agreement, as subsequently provided, set out a number of procedural matters relating to the conduct of the expert determination, including the "Expert Determination Rules" of the Resolution Institute. It also identified the issues to be determined in terms identical to those appearing in paragraphs (a) and (b) of the explanation of the Dispute set out in the parties' 9 May 2022 letter, as extracted above. 34 Relevantly, the Expert Determination Rules included the following provisions: RULE 3 Agreement to be Bound 1. The parties agree that the Expert is deemed to be an expert in the subject matter of the Dispute. 2. Unless otherwise agreed in writing by the parties, the determination of the Dispute by the Expert shall be final and binding between the parties. … RULE 12 Waiver of Right to Object 1. Subject to any rule of law or equity or written agreement of the parties to the contrary, if a party to the Process takes part, or continues to take part, in the Process without making within a reasonable time thereafter any objection: a. that the Expert lacks substantive jurisdiction; b. that the Process has been improperly conducted, c. that there has been any other irregularity affecting the Expert or the Process, then that party shall be deemed to have waived its right to make such objection later, before a Court, unless it shows that, at the time it took part or continued to take part in the Process, it did not know and could not with reasonable diligence have discovered the grounds for the objection. 2. Subject to any Statute Law or principle of common law or equity, or written agreement of the parties to the contrary, where the Expert rules that he or she has substantive jurisdiction and a party to the Process who could have questioned that ruling in a Court does not do so within any time fixed by the Expert (or if no time is fixed, within a reasonable time), then that party shall be deemed to have waived any right it may otherwise have had to later object to the Expert's substantive jurisdiction on any ground which was the subject of that ruling, and shall be deemed to have submitted to the Expert's jurisdiction. 35 The agreement was executed and returned to Mr Peisley on 1 June 2022, along with an agreed chronology and a joint brief.

The expert's determination 36 On 12 December 2022, Mr Peisley wrote by email to the parties, advising that his determination was complete, subject to payment of his fees and those of the Resolution Institute. There were some issues in arranging payment of those fees, but those matters need not be recounted for the present purposes. Ultimately, the issues were resolved to a sufficient extent for Mr Peisley to publish his determination to the parties on 6 February 2023 (the Determination). 37 There is little reason, on this application, for the content of the Determination to be described in detail. It suffices to note the following points: (a) The Determination listed the submissions and other documents provided by the parties in the course of the expert determination process. This list suggested that there were multiple occasions on which the parties had the opportunity to put material before Mr Peisley, and that both parties fully participated in the process by availing themselves of such opportunities. (b) The parties' respective positions as to the average annual gross profit for the financial years ended 30 June 2020 and 30 June 2021 (relevant to the calculation of the first Instalment) were set out as follows: (i) ThoughtWare contended the profit figure to be $1,081,042, such that the first Instalment of $500,000 was not to be reduced; and (ii) IonMy contended the profit figure to be $413,399, such that the first Instalment was to be reduced to $206,700. (c) It was noted that ThoughtWare had asserted that the profit calculation should "be based on the terms of the BSA", being the methodology that it had used to calculate gross profit during the time that it had operated the Business. By contrast, IonMy asserted that "the BSA does not define the methodology for calculating gross profit and it is left to the parties to choose their own methodology" and, further, that the methodology that it had used was to be preferred as it "reflect[ed] the average annual performance of the … Business for the 2 years prior to 30 June 2021". (d) Mr Peisley proceeded, in the critical part of the Determination, to engage in a contractual construction exercise, in the course of which he: (i) drew on case law to identify the interpretive task at hand, including the application of an entire agreement clause in the BSA, the parol evidence rule, and the "ambiguity gateway" concept arising from the judgment of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; (ii) recognised that there was no specific definition of "gross profit" in the agreement, but "on an objective interpretation of the BSA, the parties include the Business Accounts at Annexure A as part of the BSA, which illustrates the methodology for calculating gross profit"; (iii) noted that the financial statements referred to in the BSA and which had been provided to IonMy showed that ThoughtWare had consistently classified the Business' wages and contactor expenses as operating expenses; (iv) noted that IonMy had chosen to account for those expenses (described elsewhere in the Determination as "Management fees (wages), Contractors fees and Licence fees") as cost of goods sold in its profit calculations, such that its method for calculating the gross profit of the Business was "different to the methodology in the Business Accounts of the BSA". (e) Mr Peisley's conclusion from this construction exercise was expressed as follows: 98. [IonMy] cannot, for the purpose of calculating the "average annual gross profit of the Business" during 2020 and 2021 at clause 3.5(a) of the BSA, go behind what the parties have expressly agreed in the BSA and adopt its own methodology for calculating the average annual gross profit. 99. The parties attached the Business Accounts at Annexure A to illustrate the method of calculating gross profit for the IonMy Business, the parties plainly intended this methodology to be used to determine the "average annual gross profit of the Business" in the period of the instalment at Clause 3.5. 100. … [T]he parties use language which relates to accounting concepts. These matters tend against a conclusion that errors occurred in drafting, or that the contract should be interpreted as meaning something other than what the words used mean. 101. On this basis, the term gross profit is not ambiguous when regard is had to plain words of the contract and the objective intentions of the parties as discussed further below. (f) Several other textual and contextual points were made by reference to the BSA in support of the conclusion that IonMy was not entitled to adopt a different accounting policy to calculate the gross profit of the Business (specifically, by treating wages and contractor expenses as part of cost of goods sold), and that the appropriate methodology to calculate gross profit was illustrated in the Business Accounts in Annexure A of the BSA. (g) Other arguments made by the parties in relation to, inter alia, an implied term, pre-contractual and post-contractual conduct, an "expert report" and certain articles regarding the calculation of gross profit adduced by ThoughtWare were each considered in turn, but ultimately rejected or afforded little weight. (h) On the basis of these conclusions, Mr Peisley calculated the average annual gross profit of the Business in 2020 and 2021 to be $1,291,106. 38 As ThoughtWare has pointed out, Mr Peisley substantially accepted its position in relation to the two issues that were referred by the parties for expert determination.

ThoughtWare's response to the Determination 39 On 8 February 2023, ThoughtWare's solicitors wrote to IonMy's solicitors demanding payment of the monies due in accordance with the Determination. The demand extended to the full $750,000 amount of the second Instalment, which was identified as being payable in accordance with a calculation of the Business' gross profit over the financial years ending 30 June 2021 and 30 June 2022. The calculations performed in relation to the latter year were contained in a spreadsheet attached to the letter. Although the second Instalment had not specifically been addressed in the Determination, it was apparent from the letter that ThoughtWare's solicitors (or some other party) had purportedly performed the calculation in the attached spreadsheet in accordance with the methodology that Mr Peisley had found to be correct. 40 IonMy did not accede to the demand, and ThoughtWare commenced the present proceeding. Its Originating Application seeks a number of orders. Those that are relevant to the present application may be summarised as follows: (a) at paragraphs 1 and 2, a declaration that the first and second Instalments due by IonMy to ThoughtWare pursuant to cl 3.2 of the BSA were $368,903.59 and $750,000, respectively, and a declaration that IonMy was in breach of cl 3.2 of the BSA by failing to pay those Instalments; and (b) at paragraphs 3 and 4, an order that IonMy pay to ThoughtWare within 14 days the sum of $1,118,903.59, or alternatively some other sum determined by this Court, and an order that interest be paid on whatever sum is awarded.

IonMy's challenge to the Determination 41 IonMy contended in its Concise Statement in Response that the Determination is "unenforceable, invalid, void, of no effect and liable to be set aside". It made this contention on the principal basis that Mr Peisley, so it is alleged, acted in a manner that was "not permitted by the contract", or was not "in accordance with or in compliance with the obligations of the expert set out in the relevant contract", by purporting to determine or consider various matters as part of the Determination. It also said that Mr Peisley was required only to consider the two issues put to him in the 9 May 2022 joint letter of appointment and reiterated in the written agreement that he subsequently issued to the parties, as set out above. 42 In connection with this primary contention, IonMy asserted that it is a presumption of contractual construction that, in the absence of clear contractual terms to the contrary, "matters of objective fact, such as the meaning and effect of the agreement, are matters for the court whilst matters involving discretion or opinion are matters for an expert". 43 It further alleged that the Determination is reviewable, even though it is stated to be final and binding, because: (a) "it is not in accordance with the contract"; (b) "it purports to make findings or decisions without any authority being conferred by the parties on the expert"; and (c) although "the expert was to have regard to the submissions of the parties under the contract", he was "as a matter of law … obliged to disregard what was inconsistent with the requirements of the contract in coming to the expert determination". 44 Its submissions on this application were to similar effect, but were rather more elaborate, and will be considered in some detail. At the outset, though, it ought to be acknowledged once again that this is an application for summary judgment, and the parties' submissions must be approached with that fact borne steadily in mind. 45 It is necessary to set out the applicable principles, beginning first with the more general principles by which the Court must decide applications of this type, and then turning to two more specific issues raised in the circumstances of this case.

General principles 46 This Court may grant summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), which provides relevantly as follows: 31A Summary judgment (1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. … (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. 47 That section is supplemented by r 26.01 of the Federal Court Rules 2011 (Cth), by which a party may apply for summary judgment. That rule provides relevantly as follows: 26.01 Summary judgment (1) A party may apply to the Court for an order that judgment be given against another party because: … (e) the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding. … (4) If an order is made under subrule (1) dismissing part of the proceeding, the proceeding may be continued for that part of the proceeding not disposed of by the order. 48 The High Court has emphasised that s 31A should be applied in accordance with the statutory language; that is, summary judgment should be granted if, and only if, the Court is satisfied that the party against whom the claim is brought has "no reasonable prospect" of success: Spencer v Commonwealth (2010) 241 CLR 118, 140 - 141 [56] - [60] per Hayne, Crennan, Kiefel and Bell JJ (Spencer). In determining whether or not there is a reasonable prospect of success, much will depend on the case at hand, and no hard and fast rule can be laid down as to when summary judgment is available: Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) (2011) 203 FCR 293, 300 [17] per Kenny J. However, the power to dismiss an action summarily is not to be exercised lightly: Spencer at 131 - 132 [24] per French CJ and Gummow J, 141 [60] per Hayne, Crennan, Kiefel and Bell JJ. 49 In this Court, it has been recognised that, because the assessment of prospects of success under s 31A necessitates the making of a value judgment in the absence of a full and complete factual matrix and full argument thereon, a discretion is reposed in the judge hearing the relevant application to grant summary judgment: Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401, 408 - 409 [28] per Spender, Graham and Gilmour JJ. In the exercise of that discretion, it must be kept in mind that the section is concerned with substance, not just with form: White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298, 310 [50] per Lindgren J. The grant of summary judgment is therefore to be distinguished from the application of rules concerning deficient pleadings, as explained by Wigney J in Chandrasekaran v Commonwealth of Australia (No 3) [2020] FCA 1629 at paragraph [96]: Where the evidence shows that a person may have a reasonable cause of action or reasonable prospects of success, but the person's pleading does not disclose that to be the case, the Court may be empowered to strike out the pleading under r 16.21, but is not empowered to summarily dismiss the proceeding under s 31A of the FCA Act: see White Industries Australia Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [47], referred to in Spencer at [23]. That said, a "failure after ample opportunity to plead a reasonable cause of action may suggest that none exists and therefore that the applicant has no reasonable prospects of success": White Industries at [47]. 50 A number of further principles relevant to the application of s 31A were collected and succinctly articulated by McKerracher J in Prior v South West Aboriginal Land and Sea Council Aboriginal Corporation [2020] FCA 808 at paragraph [29]. It is convenient to repeat that summary below: (a) a reasonable prospect of success is one which is real, not fanciful or merely arguable: Rogers v Assets Loan Co Pty Ltd (2008) 250 ALR 82 per Logan J (at [41]), cited in Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd (No 2) [2018] FCA 978 per McKerracher J (at [3]), though this must now be read with Spencer (at [58]-[60]); (b) there will be no prospect of success in circumstances where there is a defect in the pleadings which cannot be cured: "Sam Hawk" v Reiter Petroleum Inc (2016) 246 FCR 337 per Kenny and Besanko JJ (at [269]), cited in Buurabalayji (at [3]); (c) an application for summary dismissal is likely to succeed where the applicant's success in the principal proceedings relies upon a question of fact that can truly be described as fanciful, trifling, implausible, improbable, tenuous or one that is contradicted by all the available documents or other materials. Conversely, as a general principle, an application for summary dismissal is unlikely to succeed where, on a critical examination of all the available materials, the Court is satisfied that there appears to be a real question of fact to be determined between the parties: Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256 per Reeves J (at [47]); (d) similarly, as a general principle, the moving party on an application for summary dismissal is likely to succeed if it is able to demonstrate to the Court that the applicant's success in the principal proceedings relies upon a question of law that is straightforward and confined, or is trite in the sense that it is well settled on authority, such that the question can be resolved summarily without the necessity for a full trial. On the other hand, the moving party would be unlikely to succeed if the Court is satisfied that the applicant's success in the proceedings relies upon a question of law that is serious or important, or is difficult and therefore likely to require lengthy argument for its resolution, or involves conflicting authority: Cassimatis (at [48]); see also: Luck v University of Southern Queensland [2008] FCA 1582 per Logan J (at [14]-[15]): s 31A is amenable to resolving straightforward questions of law; SK Foods LP v SK Foods Australia (in liq) (No 3) (2013) 214 FCR 543 per Flick J (at [115]): summary judgment may still be appropriate if a question raised is of some complexity; McAleer v University of Western Australia (No 3) (2008) 171 FCR 499 per Siopis J (at [39] and the cases therein cited): s 31A permits dismissal of a proceeding where an inquiry into the merits of the issues of law demonstrates the arguments are insufficiently strong to warrant the matter going to trial; (e) a Court should be particularly cautious about ordering summary determination where proceedings involve questions of fact and law, or mixed questions of fact and law, as these combinations usually give rise to some complexity that would require a full hearing. In such circumstances the moving party, as a general principle, would need to show a substantial absence of merit on either of the question of fact or law concerned, or on the mixed question: Cassimatis (at [49]); and (f) if a prima facie case in support of summary judgment is established, the onus shifts to the opposing party to point to some factual or evidentiary issues making a trial necessary: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 per Gordon J (at [127]), cited in Buurabalayji (at [3]). See also Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 per Gilmour J (at [6]). 51 His Honour also set out a number of relevant principles in a similar way in Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd (No 2) [2018] FCA 978 at paragraph [3], wherein the following additional points were drawn from the prior authorities of this Court: • the moving party bears the onus of persuading the Court the application has no reasonable prospects of success. The assessment of whether a proceeding has no reasonable prospects of success necessitates the making of a value judgement in the absence of a full and complete factual matrix and argument, with a result that the provision vests a discretion in the Court. That discretion includes whether to deal with the motion at once or at some later stage in the proceedings, when the legal and factual issues have been more clearly defined: Kimber v Owners of Strata Plan No 48216 [2017] FCAFC 226 per Logan, Kerr and Farrell JJ (at [62]) quoting with approval Eliezer v University of Sydney (2015) 239 FCR 381 per Perry J (at [37]); … • the Court does not, in such an application, conduct a 'mini trial based upon incomplete evidence to decide whether the proceedings are likely to succeed or fail at trial'. Rather, it 'requires a critical examination of the available materials to determine whether there is a real question of law or fact that should be decided at trial': Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256 per Reeves J (at [46]); and • each application for summary judgment or summary dismissal has to be determined according to its particular circumstances. What is required is a practical judgment of the case at hand. The relevant facts and circumstances will partly depend upon the stage which the proceedings have reached. Among other things, this will affect materials available to the Court for considering the application, for example, where the pleadings have been exchanged, or discovery of documents has occurred: Cassimatis per Reeves J (at [46]). 52 These general principles did not seem to be the subject of any particular controversy as between the parties to the present case. 53 Nevertheless, it must be added that, merely because there may exist some complexity in the underlying issues, courts should not shy away from granting summary judgment when, after a consideration of the facts and law, the outcome of the disputation is clear. If it is apparent that the result will not be altered by the holding of a trial, it is antithetical to the proper administration of justice to require the parties to be put to the effort and expense of conducting a full hearing: Theseus Exploration NL v Foyster (1972) 126 CLR 507; see also Federal Court Act ss 37M and 37N. In this respect the observations of White JA (with whom Margaret Wilson AJA and Martin J agreed) in Thomas v Balanced Securities Ltd [2012] 2 Qd R 482 at 502 [68] - [70] are relevant, albeit that they concerned the cognate rules applicable in the Queensland Supreme Court: [68] His Honour could have declined to grant summary judgment in light of the complexity of the issues to be determined but having embarked upon a consideration of the very full written arguments advanced by counsel and, being pressed by the parties' representatives to do so, it was open to him to proceed to dispose of the claim and in a summary way. In Australian Can Co Pty Ltd v Levin & Co Pty Ltd (as quoted by Stephen J in Theseus Exploration) the Court said: "… We think this Court being clear as to the meaning of the contract is not so helpless that it cannot prevent the absurdity of remitting the case to a single judge for trial because before full argument there might have been some uncertainty as to the meaning of the document." Similarly, a judge hearing a summary judgment application may be prepared to tackle a legally difficult analysis without being in error in doing so. [69] The approach to r 292 and its corollary for a defendant, r 293, is as enunciated in Deputy Commissioner of Taxation v Salcedo and confirmed and elaborated in Coldham-Fussell v Commissioner of Taxation. In the latter decision it was noted that rr 292 and 293 must be applied in the context of the overriding purpose of the UCPR to "facilitate the just and expeditious resolution" of the matter in dispute. [70] While the primary judge could have declined to embark on the applications, no error has been demonstrated in him having done so. (Footnotes omitted). 54 Justice Flick was of a similar view in SK Foods LP v SK Foods Australia Pty Ltd (in liq) (No 3) (2013) 214 FCR 543, where his Honour held at 579 - 580 [115]: [115] An application for summary judgment may be entertained even if the questions raised for resolution involve some complexity: cf Civil & Civic Pty Ltd v Pioneer Concrete (NT) Pty Ltd (1991) 1 NTLR 43 at 52-53 per Asche CJ. The fact that a case may present complexity - either by reason of the law to be applied or the facts to be found - does not preclude an application being made for summary judgment. But caution must be exercised before entering summary judgment: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. Dixon J there observed: The application is really made to the inherent jurisdiction of the court to stop the abuse of its process when it is employed for groundless claims. The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process. This passage has since been endorsed by (for example) Hayne J in Re Green (2011) 85 ALJR 423 at [6]. See also: General Steel Industries Inc v Commissioner for Railways (NSW) at 128-129 per Barwick CJ; Silverton Ltd v Harvey [1975] 1 NSWLR 659 at 665 per Rath J.

Granting summary judgment where the case will proceed to trial in any event 55 In its written submissions, IonMy referred to Tectran Co Pty Ltd v Raybos Australia Pty Ltd (Supreme Court of New South Wales, Yeldham J, 12 August 1982) for the proposition that, where at least part of a matter will proceed to trial notwithstanding the grant of summary judgment, the applicant must show an "exceedingly strong" case as to why the whole matter should not go to trial. Such a proposition seems to have had its origin in the earlier decision in Peter Kent Development Pty Ltd v ANZ Banking Group Ltd (Supreme Court of New South Wales, Hunt J, 6 May 1980). 56 However, the approach of this Court to an application for summary judgment in respect of part of a case seems to depart to some extent from that suggested by these earlier New South Wales decisions. The position was explained as follows by Reeves J in Crocker v Toys 'R' Us (Australia) Pty Ltd (No 3) [2015] FCA 728 at paragraph [10]: [I]t is apt to note that there is authority that an applicant for summary judgment on the remaining claims in a proceeding must show an exceedingly strong case as to why the whole matter should not proceed to trial: see Peter Kent Development Pty Ltd v ANZ Banking Group Ltd (unreported, Sup Ct, NSW, Hunt J, 6 May 1980). However, in Caterpillar Inc v Sun Forward Pty Ltd (1996) 36 IPR 411 …, Drummond J also observed that this Court should not approach a claim for summary judgment on part of a proceeding with a predisposition not to grant it, save in exceptional circumstances. Rather, his Honour held (at 425) it is necessary to take account of all the relevant circumstances to determine whether it is appropriate to give summary judgment in respect of a particular part of a proceeding, when other parts can be, or are only suitable to be, resolved at a trial. This reasoning was followed by this Court in Geoffrey Inc v Luik (1997) 38 IPR 555. 57 In other words, in exercising the discretion under s 31A of the Federal Court Act, it may be relevant to consider whether there might remain some part of the case left to proceed to trial in the event that summary judgment is granted. However, that consideration should not be attributed so much weight that it effectively fetters the Court's discretion. It is not the case that, where some residual part of the case must go to trial, the Court should be predisposed not to grant summary judgment. 58 An illustration of how the factor might appropriately be taken into account was offered by Drummond J in Caterpillar Inc v Sun Forward Pty Ltd (1996) 36 IPR 411 at 425: If, for example, summary determination of some of an applicant's claims is not likely to have any significant impact on containing the costs of, and time needed to resolve, other claims, which will themselves have to be determined before, in practical terms, the whole dispute between the parties is likely to be resolved, that would be a good discretionary reason for refusing summary judgment on some only of an applicant's claims. 59 One might see reflected in this passage certain case management considerations, which have been identified in other authorities of this Court as bearing on the availability of summary judgment under s 31A: see generally Cook Inc v World Medical Manufacturing Corp (2003) 58 IPR 193, 199 [21] - [23] per Goldberg J; Hastie Group Limited (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (No 3) [2022] FCA 1280 [428], [431] per Middleton J. In particular, it was recognised by Gordon J in Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 at 406 [125] that the section "permits, and assists, the Court to manage proceedings and therefore assists in controlling the cost of, and delays in, resolving proceedings by summarily dismissing claims which have no reasonable prospect of success". It is relevant, then, to ask whether the grant of summary judgment in respect of part of the case will lead to any particular efficiencies, or will narrow the issues in dispute to such an extent as to reduce materially the time and cost required to bring the proceeding to a conclusion. If it would not, there may be good reason to doubt whether an order under s 31A could assist the Court in managing the proceeding, and it may be appropriate to allow the matter to go to trial in the ordinary manner.

Summary judgment in respect of points of construction 60 In the course of the hearing of this application, Mr Trim for ThoughtWare drew attention to paragraph [36] of the judgment of Jackson J, in the Queensland Supreme Court, in Wiggins Island Coal Export Terminal Pty Ltd v Monadelphous [2015] QSC 309, where it was said (with footnotes omitted): There is a long history in this court of deciding a question of construction of written contracts summarily. Prior rules of court specifically provided for the court to be able to do so on what was known as a "construction summons". Although those specific rules of court have been repealed, it does not seem to me that the approach of the court under the UCPR, guided by UCPR r 5, should be different. 61 The point that seemed to be made by reference to this authority was that, where a case raised only a question of construction, the case could more readily be determined summarily. Mr O'Brien for IonMy did not contest the proposition that questions of construction could be considered in some detail on a summary judgment application, since there was no concern as to the potential effect of witnesses not being cross-examined, or other factual material being unavailable. However, he emphasised that the test for summary judgment was no different in such cases: it is still necessary to show that the party opposing the application has no reasonable prospect of successfully defending the proceeding. 62 Mr O'Brien was no doubt right to identify that the test for summary judgment does not change. However, a question of construction of an instrument is a question of law, and a narrow one at that: see generally Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239, 279 - 280 [82] per Heydon J. It may therefore be possible that, faced with such a question, the Court will draw a conclusion regarding the parties' respective prospects of success that is sufficiently comprehensive as to resemble a final determination of the question. It is not the case that the Court will examine the question of construction only to the extent necessary to discern that it is, for instance, arguable or without a prima facie answer, and will then defer resolution of the point to trial. This would tend only towards a duplication of effort, as the evidence and submissions relevant to the question of construction are unlikely to change materially between the summary judgment application and the trial itself. The inefficiency of this duplication would be inimical to the case management considerations relevant to s 31A. 63 It may well be otherwise where the construction exercise in a particular case requires more extensive recourse to evidence; for example, where resort must be had to pre-contractual material to resolve ambiguity, or where there is a need to prove a customary meaning of a term or phrase. That evidence may only be fully available and properly processed by the time of trial. However, care must be taken to ensure that an application for summary judgment is not brought to an end by mere speculation that such matters might arise in the construction exercise. There must be some real basis in the material for any assertion that they will.

Consideration 64 It is now appropriate to consider the present case against the background of these principles, commencing with an assessment as to how best the issues should be characterised.

Characterisation of the issues 65 In its written submissions, ThoughtWare contended that IonMy's defence to its claim was essentially limited to an argument that Mr Peisley strayed beyond the bounds of his authority as an expert in making the Determination. That summary seemed to be broadly consistent with how the defence was expressed in the Concise Statement in Response, as set out above. 66 ThoughtWare said further that, because IonMy has put on no evidence, there are no factual issues arising for determination. It contended that, having regard to its evidence alone (insofar as it has not been opposed), IonMy's defence has no reasonable prospects of success for several reasons. Those reasons can be distilled to three overarching issues, on which Mr Trim focused his submissions at the hearing. They are as follows: (a) first, whether Mr Peisley acted within the authority conferred upon him by the parties, in accordance with the BSA, and whether the points raised by IonMy therefore provide a proper basis upon which to argue that the Determination is not valid and binding; (b) secondly, whether IonMy waived its right to object to the Determination, or is otherwise estopped from so objecting; and (c) thirdly, even if its challenge to the Determination is successful, whether IonMy has explained why the fixed sums under the BSA are not payable. 67 IonMy, in its written submissions and at the hearing, raised two further issues. The first was that the issue of whether Mr Peisley had acted within his authority raised factual questions on which additional evidence would be required, including expert evidence, which could only be dealt with appropriately at trial. The second was that the matter was inappropriate for summary judgment because it would not resolve all of the issues in dispute in the proceeding, and the whole matter therefore ought to go to trial. 68 As the discussion below reveals, the pivotal issue is the extent to which the parties are bound by the Determination. If they are, the other questions do not arise, or can be dealt with quite briefly. It is relevant to point out that this pivotal issue is essentially one of construction of the BSA; that is, a question of law. It is therefore possible for this Court to deal with the issue comprehensively notwithstanding the fact that it has arisen in the context of an application for summary judgment.

Principles relating to the scope of an expert's authority 69 Expert determination is simply a private contractual mechanism to which parties agree, and the determination does no more than create binding contractual rights and obligations: Illawarra Community Housing Trust Ltd v MP Park Lane Pty Ltd [2020] NSWSC 751 [62] per Hammerschlag J. The scope of the expert's authority and the effect of the determination on the resolution of the issues in dispute are therefore matters that are properly to be addressed by interpretation of the parties' contract. 70 A dispute resolution clause, including a clause by which the determination of a dispute is entrusted to an expert, is to be construed like any other clause in a commercial contract - that is, by reference to the language used by the parties, the circumstances known to them and the commercial purpose or objects to be secured by the contract: Lepcanfin Pty Ltd v Lepfin Pty Ltd (2020) 102 NSWLR 627, 647 [79] - [80] per Bell P (with whom Payne and McCallum JJA agreed). A construction is to be preferred that avoids "making commercial nonsense or working commercial inconvenience": Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656 - 657 [35] per French CJ, Hayne, Crennan and Kiefel JJ, quoting Zhu v Treasurer (NSW) (2004) 218 CLR 530, 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. 71 Consistent with this preference for an interpretation that avoids working commercial inconvenience is the well-established proposition that dispute resolution clauses are, in general, to be afforded a broad and liberal construction: see Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160, 165 per Gleeson CJ (with whom Meagher and Sheller JJA agreed); Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45, 87 - 88 [164] - [165] per Allsop J (with whom Finn and Finkelstein JJ agreed); Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 [6] - [8] per Allsop P (with whom Young JA and Tobias AJA agreed); Rinehart v Welker (2012) 95 NSWLR 221, 247 [117] - [120] per Bathurst CJ. 72 It follows that, where the parties to a contract have referred a dispute between them to expert determination pursuant to a dispute resolution clause and the process of expert determination has run to completion, there remains limited scope for the outcome to be challenged. The usual extent to which an expert determination will be considered binding was explained straightforwardly by Hammerschlag J in Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576 at paragraph [39], as follows: As the authorities on the subject make clear, the parties will be bound if the Expert did what the Contract, on its proper construction, required him to do, irrespective of the result. Conversely, the Determination will not be binding if the Expert went outside the ambit of what the Contract required him to do … 73 The simplicity of this statement conceals the potential difficulty, in many cases, of determining what exactly the expert was required by the contract to do. However, the case law does offer further guidance as to how that task ought properly to be approached. 74 An appropriate starting point is the judgment of McHugh JA in Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314. After conducting an extensive review of the authorities, his Honour identified (at 335 - 336) several principles relevant to the validity of an expert determination, which can be summarised as follows: (a) Whether a determination is binding depends, in the first instance, upon the terms of the parties' contract. The overriding question for the Court is whether the determination was made in accordance with those terms, not whether the expert made an error in their discretionary judgment. (b) A determination that was obtained by fraud or collusion can usually be disregarded, as the correct conclusion to be drawn in such a case will almost certainly be that the determination was not made in accordance with the terms of the contract. (c) An action for damages for negligence may lie against an expert if one party suffers loss as a result of a negligent determination. However, as between the parties, that determination can still stand. (d) A term can readily be implied that a determination must be made honestly and impartially, such that it will be invalid if it is not. However, it will be difficult, if not impossible, to imply a term to the effect that the determination can be set aside on the grounds of mistake or unreasonableness. (e) A mistake or an error on behalf of the expert will not, of itself, be sufficient to invalidate the determination, unless the mistake or error is of such a nature that the determination is not in accordance with the terms of the contract. If the determination can be said to have been made in accordance with the terms of the contract, then the mere fact that the expert has made an error in the application of relevant principles, such as the principles of valuation or accounting, will not usually vitiate the determination. (f) It is similarly irrelevant, where the determination has been made in accordance with the terms of the contract, that the expert has taken into account matters that he or she should not have, or has failed to take into account matters that he or she should have. 75 The observations of McHugh JA have been followed on numerous occasions: see, eg, Holt v Cox (1997) 23 ACSR 590, 595 - 597 per Mason P (with whom Priestley JA agreed); Kanivah Holdings Pty Ltd v Holdsworth Properties Pty Ltd (2002) 11 BPR 20,201, 20,207 - 20,208 [45] - [50] per Stein JA (with whom Beazley JA agreed), 20,209 - 20,210 [70] - [75] per Giles JA; Galileo Miranda Nominee Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 1157 [134] - [136] per Parker J. 76 They were also referred to by Applegarth J in Canaipa Developments Pty Ltd v TLC Jones Pty Ltd [2021] QSC 237 at paragraphs [57] to [77], where his Honour added further observations, by reference to more recent Australian authorities, regarding the manner in which the Court should approach the question as to the binding nature of an expert determination. The following propositions can be taken from his Honour's judgment: (a) The identification of the matters that the parties have entrusted to the expert for determination will ultimately turn on the proper construction of the contract: Sino Iron Pty Ltd v Mineralogy Pty Ltd (2019) 55 WAR 89, 133 [198] per Buss P, Murphy and Beech JJA (Sino Iron). (b) Although the matters entrusted to the expert for determination are to be ascertained by construction of the particular contract, it can usually be assumed that matters of an evaluative nature within the expertise of the expert, involving elements of judgment, opinion or discretion, are more likely to have been committed for final determination by the expert than questions of law, particularly where the expert has no legal qualifications or experience. (c) A distinction is often drawn, in this respect, between an error in the exercise of a judgment or discretion, or the giving of an opinion, and an error in the assessment of an "objective fact". In AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd (formerly TXU Networks (Gas) Pty Ltd) [2006] VSCA 173 (AGL), Nettle JA (with whom Maxwell P and Bongiorno AJA agreed) explained as follows at paragraphs [53] and [54]: Therein lies the distinction drawn in some of the authorities, and observed by the judge in this case, between an error in the exercise of a judgment, opinion or discretion entrusted to an expert, and an error which involves objective facts or a mere mechanical or arithmetical exercise. Subject to the contract in question, it is easier to suppose that parties to a contract contemplate that an error of the former kind be beyond the realm of review than it is to think that they intend to be fixed with errors of objective fact or in processes of mechanical calculation. … The question in each case is what the parties should be presumed to have intended, and that is to be determined objectively from the terms of the contract, bearing in mind the context in which it was created. (d) That is not to say, however, that questions of mixed fact and law, or questions of pure law, cannot be left to the determination of an expert: Australian Vintage Ltd v Belvino Investments No 2 Pty Ltd (2015) 90 NSWLR 367, 385 [76] per Bathurst CJ (with whom Beazley P and McColl JA agreed) (Australian Vintage). (e) There will be cases where, in order to perform the agreed task, the expert will be required to consider the construction of a contract, but this does not necessarily mean that the parties are bound by the expert's interpretation. The fact that an exercise of judgment is involved in resolving a question of interpretation does not mean that "the ascertainment of that meaning was necessarily left to the expert, such that the expert's determination was immune from review by the Court": Australian Vintage at 385 - 386 [78]. 77 This final principle assumes a degree of importance in the present case, as a key point of contention between the parties concerned the extent to which they will be bound by Mr Peisley's construction of the expression "gross profit" in cl 3.5(a) of the BSA if, as IonMy contended, that construction was erroneous. The proper approach to a scenario of this kind was addressed in the unanimous joint judgment of Buss P, Murphy and Beech JJA in Sino Iron, where their Honours stated the following at 133 - 134 [199] (with footnotes omitted): Matters of mixed law and fact, requiring both the construction of a term (a question of law) and the application of the term to the facts (a question of fact) may be committed to expert determination. Where the expert is contractually required to determine specified facts, but the process necessarily involves an intermediate conclusion on a point which is properly regarded as a question of law, in deciding whether the expert has contractual authority to determine both the intermediate point of law and the ultimate questions of fact, the court may have regard to (1) whether the contract directs attention to expert determination of the ultimate question of fact (only), and (2) whether the intermediate point of law falls within the expertise of the expert. 78 Their Honours proceeded to discuss the English case of Mercury Communications Ltd v Director General of Telecommunications [1996] 1 WLR 48 (Mercury), which concerned a similar point. In that case, British Telecommunications plc (BT) had been granted a licence to run a telecommunication system. Condition 13 of the licence required BT to enter into an agreement with any person (described as "the operator") who was licensed to run a connectable system, if the operator required it to do so. If BT failed to enter into an agreement as required by the operator, then paragraph 13.5 of condition 13 provided, relevantly, that the Director General of Telecommunications (the Director): … shall, on the application of the operator or the licensee, determine the permitted terms and conditions for the purpose of that agreement which have not been agreed between the Licensee and the Operator being terms and conditions relating to the matters mentioned in paragraph 13.4 which appear to the Director reasonably necessary (but no more than reasonably necessary) to secure (a) that the operator pays to the licensee the cost of anything done pursuant to or in connection with the agreement including fully allocated costs attributable to the services to be provided and taking into account relevant overheads and a reasonable rate of return on attributable assets … 79 A licence was in due course granted to Mercury Communications Ltd (Mercury), which then entered into an agreement with BT. Clause 29 of the agreement between them contained a review mechanism which provided, amongst other things, that the parties could request the Director to determine whether he was satisfied that there had been a material change in circumstances since the agreement was made and, if so, to determine whether the agreement should be amended in accordance with the criteria laid down in condition 13 of the licence. 80 After the passage of some years, the parties jointly referred to the Director, under clause 29, the question of the amounts to be charged for connection and the conveyance of calls under a possible replacement agreement between them. After the Director's determination was issued, Mercury contended that the Director had misinterpreted the phrases in condition 13 "fully allocated costs attributable to the services to be provided" and "relevant overheads". 81 The House of Lords held that the determination was open to challenge. Lord Slynn, with whom the other Law Lords agreed, identified the limits of the powers of the Director at 58 - 59 as follows: What has to be done in the present case under condition 13, as incorporated in cl. 29 of the agreement, depends upon the proper interpretation of the words 'fully allocated costs' which the respondents agree raises a question of construction and therefore of law, and 'relevant overheads' which may raise analogous questions. If the director general misinterprets these phrases and makes a determination on the basis of an incorrect interpretation, he does not do what he was asked to do. If he interprets the words correctly then the application of those words to the facts may in the absence of fraud be beyond challenge. In my view when the parties agreed in clause 29.5 that the Director's determination should be limited to such matters as the Director would have power to determine under condition 13 of the B.T. licence and that the principles to be applied by him should be "those set out in those conditions" they intended him to deal with such matters and such principles as correctly interpreted. They did not intend him simply to apply such meaning as he himself thought they should bear. His interpretation could therefore be reviewed by the court. There is no provision expressly or impliedly that these matters were remitted exclusively to the director general, even though in order to carry out his task he must be obliged to interpret them in the first place for himself. Nor is there any provision excluding altogether the intervention of the court. On the contrary cl. 29.5 contemplates that the determination shall be implemented 'not being the subject of any appeal or proceedings'. In my opinion, subject to the other points raised, the issues of construction are ones which are not removed from the court's jurisdiction by the agreement of the parties. 82 It is useful to contrast that decision with two others. 83 First, in Jones v Sherwood Computer Services plc [1992] 1 WLR 277 (Jones), the defendant company agreed to purchase the plaintiffs' shares in a certain company, Corporate Technology Group plc, with the consideration to include the issue to the plaintiffs of a number of new shares in the defendant. The consideration was to be calculated by reference to the amount of "sales" of products sold by subsidiaries of Corporate Technology Group plc in a particular period. It was further provided that a statement of the amount of sales would be reviewed by firms of accountants representing each of the parties and, if those firms were unable to agree to approve the statement, the matter was to be referred to independent accountants acting as experts. 84 The firms representing the parties (referred to as "Peats" and "Deloittes") were ultimately unable to agree whether two categories of transactions were "sales". The matter was referred to independent accountants (referred to as "Coopers") who published a statement, without accompanying reasons, in which they determined an amount that was the same as that calculated by the defendant's accountants. The plaintiffs contended that they were entitled to call on the Court to determine whether or not the independent accountants had made mistakes, which they contended were mistakes of law or of mixed law and fact. 85 The Court of Appeal rejected this contention. Lord Justice Dillon, with whom Balcombe LJ agreed, stated the following at 287 - 288: … Coopers have done precisely what they were asked to do. They were asked to consider only the points on which Peats and Deloittes were not in agreement, to decide whether the two classes of disputed transactions were or were not to be included in the total of "sales" as defined in appendix I, and to determine the amount of sales accordingly; that is what they have done. Under paragraph 7 of appendix I, a decision of the accountants under paragraph 3, if the accountants are in agreement, is to be as conclusive, final and binding as the decision of the expert if the accountants disagree with each other. … If the parties to an agreement have referred a matter which is within the expertise of the accountancy profession to accountants to determine, and have agreed that the determination of the accountants is to be conclusive, final and binding for all purposes, and the chosen accountants have made their determination, it does not seem appropriate that the court should rush in to substitute its own opinion, with the assistance of further accountants' evidence, for the determination of the chosen accountants. When the parties provided in appendix I to the sale agreement for a third firm of accountants - in the event, Coopers - to act as the expert in the event of disagreement between Peats and Deloittes, they cannot have had in mind merely disagreements between Peats and Deloittes on simple arithmetic - the adding up of the figures of the sales. 86 Secondly, in John Nelson Developments Pty Ltd v Focus National Developments Pty Ltd [2010] NSWSC 150 (John Nelson Developments), Ward J dealt with a dispute between two parties to a failed property joint venture, in the course of which the parties had invoked the dispute resolution provisions of their joint venture agreement (the JVA) on multiple occasions. Relevantly, on the first of these occasions, the parties relied upon cl 15.3.1 of the JVA, which provided: [A]ny dispute relating to legal issues will be determined by [a] practising Barrister or Solicitor selected by the parties or if they cannot agree, then nominated by the President of the Law Society of NSW 87 The President of the Law Society ultimately nominated a Mr Molloy to determine the relevant question raised by the parties, which was essentially one of construction of certain provisions of the JVA. That question was duly determined. The defendant challenged the determination on multiple grounds, including on the basis of its correctness as a matter of law. Her Honour dismissed this challenge, explaining the outcome as follows at paragraphs [229], [230] and [232]: [229] Reliance was placed by [the defendant] on what was said in Mercury … at 58, namely that if there is an error on the question of the construction of the relevant agreement and the expert makes a determination on the basis of an incorrect interpretation, then the expert does not do what he or she was asked to do. There, however, the issue for determination was not the very issue in respect of which the error of law was said to have been made. [230] Here, Mr Molloy was asked, as a legal expert, to construe certain clauses of the JVA. If he made an error of law in that regard (by disregarding words or by misconstruing phrases in the agreement as is submitted), this surely is an error of judgment of the kind of which the parties should be taken to have assumed the risk. His skill and judgment in construing provisions of a contract are the very matters on which the parties have placed reliance and, if he has erred in that regard, that is a risk the parties must be taken to have accepted. Therefore, I do not consider the reasoning in Mercury to be of assistance. … [232] Here, what Mr Molloy was asked to do was to construe various clauses of the JVA. He did so. If he made a mistake in the construction of the contract (by applying the wrong legal principles or by placing too little or too much weight on the wording of particular clauses) it is nevertheless hard to see that this renders his determination something beyond the realm of contractual contemplation, (as opposed, for example, to the situation where he might have had regard to, and construed, the wrong clauses of the contract or a superseded version of the contract). 88 As these authorities make clear, although the principles as to the justiciability of an expert's determination can readily be articulated, albeit with some degree of generality, the outcome in any particular case will depend heavily upon the specific terms of the agreement between the parties, the question that has been referred to the expert, and the expert's qualifications to answer that question.

What task did the BSA require Mr Peisley to perform? 89 In determining the scope of Mr Peisley's authority as the expert in this case, the necessary starting point is cl 19 of the BSA. That clause refers throughout simply to "a dispute", and in that way does not restrict the range of issues that might permissibly be dealt with under the dispute resolution mechanism that it establishes. The issues that might be referred for expert determination in accordance with cls 19.2 and 19.3 are therefore left entirely unconfined. 90 This is consistent with cl 19.5, which essentially provides that, if the procedure for the commencement of an expert determination under clause 19.2(b) breaks down, the parties may take any steps that they consider appropriate in connection with the dispute, including commencing an action in the courts. The range of issues in dispute that might properly be referred to an expert accordingly seems to be no narrower than the range of issues that might be brought before a court. 91 The procedure in cl 19.2(b) and (c) for the commencement of the expert determination is of similar breadth. Clause 19.2(b) entitles one party to give notice to the other of an intention to appoint an expert to make an expert determination of the dispute and, together with that notice, nominate a "relevant professional body", of which the expert is to be a member of not less than five years' standing. There are only two limitations apparent in this provision: the specification that the nominated professional body is to be "relevant", and the requirement that the expert be a member of not less than five years' standing. These limitations seem to be directed only to ensuring that the expert is qualified to determine the dispute. 92 The apparent effect of these provisions, in combination, is that the parties are entitled to refer any question the subject of a dispute between them for determination by a suitably qualified person. This strongly suggests that the expert appointed by the parties is intended to bring their professional judgment and opinion to bear upon the determination, and that the determination is therefore not to be disturbed on the basis of mere mistake. 93 This conclusion is reinforced by the fact that cl 19.3(b) identifies the expert's determination to be "final and binding": see generally WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489, 500 [41] per Ipp J (with whom Kennedy and White JJ agreed). Though these words do not, in and of themselves, preclude any challenge to the determination, their presence may serve to emphasise that elements of the determination that involve discretion, opinion and judgment are beyond the scope of review: AGL [76], [79]. 94 The result of this is that, as a matter of construction, the expert appointed by the parties is simply required to answer the questions that are put to him or her, so as to resolve the relevant "dispute". Particularly when it is recalled that dispute resolution clauses are generally to be afforded a broad and liberal construction, the expansive language of cl 19 makes it especially difficult to perceive any basis upon which to conclude that the parties would be free to challenge mistakes, even as to matters of law, made by an expert appointed from a "relevant professional body". 95 The questions put to the expert in this case are readily identifiable. In the correspondence between the parties and the Resolution Institute (as the "relevant professional body") in early 2022, the parties identified the "dispute" as involving the "method of calculation of Gross Profit" for the purpose of ascertaining the sale price for the Business under the BSA. This dispute quite clearly had the potential to raise issues of law and fact, in the sense that it might foreseeably be necessary to interpret the BSA in order to decide the appropriate methodology for calculating gross profit, before proceeding to perform that calculation for the relevant period. It follows that it was entirely appropriate for the Resolution Institute to appoint Mr Peisley, a lawyer and chartered accountant, to determine that dispute. Neither party objected to that appointment. 96 In the subsequent joint letter by which Mr Peisley was formally appointed as the expert, it was again expressly stated that the parties were "in dispute as to how 'gross profit' is to be calculated". The letter went on to provide in clear terms that: The scope of the Dispute for your determination is therefore: - (a) the proper basis for calculation of 'gross profit' for the business sold; and (b) what is the gross profit of the business for the 2021 financial year. 97 The first question can be rephrased as being, "what is the meaning of the expression of 'gross profit' as used in the BSA?", which more clearly shows it to be a question of construction. It would seem to be self-evident that Mr Peisley was asked by the parties, as a qualified lawyer and accountant, to resolve that legal and accounting question by using his professional skill and judgment. Taking up the language of Ward J in similar circumstances in John Nelson Developments, the parties here have placed reliance on Mr Peisley's expertise as to the matters the subject of their dispute, and must be taken to have accepted the risk that he might err in the application of that expertise to the question of construction that was squarely put before him. This is not a case like Mercury, where, as Lord Slynn found, the parties intended for the Director to deal with the necessary matters and principles "as correctly interpreted" and did not intend for him to "apply such meaning as he himself thought they should bear". On the contrary, it is apparent that ThoughtWare and IonMy specifically requested Mr Peisley, first, to interpret the phrase "gross profit" for himself and then, secondly, to apply that interpretation in order to calculate part of the consideration payable under the BSA. 98 If the question of construction in this case is to be regarded as an intermediate question of law only, then it is relevant to consider what was said by the Court of Appeal of Western Australia in Sino Iron, that: … in deciding whether the expert has contractual authority to determine both the intermediate point of law and the ultimate questions of fact, the court may have regard to (1) whether the contract directs attention to expert determination of the ultimate question of fact (only), and (2) whether the intermediate point of law falls within the expertise of the expert. 99 The answer to the first question asked in this passage is "no". The BSA, in its broad and unconfined language, directed attention to the expert determination of the questions asked by the parties and nothing more. The questions that were ultimately posed by the parties to Mr Peisley did not direct attention to expert determination of the ultimate question of fact only, but also directed attention squarely and separately to a prior question of law. 100 The answer to the second question is "yes". Mr Peisley, as a lawyer and chartered accountant, had sufficient expertise in either of those capacities to answer the question of construction. 101 Mr Peisley was therefore required to determine the proper basis to calculate the "gross profit" of the Business, and to determine the gross profit of the Business for the 2021 financial year. He had "authority to err", at least to a certain extent, in the exercise of his professional skill and judgment to resolve those questions.

Did Mr Peisley perform the task that he was supposed to perform? 102 From the description of Mr Peisley's Determination, which is set out above, it is pellucid that he undertook the task required of him. He determined the two questions that the parties referred to him under the BSA. 103 In answering the first question, he undertook a textual and contextual interpretation of the BSA, identifying those matters that influenced the construction of the relevant expression, "gross profit". He took into account the parties' submissions about those matters. Specifically, at paragraph [83] of the Determination, he identified that "gross profit" was an accounting term ordinarily understood as being "income less cost of sales", with the cost of sales (otherwise referred to as "cost of goods sold") being "those direct costs associated with deriving the income from the trading activity". He went on to find that, in the absence of any definition of the expression in the BSA, it should have its objective meaning. That meaning was influenced by the Business Accounts annexed to the BSA, which illustrated a method of calculating gross profit. In making this finding, he considered both the manner in which the expression had been used elsewhere in the BSA and the function served by the Business Accounts annexed to the BSA. After assaying the parties' respective submissions, he concluded that gross profit was, for the purpose of cl 3.5(a), to be calculated by the same method as had been adopted in the Business Accounts annexed to the BSA. 104 It is difficult to understand how it can be said that the parties are not bound by Mr Peisley's determination of this question. Although the question was essentially a legal one, being the meaning of an expression used in an agreement, Mr Peisley was qualified to answer it. The issue of contractual construction was squarely put to him, and he resolved it by applying his professional skill and judgment. It is unclear what else he could have done in the circumstances. IonMy's contention that his construction cannot be binding amounts, effectively, to a contention that: (a) IonMy agreed to refer a question to Mr Peisley under cl 19 of the BSA; (b) the question could permissibly be referred to Mr Peisley, as it formed part of a "dispute" for the purposes of cl 19 of the BSA; (c) Mr Peisley was duly appointed under cl 19 of the BSA to answer the question, as he was a member of not less than five years' standing of a "relevant professional body"; but (d) despite all of this, IonMy could not be bound by Mr Peisley's answer to the question. 105 This reasoning cannot be right, or else the expert determination process for which cl 19 of the BSA provides would, in cases such as the present, be rendered entirely pointless. It would be commercially nonsensical for the parties to put questions of law, or mixed fact and law, to an expert suitably qualified to answer them, make submissions to that expert, and remunerate him, if the ultimate determination of the questions could have no binding legal effect. 106 The resolution of the first question in this case was necessarily influenced by accounting considerations. It is apparent from the Determination that Mr Peisley relied on his experience as a chartered accountant in the course of his reasoning. As explained in Jones, in the passage extracted above, if the parties to an agreement have referred a matter which is within the expertise of the accountancy profession to an accountant to determine, and have agreed that the determination of the accountant is to be conclusive, final and binding for all purposes, and the chosen accountant has made his or her determination, it does not seem appropriate that the court should rush in to substitute its own opinion. 107 In answering the second question, concerning the quantum of the gross profit for the 2021 financial year, Mr Peisley simply applied the methodology that he had identified in response to the first question. He calculated the gross profit as being $1,033,548. It was not in dispute that the gross profit for the prior financial year ending 30 June 2020 was well over $1 million, so it followed that the "average annual gross profit of the Business for the two financial years immediately preceding the date that [the first Instalment was] due for payment" was also over $1 million. In fact, Mr Peisley calculated it precisely at $1,291,106. There was accordingly no scope for a reduction to the first Instalment under cl 3.5(a) of the BSA. 108 There was no suggestion that Mr Peisley incorrectly applied the methodology for the calculation of gross profit that he had identified in response to the first question, or that any objective factual errors caused the exercise undertaken in this part of the Determination to miscarry. Rather, it appears that the only criticism levelled by IonMy in respect of the answer to the second question was that it proceeded upon an incorrect basis; specifically, IonMy contended that the expression "gross profit" ought to have been construed differently by Mr Peisley in answer to the first question. However, given the conclusion drawn above in relation to that question, this does not constitute a sufficient basis upon which to contend that Mr Peisley did not do what he was required to do. 109 It is apparent, then, that Mr Peisley performed the task required of him and the Determination is binding upon ThoughtWare and IonMy.

Mr Peisley's conclusions were correct 110 Even if it was accepted, contrary to the conclusion reached above, that the parties were not bound by Mr Peisley's construction of the expression "gross profit" or the aspects of the Determination that followed from that construction, the outcome of this dispute could only change if it could be shown that there was some material error in the Determination. 111 There is no such error. With respect, there is no reasonable argument that the expression "gross profit" is to be understood any differently to how Mr Peisley construed it. The reasons for this can be set out as follows: (a) "Gross profit" is a sufficiently common expression, although it does not have an established universal meaning. The calculation of gross profit of a business usually involves subtracting its cost of goods sold from its revenue, and may involve opening and closing stock. The items making up the "cost of goods sold" element of the equation are usually confined to those relating to the direct cost of the goods sold. In the ordinary course, other business costs are excluded. That said, it can be accepted that the costs that are characterised as the "cost of goods sold" may vary from business to business. As Mr Peisley himself acknowledged at paragraph [83] of the Determination, "in the context of non-reporting entities, the classification of expenses as part of costs of sales is often arbitrary and differ[s] between entities". (b) The parties in this case did not explicitly define "gross profit" in the BSA, or prescribe in express terms any particular methodology by which it might be calculated for the purposes of that agreement. Their silence on this point may be understood in either of two ways. First, as IonMy contended, it may mean that the methodology was left at large and could be determined by the owner of the Business from time to time. Secondly, as ThoughtWare contended, it may mean that the methodology was to be that appearing in the Business Accounts annexed to the BSA. (c) ThoughtWare's position is to be preferred as a matter of construction. The methodology appearing in the Business Accounts was the only methodology in the BSA which could reasonably be assumed to have been in the contemplation of the parties at the time of contracting. The fact that there is no universal meaning of the expression "gross profit", and that it is not uncommon for different businesses to adopt different definitions, would make it more likely that the parties would have intended to settle on a particular methodology for calculation of gross profit as at the date of their agreement. This conclusion follows all the more strongly in circumstances where the consideration for the sale of the Business was, pursuant to cl 3.5(a), dependent upon its gross profit. Given the importance of the term to the transaction, a construction that standardises the meaning of "gross profit" must be regarded as inherently more businesslike than one that would leave it at large. (d) Furthermore, cl 3.5(a) of the BSA refers specifically to the "gross profit of the Business", and the Business is defined in cl 1.1 as meaning "the business of the development and supply of governance, risk and compliance software carried on by the Seller using the Business Name [that is, IonMy]". It was apparent that the parties intended that, despite the change in ownership effected by the sale, the Business would continue in operation in the same form. That lends some support to the view that the accounting methodology employed in the Business, being one facet of the overall enterprise, would likewise continue in operation. It does not lend support to the view that the accounting methodology would be liable to change. (e) The expression "Business Accounts" is defined in the BSA as meaning "the normalised management accounts of the Business for the period from the Accounts Date [being 30 June 2019] to 24 February 2020 which are attached at Annexure A". Those accounts revealed that, in the period from 1 July 2019 to 23 February 2020, the gross profit of the Business was $719,882.93. This figure was calculated on the premise that certain expense items were to be characterised as "cost of goods sold". That figure and the methodology by which it was calculated were relevant to the assessment as to whether the first Instalment (which was payable on 30 June 2021 as per cl 3.2(a)) was to be reduced pursuant to cl 3.5(a), insofar as the assessment under that clause concerned the average annual gross profit of the Business for the two financial years immediately preceding the date that the Instalment was due under cl 3.2. Once the effect of the interaction between the Business Accounts and cls 3.2 and 3.5 is appreciated, it would seem unusual for the BSA to operate such that the accounts from 24 February 2020 onwards could be prepared entirely differently, such that the method for the calculation of the consideration for the sale also changed after it had already commenced. (f) This construction is also supported by the warranties in cls 2.1(c) and 3(a) of Schedule 1 to the BSA, pursuant to which ThoughtWare: first, warranted that the Business Accounts disclosed a true and fair view of, inter alia, the gross profit of the Business for the financial period ending on the Accounts Date; and, second, warranted that, since the Accounts Date, the Business had been conducted in the ordinary course and there had been no material adverse change in the gross profit of the Business. The expression "gross profit" must, in this context, have meant the gross profit calculated in accordance with the methodology employed in the Business Accounts. There is no reason why the expression would take a different meaning when used elsewhere in the BSA. (g) The construction propounded by IonMy is both uncommercial and unbusinesslike, and would lead to a somewhat obtuse or absurd result. It would permit the purchaser of the Business to adopt an accounting methodology that was specifically contrived for the purpose of reducing the recorded gross profit of the Business, allowing it to take advantage of the reduction mechanism in cl 3.5(a) so as to diminish substantially the Instalments payable pursuant to cl 3.2. Conceivably, by simply characterising more significant expense items as cost of goods sold, IonMy could reduce the purchase price of the Business to an amount far less than the Business' actual value. Despite his intrepid and valiant attempts to find a suitable answer to this point, Mr O'Brien for IonMy was unable to do so. That is not a criticism, it simply suggests that there is no substantive answer to it. It is most unlikely that the parties could have intended for the BSA to operate in such an uncommercial manner. The fact that an alternative construction is available that avoids this difficult result is a compelling indication that that alternative is correct. (h) To the extent that it is necessary to go further, it might also be pointed out that the above construction is confirmed by the factual circumstances known to the parties at the time of their entry into the BSA. As Mr Peisley identified, prior to that time, ThoughtWare had provided to IonMy the accounts of the Business for the periods ending 30 June 2017, 30 June 2018 and 30 June 2019, as well as the Business Accounts annexed to the BSA. The accounts for the period of 36 months ending 30 June 2019 are captured within the defined term "Accounts" in cl 1.1 of the BSA. In cl 2.1(a) of Schedule 1, ThoughtWare warranted that the Business Accounts had been prepared "on a consistent basis with the practice used in the preparation of the accounts of the Business", and the "accounts of the Business" in this context must necessarily have referred to, or at least included, those accounts falling within the definition of "Accounts". Again, the way that gross profit was calculated and items were characterised as cost of goods sold in those Accounts is consistent with the methodology advanced by ThoughtWare. There is no reason to believe that the methodology was liable to change once the BSA was on foot. To the extent that those Accounts form part of the circumstances surrounding the entry into the BSA, known by both parties, they may be considered as supporting the above conclusion. 112 It follows that IonMy's proffered construction of the expression "gross profits", by which it was said to be the average gross profit of the business as reflected in its accounts at each relevant point in time, is properly to be rejected. In its written submissions, it merely asserted that "it is a matter for the respondent, as the party conducting the business, to calculate the average annual gross profit of the business in the manner it considers most appropriate", and that Mr Peisley's construction of the methodology by reference to the Business Accounts was "an error". It was not clearly explained why this was so. 113 It further contended that the Determination was vitiated because, although Mr Peisley determined the two questions that he was asked to address, he also commented on or made findings about some additional matters. The precise nature of this complaint was a little vague. A number of issues that were allegedly "not permitted by the contract" were set out at paragraph [9(f)] of IonMy's Concise Statement in Response and it seemed to be contended that, because Mr Peisley addressed these issues, he had performed a task other than the task required of him as the expert appointed pursuant to the BSA. However, many of the issues identified were simply contextual, or merely dealt with the circumstances by which the dispute arose or with the submissions made to Mr Peisley by the parties themselves. There was little to no elaboration on IonMy's contention in the course of the hearing, and that is unsurprising. 114 The matters identified in the Concise Statement in Response, for the most part, were necessary component parts of the decisional process by which Mr Peisley reasoned to an answer to the two questions asked of him, or were entirely divorced from it. 115 To the extent that they fell within the former category, they were within Mr Peisley's authority to determine. For instance, it is alleged in paragraph [9(f)(8)] that Mr Peisley erroneously "purported to determine the proper meaning and construction of the term gross profit as an objective fact", but that was plainly something that he was required to do, having been asked specifically to determine "the proper basis for calculation of 'gross profit' for the business sold". It is not clear how he could have strayed beyond the limits of his authority by undertaking precisely the task that he was appointed to undertake. 116 To the extent that they fell within the latter category, it can simply be concluded that those findings made by Mr Peisley are not binding. For instance, it is alleged at paragraph [9(f)(4)] that Mr Peisley erroneously "purported to determine non est factum or unconscionability claims", for which IonMy cites paragraphs [64] to [71] of the Determination. It is not apparent, looking at those paragraphs, that Mr Peisley did what IonMy now accuses him of having done; the concepts of "non est factum" and "unconscionability" are not mentioned there, or anywhere in the Determination for that matter. Instead, it appears that Mr Peisley was, in that part of the Determination, addressing IonMy's own submission to the effect that its execution of the BSA was not to be taken as an indication that it was aware of the annexed Business Accounts or that it had consented to the methodology adopted therein for the calculation of cost of goods sold or gross profit. Mr Peisley rejected this submission by resort to the well-known principles in L'Estrange v F Graucob Ltd [1934] 2 KB 394 and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165. This finding might well be considered a step in his reasoning towards an answer to the first question asked of him, as to the construction of the expression "gross profit", which he was entitled to address. But, even if it is not, it can simply be treated as non-binding. That does not come close to vitiating the Determination as a whole. It should be recalled that, where an expert determination can be said to have been made in accordance with the terms of the contract, it is irrelevant that the expert might have taken into account matters that he or she should not have, or failed to take into account matters that he or she should have. 117 The consequence of the foregoing reasons is that, even if Mr Peisley's conclusions were open to challenge by IonMy, it has no reasonable prospect of successfully establishing any error, material or otherwise, in the Determination.

Has IonMy waived its right to challenge the Determination, or is it estopped from doing so, and has it explained why the fixed sums under the BSA are not payable? 118 Given the findings made above, there is no need to address the further points raised by ThoughtWare, to the effect that IonMy has waived its right to object to the Determination, or is otherwise estopped from so objecting, and has failed to explain why the fixed sums under the BSA are not payable.

The exercise of the discretion 119 For the foregoing reasons, IonMy does not have reasonable prospects of succeeding in its challenge to the binding force of the Determination. It is useful to consider at this point the two further issues that it raised on this application, as set out above.

Are there factual questions that can only be determined at trial? 120 IonMy submitted that it was inappropriate to determine summarily the issues in this proceeding as to the proper construction of cl 3.5(a) of the BSA because those issues involved factual questions. Specifically, it was suggested that there may be a need for the Court to delve into pre-contractual conduct and negotiations, and to receive expert evidence as to common and accepted accounting practices. The answer to these concerns is at least threefold. 121 First, unless IonMy established, as a matter of pure contractual construction, that the alleged error was one that Mr Peisley was not entitled to make, then there would be no need to embark upon a factual inquiry of any kind. For the reasons set out above, it has not established that threshold matter. 122 Secondly, and in any event, it is open for this Court to find as a matter of pure construction that Mr Peisley came to the correct conclusion as to the methodology required to calculate "gross profit" under the BSA. IonMy has failed to demonstrate, as a matter of law, that there was any material error in the Determination, and there is accordingly no need to go into evidence. While some mention of surrounding circumstances is made above in connection with the construction exercise, the narrow point there made is readily available on the material already before the Court in this proceeding. The relevant material has not been contradicted to any extent by IonMy despite it having had sufficient opportunity to put on evidence and submissions, and it is not apparent how it could be contradicted. Regardless, that point is not essential to the conclusion drawn as to the proper construction of the expression "gross profit". 123 Finally, there was simply no real explanation offered as to why evidence of pre-contractual negotiations and expert evidence as to accounting practices would have any functional, substantive part to play in this dispute. The suggestion that such evidence might have some bearing on the outcome in this proceeding was mere assertion, and seemed essentially speculative. That is not a sufficient reason to decline to exercise the discretion conferred by s 31A of the Federal Court Act.

Should summary judgment be granted if the matter will proceed to trial in any event? 124 It was further submitted by IonMy that the Court should, in the exercise of its discretion, refuse to grant summary judgment on the basis that a trial would still be required in order to consider the availability of certain other orders sought in ThoughtWare's Originating Application. 125 While the premise of that submission is correct, the issue determined on this application is the pivotal one between the parties. The outcome of the application is therefore likely to resolve most, if not all, of ThoughtWare's remaining claims to other forms of relief. Once the proper methodology for the calculation of "gross profit" under the BSA has been ascertained, it might be expected that reasonable commercial parties will readily resolve the remaining issues in dispute. It follows that there is very little likelihood of there being a trial in relation to the remaining issues and, if there is, on the basis of the information presently available and the conclusions reached above, it is not likely to be of any great length. 126 As explained above, the possibility that the grant of summary judgment will not resolve all of the issues in the proceeding directs attention to case management considerations. The relevant question to ask is whether the grant of summary judgment in respect of part of the case will lead to any particular efficiencies, or will narrow the issues in dispute to such an extent as to reduce materially the time and cost required to bring the proceeding to a conclusion. In this case, it quite clearly will do both of these things. There is accordingly no compelling reason to decline to grant summary judgment.

Conclusion 127 As identified at the outset of these reasons, a number of orders were made by consent at the hearing of this application. There is no need to address those matters further. The key issue is IonMy's obligation to pay the Instalments under the BSA. 128 ThoughtWare sought an order that IonMy pay to it the sum of $1,118,903.59. That sum comprised the $368,903.59 remaining from the first Instalment of $500,000 after the deduction of licence fees in accordance with cl 3.5(b), plus the full amount of the second Instalment of $750,000. 129 On the basis of the conclusions drawn by Mr Peisley in the Determination, and the evidence before the Court on this application, it was established that the average annual gross profit of the Business for the two financial years immediately preceding 30 June 2021 exceeded $1 million. It follows that the first Instalment of $500,000 was due in accordance with cl 3.2(a), subject to the conceded deduction by reason of cl 3.5(b). The remaining sum of $368,903.59 was therefore due and owing, and judgment should be given in favour of ThoughtWare for that amount. 130 The entitlement of ThoughtWare to the second Instalment, due on 30 June 2022, is more difficult. Whilst it has demanded payment of that Instalment, IonMy has not acceded to that demand. ThoughtWare claimed that it is entitled to be paid the full amount of the Instalment, as identified in cl 3.2(b) of the BSA, on the basis that IonMy has not positively contended that any lesser amount is owing. However, that submission should not be accepted. Clause 3.2 does not establish an entitlement to payment of an Instalment, subject to a responsive claim by IonMy that the Instalment should be reduced pursuant to cl 3.5(a). It commences with the words, "Subject to the terms of this agreement", which indicate that it has no independent operation. In order for ThoughtWare to be entitled to the full amount of an Instalment, it must establish that the date for payment identified in cl 3.2 has passed, that the average annual gross profit of the Business for the two immediately preceding financial years is not less than $1 million, and that no reduction is required on account of its receipt of licence fees. It may well be that those matters will not be difficult to establish, given the findings made in these reasons. However, the necessary steps have not yet been taken. 131 It might be inferred that no reduction to the second Instalment of $750,000 is required, given that IonMy has remained silent in circumstances where it would naturally be expected to point out any reductions that should be made. However, that is too a slender basis on which to give summary judgment. It should be acknowledged that some of the difficulty in relation to this second Instalment arises from IonMy's approach to the litigation, including, in particular, its refusal to state precisely its position in relation to the matters raised by ThoughtWare. That being so, it is appropriate at this juncture to refuse to give summary judgment on the current application for more than the adjusted first Instalment sum of $368,903.59, but to adjourn the remainder of the application to a later date on which any other relief sought in this proceeding might be pursued on a summary basis. Additional evidence may be produced on that occasion, to the extent that it is needed to establish ThoughtWare's entitlement to such relief.

Interest 132 ThoughtWare is entitled to interest at the Australian Reserve Bank base cash rate from time to time under cl 3.3 of the BSA. It may also be entitled, further or alternatively, to interest in accordance with the Federal Court Act. Further evidence and submissions should be received in relation to these matters.

Costs 133 As the interlocutory application is to proceed at a further date, it is best to reserve the costs of the application to date. Full submissions can be made, in light of these reasons, as to the question of costs and the further relief (if any) that the applicant might seek to secure. I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.