Peter Simson v Wotif.com Holdings Limited [2013] NSWSC 1809

Supreme Court New South Wales

Medium Neutral Citation: Peter Simson v Wotif.com Holdings Limited [2013] NSWSC 1809 Hearing dates: 29 November 2013 Decision date: 29 November 2013 Jurisdiction: Equity Division Before: Kunc J Decision: Limited disclosure before evidence allowed Catchwords: PRACTICE AND PROCEDURE - Practice Note SC Eq 11 - Disclosure before evidence - Whether exceptional circumstances exist to warrant disclosure before evidence is served in proceedings - No issue of principle Legislation Cited: Civil Procedure Act 2005 UCPR Part 42 r 42.7 Cases Cited: In the matter of Mempoll Pty Limited, Anakin Pty Ltd and Gold Kings (Australia) Pty Limited [2012] NSWSC 1057 Leighton International v Hodges; Thiess v Reinforced Earth [2012] NSWSC 458 Category: Interlocutory applications Parties: Peter Simson and Naomi Simson (Plaintiffs) Wotif.com Holdings Limited CAN 093 000 456 (First Defendant) Wotif.com Holdings Limited CAN 093 000 456 (Cross Claimant to First Cross Claim) Peter Simson (First Cross Defendant to First Cross Claim) Representation: Counsel: T. North SC, A. Paterson (Plaintiffs) R. Dick SC, T.L. Wong (Defendant) Solicitors: Fitzpatrick Legal through its town agent MWA Lawyers (Plaintiffs and Cross Defendants to Cross Claim) Johnson Winter & Slattery (Defendant/Cross-Claimant) File Number(s): 2011/00325502 Publication restriction: No

EX TEMPORE Judgment 1HIS HONOUR: By notice of motion filed on 24 September 2013, the plaintiffs seek three things: (1)Discovery of fifty-one categories of documents, referred to in a document before me, signed by or prepared by the plaintiff's solicitors dated 5 June 2013, and referred to as a revised schedule of documents to be discovered by Wotif.com Holdings Pty Limited. (2)The provision of further and better particulars. (3)Directions in relation to the preparation and service of expert witness statements. 2These proceedings have already been the subject of other interlocutory applications, including one which resulted in a judgment of Associate Justice Macready, delivered on 22 February 2013. His Honour there set out the background of these proceedings, which I gratefully adopt: 3. The proceedings concern a share sale agreement whereby the plaintiffs sold the defendant, Wotif.com Holdings Limited ("Wotif"), all the shares in the company GoDo Pty Ltd with an "earn-out" provision such that Wotif would pay the plaintiffs an adjusted total purchase price after the first 12 months, such amount to be dependent on how well the GoDo business performed during the first year. 4. The plaintiffs, the Simsons, were formerly owners of all the shares issued by GoDo Pty Ltd, a real time online tours and activities booking business. The business operated across a network of websites owned by GoDo and websites owned by third parties. 5. The plaintiffs describe the operating model of the business as simple. GoDo employed a small number of staff, including a full time manager. GoDo's staff were not permitted to operate a business, in competition with GoDo. 6. An agreement was made between the Simsons and Wotif in about December 2009 pursuant to which Wotif purchased the shares, which the Simsons held in GoDo. 7. The plaintiffs plead in par 5A of the amended statement of claim that the share sale agreement (the Agreement) contained the following oral term: "within the 12 month period after the Completion Date Wotif would not change, nor cause GoDo to change, the operating model which had been used by GoDo in the conduct of its business prior to the sale of its shares." 8. It is common ground that the total purchase price, payable by Wotif under the agreement, depended in part on how well the business of GoDo performed during the next 12 months, the "earn-out" period, following the sale of its shares. 9. The initial purchase price was $2,238,000. Prior to the sale, the plaintiffs' engaged Price Waterhouse Coopers ("PWC") to value GoDo's expected or anticipated EBITDA, based on its prior trading history. This was determined by PWC to be $632,000 in its October 2009 report. Unfortunately, GoDo's performance in the earn-out period did not match the expected or anticipated EBITDA. 10. The share sale agreement contained a minium adjusted purchase price, after the earn-out period, of $1,888,000 and a maximum adjusted purchase price of $8,000,000. 11. The plaintiffs claim that an amount of $4,082,000 should have been payable by Wotif to them at the end of the earn-out period. The defendant, Wotif, by way of cross claim and defence, claim that the plaintiffs owe it a refund of $350,000 with the third cross-defendant, Red Balloon Pty Ltd, as guarantor for the debt. This is based upon its post completion EBITDA calculation of $24,271. 3Most of the hearing before me as Applications Judge was taken up with argument concerning the plaintiffs' application for discovery. I shall return to that in due course. I shall first deal with the second and third aspects of the plaintiffs' notice of motion.