Australia, Aug. 21 -- New South Wales Land and Environment Court issued text of the following judgement on July 21:

1. HER HONOUR: This judgment concerns whether pre-judgment interest should be calculated on a simple or compound basis, and whether any special costs order should be made.

Facts

2. The parties executed a Share Sale Agreement which provided for deferred consideration to be paid by the purchaser based on financial performance in the two years' post-completion, that is, an 'earn-out'. The parties agreed on an expert determination procedure in the event that there was a dispute as to the amount of 'earn-out'. Such a dispute arose.

3. In September 2023, the expert determined that the purchaser was obliged to pay the vendor $9,663,200. In October 2023, the vendor commenced these proceedings, seeking a declaration that the parties were bound by the expert determination. In November 2023, the purchaser filed a defence and cross-claim, contending that the expert determination was affected by a number of "manifest errors", most significantly, as to the proper construction of the earn-out provisions in the Share Sale Agreement. In December 2023, the vendor amended its summons, seeking rectification of the Share Sale Agreement in the event that the purchaser's suggested construction was correct.

4. In February 2024, the vendor put on its lay evidence. In May 2024, the purchaser did likewise. In June 2024, the parties turned their minds to discovery. On 24 June 2024, the purchaser's solicitors circulated proposed categories of discovery to be provided by the vendor, noting that the rectification suit resulted in a waiver of privilege over communications between the vendor and its solicitors in respect of the drafting of the relevant document, being a Variation Deed.

5. In August 2024, consent orders were made for the vendor to give discovery. In September 2024, Stevenson J made directions to address any contested claims for privilege and listed the matter for final hearing with an estimate of three days commencing on 14 April 2025. The parties exchanged discovered documents on 20 September 2024.

6. On 1 November 2024, the vendor served a detailed Calderbank offer, which was open for 28 days. The vendor offered to accept $8,663,200, being a $1 million discount off the expert determination, foregoing some $1 million in interest and foregoing costs. The purchaser does not dispute that the offer presented a genuine compromise.

7. On 13 November 2024, the vendor's solicitors noticed that the vendor's discovery did not include copies of 22 documents (over which no privilege had been claimed). The missing documents were provided the next day. On 22 November 2024, the purchaser filed a motion seeking to inspect various privileged documents.

8. The Calderbank offer expired on 29 November 2024, without response. On 6 December 2024, Stevenson J made orders for the vendor to produce various privileged documents for inspection, noting that the purchaser's motion seeking production was discontinued with no order as to costs. The privileged documents were made available the same day.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/1982a9e6e11f32b1a492fd5d)

Disclaimer: Curated by HT Syndication.