Liberty Grove (Concord) Pty Ltd v Mirvac Projects Pty Ltd [2008] NSWSC 113

Liberty Grove (Concord) Pty Ltd v Mirvac Projects Pty Ltd [2008] NSWSC 113

The contract required calculation of the IRR as an effective annual rate, not a nominal rate. The profit share was to be based on actual cash flows, with actual incurred costs (not budgeted) for August and September 2005, and clause 6 referred to accounting practices regarding cost allocation, not Mirvac's methodology for expressing IRR. No effective variation was shown to permit use of budgeted costs. Mirvac's methodology and cash flow adjustments were incorrect and not compliant with the agreement.

Jurisdiction
Australia
Judgment Date
21 February 2008
Procedural Posture
Commercial List / Principal Judgment
Outcome
Contract construed; parties directed to bring in short minutes of order to comprehend the findings; costs to be argued
Legal Topics
['construction of Contract' 'profit Share Arrangement' 'internal Rate of Return (irr) Calculation' 'accounting Practices' 'variation of Contract']
['contract Law' 'property Law' 'commercial Law'] ['construction of Contract' 'profit Share Arrangement' 'internal Rate of Return (irr) Calculation' 'accounting Practices' 'variation of Contract']

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Procedural Posture

Commercial List / Principal Judgment

Legal Issues

  1. 1 ['Proper construction of profit-sharing agreement' "Whether 'internal rate of return' means effective or nominal rate" 'Whether contract permits calculation using budgeted or actual costs' 'Admissibility and effect of evidence of negotiations prior to written contract' "Whether 'normal accounting practices' includes Mirvac's methodology" 'Whether alleged oral variation was effective']

Ratio Decidendi

The contract required calculation of the IRR as an effective annual rate, not a nominal rate. The profit share was to be based on actual cash flows, with actual incurred costs (not budgeted) for August and September 2005, and clause 6 referred to accounting practices regarding cost allocation, not Mirvac's methodology for expressing IRR. No effective variation was shown to permit use of budgeted costs. Mirvac's methodology and cash flow adjustments were incorrect and not compliant with the agreement.

Court Disposition

Contract construed; parties directed to bring in short minutes of order to comprehend the findings; costs to be argued

Orders

  • ['Parties directed to bring in short minutes of order to comprehend the findings' 'Costs to be argued']