Great Australian Operations Pty Limited (receivers and managers appointed) v CopperChem Limited [2012] FCA 391

Great Australian Operations Pty Limited (receivers and managers appointed) v CopperChem Limited [2012] FCA 391

The proper construction of the relevant agreements is that the dilution mechanism is triggered by reference to the Actual EBITDA of CopperChem and any subsidiaries, and not by reference to the EBITDA of WHSP as a parent or Related Body Corporate. The alternative construction contended for by GAO is inconsistent with the contractual language, the commercial purpose of the agreements, and business common sense. There is, therefore, no need to grant rectification, but if the construction were otherwise, there would be clear evidence of a common intention to give effect to the dilution mechanism based on CopperChem’s performance.

Parties
Plaintiff/cross Respondent: Great Australian Operations Pty Limited (Receivers and Managers Appointed); First Defendant: CopperChem Limited; Second Defendant/cross Claimant: Washington H Soul Pattinson and Company Limited
Jurisdiction
Australia
Judgment Date
19 April 2012
Procedural Posture
Derivative Action / Judgment at Trial
Outcome
proceeding dismissed
Legal Topics
Derivative Actions, Company Shares, Rectification of Contracts, Contract Construction
Corporations Law Contract Law Derivative Actions Company Shares Rectification of Contracts Contract Construction

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Parties

Great Australian Operations Pty Limited (Receivers and Managers Appointed)

Plaintiff/cross Respondent

CopperChem Limited

First Defendant

Washington H Soul Pattinson and Company Limited

Second Defendant/cross Claimant

Procedural Posture

Derivative Action / Judgment at Trial

Legal Issues

  1. 1 Proper construction of 'CopperChem Group' and 'Actual EBITDA' in the context of a dilution mechanism in company transaction documents
  2. 2 Entitlement to rectification if the documents fail to reflect parties' common intention

Ratio Decidendi

The proper construction of the relevant agreements is that the dilution mechanism is triggered by reference to the Actual EBITDA of CopperChem and any subsidiaries, and not by reference to the EBITDA of WHSP as a parent or Related Body Corporate. The alternative construction contended for by GAO is inconsistent with the contractual language, the commercial purpose of the agreements, and business common sense. There is, therefore, no need to grant rectification, but if the construction were otherwise, there would be clear evidence of a common intention to give effect to the dilution mechanism based on CopperChem’s performance.

Court Disposition

proceeding dismissed

Orders

  • The proceeding be dismissed.
  • The plaintiff pay the costs of the second defendant as agreed or assessed.