Federal Court of Australia ThoughtWare Australia Pty Limited v IonMy Pty Ltd (No 2) [2023] FCA 1161 File number: QUD 107 of 2023 Judgment of: DERRINGTON J Date of judgment: 18 August 2023 Date of publication of reasons: 27 September 2023 Catchwords: CONTRACTS – dispute as to construction of business sale agreement referred to expert determination – whether determination binding – meaning of "gross profit" PRACTICE AND PROCEDURE – summary judgment – question of construction – granting summary judgment in complex cases Legislation: Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth) Corporations Regulations 2001 (Cth) Federal Court Rules 2011 (Cth) Cases cited: Minister for Immigration, Citizenship, Migrant Services & Multicultural Affairs v AAM17 (2021) 272 CLR 329 ThoughtWare Australia Pty Limited v IonMy Pty Ltd [2023] FCA 906 Todorovic v Moussa (2001) 53 NSWLR 463 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 79 Date of hearing: 18 August 2023 Counsel for the Applicant: Mr D Keane KC Solicitor for the Applicant: HWL Ebsworth Lawyers Solicitor for the Respondent: Mr D Ward of Brown Ward King Solicitor for an interested person: Mr N Chase Berry of ERA Legal ORDERS QUD 107 of 2023 BETWEEN: THOUGHTWARE AUSTRALIA PTY LIMITED ACN 086 417 338 Applicant AND: IONMY PTY LTD ACN 639 514 480 Respondent order made by: DERRINGTON J DATE OF ORDER: 18 AUGUST 2023 THE COURT ORDERS THAT: Leave to proceed 1. The applicant have leave to proceed with this proceeding pursuant to s 453S of the Corporations Act 2001 (Cth). Leave — Amendments 2. The applicant have leave to file: (a) an Amended Originating Application pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) in the form annexed as exhibit "WPJ-56" to the Affidavit of Warren Peter Jiear sworn 15 August 2023; and (b) an Amended Concise Statement pursuant to r 16.53 of the Federal Court Rules 2011 (Cth) in the form annexed as exhibit "WPJ-57" to the Affidavit of Warren Peter Jiear sworn 15 August 2023. Judgment 3. There be judgment for the applicant in the sum of $2,368,903.59. 4. An order that the respondent pay the applicant interest on the judgment: (a) pursuant to the Business Sale Agreement dated 30 June 2020 (BSA) for the dates payment was required, to commencement of these proceedings; and (b) pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) from commencement of these proceedings to judgment, fixed in the sum of $55,444.25. 5. There be declarations that as at 14 August 2023: (a) the respondent was unable to pay the Purchase Price instalments as per clause 3.2 of the BSA; and (b) the BSA was terminated. 6. There be specific performance of clause 13.3(c) of the BSA, with the respondent to within 21 days: (a) return operating control of the Business and the Assets (as defined in the BSA) to the applicant; (b) deliver to the applicant or procure delivery of: (i) all documents of title relating to the Assets; (ii) assignments of each Contract to the applicant and written consent of the other party to those assignments, or executed novations of the Contracts together with the originals of all Contracts; (iii) all Records; (iv) all Assets together with title documents (v) all documents necessary to fully discharge any Encumbrance in respect of any Asset; (vi) all documents necessary to record the changes of ownership of any of the Assets at each place the relevant Asset is registered or recorded; (vii) all other documents and things required to be done or delivered or which are reasonably required to vest full ownership, title, possession and benefit of the Assets in the applicant to enable the applicant to conduct the Business in the same manner as the respondent has been conducting it. 7. Until further order, the respondent, by its directors, servants, agents, employees be restrained from transferring any part of the Assets or the Business (as defined in the BSA) to any other party or otherwise dealing with them other than with the consent in writing of the applicant by its solicitors, so as to be able to transfer the Business to the applicant in accordance with clause 13.3(c) of the BSA if required. Costs 8. The respondent pay the applicant's costs to 4 August 2023 on the standard basis. 9. The respondent pay the applicant's costs from 4 August 2023 on the indemnity basis to be taxed if not agreed. Special Costs Order 10. The applicant have leave to make any application it sees fit in relation to the making of a special costs order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DERRINGTON J: Introduction 1 By a decision handed down on 4 August 2023, the applicant in this proceeding, ThoughtWare Australia Pty Limited (ThoughtWare), obtained summary judgment in respect of part of its claim: ThoughtWare Australia Pty Limited v IonMy Pty Ltd [2023] FCA 906 (ThoughtWare v IonMy). The result was the entry of judgment against the respondent, IonMy Pty Ltd (IonMy), in the amount of $368,903.59. The application for summary judgment was otherwise adjourned to a date to be fixed, allowing ThoughtWare the opportunity to seek such further relief as it saw fit. Procedural history and issues for determination 2 ThoughtWare's initial application for summary judgment was advanced at an interlocutory hearing on 27 April 2023. At that time, it sought a number of other orders for the purpose of, amongst other things, preserving the status quo while the proceeding remained on foot. To that end, it was ordered in that hearing that there be an interlocutory injunction, until any future trial or further order, restraining IonMy from transferring any part of the assets of the business that it conducted to any other party or otherwise dealing with them other than in the ordinary course of the conduct of that business. It was also ordered that ThoughtWare be authorised, through its directors and solicitors, to inspect the books and records of IonMy. 3 On 14 August 2023, after ThoughtWare v IonMy had been handed down, the solicitors acting for ThoughtWare contacted the Court, seeking an urgent hearing to address certain matters identified in IonMy's books and records that were relevant to the operation of the injunction granted on 27 April 2023. That hearing was listed for 18 August 2023. 4 On 15 August 2023, ThoughtWare filed a fresh interlocutory application in this proceeding seeking, amongst other things: (a) leave to file an Amended Originating Application and Amended Concise Statement; (b) summary judgment in the amount of $2,368,903.59, plus interest; (c) a declaration that IonMy is unable to pay the purchase price pursuant to the Business Sale Agreement executed by the parties on 30 June 2020 (the BSA); and (d) an order for specific performance of part of the termination clause in the BSA, being cl 13.3(c). 5 Unsealed copies of the material on which ThoughtWare relied for the further relief were served on IonMy on the same date. It was subsequently clarified that, in place of the declaration listed in item (c) above, ThoughtWare sought declarations that IonMy was unable to pay the Purchase Price instalments as per clause 3.2 of the BSA, and that the BSA was therefore terminated. 6 On 17 August 2023, the solicitors acting for IonMy advised the Court that their client had, on that day, appointed external administrators. In effect, IonMy had sought to take advantage of the restructuring provisions in Div 2 of Pt 5.3B of the Corporations Act 2001 (Cth) (Corporations Act) by appointing a "small business restructuring practitioner". On this basis, it requested that the hearing listed for 18 August 2023 be vacated. The solicitors acting for ThoughtWare advised that their client opposed this course, and noted that they had been instructed to seek leave to proceed against IonMy pursuant to s 453S of the Corporations Act. 7 Given the manner in which events were unfolding, the matter was heard at the scheduled time on 18 August 2023. It is useful to address the issues raised by the parties in the following order: (a) whether the hearing should be adjourned, as requested by IonMy; (b) whether ThoughtWare should be allowed to continue this proceeding against IonMy pursuant to s 453S of the Corporations Act; (c) whether ThoughtWare should be permitted to file its Amended Originating Application and Amended Concise Statement; (d) whether ThoughtWare should be granted the substantive relief that it seeks; and (e) what costs orders ought to be made in the circumstances. 8 In the course of the resumed hearing, the above matters were dealt with in sequence with ex tempore reasons given as the hearing progressed. The present written reasons are a compilation of those separately delivered determinations, albeit revised and edited within the confines of the principles in Minister for Immigration, Citizenship, Migrant Services & Multicultural Affairs v AAM17 (2021) 272 CLR 329, 345 – 346 [32] and Todorovic v Moussa (2001) 53 NSWLR 463, 467 – 469 [41] – [48]. 9 It is convenient to begin by giving some background to the matter. Background 10 The history of this matter was explained in detail in ThoughtWare v IonMy, but there is some value for the present purposes in recounting certain key points. 11 ThoughtWare carried on business developing and supplying governance, risk and compliance software. On 30 June 2020, the parties formally executed the BSA, by which ThoughtWare sold that business to IonMy. ThoughtWare had previously operated under the business name "IonMy", and it can be assumed that the respondent, IonMy, was incorporated under that name in connection with its acquisition of the business. "Completion" of the sale, as defined in the BSA, occurred on or about 15 December 2020. 12 Under the BSA, the "Purchase Price" for the sale was $7.5 million. That amount was, pursuant to cl 3.2, to be paid in five "Instalments" with the first Instalment due on or before 30 June 2021 and the final Instalment due on or before 30 June 2025. The quantum of the Instalments was subject to certain terms and conditions, set out in cl 3.5 of the BSA. Clause 3.5(a), in particular, provided that the amount of an Instalment would be reduced on a pro rata basis if "the average annual gross profit of the Business for the two financial years immediately preceding the date that any Instalment is due for payment under clause 3.2 is less than $1,000,000.00". 13 Not long after the execution of the BSA, ThoughtWare and IonMy fell into dispute as to the meaning of the expression "gross profit" in cl 3.5(a). That dispute was referred to expert determination pursuant to cl 19 of the BSA in about May 2022. 14 The expert's determination was delivered on 6 February 2023, and substantially favoured the position taken by ThoughtWare. The expert concluded that the expression "gross profit" had the same meaning as was reflected in the accounts of the business contained in Annexure A to the BSA. That meaning was orthodox, though the expert acknowledged that different parties might have different views about those expenses that should fall within the "cost of goods sold" element of the "gross profit" equation. 15 IonMy sought to challenge the determination, and asserted that it was not binding on the parties. It did not pay the first Instalment of $500,000 or the second Instalment of $750,000 on the dates stated in cl 3.2 of the BSA. ThoughtWare accordingly commenced this proceeding to enforce the determination against IonMy and obtain judgment in the amount of those Instalments. It conceded that certain deductions ought properly to be made to the first Instalment, in accordance with a separate (and presently irrelevant) reduction mechanism in cl 3.5(b) of the BSA, such that the total amount owing was $1,118,903.59. 16 In ThoughtWare v IonMy, it was found that the parties were bound by the expert determination and that the expert's conclusion as to the meaning of "gross profit" was entirely correct. IonMy was ordered to pay the first Instalment of the purchase price, less the conceded deductions, such that judgment was awarded against it in the amount of $368,903.59. 17 While judgment was also sought by ThoughtWare for the full $750,000 amount of the second Instalment, I was not convinced at the hearing on 27 April 2023 that there was sufficient evidence to demonstrate that this Instalment was not to be reduced pursuant to cl 3.5(a). ThoughtWare's application was therefore adjourned, such that it could be afforded an opportunity to seek further relief by reference to additional material. 18 By the time that the judgment in ThoughtWare v IonMy was delivered, the third Instalment of $1,250,000 had also fallen due. 19 On any view, at that point, commercial parties acting reasonably should have been able to agree upon the "gross profit" of the business in each of the relevant years by applying the methodology determined by the expert, which had been approved by the Court. The correct amounts of the second Instalment and the third Instalment would then be uncontroversial. That, however, has not been the case. To date, none of the Instalments that have fallen due has been paid. It is for this reason that ThoughtWare seeks, as the first item of substantive relief on this application, judgment against IonMy in the amount of $2,368,903.59. 20 As noted above, ThoughtWare also seeks a declaration that IonMy was unable to pay the Purchase Price pursuant to the BSA. Relevantly, cl 13.3 of the BSA provides that, if before full payment of the Purchase Price is completed IonMy is unable for any reason to pay the Instalments, then the BSA will terminate on that date, and the sale of the business will essentially be reversed: ThoughtWare will repay any amount of the Purchase Price that it has received, and IonMy will transfer to it, in exchange, the ownership of all intellectual property, software, goodwill and certain other assets. The natural consequence of the declaration sought by ThoughtWare is that the preconditions to the operation of cl 13.3 will be met. Accordingly, ThoughtWare seeks a further declaration that the BSA was terminated, along with an order for specific performance of cl 13.3(c), which provides for the sale of the business to be reversed. The request that the hearing be adjourned 21 When the present application was called, Mr Ward, on behalf of IonMy, sought an adjournment. He provided an unsealed affidavit in which he purported to explain why that course was required. 22 No doubt the appointment of a restructuring practitioner has caused difficulties for Mr Ward and his client. By his affidavit, he says that he needs time to take instructions and prepare a response to the material served by ThoughtWare on 15 August 2023. 23 These concerns are valid in some respects. In particular, Mr Ward has identified at paragraph [5(7)] of his affidavit that the sole director of IonMy, Mr Kevin Zammitt, wishes to file affidavit evidence addressing in reply certain aspects of ThoughtWare's material that suggest that IonMy has acted in contravention of the injunction granted on 27 April 2023. Quite properly, Mr Ward is concerned to ensure that his client's interests are protected by some opportunity to respond to those allegations. It is true that the matters raised by ThoughtWare are very concerning. If those matters were critical, or even relevant, to the outcome of this application, an adjournment would necessarily be granted in the interests of fairness. However, as it was, counsel for ThoughtWare, Mr Keane KC, indicated that he did not intend to delve into the issue of potential non-compliance with prior Court orders in the course of advancing the present interlocutory application. That being so, there could be no pressing need for IonMy to put on evidence as to its position in respect of that issue. It was, strictly speaking, irrelevant to this hearing, and could therefore provide no compelling basis for the grant of an adjournment. 24 The reality is that the issues properly arising on the application before the Court are straightforward, given the findings made in ThoughtWare v IonMy. At their heart, they concern ThoughtWare's entitlement to payment of the first, second and third Instalments under the BSA. The critical dispute between the parties as to whether those instalments are due and payable has already been determined. 25 In opposing IonMy's request for an adjournment, Mr Keane KC submitted that ThoughtWare has a clear and strong case that will take very little time to advance, given the issues that have already been determined. There is considerable merit in that submission. He added that the evidence in relation to the first item of substantive relief sought, that judgment be given for ThoughtWare in the amount of $2,368,903.59, is found solely in the existing material in this proceeding and in IonMy's own books and records. He explained that all that is required to establish a basis for the grant of this relief is the methodology determined by the expert (and confirmed by this Court) for the calculation of "gross profit". The parties are bound by that methodology, which can now be applied to the financial information appearing in IonMy's books and records to produce the "gross profit" figures necessary for a final calculation of the amount of the Instalments of the Purchase Price that are payable by IonMy. 26 These submissions should be accepted. The exercise to be performed is an objective one, and it relies only on material that has been available to IonMy for some time. No adjournment is required for IonMy to familiarise itself with that material. 27 Mr Keane KC further submitted that the remaining items of substantive relief sought by ThoughtWare follow naturally from the findings made in ThoughtWare v IonMy. This submission should also be accepted, at least in respect of the order for specific performance. Clause 13.3 takes effect upon IonMy's failure to pay an Instalment that has fallen due. According to the BSA, three Instalments have fallen due. They have not yet been paid. These elementary facts provide a sufficient foundation for the relief sought by ThoughtWare. 28 Accordingly, in the circumstances, it is possible to put to one side any issue in relation to IonMy's potential non-compliance with the interlocutory injunction granted on 27 April 2023. That issue is irrelevant to the relief now sought. Once it is excluded from the Court's consideration, there remains no apparent foundation for IonMy's contention that it requires more time to respond to ThoughtWare's case. 29 The affidavit filed in support of the adjournment is in general terms, and merely identifies a desire on the part of IonMy (through its sole director, Mr Kevin Zammitt) to investigate matters, to ascertain if there is any evidence that might be produced in relation to the relief now sought by ThoughtWare, and to file that evidence by way of reply. Given that the parties are, or at least ought to be, acutely aware of the issues presently before the Court as a consequence of the reasons given in ThoughtWare v IonMy, I do not accept that to be a legitimate reason for adjourning the application. There is reason to suspect that the application for an adjournment has been made only in an attempt to delay the inevitable outcome in this case. It should be refused. Continuing the proceeding against IonMy pursuant to s 453S of the Corporations Act 30 On the day immediately prior to the hearing of this application, Mr Thomas Dawson, a registered liquidator, was purportedly appointed as a small business restructuring practitioner of IonMy pursuant to s 453B of the Corporations Act. 31 According to an unsealed affidavit affirmed by Mr Dawson on the day of the hearing, his appointment followed a meeting of the directors of IonMy that took place yesterday, on 17 August 2023. As Mr Zammitt is presently the company's sole director, he was the only attendee. 32 The minutes of the meeting indicate that Mr Zammitt, as the self-appointed Chairperson, tabled a document by which Mr Dawson consented to act as a restructuring practitioner of IonMy. It was then resolved that, "in the opinion of the director/s, the Company is eligible for entering the Small Business Restructuring process", and resolved that Mr Dawson be appointed to that position. Mr Zammitt also passed a resolution that, "in the opinion of the director/s, the Company is insolvent, or is likely to become insolvent at some future time". 33 ThoughtWare's primary submission in response to these events was that IonMy did not, as at 17 August 2023, meet the eligibility criteria for restructuring set out in reg 5.3B.03(1) of the Corporations Regulations 2001 (Cth). That provision states that, for the purposes of s 453C(1)(a) of the Corporations Act, "the test for eligibility is that the total liabilities of the company on the day the restructuring begins must not exceed $1 million". ThoughtWare has contended that, because the first, second and third Instalments had fallen due by 17 August 2023, IonMy's liabilities substantially exceeded the $1 million threshold. On this basis, it is said that the purported appointment of Mr Dawson was invalid. 34 Mr Dawson is not a party to this proceeding. I will therefore refrain from making any determination on this point. He is himself able to ascertain what might be the impact of my reasons. In his affidavit, he has very properly deposed that, if IonMy's debts exceed the statutory threshold for eligibility for small business restructuring relief, he intends to lodge with the Australian Securities and Investments Commission a notification of cessation of external administrator. 35 For the present purposes, the potential issues arising from IonMy's purported entry into external administration and the purported appointment of Mr Dawson can be resolved by the application of s 453S(1) of the Corporations Act, which provides as follows: 453S Stay of proceedings (1) During the restructuring of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except: (a) with the restructuring practitioner's written consent; or (b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes. 36 On the day of the hearing, solicitors acting for Mr Dawson wrote by email to solicitors acting for ThoughtWare, stating that their firm was "instructed to consent to leave being granted pursuant to section 453S of the Corporations Act 2001 (Cth) for the Applicant to proceed with today's hearing". This suffices to permit the proceeding to continue against IonMy. In any event, I would have granted leave pursuant to s 453(1)(b) in the circumstances, had it been necessary to do so. The filing of the Amended Originating Application and Amended Concise Statement 37 The first interlocutory order sought in this hearing is that ThoughtWare have leave to file an Amended Originating Application and an Amended Concise Statement. 38 The amendments are relatively straightforward. Most importantly, ThoughtWare has: (a) added that it now seeks payment of the third Instalment, given that it fell due on 30 June 2023; and (b) clarified that it seeks a declaration that the BSA was terminated pursuant to cl 13.3(b) due to IonMy's inability to pay the Instalments of the Purchase Price in accordance with cl 3.2, and that it therefore seeks an order for specific performance of cl 13.3(c). 39 In the circumstances, there is no reason why leave to amend should not be granted pursuant to rr 8.21 and 16.53 of the Federal Court Rules 2011 (Cth). The amended relief arises out of the same facts as were set out in the original Concise Statement in support of ThoughtWare's existing claims. The amendments will not require any substantial amount of new evidence to be introduced. At the same time, they will allow for the full controversy to be determined at once by this Court, and will thereby avoid any need for multiple proceedings to be commenced. 40 Leave is accordingly granted for ThoughtWare to file the Amended Originating Application and the Amended Concise Statement, each of which is annexed to the affidavit of Mr Warren Jiear sworn on 15 August 2023. ThoughtWare's entitlement to the substantive relief sought 41 As mentioned, the application presently before the Court is, in effect, a resumption of ThoughtWare's prior application for summary judgment. The background to the dispute is set out in ThoughtWare v IonMy and certain salient points have been repeated above. 42 The relevant principles concerning the grant of summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) were set out in ThoughtWare v IonMy at paragraphs [46] to [51] and there is no need to repeat them. The fundamental question is whether this Court can be satisfied that IonMy has "no reasonable prospect of successfully defending the proceeding". 43 ThoughtWare now seeks judgment for the combined amounts of the first, second and third Instalments payable pursuant to cl 3.2 of the BSA, subject to certain deductions in the case of the first Instalment. In total, it asserts an entitlement to $2,368,903.59 plus interest. It also seeks declarations that IonMy was unable to pay the Purchase Price pursuant to the BSA, and that the BSA was terminated. On the basis of those declarations, it seeks specific performance of cl 13.3(c). 44 The three items of relief can be stepped through in turn. Judgment for the three Instalments plus interest 45 The claim for judgment in the amount of the first three Instalments due under the BSA only requires it to be determined whether or not the average annual gross profit of the business conducted by IonMy for the two financial years immediately preceding the date on which each Instalment was payable was less than $1 million. 46 Some accounts prepared by IonMy are before the Court which indicate that, on its view, the gross profit of the business over the relevant period has been negative or minimal. However, those accounts appear to have been produced in accordance with IonMy's idiosyncratic view of what constitutes "gross profit". The methodology that it has used is inconsistent with the findings made in ThoughtWare v IonMy. As was held in that decision, the method by which gross profit is properly to be calculated, including what expenses should be classified as part of the "cost of goods sold", is that identified by the expert in his determination. IonMy is bound by that determination. 47 IonMy's accounts nevertheless contain the information necessary to ascertain the correct gross profits of the business in each of the relevant years. The reduction mechanism in cl 3.5(a) of the BSA can therefore be applied in order to determine the amount presently owing from IonMy to ThoughtWare. 48 According to IonMy's calculations, the business had a gross profit of $40,418.01 in 2020, $127,597.94 in 2021, -$114,349.57 in 2022 and $32,521.92 in 2023. These figures appear to have been produced by characterising substantial expenses for "Contractors - Development and Sales Support" and "Direct Wages" as part of the cost of goods sold. In the expert determination, it was found that the characterisation of such expenses as part of the cost of goods sold was, in the context of the BSA, incorrect. That conclusion was supported by the reasons in ThoughtWare v IonMy. 49 The expert calculated that the average annual gross profit of the business in 2020 and 2021 was $1,291,106. That is over $1 million. It can now be ascertained that, once the improperly classified expenses are removed from the cost of goods sold category, the gross profit of the business was $1,118,644.38 in 2022 and $1,426,594.33 in 2023. The average annual gross profit of the business therefore exceeded $1 million over the whole of the period from 2020 to 2023. 50 It follows that no deduction is to be made to the Instalments in accordance with cl 3.5(a) of the BSA. 51 Mr Ward submitted at the hearing that he wished to determine if there was any evidence relating to the accuracy of the amounts in IonMy's financial accounts. The difficulty is that this issue was not raised in the unsealed affidavit that he produced for the purposes of the hearing. There is simply no evidence before the Court to suggest that IonMy's accounts are inaccurate. Indeed, nothing has been identified that can alter the conclusion that, properly calculated, the average annual gross profit of the business for the two years preceding the date of each of the three relevant Instalments was over $1 million. 52 On that basis, there is no reason why ThoughtWare should not have judgment in the full amount of the second Instalment of $750,000 and the third Instalment of $1,250,000. It was already awarded judgment in the amount of $368,903.59 for the first Instalment in ThoughtWare v IonMy. The reasons for that decision, and the calculations performed above, make apparent that IonMy has no reasonable prospect of successfully defending ThoughtWare's claim for $2,368,903.59. 53 ThoughtWare also sought interest pursuant to the BSA for the period leading up to the commencement of the proceeding. It sought interest pursuant to s 51A of the Federal Court Act for the period from the commencement of the proceeding to judgment. Clause 3.3 of the BSA relevantly provides as follows: 3.3 Interest In addition to payment of the Instalments referred to in clause 3.2, the Buyer shall pay to the Seller, interest on the relevant Instalment calculated at the Prescribed Rate from the due date of the Instalment until the actual date of payment of the relevant Instalment. 54 The "Prescribed Rate" is defined in cl 1.1 as "the Australian Reserve Bank base cash rate from time to time". Evidence was produced in an affidavit of Mr Jiear sworn on 17 August 2023 of the Reserve Bank cash rate at the relevant times and of the pre- and post-judgment interest rates to be applied in this Court. 55 In ThoughtWare's written submissions, the precise amounts of interest that have accrued have been calculated. IonMy did not question the accuracy of these calculations. They may be repeated below. 56 Interest is due and payable on the first Instalment of $368,903.59 for the period from 1 July 2021 to the commencement of this proceeding. In accordance with cl 3.3 of the BSA, that interest totals $7,867.04. To this can be added pre-judgment interest on the same amount from the commencement of the proceeding onwards, totalling $8,903.13. 57 Interest is due and payable on the second Instalment of $750,000 for the period from 1 July 2022 to the commencement of this proceeding. That interest totals $13,775.34. Pre-judgment interest on the same amount totals $18,100.51. 58 Finally, pre-judgment interest is due and payable on the third Instalment of $1,250,000 for the period from 1 July 2023. That interest totals $6,798.23. 59 It follows that ThoughtWare is entitled to interest on the first, second and third Instalments in the amount of $55,444.25. Declarations that IonMy was unable to pay the Purchase Price and the BSA was terminated 60 As previously mentioned, IonMy has failed to pay any amount of the Purchase Price, including the $368,903.59 amount that it was ordered to pay in ThoughtWare v IonMy. Mr Zammitt, its sole director, resolved at a meeting that took place yesterday that the company is insolvent or is likely to become insolvent at some future time. 61 This affords some basis to believe that IonMy is indeed unable to pay the Purchase Price pursuant to the BSA. However, that conclusion can also be drawn more concretely by reference to financial records. 62 The evidence before the Court shows that one of ThoughtWare's directors, Mr Robin Craig, recently accessed the books and records maintained by IonMy, as he was entitled to do pursuant to the orders made on 27 April 2023. He considered the accounts in IonMy's Xero accounting system and, on 14 August 2023, printed out a balance sheet for the company, which is exhibited to his affidavit in this proceeding. That balance sheet shows that the net assets of IonMy as at 14 August 2023 were -$516,257.50. That figure did not appear to take into account IonMy's liability to ThoughtWare for the Instalments, which would increase the deficit substantially. 63 This evidence is relied upon in support of the contention that IonMy was unable to pay the Instalments owed to ThoughtWare, that they have not been paid, and that IonMy cannot now pay them. That should be accepted. It is particularly notable that IonMy has taken no steps to pay the amount of $368,903.59 in accordance with the prior judgment of this Court. No reason has been given for its failure to pay a debt that is so obviously due. 64 All of this tends to suggest that, as indicated by Mr Zammitt's resolution on 17 August 2023, the company is insolvent or likely to become insolvent at some time in the future. The evidence perhaps supports the former conclusion more than the latter. There is nothing to demonstrate that the company can pay its debts. There has been no expression of willingness on the part of Mr Zammitt, or any other person, to advance the money necessary to comply with cl 3.2 of the BSA. Nor does there appear to be sufficient cash or other assets in the company to meet that obligation. It follows that IonMy was, and is, unable to pay the Purchase Price pursuant to the BSA. 65 A declaration should therefore be made that IonMy was unable to pay the Purchase Price instalments as per clause 3.2 of the BSA. It should be declared, as a result, that the BSA was terminated. That is the necessary consequence of the operation of cl 13.3 of the BSA, to which I will now turn. Specific performance of cl 13.3(c) of the BSA 66 Clause 13.3 of the BSA, in full, provides as follows: 13.3 Termination due to Buyer actions If: (a) Completion has not occurred by 30 June 2021 or such other date as agreed in writing between the parties (acting in good faith); or (b) before full payment of the Purchase Price is completed the Buyer is unable to pay the Purchase Price instalments as per Clause 3.2 taking into account Clauses 3.5 to 3.7, for any reason including but not limited to: (i) Insolvency; (ii) Inability to run the Business successfully; or (iii) Sale of the Business or Assets unless the Seller consents to the sale; Then: (a) This agreement will terminate on that date; (b) If termination has occurred in accordance with clause 13.3(a), the Seller will repay to the Buyer any Purchase Price paid; (c) This Sale will be reversed, with full ownership of all IP, software and Goodwill in the Business and Assets being immediately transferred to the Seller; (d) The Buyer and Seller agree that revenue already earned by the Buyer up to that date comprises full and acceptable payment to the Buyer for any and all activities up to that date, and that any payments made according to Clauses 3 remain the property of the Seller; (e) The Seller will assist in this process with their best efforts; and (f) The Buyer will consider all claims against the Seller satisfied. 67 Given the state of affairs that gave rise to the declarations made above, ThoughtWare sought an order that cl 13.3(c) be specifically performed. In the hearing, Mr Keane KC sought a more precise order having the effect that the sale of the business be reversed and that full ownership of all of its assets be transferred by IonMy back to ThoughtWare. 68 In the circumstances of this case, that relief is available. It is apparent from the terms of cl 13.3 that, where IonMy is unable to pay the Purchase Price instalments as per cl 3.2 for any reason, the BSA will terminate. The obligation to repay any part of the purchase price does not arise in this case where the termination occurred by reason of cl 13.3(b). Otherwise, termination has the consequence that the transfer of the business is to be reversed. 69 Mr Keane KC submitted that cl 13.3 was enlivened by at least 4 August 2023, being the date that ThoughtWare v IonMy was handed down. It is said that, from that date, the judgment debt of $368,903.59 was owing. As it transpires, on the determinations made in these reasons, the amounts of the second and third Instalments were also owing by that point. 70 Those facts are effectively incontrovertible, such that the basis for an order that cl 13.3(c) be specifically performed is clearly established. Mr Keane KC has identified a number of steps that I accept should be taken for the purpose of effecting the re-transfer of the business to ThoughtWare. Those steps will be reflected in the ultimate orders. 71 Mr Ward raised with the Court the problems that might follow from the short timeframe within which the re-transfer was initially expected to take place, which was seven days. Quite properly, Mr Keane KC acknowledged that there may be difficulties with that, given the need for the reassignment of contracts with third parties. In the circumstances, 21 days is a more suitable period of time. 72 For the reasons so given, it should be ordered that there be specific performance of cl 13.3(c) of the BSA, with the steps identified by Mr Keane KC to be taken by IonMy within 21 days. 73 A further order was sought that IonMy, by its directors, servants, agents, employees or by Mr Dawson, be restrained from transferring any part of the "Assets" or the "Business" (as defined in the BSA) to any other party or otherwise dealing with them other than with the consent in writing of ThoughtWare by its solicitors, so as to be able to transfer the Business to the ThoughtWare in accordance with clause 13.3(c) of the BSA if required. 74 That order is, in effect, a continuation of the interlocutory injunction made on 27 April 2023. Although the suggestion that IonMy or its sole director, Mr Zammitt, will seek to circumvent the effect of the Court's orders is not a strong one, it can be accepted for the present purposes that an injunction of this nature can logically accompany the order for specific performance. It should be granted so that ThoughtWare is not denied the fruits of its judgment. However, no such injunction should be made against Mr Dawson, who is presently not a party to the proceeding in his own capacity. Costs 75 In relation to the question of costs, a rather difficult issue arises. Mr Keane KC sought an order that IonMy pay ThoughtWare's costs on an indemnity basis, and there are very good reasons for making such an order. In particular, this action was brought, essentially, to enforce an expert determination by which the parties had already agreed to be bound. Ultimately, the points of contention were clear, and ThoughtWare's case was strong. 76 However, at least until the end of the first application for summary judgment, the opposition by IonMy was not of a nature that might be described as high-handed or entirely unreasonable. Whilst its arguments proved unsuccessful, and were perhaps not especially compelling to begin with, it would be inappropriate to describe them as being fanciful. 77 Accordingly, for the period up to the delivery of ThoughtWare v IonMy on 4 August 2023, the usual order as to costs should be made; that is, costs should follow the event and ThoughtWare should have its costs on the standard basis. 78 The period after 4 August 2023 is different. Any doubt about the nature of IonMy's obligations under the BSA had by then been dispelled by the Court. The parties' respective obligations were clear, and IonMy's continued defence to ThoughtWare's claims could only really be seen as an attempt to delay the inevitable. From that point onwards, the resistance put up by IonMy demonstrated high-handedness. For that reason, ThoughtWare should have its costs on an indemnity basis from 4 August 2023. 79 ThoughtWare also sought leave to make any application as it sees fit in relation to the making of a special costs order. Although no specific order is required for it to be able to make such an application, there is no reason why leave should not expressly be given. I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate: Dated: 27 September 2023