Tyco Fire & Security & Anor v Norfolk Mechanical & Ors

Supreme Court of NSW|2007-05-15|Before: McDougall J, Dougall J

CITATION : Tyco Fire & Security & Anor v Norfolk Mechanical & Ors [2007] NSWSC 585

CATCHWORDS : CONTRACTS - construction and interpretation - price adjustment clause - plaintiff gave defendant dispute notice - specific time regime for furtherance or resolution of dispute - whether time of the essence - whether defendant's response to dispute notice delivered in time - definition of "Business Day" - distinction between delivery and receipt - whether deemed receipt of notice amounts to delivery - whether time began to run from delivery - form of relief - costs

Conveyancing Act 1919 LEGISLATION CITED : English Bills of Exchange Act 1882 English Limitation Act 1939

Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 Curtice v London City and Midland Bank, Limited [1908] 1 K.B. 293 Eaglehill Ltd v J. Needham Builders Ltd [1973] AC 992 FAI General Insurance Company Ltd (In Liquidation) v Parras and Others (2002) 55 NSWLR 498 G R Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 24 NSWLR 80 Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 16, 361 CASES CITED : Newborough (Lord) v Jones [1975] Ch 90 NM Superannuation Pty Ltd v Hughes and Others (1992) 27 NSWLR 26 N.V. Stoomv Maats "de Maas" v Nippon Yusen Kaisha (The "Pendrecht") [1980] 2 Lloyd's Rep 56 Parras & Ors v FAI General Insurance Company Ltd (Prov Liq apptd) [2001] NSWSC 1077 Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Others (2004) 219 CLR 165 United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 United Scientific Holdings (see Gollin & Company Limited v Karenlee Nominees Proprietary Limited and Another (1983) 153 CLR 455

Tyco Fire & Security Pty Limited (First Plaintiff) Firmagroup Operations Holdings Pty Limited (Second Plaintiff) PARTIES : Norfolk Mechanical (Aust) Pty Limited (First Defendant) Norfolk Electrical (Aust) Pty Limited (Second Defendant) Norfolk Building Products (Aust) Pty Limited (Third Defendant)

COUNSEL : S G Finch SC/G K J Rich (Plaintiffs) A J L Bannon SC/D B Studdy (Defendants)

SOLICITORS : Allens Arthur Robinson (Plaintiffs) Gilbert & Tobin (Defendants)

Tyco Fire & Security & Anor v Norfolk Mechanical & Ors [2007] NSWSC 585

Para The issues 2 Factual background 5 Relevant contractual provisions 7 First issue: is time of the essence of clause 7.7(b)? 13 Issue 2: was Norfolk's response delivered in time? 23 Background 23 The competing submissions 24 Decision 34 Approach to construction 35 Delivery and receipt: the relevant principles 39 Analysis 61 Conclusion 89 Consequences 91 Issues 14 to 17: the Completion Balance Sheets of 16 November and 9 December 2004 95 Relief 104 Orders 106

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50127/05 TYCO FIRE SECURITY PTY LIMITED v NORFOLK MECHANICAL PTY LIMITED & ORS JUDGMENT 1 HIS HONOUR: By share sale agreement (the agreement) dated 1 October 2004 the plaintiffs (collectively Tyco) agreed to sell to the defendants (collectively Norfolk) all the issued shares in four companies (the sale entities). Nothing of present moment turns on the identification of individual vendors, purchasers or sale entities. The agreement provided for the payment of an initial purchase price on completion, and for adjustments (which might go either way) thereafter. Tyco's case is that the working out of the post completion adjustment process means that Norfolk is liable to pay an additional sum of, in round figures, $16 million plus interest. This result follows, Tyco says, because Norfolk was 17 minutes late in delivering its "Response" to Tyco's "Dispute Notice", with the result that the adjusted purchase price is deemed to be calculated in accordance with Tyco's Dispute Notice. The principal question between the parties relates to the proper construction of the provisions of the agreement dealing with the delivery and receipt of notices. If those questions are determined in favour of Tyco, Norfolk relies on alternative defences of estoppel, unconscionability and relief against forfeiture. The issues 2 The parties agreed that the real issues for decision, arising on the "pleadings" (to use a convenient although technically inaccurate term) were as follows: "Tyco's Claim 1. Whether time is of the essence of clause 7.7(b) of the Agreement. 2. If so, whether on the proper construction of clauses 7.7(b), 24.1(a) and 24.1(b) of the Agreement, the fact that Norfolk's Response was delivered after 4 pm on 29 March 2005 means that Norfolk's Response was not delivered within 10 Business Days, as required by clause 7.7(b). 3. If so, whether the Completion Balance Sheet and Completion Net Asset Value are deemed to be amended as required in Tyco's Dispute Notice and are taken to be final, such that Norfolk's Response is a nullity and the adjustment to the Initial Purchase Price payable under the agreement has been finally and conclusively determined by Tyco's Dispute Notice. 4. Whether the statements in Tyco's Dispute Notice to the effect that it was unable to respond to all of Norfolk's proposed adjustments and reservation of a liberty to respond on receipt of further information precluded the outcome referred to in 3 above or obviated any obligation on Norfolk to respond under clause 7.7(b) by 29 March 2005. 5. Whether the Defendants are jointly and severally liable to pay to the Plaintiffs the sum of $16,338,665 plus interest or, alternatively, are each liable to pay the Plaintiffs a portion of that sum. 6. Whether the Agreement contained the implied terms pleaded in [14] of Norfolk's Amended Commercial List Response, concerning the exercise of rights conferred by clause 7 in good faith, reasonably and/or co-operatively. 7. If so, whether the conduct of Tyco particularised in [15] of Norfolk's Amended Commercial List Response amounts to a breach of such implied terms. 8. If so, whether those breaches mean (as alleged in [16] of Norfolk's Amended Commercial List Response) that Tyco is not entitled to the relief sought in the Summons. 9. Whether, by reason of the matters referred to in [17] and [34] of Norfolk's Amended Commercial List Response, Tyco has "acted unconscionably in seeking the relief claimed in the Summons". 10. Whether, by reason of the matters referred to in [32] and [34] of Norfolk's Commercial List Response, there was no document which answered the description of a Completion Balance Sheet within the meaning of clause 7.3 of the Agreement such as to trigger the operation of any of clauses 7.4, 7.5 or 7.7 of the Agreement. 11. Whether, by reason of the matters referred to in [18] to [34] of Norfolk's Amended Commercial List Response, Tyco is estopped from denying that the delivery by Norfolk of its Response after 4 pm 29 March 2005 complied with clause 7.7(b) of the Agreement. 12. Whether, by reason of the matters referred to in [34] of Norfolk's Commercial List Response, Norfolk is entitled to be relieved against its failure (if it is a failure) to comply with clause 7.7(b) of the Agreement by less than 20 minutes and against any consequent forfeiture of its right to have the dispute identified in its Response determined in accordance with the procedure identified in clause 7.7(c) to (k) of the Agreement." Factual background 3 There was little dispute as to the relevant facts. As I have said, the agreement was made on 1 October 2004. Completion occurred on 1 November 2004. The initial purchase price was the sum of $91,500,000. That was subject to adjustment (up or down) by reference to an "Estimated Completion Net Asset Value" derived according to the mechanism set out in clauses 7.1 and 7.2 of the agreement. In the events that happened, the initial purchase price was calculated to be $80,841,553. 4 The first (pre completion) adjustment of the initial purchase price was based on estimated net asset values. Clauses 7.3 and following of the agreement provided for a process of recalculation after completion, by reference to actual asset values. On 16 November 2004 and again on 9 December 2004, Tyco prepared and served what clause 7.3 of the agreement called the "Completion Balance Sheet". Norfolk reviewed each Completion Balance Sheet and, as clause 7.4 contemplated might happen, notified Tyco that adjustments needed to be made. 5 Tyco then gave Norfolk a "Dispute Notice" as contemplated by clause 7.7(a). Norfolk delivered its "Response", it says (but Tyco disputes), as contemplated by clause 7.7(b). 6 The contractual process thereafter (if it were engaged) would require the dispute constituted by the Dispute Notice and the Response (and, presumably, their antecedent or underlying documents) to be resolved through an escalating procedure starting with attempted agreement and moving through a meeting of the managing directors of each party or their nominees to expert determination. Relevant contractual provisions 7 Clause 2 of the agreement provided for sale and price. Clause 2.4 provided for the allocation (between the various sale entities and purchasers) of any adjustment to the Initial Purchase Price. 8 Clause 5.5(a) set out the mechanics for payment of the initial purchase price. 9 Clause 7 dealt with adjustments before and after completion. I set it out so far as it is relevant: " 7. ADJUSTMENTS TO THE INITIAL PURCHASE PRICE 7.1 Proforma Balance Sheet On a date which is between 5 and 10 Business Days prior to the Completion Date, the Vendors must prepare an aggregated special purpose proforma balance sheet as at the Completion Date for the Sale Entities (consolidated with their respective Subsidiaries) (Proforma Balance Sheet) and on the basis of the Proforma Balance Sheet estimate the Completion Net Asset Value (Estimated Completion Net Asset Value). The Proforma Balance Sheet and the calculations required for the Estimated Completion Net Asset Value must be done: (a) in accordance with the Accounting Standards, consistently applied; (b) by excluding the Excluded Assets and Retained Assets; and (c) for the purposes of calculating the Completion Net Asset Value, by including any provision for current Tax required to be included by the Accounting Standards but not including any deferred tax asset or deferred tax liability. The Vendors must deliver the Proforma Balance Sheet and calculation of the Estimated Completion Net Asset Value to the Purchasers on the date which is 5 Business Days prior to Completion Date. 7.2 First Adjustment Payment Based on the Vendors' estimated calculations of the Estimated Completion Net Asset Value, and following discussion between the Vendors and Purchaser, where any adjustments are agreed by the parties at least 3 Business Days prior to the Completion Date (with each party acting reasonably and in good faith): (a) If the Estimated Completion Net Asset Value is less than the Average Net Asset Value the Initial Purchase Price payable shall be reduced by the difference between the two amounts ( Adjustment Amount). (b) If the Estimated Completion Net Asset Value is more than the Average Net Asset Value the Initial Purchase Price payable shall be increased by the Adjustment Amount. The Adjustment Amount payable under this clause shall be payable by way of adjustment to the Initial Purchase Price payable in accordance with clause 5.5(a) of this Agreement. 7.3 Completion Balance Sheet The Vendors must as soon as reasonably possible after the Completion Date (and, in any event, within 10 Business Days after that date) prepare a final aggregated balance sheet as at the Completion Date for the Sale Entities (consolidated with their respective Subsidiaries) (Completion Balance Sheet) and calculate the Completion Net Asset Value for each of the Sale Entities (consolidated with their respective Subsidiaries). The Completion Balance Sheet and the calculations required for the Completion Net Asset Value must be done: (a) in accordance with the Accounting Standards consistently applied; (b) by excluding the Excluded Assets and Retained Assets; and (c) for the purposes of calculating the Completion Net Asset Value by including any provision for current Tax required to be included by the Accounting Standards but not including any deferred tax asset or deferred tax liability. The Vendors must deliver the Completion Balance Sheet and calculation of the Completion Net Asset Value (together with all of the Vendors' working papers) to the Purchaser within two Business Days of their preparation under this clause 7.3. 7.4 Purchasers' Review The Purchaser must perform a review of the Completion Balance Sheet and calculation of the Completion Net Asset Value and report in writing (attaching a copy of the Completion Balance Sheet and calculation of the Completion Net Asset Value, together with all working papers) to the Vendors within 40 Business Days after the date of receipt of those items under clause 7.3 and provide written notice to the Vendor either that: (a) the Completion Balance Sheet has been drawn up and the Completion Net Asset Value has been calculated in accordance with this clause 7 and that no adjustments to them need to be made; or (b) the Completion Balance Sheet or the Completion Net Asset Value need to be adjusted (in which case the Purchaser must also set out in writing the adjustments that need to be made) to comply with this clause 7. The costs and expenses of the Purchaser in performing the review of the Completion Balance Sheet and the calculation of the Completion Net Asset Value must be paid by the Purchaser. 7.5 Parties' response to Audit (a) If the Completion Balance Sheet and the Completion Net Asset Value calculation: (i) as confirmed by the Purchaser under clause 7.4(a); or (ii) as adjusted by the Purchaser under clause 7.4(b), are not disputed by the Vendors to notice under clause 7.4 [sic: the parties agreed that this should be a reference to clause 7.7] within 20 Business Days of receipt by the Vendor, it will be taken to be final. (b) If the Completion Balance Sheet and the Completion Net Asset Value calculation as adjusted by the Purchaser under clause 7.4(b), is disputed by the Vendors or the Purchaser by notice under clause 7.7 prior to the date specified in paragraph 7.5(a), the dispute will be determined under clause 7.7. [Clause 7.6 dealt with access to information.] 7.7 Dispute Resolution Procedure (a) If there is any difference of opinion or dispute between the Vendors and the Purchaser regarding the Completion Balance Sheet or the Completion Net Asset Value calculation, the Vendors or the Purchaser (Disputing Party) may give a notice (Dispute Notice) to the other party setting out: (i) details of each of the matters in dispute; (ii) a separate Dollar value for each of those matters; and (iii) reasonable details of the reasons why each of those matters is disputed. (b) Within 10 Business Days of the Disputing Party having delivered a Dispute Notice to the other party, the other party must deliver to the Disputing Party a response in writing on the disputed matters (Response). If the other party does not deliver a Response within that time, the Completion Balance Sheet and Completion Net Asset Value will be deemed to be amended as required by the Disputing Party and will be taken to be final. [The balance of clause 7.7 dealt with the manner of resolution of the dispute.] [Clause 7.8 dealt with minimum limits for amounts in dispute.] 7.9 Second Price Adjustment If due to Expert determination under this clause 7 or by operation of clause 7.5 an adjustment to the Initial Purchase Price is required to be made: (a) and no adjustment to the Initial Purchase Price was made under cause [sic] 7.2 then either: (i) if the Completion Net Asset Value is less than the Average Net Asset Value the Initial Purchase Price will be reduced by the difference between the two (Adjustment Amount); or (ii) if the Completion Net Asset Value is more than the Average Net Asset Value then the Initial Purchase Price will be increased by the Adjustment Amount; or (b) if an adjustment to the Initial Purchase Price was made under clause 7.2 the Initial Purchase Price will be adjusted by the difference between the amount of the adjustment under clause 7.2 and the Adjustment Amount that is calculated by paragraph (a) above (as if no adjustment has been made under clause 7.7). [Clause 7.10 dealt with interest. The parties have agreed that the applicable interest rate is 7.5% per annum.] [Clause 7.11 dealt with the time of payment where the Adjustment Amount exceeded $20 million.]" 10 Clause 24.1 dealt with the giving and receipt of notices. It provided as follows: "24. GENERAL 24.1 Notice (a) A notice or other communication given under this agreement including, but not limited to, a request, demand, consent or approval, to or by a party to this Agreement: (i) must be in legible writing and in English; (ii) must be addressed to the addressee at the address or facsimile number set out below or to any other address or facsimile number a party notifies to the others under this clause: A. if to any member of the Vendor Group, the notice will be taken to be accepted by the relevant member of the Vendor Group if the notice is delivered as follows: C/- Tyco International Pty Ltd Address: Level 6, 12 Help Street Chatswood, NSW 2067 Attention: The Managing Director. Facsimile: 02 9411 2890 B. if to any member of the Purchaser Group, if the notice is delivered as follows: Hauraki Private Equity No. 2 Fund Limited Address: Goldman, Sachs JB Were (NZ) Limited Level 38, Vero Centre 48 Shortland Street Auckland 1101 New Zealand Attention: The Directors Facsimile: 0011 64 9 353 2396 C. if to the Guarantor, if the notice is delivered as follows: C/- Hauraki Private Equity No. 2 Fund Limited Address: Goldman, Sachs JB Were (NZ) Limited Level 38, Vero Centre 48 Shortland Street Auckland 1101 New Zealand Attention: The Directors Facsimile: 0011 64 9 353 2396 (iii) must be signed by an Officer or under the common seal of a sender which is a company; and (iv) is deemed to be received by the addressee in accordance with paragraph (b). (b) Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice is deemed to be received: (i) if sent by hand, when delivered to the addressee; (ii) if by post, 3 Business Days from and including the date of postage/on delivery to the addressee; or (iii) if by facsimile transmission, on receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent, but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is deemed to be received at 9.00 am on the following Business Day. (c) A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under paragraph (b)(iii) and informs the sender that it is not legible. (d) In this clause, a reference to an addressee includes a reference to an addressee's Officers, agents or employees." 11 There was an extensive dictionary to the agreement (attachment D). I do not think that it is necessary to go to the definitions of all of the defined terms, which are indicated by the use of initial capital letters. It is however, convenient to set out the definition of "Business Day": "Business Day means a day on which banks are open for business excluding Saturdays, Sundays or public holidays in Sydney, NSW and Auckland and Wellington in New Zealand." 12 The parties referred to various other provisions of the agreement. It is not necessary to set them out at this point. First issue: is time of the essence of clause 7.7(b)? 13 Uninstructed by authority, I would incline to the view that the concept of "time of the essence" has nothing to do with a contractual provision such as clause 7.7(b). Paragraph (b) does not involve a promissory obligation on the part of the "Disputing Party". It is self executing, in the sense that it provides a time limit for (but does not require) the taking of the step to which it refers, and provides for the consequences if the step is not taken within that time. It is a condition precedent to the steps laid down in paras (c) and following. If it is not fulfilled, those steps do not take place. 14 However, Tyco submitted that, by analogy with rent review cases including specifically G R Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 24 NSWLR 80, the concept of "time of the essence" was relevant. 15 A convenient starting point for the analysis is the decision of the House of Lords in United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904. The essence of the decision in United Scientific Holdings is that the rent review provisions considered by their Lordships, specifying machinery for the ascertainment of rent, were "not … mandatory or inflexible" but "only directory" (to use the words of Lord Salmon at 951). To similar effect, Lord Diplock said at 930 "that in the absence of any contra indications … the presumption is that the timetable specified in a rent review clause for the completion of the various steps for determining the rent payable … is not of the essence of the contract." 16 Their Lordships' reasoning has been criticised, particularly because it involves the so called "fusion fallacy". Nonetheless, the High Court of Australia has referred with approval to the decision in United Scientific Holdings (see Gollin & Company Limited v Karenlee Nominees Proprietary Limited and Another (1983) 153 CLR 455). Gleeson CJ said in Mailman at 86, that "the law … stated [in United Scientific Holdings] … represents the law in New South Wales". 17 His Honour at 88 perceived "an element of incongruity in the importation into this area of discourse of the notice procedure". It will be apparent from what I have said in para [13] above that I share this view. 18 The Court in Mailman concluded that the time stipulation in the rent review provisions there under consideration was of the essence. Samuels and Meagher JJA reached this conclusion (in separate judgments) because the lease itself expressly spelt out the consequences of non compliance with the time limit: namely, that if the lessee did not serve a notice of dispute within the prescribed time, it should "be deemed to have agreed that the amount set out in the [lessor's] notice … is the current market rent of the Demised Premises … ". 19 Gleeson CJ reasoned slightly differently. His Honour said at 90 that the Court could not "disregard, or fail to give effect to, the language of an express stipulation" of the kind under consideration. His Honour said that "[i]t is one thing to treat a stipulation as to time as directory rather than mandatory. It is, however, another thing to treat a contractual provision which spells out the agreed consequence of failing to do something within a particular time as not meaning what it says." 20 There is no distinction of any substance between the form of words considered by the Court of Appeal in Mailman and the words of clause 7.7(b). Nor do I think that the different contractual setting enables me to put Mailman aside. In that case and this, if the requisite steps to dispute the other side's assessment are not taken, the other side's assessment is "deemed" to be the amount required to be paid. 21 I think that the reasoning of Samuels and Meagher JJA in Mailman requires me to conclude that issue 1 should be answered "yes". If it were permissible for me to consider the question at large, I would conclude, in substance as Gleeson CJ did in Mailman, that the Court cannot treat the concluding words of clause 7.7(b), spelling out the consequence of failing to do a prescribed act within a prescribed time, as not meaning what it says; and otherwise leave the question raised by issue 1 for another day. 22 On either approach, it would follow as a matter of construction (and leaving aside questions of estoppel, unconscionability and relief against forfeiture) that if Norfolk did not deliver its Response within ten Business Days of delivery to it of Tyco's Dispute Notice, the consequences set out in clause 7.7(b) would follow, and the further steps commencing with clause 7.7(c) would not be engaged. Issue 2: was Norfolk's response delivered in time? Background 23 It was common ground that:

(1) Tyco's Dispute Notice (clause 7.7(a)) was delivered to Norfolk on 11 March 2005;

(2) Taking into account weekends and the Easter break, 10 Business Days thereafter expired on, so that the last day for delivering a Response (clause 7.7(b)) was, 29 March 2005; and

(3) Norfolk's Response was in fact delivered, by hand in accordance with clause 24.1(a) (leaving aside for the moment subpara (iv)), at 4.17 pm on 29 March 2005, and in fact received by officers of Tyco within a few minutes thereafter. The competing submissions 24 Tyco's submissions, stripped to their essence, were that:

(1) Delivery and receipt are "two sides of the same coin" (a phrase much used, with slight variations, in oral addresses);

(2) When a document was given by one party to another "under" the agreement (clause 24.1(a)), the effect of clause 24.1(a)(iv) was that the document was "deemed to be received by the addressee in accordance with paragraph (b).";

(3) The concluding words of clause 24.1(b) (the words following sub para (iii), which for convenience I shall call the second deeming words) took effect whenever a document "under" the agreement was delivered by one party to the other;

(4) Alternatively, the second deeming words had effect whenever, as in Tyco's submission happened here, documents "under" the agreement were delivered by one party to the other by one of the three means specified in clause 24.1(b)(i)-(iii);

(5) In either case, the effect of the second deeming words was to deem a document delivered (as was Norfolk's Response) after 4 pm on a Business Day "to be received at 9.00 am on the following Business Day";

(6) Thus, delivery and receipt being two sides of the one coin, the operation of the second deeming words had the effect in this case that Norfolk's Response was deemed to have been delivered at 9 am on the business day following 29 March 2005; and

(7) Accordingly, the Response was delivered out of time. 25 Mr S G Finch SC, who appeared with Mr G K J Rich of counsel for Tyco, accepted that clause 7 spoke variously of "delivery" in some cases and "receipt" in others. He submitted that in each such case, the words were used to describe the one event, but that the choice of words depended on the perspective of the party from which, as it were, the particular event was perceived. 26 Mr Finch submitted further that to draw a distinction between delivery and receipt would cause anomalies in some cases. In the present case, he submitted, that distinction would mean that the Response was delivered at 4.17 pm on one business day but not received until 9 am the following business day, so that time would begin to run against (in this example, which was not Mr Finch's) Tyco "before [the document] had been received." (written outline of submissions dated 2 May 2007, para 28.2; emphases in the original). 27 Mr Finch noted that if a distinction were to be maintained between delivery and receipt, the result would be that there was a contractual mechanism for establishing conclusively (in all cases, on his submission) the day of receipt, but no equivalent mechanism for fixing (in any case) the date of delivery. He submitted that this was a significant factor, in circumstances where, in some cases (for example, clause 7.7(b)) the running of time was expressed to commence on delivery of a document, with significant consequences if the appropriate reply were not delivered within the time limit for that to occur. 28 Norfolk put its submissions on this issue in three different ways. Firstly, Norfolk submitted, clause 24.1 had nothing to do with the concept of delivery, which was central to clause 7.7(b). Secondly, Norfolk submitted, the second deeming words in clause 24.1(b) had no application where a party was able to prove receipt other than by reliance on them; and that in this case, Norfolk was able to do precisely that. Thirdly, Norfolk submitted, time was not of the essence for clause 7.7(b). I have dealt with this submission above, in relation to issue 1. It does not require further attention. 29 Norfolk's submissions on the first proposition may be summarised as follows:

(1) The relevant time limit in clause 7.7(b) was founded on delivery, not receipt;

(2) The use of the concept of delivery in some cases, and the concept of receipt in others, was deliberate;

(3) That usage, and the parties' intention objectively ascertained, are to be understood against the distinction drawn by the law (in some but not all cases) between delivery and receipt. See for example the decision of Santow J in Parras & Ors v FAI General Insurance Company Ltd (Prov Liq apptd) [2001] NSWSC 1077 (an appeal from his Honour's decision was dismissed: FAI General Insurance Company Ltd (In Liquidation) v Parras and Others (2002) 55 NSWLR 498);

(4) Thus, under the general law, it was not always correct to say that delivery and receipt were two sides of the one coin;

(5) The words in clause 24.1(b) commencing with "a notice is deemed to be received" and finishing at the end of sub para (iii) (which I shall call the first deeming words) were intended to address the problem, recognised by the law, that delivery and receipt were not always the two sides of the one coin;

(6) The second deeming words governed only the first deeming words and not, as well, the circumstance - recognised by the introductory words of clause 24.1(b) - that receipt might be proved by "other means" in a particular case;

(7) Clause 24.1(b) was intended to be facultative of proof and not - at least, as to the operation of the second deeming words - exhaustive;

(8) Having regard to the consequences (or, in its submission, "potential consequences") of failure to deliver a Response within the time stipulated in clause 7.7(b), the parties could not have intended to deprive a party of the capacity to prove, from its own evidence, that delivery occurred within that stipulated time; and

(9) The distinction drawn, in the drafting of clause 7, between delivery and receipt served a sensible commercial purpose, particularly in the case of clause 7.7(b); whereas the denial of such a distinction served no sensible (or other) commercial purpose. 30 Norfolk's submissions in support of the second proposition were based on a textual analysis of clause 24.1(b). Norfolk submitted in addition that the agreement itself recognised, in clause 24.1(c), a distinction between a document's being received on the one hand and regarded as received on the other, in the case of facsimile transmission. 31 Norfolk submitted that its approach to the construction of clause 24.1(b) - in particular, the submission that the second deeming words governed only the first deeming words and not proof of receipt by other means (see para [29(7)] above) was consistent with the proposition that such clauses are to be taken as facultative and not exhaustive or exclusive. For this submission, it relied on the decision of Young CJ in Eq in Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 16, 361 and on the decision on appeal in Parras where Young CJ in Eq referred to Lolly Pops at 507 [39] and indicated, in substance, that he remained of the view that he expressed on this point in Lolly Pops. 32 In reply, Tyco submitted that it did not really matter whether the first deeming words were to be regarded as facultative or exhaustive, or whether the second deeming words on their proper construction governed the first deeming words only, or the whole of the preceding language of clause 24.1(b). This followed, it said, because the means in fact chosen by Norfolk to "deliver" its response to Tyco was hand delivery: a means of delivery expressly encompassed in clause 24.1(b) and, even on Norfolk's submission, therefore governed by the second deeming words. 33 Neither party submitted that the definition of "Business Day" in general, or the question of whether banks were or were not open at the time Norfolk's Response was in fact delivered, bore upon the resolution of this issue. Nor did they submit that, apart from the impact of the second deeming words, the time of actual delivery of the Response had any dispositive significance. Decision 34 The Court's task is to ascertain, in an objective sense from the language employed in the agreement, the parties' intention. Neither party submitted that this task required, or would be assisted by, recourse to the factual matrix or other material outside the agreement itself. Thus, the context, for the ascertainment of the parties' intention, is limited to the agreement itself. Approach to construction 35 In applying itself to its task, the Court should bear steadily in mind the approach described by Gibbs J in the well known, and now canonical, passage in Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at 109. His Honour said (omitting citations): "It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous, the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable … . The court has no power to remake or amend the contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust … . Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, … the court should construe commercial contracts "fairly and broadly, without being too astute or subtle in finding defects" … ". 36 In ascertaining the meaning of the terms of the agreement, the Court should enquire what a reasonable person, having knowledge of the text of the agreement, the surrounding circumstances known to the parties to it and the purpose and object of the agreement would understand them to mean. This approach appears from a number of recent decisions of the High Court of Australia, culminating in Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Others (2004) 219 CLR 165 at 179 [40]. 37 The starting point is the language chosen by the parties. They have chosen to use the concepts of delivery and receipt. According to the Australian Oxford Dictionary (second edition, 2004), the principal meanings of the verb "deliver" include "distribute (letters, parcels, ordered goods etc. to the addressee or purchaser)" and "hand over" (said often to be followed by "to"). The same source gives the primary meaning of receipt as "the act or an instance of receiving or being received into one's possession" and the principal meanings of the cognate verb "receive" as "take or accept (something offered or given) into one's hands or possession", "acquire; be provided with or given"; and "accept delivery of (something sent)". 38 Thus, it may be accepted that the two concepts frequently will describe, from different perspectives, the one transaction: a transaction whereby something is handed over, or given, by one person to another. Delivery and receipt: the relevant principles 39 Relevantly, the basic question considered by Santow J in Parras was whether a notice of exercise of an option to take a new lease was "given" or "served" on the lessor (the defendant) within the stipulated time. His Honour considered, among other things, whether service of the notice was effected at common law. It was in that context that his Honour considered the concepts of delivery, actual receipt and constructive receipt. He did so because (see para [76]) a question for resolution was whether the lessee's acceptance (by its notice of exercise of the option) of the lessor's offer (to grant a new lease, in terms of the option) could be communicated to the lessor by delivery of the acceptance to the lessor's premises but without its necessarily coming to the attention of an officer of the lessor. 40 After reviewing a large number of cases, Santow J concluded (para [90]) "that a document sent by post to a company which, it can be inferred, was earlier [sic] received by that company, or should have been if the ordinary course of business was followed, is … served for the purposes of the common law." His Honour held (ibid) that "actual notice by the officer concerned is not necessary once it is accepted that the notice exercising the option was delivered to the officers of the addressee and should ordinarily have come to the attention of the relevant officer." Thus, his Honour concluded (ibid) "in the present circumstances … the notice was given at common law to the Lessor". 41 The decision says nothing as to whether delivery and receipt are, as Tyco submitted, two sides of the one coin or whether, as Norfolk submitted, they may on occasions be temporally or conceptually separated. 42 Since Norfolk placed weight on a number of the cases to which Santow J referred in Parras, it is necessary to consider some of them. In doing so, however, one must bear in mind that none of them deals precisely with the question that I am required to consider, which is whether a contractual deeming provision dealing with receipt must be applied to a provision of the same contract dealing with delivery, so that a document that in fact is delivered at a particular time, but (I shall assume for present purposes) is deemed to have been received at a later time, must be taken by force of the deeming provision also to have been delivered at that later time. 43 First, and out of chronological order, it is convenient to refer to the decision of Parker J in N.V. Stoomv Maats "de Maas" v Nippon Yusen Kaisha (The "Pendrecht") [1980] 2 Lloyd's Rep 56. One of the questions considered by his Lordship was whether, in terms of s 27(3) of the English Limitation Act 1939, notice of intention to commence an arbitration had been "served" on the respondent (defendant in the proceedings) within the applicable limitation period. The limitation period expired, at the latest, on 9 January 1977. On 7 January 1977 (a Friday), the claimant (plaintiff) gave notice to the respondent by telex. The telex was sent from the claimant's premises in London at about 9.45 am English time. It was received in the respondent's premises in Tokyo on the same day, but after ordinary business hours, when those premises had been closed for the weekend. It did not come to the attention of any responsible officer of the respondent until the following Monday, 10 January 1977. 44 The statutory obligation was to "serve", not to "deliver". Parker J observed at 65 that "the purpose of the notice is to stop time running and to preserve the rights of the party serving". By analogy with proceedings commenced by writ (when the issue of the writ stops time running, even though the fact and date of issue may not be known to the defendant until some time later), his Lordship concluded that the notice was effective to stop time running when it was in fact received at (ie, delivered to) the respondent's premises, even though it did not then (or at any time prior to expiry of the limitation period) come to the attention of the respondent through any responsible officer. 45 It was I think of significance to his Lordship's reasoning that the parties were corporations, and therefore could only "know" things through their human agents. However, having regard to the statutory purpose, his Lordship concluded that it was not necessary that the respondent corporation should "know" of the contents of the telex, or that it should come to the attention of its responsible officer, before service should be taken to have been effected. 46 There are passages in his Lordship's reasoning that appear to equate receipt with delivery. Thus, at 66, his Lordship said "that a telex notice … is, in the case of an English registered company, served when it is received at the registered office whether or not this is in normal business hours … ". A little later on the same page, in considering the question of service on foreign companies, his Lordship said that the telex "was in effect delivered to the head office of the company on Jan. 7" and thus held that "it was served on" that date. It seems to me to be reasonably plain from these passages that his Lordship did not see any particular distinction between receipt (when speaking of English companies) and delivery (when speaking of foreign companies). However, that is to be understood in light of his Lordship's view that what might be called "mere delivery" or "mere receipt" (mere, in the sense that that which is delivered or received did not come to the attention of any responsible officer) was sufficient to satisfy the relevant statutory purpose. 47 Of present significance, his Lordship's reasoning makes it plain that in considering whether something has been "delivered", it is necessary to have regard to the purpose for which the question is being asked. In the case before his Lordship, the purpose was the satisfaction of s 27(3) of the Limitation Act. His Lordship's analysis of that purpose enabled him to conclude that what I have called "mere" delivery would suffice. 48 Thus, his Lordship said at 66 that the case to which I next turn (the decision of the House of Lords in Eaglehill Ltd v J. Needham Builders Ltd [1973] AC 992) did not assist in the resolution of the particular problem with which he was faced. 49 The question for decision in Eaglehill was whether notice of dishonour of a bill of exchange had been given to the drawer of the bill after the bill was dishonoured, as required by s 48 of the English Bills of Exchange Act 1882. The due date for payment of the bill was 31 December 1970. It was accepted payable at the acceptor's specified bank branch. It was posted to that branch and arrived there, in the ordinary course of post, early on 31 December 1970. The bank manager's evidence was that it would have been dealt with immediately on receipt. Since the acceptor was in liquidation, it was plain that the bill would be dishonoured. Their Lordships proceeded on the basis that the time of dishonour was the time when, in the ordinary course of business, the bill was considered by someone having authority to deal with it who recognised that it would not be met and would have to be returned to the holder or the collecting bank. 50 By some clerical error, notice of dishonour was sent to the drawer of the bill earlier than intended. It was delivered to the drawer's office on 31 December 1970. As Viscount Dilhorne put it at 1004, "[t]he notice of dishonour was presumably delivered to the [drawer] a few minutes before or a few minutes after the bill was delivered to the bank. It was presumably received by the [drawer] when [its] post was dealt with." The drawer of the bill was not liable unless the notice of dishonour was given to it after the bill was dishonoured. 51 Lord Cross of Chelsea (with whom Lord Reid, Lord Diplock and Lord Simon of Glaisdale agreed) at 1010 stated the relevant questions as being "at what time on December 31 the bill was dishonoured and at what time on that day the notice of dishonour was received". At 1011, his Lordship concluded on the facts of the particular case that the bill was dishonoured as soon as it was seen and recognised as a bill that could not be met (because the acceptor was in liquidation). His Lordship dealt with the second question at 1011 as follows (omitting citations): "One must next consider at what time on December 31 the notice of dishonour was received by the respondents. I do not think that such a notice is "received" as soon as it is put into the drawer's letterbox either by the postman or a private messenger. On the other hand, it is the duty of the drawer if he be absent from his place of business or residence to see that there is someone there to receive notice on his behalf. … So I think that such a notice is received when it is opened in the ordinary course of business or would be so opened if the ordinary course of business was followed." 52 Viscount Dilhorne, who concurred in the result but gave separate reasons, dealt with that second question at 1004, in the passage to which I have referred at para [50] above. His Lordship returned to the point at 1007 as follows: "On the facts the evidence shows that the bill was delivered to the bank and the notice to the respondent by the first post on the same day at premises only a short distance apart. They must have been delivered within a period of a few minutes. The bill was received by the bank at the commencement of business, which I take to mean when the post was dealt with. I think one is entitled to infer that the notice was received by the respondents when their post was opened at the commencement of the day's work … ." 53 Thus, the reasoning of Lord Cross (and those of their Lordships who agreed with him) and of Viscount Dilhorne supports the view that, for the purposes of the relevant sections of the Bills of Exchange Act, there may be (and on the facts of the case was) a difference between the time (or event) of delivery and the time (or event) of receipt of each of the bill and the notice of dishonour. It is easy to see why this might be so where the relevant inquiries were: firstly, when was the bill of exchange dishonoured; and, secondly, when was the notice of dishonour given. Obviously enough, a bill of exchange cannot be dishonoured until it comes to the attention of someone and is dealt with in a way that amounts to dishonouring. Equally, their Lordships thought, a notice of dishonour could not be given unless it came, or in the ordinary course of business should have come, to the attention of the addressee. 54 It does not follow from the decision in Eaglehill that for all purposes and in all factual situations, there is a distinction between delivery and receipt. Nor does it follow that their Lordships were purporting to lay down general rules as to the time when documents might be taken to have been received: see for example the decision of Cohen J in NM Superannuation Pty Ltd v Hughes and Others (1992) 27 NSWLR 26 at 37. 55 In Curtice v London City and Midland Bank, Limited [1908] 1 K.B. 293, the plaintiff drew a cheque on October 31 1906 in payment for three horses. The horses were not delivered. Accordingly, on the same day but after hours, the plaintiff telegraphed his bank to countermand payment of the cheque. The telegram was received on the evening of the same day by the post office and, after office hours, (but again on the same day) placed in the defendant's letterbox. By oversight, the telegram was not brought to the attention of the bank manager until 2 November; in the meantime, the cheque had been paid on 1 November. The plaintiff's action was for money had and received, and not for negligence: a fact of some significance to the outcome. 56 All of their Lordships concluded that the telegram was not effective to countermand the cheque. According to Cozens-Hardy MR at 298, this was because countermand required both change of purpose and actual notification of that change of purpose to the bank. His Lordship said that "[t]here is no such thing as a constructive countermand … ". Fletcher Moulton LJ at 300 agreed with this aspect of the reasoning of the Master of the Rolls. Farwell LJ at 301 reasoned to the same effect. His Lordship said that "mere delivery" of a telegram to a bank, in circumstances where the telegram was not opened and therefore did not come to the bank's attention, could not operate as a countermand of payment. That was because, as his Lordship said, what was required was "actual notice brought to [the bank's] attention". At 300-301, his Lordship asked what plainly was intended to be a rhetorical question (in words that may be somewhat surprising to people accustomed to present day postal services): "Supposing a midday post comes in with so many letters that it takes a quarter of an hour (not an unreasonable time) to open them - it is during bank hours, and just as the post comes in or within five minutes afterwards a number of cheques are presented, is it to be said that the banker must thereupon refuse to cash any of these cheques until he has opened all his letters?" 57 It is implicit in the reasoning of the Master of the Rolls and Fletcher Moulton LJ, and I think explicit in the reasoning of Farwell LJ, that delivery and receipt may occur at the same time and by (as to aspects or perceptions of) the same action. It was not necessary for any of their Lordships to consider this in greater detail, because "mere delivery" or "mere receipt" was not sufficient to effect a countermand of a cheque. Again, it seems, the question of what amounts to delivery or receipt (or notice) is something to be answered having regard, among other things, to the purpose for which the question is asked. 58 I have referred in para [29] above to the decision of Young CJ in Eq in Lolly Pops. One of the questions considered by his Honour in that case was whether, and if so when, a notice of exercise of option had been served. His Honour concluded, based on s 170 of the Conveyancing Act 1919, that the notice was served when (as he concluded had occurred) it was put into the defendant's mailbox on 14 January 1997 (and thus within the time limited for exercise of the option), even though it did not come to the attention of the defendant until 26 February 1997 (after the time limited for exercise of the option). In substance, his Honour said that the document was served, on the facts of that case, by being left at the last known business address of the defendant (s 170(1)(b) of the Conveyancing Act). His Honour relied on cases such as Newborough (Lord) v Jones [1975] Ch 90, in which case a notice to quit placed under the door of a farmhouse was held to have been served when so placed, even though it slid under the floor covering inside the house and the tenant did not actually receive it or become aware of its contents. 59 His Honour found an alternative way to the same conclusion, based on (among other cases) Eaglehill, Curtice and The "Pendrecht". Those cases, his Honour said at 16,372, stood for the proposition that "in the case of a company, the rule that communication of acceptance is required is satisfied when the relevant letter is opened "in the ordinary course of business or would have been so opened if the ordinary course were followed" … ". (The internal quotation comes from the speech of Lord Cross in Eaglehill at 1011.) 60 In summary, the cases to which I have referred seem to demonstrate the following, not entirely remarkable, propositions:

(1) Delivery is the act of one person in handing something to another.

(2) In the case of a corporation, delivery may be effected by leaving the thing delivered in the letterbox or at the premises (registered office or in some circumstances other) of the corporation.

(3) Receipt - or "mere receipt" - may be the counterpart of delivery.

(4) In some cases, receipt may require that the thing delivered comes, or in the ordinary course of business should have come, to the attention of the recipient.

(5) Thus, in some cases delivery and receipt are simply different perspectives of the same act or transaction, and occur at the same time; but in other cases, delivery and receipt may involve different elements, and occur at different times.

(6) Whether delivery amounts to receipt, or (to put it another way) what is sufficient in the particular case to demonstrate receipt, depends on a number of factors, including: (a) the relevant legislative or contractual context (where applicable); (b) the facts of the particular case; and (c) identification of the purpose for which the inquiry is being undertaken. Analysis 61 With that somewhat lengthy exposition of what I understand to be the relevant principles and their bases, I turn to the relevant provisions of the agreement and the facts of this case. 62 The starting point must be the language of the agreement. Clause 7, in dealing with adjustments to the Initial Purchase Price, sometimes uses the verb "deliver". Thus, under clause 7.1, Tyco's obligation is to deliver the documents the subject of that sub clause to Norfolk on the specified day. Again, under clause 7.3, Tyco's obligation is to deliver the documents the subject of that sub clause to Norfolk within the time specified. 63 By contrast, clause 7.4, which deals with the documents delivered under clause 7.3, imposes a time limit not by reference to the date of delivery but by reference to the date of receipt. 64 Clause 7.4 then introduces a fresh concept - that of providing written notice. It is not immediately clear why the parties chose, in this instance, to depart from the language of delivery and receipt. (A similar point may be made about the concluding words of clause 4.1, and perhaps about the introductory words of clause 5.1. I shall return to those provisions.) 65 Clause 7.5 employs somewhat different language. If (following the procedure through to clause 7.4) there remains a dispute between Tyco and Norfolk, of which continuing dispute Norfolk has provided written notice to Tyco under clause 7.4, clause 7.5(a) indicates what Tyco is to do if it wishes to take the dispute further, and imposes a time limit which runs from receipt of Norfolk's document provided pursuant to clause 7.4. 66 Clause 7.5(a) does not in terms say that Tyco is to provide, or give, or deliver, or in any other way furnish, its Dispute Notice to Norfolk. That is to be done "under clause 7.7" (making the agreed correction to the printed text of clause 7.5(a)). 67 One then goes to clause 7.7(a), which provides that where there is a dispute, the "Disputing Party" may give a Dispute Notice to the other party. The use of the verb "give" calls attention to clause 24.1(a), from which, one might think, giving is equated to delivery. That would appear to be confirmed by clause 7.7(b), which describes the giving of notice pursuant to clause 7.7(a) by the use of the words "the Disputing Party having delivered a Dispute Notice to the other party". 68 Clause 7.7(b) may appear at first blush to be cast in terms of obligation: if the Disputing Party delivers a Dispute Notice to the other party, the other "must deliver to the Disputing Party a" Response. However, as the following sentence makes clear, there is no obligation on the recipient of a Dispute Notice to deliver a Response. The mandatory element of the first sentence of clause 7.7(b) is directed only to the time within which any Response must be delivered to the Disputing Party. The failure thus to deliver a Response is attended by consequences, which may or may not be severe; the Disputing Party's position, as stated in its Dispute Notice, will prevail. But that is simply a result of what I have earlier called the self executing nature of clause 7.(b), and in no way a breach, or the result of a breach, of the agreement. 69 I have referred in para [64] above to what might be thought to be some inconsistencies in the language used in the agreement to describe the process whereby something (a document, information or whatever) makes its way from one party to the other. Clause 4.1 sets out the general obligations of the parties before completion. It concludes with the following words: "The Purchaser must not unreasonably withhold or delay any consent required under this clause and, if that consent is declined, must provide a reasonable written statement of the reasons for that decision. The Purchaser will be taken to have given its consent for the purposes of this clause if the Purchaser does not, within 2 Business Days after being notified by a Vendor of a matter which is reasonably considered by the Vendor to be urgent and in any event within 5 Business Days after being notified by the Vendor of a proposed action, notify the Vendors that it refuses its consent." 70 It will be seen that the event that starts time running is Norfolk's "being notified by" Tyco of some matter. 71 Clause 5.1 deals with a notice from Norfolk to Tyco setting out certain details. The introductory words read as follows: "At least 5 Business Days before Completion, the Purchaser must give the Vendors a notice setting out details of: … ". 72 I have already referred to the provisions of clauses 7.4 ("provide written notice") and 7.7(a) ("giving notice"). 73 The references to "giving" a notice or other document may be understood readily by reference to clause 24.1(a). As its opening words show, that deals with notices and communications "given under this agreement". In sub para (ii)A, it sets out the circumstances in which a notice "will be taken to be accepted" (it is at least arguable that those words, which appear in sub sub para A, should also apply to sub sub paras B and C). With what is perhaps an excess of caution, it provides in sub para (iv) that a notice etc given in accordance with the preceding verbiage "is deemed to be received … in accordance with paragraph (b)." 74 Thus, although the subject matter of clause 24.1(a) is notices etc given under the agreement, its clear purpose is to establish when and by what means the notice "is deemed to be received". (I am not sure what the additional deeming provision, whereby a notice is "taken to be accepted" adds; it is sufficient to say that it does not detract from the view of clause 24.1(a) that I have just expressed.) 75 On the face of things, clause 24.1(a) relates to all notices or other forms of communication from one party to another under the agreement. It thus encompasses not only the "giving" of communications (clauses 5.1, 7.7(a)); it would also encompass the "providing" of communications (clause 7.4). Clearly, it would apply to the "delivery" of communications. Again, I think, if the notification contemplated by the concluding words of clause 4.1 occurs by means of some written (including electronic) notice or communication, that notification would be caught by clause 24.1(a). 76 A consideration of clause 24.1 of the agreement suggests that the parties were well aware that delivery might not always coincide with, or amount to, receipt. Indeed, if the parties saw the two things as being in essence the same, or different perspectives of the same act, or two sides of the one coin, it is a little difficult to understand why they engaged in the process of repetitive deeming embodied in paras (a) (especially sub para (iv)) and (b). 77 When documents are delivered by hand, or by facsimile or e-mail transmission, proof of the objective fact of delivery requires no deeming provision. Different considerations attend delivery by post (unless some form of post requiring acknowledgment from the addressee is utilised). But in general terms, where proof of the date (or time) of delivery is important, it is open to the party making the delivery to adopt a means of delivery that facilitates precise proof. 78 Equally, if receipt is no more than the counterpart of delivery, proof of delivery will amount also to proof of receipt. But the parties set out a detailed provision for deeming receipt to occur in certain circumstances. Those circumstances include two where precise proof of delivery would be available. This suggests that the parties regarded receipt as entailing something more than the physical transfer of some notice or other communication from one to the other. Thus viewed, the scheme of clauses 24.1(a) and (b) is complementary to the scheme of (for present purposes) clause 7, in which the emphasis is sometimes on delivery and at others on receipt. 79 Thus, I think, both the scheme of clause 7 and the detailed provisions contained in clause 24.1 suggest that the parties regarded the concept of receipt as involving (apart from any deeming) the notion that the thing received comes (or should have come) to the attention of the person by whom it is received. That (combined with what I have said in para [77] above) could explain why they thought it important to facilitate proof of receipt, but did not turn their attention to facilitating proof of delivery. 80 These considerations suggest that the parties' apparent deliberate use of the concept of delivery in clause 7.7(b) should be respected. I do not think that the parties intended that concept to be conflated, or interchangeable, with the concept of receipt. When the parties in clause 7.7(b) required the recipient of a Dispute Notice, if it wished to continue the dispute, to deliver a Response within the time fixed by that paragraph, they focussed deliberately on the concept of delivery. 81 I therefore think that the crucial question for the purposes of clause 7.7(b) is to be answered by giving attention to the evidence of delivery of the Response, and asking whether that occurred within 10 Business Days of the delivery of the Dispute Notice. There is no ambiguity or uncertainty in the concept of delivery in either sense. The recipient of the Dispute Notice will know when the Dispute Notice was in fact, or physically, delivered. Likewise, the recipient of the Response will know when the Response was in fact, or physically, delivered. In each case, assuming that the giver of the relevant document uses a means of delivery that lends itself to precise proof, the giver will know those things as well. In those circumstances, there would be no doubt as to the commencement of the relevant period of time or as to delivery within that time. 82 Further, I think, that construction is consistent with the underlying commercial purpose. It is necessary to go back to the earlier provisions of clause 7. It starts with the delivery of a Proforma Balance Sheet setting out an Estimated Completion Net Asset Value (clause 7.1). The parties may agree to adjustments to that Estimated Completion Net Asset Value, and if they do the Initial Purchase Price is adjusted accordingly (clause 7.2). Thereafter, Tyco is required to furnish a Completion Balance Sheet, setting out the Completion Net Asset Value (clause 7.3). Norfolk is required to review that. It is given 40 Business Days from receipt to do so (clause 7.4). No doubt, that length of time is allowed because of what the parties perceived to be the complexity of the task. 83 Where Norfolk seeks to adjust the Completion Net Asset Value, and Tyco does not accept that adjustment, Tyco has 20 Business Days from receipt to provide a Dispute Notice under clause 7.7. Again, no doubt, the time allowed for this task reflected the parties' assessment of its likely complexity. 84 By the time those steps have been completed, the ambit of the dispute will have been defined. What follows thereafter is the dispute resolution procedure laid out in clause 7.7. In essence, it is for the recipient of the Dispute Notice to say whether, and if so to what extent, it wishes to proceed with the dispute resolution mechanism. That is the function of the Response under clause 7.7(b). The purpose of the Response is to identify, for the purpose of the succeeding paragraphs of clause 7.7, the remaining matters in dispute, and to initiate the contractual process of dispute resolution. One would not expect that the Response would be a document that would require detailed study, over and above a consideration of the antecedent documents, to enable the managing directors or their nominees (clause 7.7(d)) to attempt to resolve the dispute. The parties therefore chose to make time run from the delivery rather than the receipt of the Response. 85 Thus, I think, one can understand why it was that the parties sought to make delivery the key event in some cases, and receipt (understood in the sense that I have explained in para [78] above, but to an extent modified by the deeming provisions of clause 24.1) the key event. 86 In circumstances where:

(1) The distinction between delivery and receipt that I have sought to describe cannot be regarded as illusory, and indeed is supported, in particular contexts, by authorities of long standing;

(2) The parties have used delivery in some cases and receipt in others as the concept that initiates the running of time;

(3) The scheme so revealed serves an apparent commercial purpose, and cannot be said to be arbitrary or absurd; and

(4) The parties have chosen to provide extensively for facilitation of proof of receipt (which, in the sense that I have explained it in para [78] above, involves an element that might not in all cases be within the knowledge of the party delivering that which is received),

the Court should accept that the parties intended to say what they did say, and intended what they did say to have the consequences that they prescribed. 87 I conclude that when the parties referred to delivery in clause 7.7(b), they meant precisely that; and they did not intend to conflate it with receipt. It follows, in my view, that the facultative or deeming provisions of clause 24.1, relevant to receipt, do not apply to the concept of delivery that is utilised in clause 7.7(b). 88 In this case, Norfolk has proved (and the parties agree) that its Response was delivered at 4.17 pm on 29 March 2005. The deeming provisions of clause 24.1 do not lead to the result that the delivery proved to have occurred at 4.17 pm on 29 March 2005 is deemed, or must be taken, to have occurred at 9 am the following day. For the reasons given in para [33] above, it is not necessary to consider whether any bank in Sydney was open at that time. Nor is it necessary to consider the time of day (if other than the last instant before midnight) that a Business Day might end. Conclusion 89 I conclude that Norfolk's Response was delivered within 10 business days of the delivery to Norfolk of Tyco's Dispute Notice. 90 Issue 2 should be answered "no". Consequences 91 Tyco accepted that, if I came to this conclusion, it would be appropriate to make an order requiring Tyco to comply with the dispute resolution procedures set out in clause 7.7(c) and following of the agreement. 92 Norfolk raised a number of issues concerning the steps taken by Tyco under the antecedent provisions of clause 7 (including as to the Completion Balance Sheet delivered by Tyco pursuant to clause 7.3 and the Dispute Notice given by Tyco pursuant to clause 7.5). However, in final submissions, Norfolk accepted that if I were to resolve the question of construction in its favour, then the remaining issues (in which, among others, those complaints are agitated) would not require resolution. 93 The resolution of those remaining issues does not involve the resolution of any disputed question of fact. Nor does it depend on any consideration of credibility. Thus, with limited exceptions, I see no utility in undertaking the task. Further, since (if the managing directors or their nominees cannot agree) the dispute will be referred to an expert under clause 7.7(d), and since many of those issues will be canvassed before the expert, I think it unwise to trespass upon and, perhaps, to interfere with the expert's consideration of those issues. 94 There is one limited group of exceptions. Tyco accepted that a number of the remaining issues should be answered in a particular way because of "assumptions" (in fact, concessions) that it made for the purpose of the proceedings. Although I do not intend to suggest that Tyco will seek to resile from that position, I think it desirable that I deal with those particular issues to the extent of recording the answers that, as Tyco accepted having regard to its assumptions, should be given. Issues 14 to 17: the Completion Balance Sheets of 16 November and 9 December 2004 95 Norfolk alleged that each of the Completion Balance Sheets (or, as it would have it, purported Completion Balance Sheets) provided by Tyco - on 16 November and 9 December 2004 - did not comply with clause 7.3 in a number of respects. One of Norfolk's complaints was that neither Completion Balance Sheet was prepared "in accordance with the Accounting Standards consistently applied" (clause 7.3(a)). The "Accounting Standards" were defined in the Dictionary to mean "generally accepted accounting principles in the United States as at the date of this Agreement." The parties referred to those principles as "GAAP", and I shall do likewise. 96 Norfolk gave particulars of the alleged non compliances with GAAP in schedule 2 to its amended first cross-summons. The same particulars were given for each Completion Balance Sheet. 97 Further, Norfolk alleged that there was an implied term of the agreement that any Dispute Notice should be prepared applying GAAP. It alleged that Tyco's Dispute Notice did not do so. Particulars of the alleged non compliances were given in schedule 4 to the amended first cross-summons. 98 Tyco accepted that the proceedings should be heard and determined on the "assumptions" that the Completion Balance Sheets delivered on 16 November and 9 December 2004 did not comply with GAAP in the respects alleged in schedule 2 to the cross-summons, and that its Dispute Notice was not prepared applying GAAP in the respects alleged in schedule 4. (It did not accept that there was an implied term of the kind alleged, but that dispute can be put to one side.) 99 Tyco confirmed in final submissions that the effect of the assumptions was that limited positive answers should be returned to issues 14 to 16, consistent with the assumptions on the basis of which it asked the Court to decide the dispute. Thus, Tyco accepted that:

(1) Issue 14 should be answered "yes" as to non compliance with GAAP: ie, that the Completion Balance Sheet and the calculation of the Completion Net Asset Value delivered on 16 November 2004 failed to comply with GAAP;

(2) Issue 15 should be answered by saying that the Completion Balance Sheet and the Completion Net Asset Value of 16 November 2004 were not prepared or calculated in accordance with GAAP in the respects alleged in schedule 2 to the amended first cross-claim;

(3) Issue 14 should be answered "yes" as to non compliance with GAAP: ie, that the Completion Balance Sheet and the calculation of the Completion Net Asset Value delivered on 9 December 2004 failed to comply with GAAP; and

(4) Issue 15 should be answered by saying that the Completion Balance Sheet and the Completion Net Asset Value of 9 December 2004 were not prepared or calculated in accordance with GAAP in the respects alleged in schedule 2 to the amended first cross-claim. 100 Further, Norfolk alleged that it was a requirement of the agreement that the Completion Balance Sheet referred to in clause 7.3 must be prepared within ten Business Days after the Completion Date and delivered, with its supporting documents, within two Business Days of preparation (so much is clear from the language of clause 7.3). Norfolk alleged further that it was not open to Tyco (or, as Norfolk put it, that it was a breach of what it called "the 12 day delivery requirement") to deliver the second Completion Balance Sheet as it did (or, Norfolk said, purported to do) on 9 December 2004. 101 Tyco accepted as a matter of fact that it did not comply with the 12 day delivery requirement in respect of the second Completion Balance Sheet. It submitted that this did not invalidate the second Completion Balance Sheet, but again that is a dispute that can be put to one side. 102 Otherwise, Tyco disputed that it did not comply with the various requirements of clause 7.3 relating to the Completion Balance Sheet. It did not admit any of the breaches alleged by Norfolk other than the ones to which I have referred; and it submitted that, to the extent that there were breaches (including of the implied term, if it were found to exist) those breaches would not invalidate the documents. 103 My decision on the question of construction makes it unnecessary to deal further with those (or other) disputes. However, I record that, had it been necessary to deal with them, I would have answered issues 14 to 17 in Norfolk's favour at least to the extent that Tyco submitted should occur having regard to the assumptions on which it invited the Court to decide the case. Relief 104 Norfolk sought orders that Tyco perform its obligations under the relevant part of clause 7.7. Tyco took no point as to the particular form of the orders sought, or as to the absence of any express averment by Norfolk of its readiness, willingness and ability to perform clause 7.7(c) and following of the agreement to the extent that it remained to be performed on Norfolk's part. 105 In substance, what is sought is an order for specific performance. I do not think that it is desirable to order only one party to a contract to perform its obligations, where the performance of those obligations is interdependent with the performance by the other party of its obligations. Thus, I think, the appropriate order is simply one requiring the parties specifically to perform clause 7.7 to the extent that it has not been performed. Since there is no point taken as to Norfolk's readiness, willingness and ability to perform (and if there were, the evidence would permit a conclusion that Norfolk was ready, willing and able to perform) I will grant relief in that form. Orders 106 I make the following orders:

(2) Declare that the "Response" delivered by the defendants to the plaintiffs at about 4.17 pm on 29 March 2005 was properly delivered, and a valid "Response", for the purposes of clause 7.7(b) of the "Share Purchase Agreement" made on 1 October 2004 between the plaintiffs as vendors and the defendants as purchasers.

(3) Order that the parties do specifically perform and put into execution clause 7.7 of the said Share Purchase Agreement to the extent that the said clause 7.7 has not already been performed.

(4) Subject to order (5), order the plaintiffs to pay the defendants' costs of the summons and the cross-summons.

(5) Reserve liberty to any party to move to discharge or vary order (4); any such application to be made by notice to the party or parties affected (with a copy to my associate) within 14 days of today's date; such notification to specify both the orders sought and in brief the reasons why they are sought.

(6) Reserve liberty to any party to apply on 7 days' notice either in respect of the implementation of order (3) or generally.

(7) Order that the exhibits remain with the papers for 28 days from today's date and that they be dealt with thereafter in accordance with the Rules. ******

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At a glance

Court

Decision date

Before

Source

Judgment (52 paragraphs)

Parties

Cases Cited (7)

Cited By (3)