Flynn v PPK Mining Equipment Pty Ltd (No 3) [2024] NSWSC 663

Supreme Court New South Wales

Medium Neutral Citation: Flynn v PPK Mining Equipment Pty Ltd (No 3) [2024] NSWSC 663 Hearing dates: On the papers (received 28 March 2024) Date of orders: 14 June 2024 Decision date: 14 June 2024 Jurisdiction: Equity - Commercial List Before: Rees J Decision: Orders made for specific performance. Catchwords: REMITTAL FOR ASSESSMENT OF DAMAGES – share purchase agreement – plaintiffs to receive $500,000 worth of shares in publicly listed company on satisfaction of earnout – contract varied to change earnout to $1M revenue in 2016 – industry recession – prolonged share trading halt – defendants breach contract by denying variation – parties disagree whether revenue more or less than $1M – in 2019 plaintiffs raise revenue item on which they ultimately succeed – in 2023 Court of Appeal determines revenue threshold met – whether plaintiffs entitled to shares plus compensation for increase in share price and dividends over intervening 8 years. DAMAGES – contract – principles at [87]-[90] – considering counterfactual – loss of chance [102] – 50:50 chance plaintiffs would have established $1M revenue at the time – not satisfied plaintiffs would have held the shares if issued – more likely to have sold in the short term. FRUSTRATION – defendants to issue number of shares "equal to $500,000 divided by VWAP Price" calculated on share trades "on the ASX over the 30 days on which trading in PPK Shares took place immediately preceding" the share issue date – clause frustrated due to share trading halt – partial frustration [105]-[106] – frustration did not discharge accrued rights [109]. SPECIFIC PERFORMANCE – whether damages an adequate remedy in contract for share issue – principles at [83]-[86] – not just to confine to damages – whether specific performance can be back-dated [114]-[115] – retrospective award of specific performance is anomalous – specific performance operates prospectively – specific performance compels $500,000 of shares to be issued now. EQUITABLE DAMAGES – Lord Cairns' Act – where damages sought in substitution or addition to specific performance – whether pleading required [117] – principles at [117]-[126] – where damages sought in aid of legal right, common law damages generally awarded. LACHES – plaintiffs delay in claim for share issue in publicly listed company – multiple share trades, buybacks and rights issues since – principles at [133]-[135]. Legislation Cited: Lord Cairns' Act 1858 Supreme Court Act 1970 (NSW), s 68(b) Cases Cited: About Life Pty Ltd v Maddocks Lawyers [2021] NSWSC 1370 Ailakis v Olivero (No 2) (2014) 100 ACSR 524 ASA Constructions Pty Ltd v Iwanov [1975] 1 NSWLR 512 Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660 Barbagallo v J & F Catelan Pty Ltd (1986) 1 Qd R 245 Bell Group Ltd (in liq) v Westpac Banking Corp (No 10) (2008) 39 WAR 1; (2008) 70 ACSR 1 Brighton Automotive Holdings Pty Ltd v Honda Australia Pty Ltd (No 2) [2024] VSC 262 Brimaud v Boston Securities Entertainment Investments Pty Ltd (Federal Court of Australia, 9 September 1998, unrep) Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653; [1986] HCA 81 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 Chan v Cresdon Pty Ltd (1989) 168 CLR 242 Chappel v Hart (1998) 195 CLR 232 Clark v Macourt (2013) 253 CLR 1 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24 Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 Crawley v Short (2009) 262 ALR 654; [2009] NSWCA 410 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 Dempster v Mallina Holdings Ltd (1994) 13 WAR 124 Dougan v Ley (1946) 71 CLR 142 Duke Group Ltd (In liq) v Alamain Investments Ltd (2003) 232 LSJS 58; [2003] SASC 415 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544 Evans Marshall & Co v Bertola SA [1973] 1 WLR 349 Ferguson v Wilson (1866) 2 Ch App 77 Fink v Fink (1946) 74 CLR 127 Flynn v PPK Mining Equipment Pty Ltd (No 2) [2022] NSWSC 1640 Flynn v PPK Mining Equipment Pty Ltd [2023] NSWCA 201 Fuller v Albert (No 3) [2021] NSWCA 226 Golden Strait Corp v Nippon Yusen Kubishika Kaisha [2007] 2 AC 353; [2007] UKHL 12 Haas Timber & Trading Co Pty Ltd v Wade (1954) 94 CLR 593 Hamann v Taleb [2021] NSWSC 1632 Inlon Pty Ltd v Celli SpA [2017] NSWSC 569 Jaggard v Sawyer [1995] 1 WLR 269 Jamac Construction Group Pty Ltd v De Mol Investments Pty Ltd [2014] WASC 273 Johnson v Agnew [1979] 1 All ER 883 Johnson v Perez (1988) 166 CLR 351 Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350 Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 407 ALR 613; [2023] HCA 6 Lindsay-Owen v HWL Ebsworth Lawyers (No 2) [2024] NSWSC 541 Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [2007] NSWSC 371 Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd (2012) 28 BCL 226; [2010] NSWCA 283 Madden v Kevereski [1983] 1 NSWLR 305 Malec v JC Hutton Pty Ltd (No 2) (1990) 169 CLR 638 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 Mills v Ruthol Pty Ltd; Tricon (Aust) Pty Ltd v Ruthol Pty Ltd (2004) 61 NSWLR 1; [2004] NSWSC 547 Nassif v Sun [2021] NSWSC 990 Nocton v Lord Ashburton [1914] AC 932 O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 Paolucci v Makedyn Pty Ltd (2021) 20 BPR 41,749 PNC Lifestyle Investments Pty Ltd v REW08 Projects Pty Ltd (No 2) [2017] NSWSC 993 Redland Bricks Ltd v Morris [1970] AC 652 Rosenberg v Percival (2001) 205 CLR 434 Rosser v Maritime Services Board (No 2) (1998) 14 BCL 375 Smith New Court Securities Ltd v Citibank NA [1997] AC 254 The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 TPT Patrol Pty Ltd (as Trustee for Amies Superannuation Fund) v Myer Holdings Ltd (2019) 293 FCR 29 Tullett Prebon (Australia) Pty Ltd v Purcell (2008) 175 IR 424; [2008] NSWSC 852 Walters v Northern Coal Mining Co (1855) 5 De G M & G 629 Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201 Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Ltd [2007] NSWCA 276 Wenham v Ella (1972) 127 CLR 454 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 Woolworths Group Ltd v Gazcorp Pty Ltd [2022] NSWCA 19 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Texts Cited: J W Carter, "Partial Termination of Contracts" (2008) 24 Journal of Contract Law 1 J D Heydon, M J Leeming, P G Turner, Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014, LexisNexis) R E Megarry (1960) 76(302) The Law Quarterly Review P Parkinson (ed), The Principles of Equity (2nd, 2003, Lawbook Co) P Young, C Croft and M Smith, On Equity (1st ed, 2009, Thomson Reuters) N C Seddon and R A Bigwood, Cheshire and Fifoot Law of Contract (11th ed, 2017, LexisNexis) P Sparkes in "Back-dating Specific Performance" (1989) 10 The Journal of Legal History 29 ICF Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages (9th ed, 2014, Sweet & Maxwell) Category: Consequential orders Parties: Daniel Flynn (First Plaintiff) Flynfam Pty Ltd as trustee for Flynn Family Trust (Second Plaintiff) PPK Mining Equipment Pty Ltd (First Defendant) PPK Group Ltd (Second Defendant) Representation: Counsel: Mr CD Wood SC / Mr AD Justice (Plaintiffs) Mr TM Faulkner SC / Mr AJ Bulley (Defendants)