Downer Engineering Power Pty Ltd v P & H Minepro Australasia Pty Ltd

[2007] NSWCA 318

NSW Court of Appeal

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Interrogate

Catchwords

1. Contract
2. › Sale of business
3. › Adjustment of purchase price after completion
4. › Construction of clause relating to work in progress
5. › Whether stocktake figure to be inserted without adjustment or used as starting point for further calculation
1. Contract
2. › Sale of business
3. › Completion adjustment mechanism
4. › Provision for referral of disagreement to expert valuer
5. › Whether dispute as to construction and operation of adjustment clause was itself a matter to be referred to the Valuer
1. Contract
2. › Sale of business
3. › Completion adjustment mechanism
4. › Effect of neither party referring disagreement to Valuer
5. › Whether draft completion statement became final and binding under default provision

Quick Take

Where a sale of business agreement provides for expert determination of disputes about a completion statement and a default mechanism making the seller's figures final and binding if no referral is made, a dispute as to the proper construction of the adjustment clause is itself a matter capable of referral to the expert. A buyer who fails to invoke the contractual dispute resolution mechanism within the specified period is bound by the seller's figures. The word 'used' in a clause requiring an agreed inventory to be 'used in preparing' a completion statement permits adjustment of the value attributed to the inventory items and does not require the stocktake figure to be inserted without modification.