Network Ten Pty Ltd v TX Australia Pty Ltd [2018] NSWCA 312

Network Ten Pty Ltd v TX Australia Pty Ltd [2018] NSWCA 312

Clause 10.2(b)(ii) of the shareholders agreement requires the auditor to determine a single price for the defaulting shareholder's shares, based on an objective market value. PwC did not fulfill this requirement, as its report did not determine a single price but instead provided a number of possible outcomes and scenarios. Accordingly, the contractual mechanism was not satisfied, and the proceedings should be dismissed.

Jurisdiction
Australia
Judgment Date
14 December 2018
Procedural Posture
Appeal / Judgment
Outcome
Appeal allowed; proceedings dismissed
Legal Topics
['valuation of Shares' 'expert Determination in Contracts' 'interpretation of Shareholders Agreements' 'market Value Determination' "auditor's Role and Obligations"]
['contracts' 'equity' 'corporations'] ['valuation of Shares' 'expert Determination in Contracts' 'interpretation of Shareholders Agreements' 'market Value Determination' "auditor's Role and Obligations"]

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Procedural Posture

Appeal / Judgment

Legal Issues

  1. 1 ["Whether auditor's report 'determined' a price as required by shareholders agreement clause 10.2(b)(ii)" "Whether clause 10.2(b)(ii) required auditor to determine a market value or a 'fair and reasonable' price for shares"]

Ratio Decidendi

Clause 10.2(b)(ii) of the shareholders agreement requires the auditor to determine a single price for the defaulting shareholder's shares, based on an objective market value. PwC did not fulfill this requirement, as its report did not determine a single price but instead provided a number of possible outcomes and scenarios. Accordingly, the contractual mechanism was not satisfied, and the proceedings should be dismissed.

Court Disposition

Appeal allowed; proceedings dismissed

Orders

  • ['Allow the appeal.' 'Set aside the declaration made by the primary judge and in lieu thereof order that the proceedings be dismissed.' 'Direct the parties within 7 days to either file a consent order dealing with the costs of the appeal and the costs of the proceedings below or submissions as to the appropriate...