Ebbsfleet Pty Ltd as trustee for Ebbsfleet Superannuation Fund v Semantic Software Asia Pacific Ltd (No 3) [2017] NSWSC 78

Ebbsfleet Pty Ltd as trustee for Ebbsfleet Superannuation Fund v Semantic Software Asia Pacific Ltd (No 3) [2017] NSWSC 78

Clause 46 warranted that the plaintiffs' shares would be worth 75 cents within two years. Clause 6.5 did not limit that specific warranty, and clause 46 did not make a transfer of additional shares by Mr Bradley the plaintiffs' exclusive remedy. On the accepted valuation evidence, Semantic's patents had no material value beyond amortised cost and the shares were of negligible or no value at all relevant times, so the shares did not triple in value. Mr Bradley and Semantic therefore breached the contractual warranty. The representation that the shares would triple in value was a representation as to a future matter made without objectively reasonable grounds, because Semantic had no...

Jurisdiction
Australia
Judgment Date
15 February 2017
Procedural Posture
Equity Commercial List / Principal Judgment
Outcome
The plaintiffs made out their claims for breach of warranty and misleading or deceptive conduct and are entitled to damages; the Court would hear further submissions on the precise amount of damages, possible transfer of shares, costs, and final orders.
Legal Topics
['share Issue Agreements' 'contractual Warranties' 'construction of Commercial Contracts' 'value of Patents' 'australian Consumer Law Ss 4 and 18' 'representations as to Future Matters' 'damages']
['contract' 'intellectual Property' 'misleading or Deceptive Conduct'] ['share Issue Agreements' 'contractual Warranties' 'construction of Commercial Contracts' 'value of Patents' 'australian Consumer Law Ss 4 and 18' 'representations as to Future Matters' 'damages']

Case Brief

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Procedural Posture

Equity Commercial List / Principal Judgment

Legal Issues

  1. 1 ['Whether the Share Issue Agreements warranted that the subscribed shares in Semantic would triple in value within two years of issue.' 'Whether clause 6.5 limited the warranty in clause 46 and whether clause 46 provided an exclusive remedy if the shares did not triple in value.' 'Whether the shares in Semantic tripled in value within two years of issue, including whether patents owned by a wholly owned subsidiary had material value.' 'Whether Mr Bradley and Semantic had reasonable grounds to represent that the shares would triple in value within two years.' 'Whether the plaintiffs relied on the representation and suffered loss caused by the warranties and representation.']

Ratio Decidendi

Clause 46 warranted that the plaintiffs' shares would be worth 75 cents within two years. Clause 6.5 did not limit that specific warranty, and clause 46 did not make a transfer of additional shares by Mr Bradley the plaintiffs' exclusive remedy. On the accepted valuation evidence, Semantic's patents had no material value beyond amortised cost and the shares were of negligible or no value at all relevant times, so the shares did not triple in value. Mr Bradley and Semantic therefore breached the contractual warranty. The representation that the shares would triple in value was a representation as to a future matter made without objectively reasonable grounds, because Semantic had no...

Court Disposition

The plaintiffs made out their claims for breach of warranty and misleading or deceptive conduct and are entitled to damages; the Court would hear further submissions on the precise amount of damages, possible transfer of shares, costs, and final orders.

Orders

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