KRM (Vic) Pty Ltd v Classicbet Pty Ltd [2019] NSWSC 1773

Supreme Court New South Wales

Medium Neutral Citation: KRM (Vic) Pty Ltd v Classicbet Pty Ltd [2019] NSWSC 1773 Hearing dates: 23-26 September 2019 Date of orders: 18 December 2019 Decision date: 29 November 2019 Jurisdiction: Equity - Commercial List Before: Rein J Decision: See [96]-[97] Catchwords: CONTRACTS – Construction – Interpretation – Dispute concerned payment of a lump sum figure to the plaintiff ("KRM") under an affiliate contract (the "APA") between KRM and two online betting companies ("Classicbet" and "Bestbet", the first and second defendants); the betting companies were initially owned by the third defendant and his father (the "Kays") but the shares in each of these companies were sold to "Playup" (which now controls Classicbet and Bestbet), leading to a cross claim dispute between Classicbet/Bestbet and the Kays about when the obligation to pay the lump sum to KRM was incurred – Classicbet/Bestbet were required under the APA to give notice to KRM of an actual or proposed change of control of Classicbet/Bestbet, the giving of which notice would trigger a 14 day period in which KRM could opt for the lump sum or continue to receive monthly commissions; whether giving notice of a proposed (as opposed to an actual) change of control was mandatory under the APA or merely permissible – Held: Classicbet/Bestbet were not contractually required to give notice of a proposed change of control, only of an actual change of control; the obligation to pay the lump sum was incurred after completion of the share sale agreements.

CORPORATIONS – Directors and officers – Directors' duties – Duty to act in good faith in the best interests of company and for proper purpose – Classicbet/Bestbet contended that the Kays breached their duties as directors of Classicbet/Bestbet by failing to issue a notice of proposed change of control before completion of the share sale agreements – Held: the APA did not require Classicbet/Bestbet to give notice of a proposed change of control, hence the Kays were not in breach of their duties; moreover, even if they were, Classicbet/Bestbet failed to prove that, had the Kays caused Classicbet/Bestbet to give notice to KRM in April instead of October 2018, KRM would have opted for the lump sum, a fact necessary to establish causation.