WLD Practice Holdings Pty Limited v Sara Stockham [2020] NSWSC 1488

WLD Practice Holdings Pty Limited v Sara Stockham [2020] NSWSC 1488

Clause 7.8 is directed to decision-making on Major Policy Issues and operates as a contractual embargo on the Trustee giving effect to such decisions without Unanimous Resolution; it renders void the decision-making process or decision, not any subsequent transaction. Clause 13 is an independent and discrete valuation mechanism requiring the Trustee Company Accountant to determine Fair Market Value as an expert by reference to specified financial material and valuation principles within a tight timeframe. The Unitholders' Agreement does not require the Valuer to investigate or be satisfied about compliance with clause 7.8, and such satisfaction is not a condition of validity of a clause...

Jurisdiction
Australia
Judgment Date
27 October 2020
Procedural Posture
Equity Expedition List; Determination of Separate Questions Concerning Construction of Unitholders' Agreement and Unit Trust Deed / Principal Judgment on Separate Questions Posed by Consent
Outcome
Separate questions answered: clause 7.8 is a contractual embargo on the Trustee giving effect to decisions in respect of Major Policy Issues without Unanimous Resolution and has no role in the Valuer's determination of Fair Market Value under clause 13; the second question was answered No.
Legal Topics
['contractual Construction' "unitholders' Agreement" 'unit Trust Valuation' 'expert Determination' 'major Policy Issues' 'unanimous Resolution' 'fair Market Value']
['contracts' 'equity' 'trusts'] ['contractual Construction' "unitholders' Agreement" 'unit Trust Valuation' 'expert Determination' 'major Policy Issues' 'unanimous Resolution' 'fair Market Value']

Case Brief

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Procedural Posture

Equity Expedition List; Determination of Separate Questions Concerning Construction of Unitholders' Agreement and Unit Trust Deed / Principal Judgment on Separate Questions Posed by Consent

Legal Issues

  1. 1 ["What is the true meaning and effect of clause 7.8 of the Unitholders' Agreement?" "Whether, on the proper construction of clause 13 of the Unitholders' Agreement, the Trustee Company Accountant determining Fair Market Value for a Unit is required to disregard any transaction relating to a Major Policy Issue unless satisfied that there is evidence of a Unanimous Resolution approving the transaction in accordance with clause 7.8, with failure to do so invalidating the valuation."]

Ratio Decidendi

Clause 7.8 is directed to decision-making on Major Policy Issues and operates as a contractual embargo on the Trustee giving effect to such decisions without Unanimous Resolution; it renders void the decision-making process or decision, not any subsequent transaction. Clause 13 is an independent and discrete valuation mechanism requiring the Trustee Company Accountant to determine Fair Market Value as an expert by reference to specified financial material and valuation principles within a tight timeframe. The Unitholders' Agreement does not require the Valuer to investigate or be satisfied about compliance with clause 7.8, and such satisfaction is not a condition of validity of a clause...

Court Disposition

Separate questions answered: clause 7.8 is a contractual embargo on the Trustee giving effect to decisions in respect of Major Policy Issues without Unanimous Resolution and has no role in the Valuer's determination of Fair Market Value under clause 13; the second question was answered No.

Orders

  • ['The parties were invited to bring in short minutes of order to reflect the reasons.' 'If costs could not be agreed, the Court would determine the question of costs.']