CMC Property Pty Ltd & Ors v Rankin Investments (Qld) Pty Ltd [2021] QSC 94 [2021] 19 QLR

SUPREME COURT OF QUEENSLAND CITATION: CMC Property Pty Ltd & Ors v Rankin Investments (Qld) Pty Ltd [2021] QSC 94 PARTIES: CMC PROPERTY PTY LTD (ACN 128 857 429) (first applicant) PETER THOMAS KENDALL (second applicant) DAVID SPENCER AHERN (third applicant) v RANKIN INVESTMENTS (QLD) PTY LTD (ACN 150 860 647) (first respondent) BRADLEY JOHN RANKIN (second respondent) FILE NO/S: BS No 3683 of 2021 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland at Brisbane DELIVERED ON: 7 May 2021 DELIVERED AT: Brisbane HEARING DATE: 20 April 2021 JUDGE: Davis J ORDER: 1. It is declared that, on the proper construction of the Property Agreement, the Chartered Accountant appointed by the board to undertake a valuation of the joint venture interest held by the first and second respondents in accordance with clause 9.2, is to value that interest as at the date of the Chartered Accountant’s valuation report. 2. The parties will be heard on the question of costs. CATCHWORDS: INTERPRETATION - GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS - COMMERCIAL AND BUSINESS TRANSACTIONS - PARTICULAR TRANSACTIONS - VALUATIONS - Where the applicants apply for declarations as to the proper construction of the terms of a contract styled “Property Agreement” - where the Property Agreement constitutes a joint venture between Rankin Investments (Qld) Pty Ltd (“Rankin investments”), and Bradley John Rankin (“the Rankin parties”) and CMC Property Pty Ltd (CMC) and Peter Thomas Kendall (“the -- 1 of 18 -- 2 Kendall parties”) to develop the Big Pineapple tourist attraction near Nambour - where the parties are in dispute as to how an expert ought value the interests held by the Rankin parties in the joint venture for the purposes of a compulsory buy-out by the Kendall parties - where the parties jointly appointed Steven Sorbello (“Mr Sorbello”), a chartered accountant, to value the Rankin parties’ interest in the joint venture - where the parties are in disagreement as to the date which should be used to strike the valuation - whether the appropriate valuation point is a matter to be determined by the expert or whether a specific date as to which the value is to be determined should be set and if so, what that date should be Central City Ltd v Nioka Corporation Pty Ltd & Anor [2007] WASC 126, considered Electricity Generation Corporation v Woodside Energy (2014) 251 CLR 640, followed Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, followed Mt Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, followed Network Ten Pty Ltd v TX Australia Pty Ltd [2018] NSWCA 312, considered Rankin Investments (Qld) Pty Ltd & Anor v CMC Property Pty Ltd & Ors [2020] QSC 366, related Zhu v Treasurer (NSW) (2004) 218 CLR 530, followed COUNSEL: M R Hodge QC with D L Tay for the applicants D O’Brien QC with F Lubett for the respondents SOLICITORS: Carter Newell Lawyers for the applicants Enyo Lawyers for the respondents [1] The applicants, CMC Property Pty Ltd (CMC), Peter Thomas Kendall and David Spencer Ahern (who I will call “the Kendall parties”), apply for declarations as to the proper construction of the terms of a contract styled “Property Agreement”. That agreement is presently operative between Rankin Investments (Qld) Pty Ltd (Rankin Investments) and Bradley John Rankin (who I will jointly call “the Rankin parties”) and CMC Property and Mr Kendall.1 [2] The Property Agreement constitutes a joint venture through which the parties are developing the Big Pineapple tourist attraction near Nambour. 1 And, not relevantly here so much, Big Pineapple Corp Pty Ltd. -- 2 of 18 -- 3 [3] The parties have been in dispute for some time and an earlier proceeding2 was tried and determined last year.3 The current issue concerns how an expert ought value the Rankin parties’ interests in the joint venture for the purposes of a compulsory buy- out by the Kendall parties. Background [4] Mr Kendall (the second applicant) and Mr Ahern (the third respondent) control CMC (the first applicant). Mr Rankin (the second respondent) controls Rankin Investments (the first respondent). [5] Big Pineapple Corp Pty Ltd4 (BPC) owns the Big Pineapple land but holds the land on trust pursuant to the Big Pineapple Corp Unit Trust. One half of the units in the trust and one half of the shares in BPC are owned by interests controlled by the Kendall parties. The other half are owned by the Rankin parties. [6] In 2011, the Property Agreement was entered into between Mr Kendall, Mr Rankin, BPC, CMC, Rankin Investments and two other parties, Roger Lago and Murgatroyd Investments Pty Ltd (Murgatroyd) who have since departed the project. In 2014, those two parties disposed of their interests in favour of the Kendall and Rankin parties. [7] The Property Agreement, at least structurally, is a fairly simple document. It recognises the various parties’ interests in BPC and the unit trust, recognises BPC as the vehicle through which the property is to be developed, and then seeks to regulate how the board of BPC will be conducted.5 [8] Recitals C and D record the shareholding and unitholding of what were then three interested groups, the Kendall parties, the Rankin parties and the Lago parties which were Mr Lago and Murgatroyd. Recitals C and D provide: “C. Roger,6 Peter7 and Brad8 (“the Shareholders”) hold the following shares in the Company9: 2 BS No 4624 of 2020. 3 Rankin Investments (Qld) Pty Ltd & Anor v CMC Property Pty Ltd & Ors [2020] QSC 366. 4 Which is also a party to the Property Agreement. 5 Clause 5. 6 Mr Lago. 7 Mr Kendall. 8 Mr Rankin. 9 A reference to Big Pineapple Corporation Pty Ltd. -- 3 of 18 -- 4 (a) Roger 2 Shares; (b) CMC Property 1 Share; and (c) Brad 1 Share. D. Murgatroyd, CMC and Rankin (“the Unitholders”) hold the following units in the Unit Trust10: (a) Murgatroyd 100 units; (b) CMC Property 50 units; (c) Rankin 50 units.” [9] The scope of the venture was defined by clause 2, which provides: “2. SCOPE OF THE JOINT VENTURE 2.1 The Joint Venturers agree the Company will lease, licence and/or develop and/or ultimately dispose of the Property or do any other act, matter or thing as the Board may determine, from time to time, where applicable, in accordance with the provisions of this document whether alone or in conjunction with one or more third parties…” [10] The intention of the parties as to how the development would proceed is recorded in recitals F and G, which provide: “F. The Company has acquired certain land situate in Queensland and known as The Big Pineapple (“the Land”). G. The Shareholders and the Unitholders are the Joint Venturers. The Company is to deal with the Land including the leasing, development, and/or ultimate disposal of the Land or any part of it or as the Board from time to time * in accordance with and subject to the provisions of this document whether alone or in conjunction with one or more third parties.” [11] It seems likely that the word “determines” should appear where I have placed *, but the intention is clear enough. [12] At the time the Property Agreement was entered into, the Lago parties owned one half of the units and shareholding and each of the Rankin parties and the Kendall parties held one quarter each. Proportional representation was not carried through to the control of the board of BPC. By clause 5, each of the three groups were represented on the board and had equal voting rights. Clause 5 provides, relevantly: 10 A reference to the Big Pineapple Corp Unit Trust. -- 4 of 18 -- 5 “5. ACTIVITIES OF THE BOARD 5.1 The Board will be responsible for the Project for and on behalf of the Joint Venture and will be responsible for the overall policies and implementation of the Project subject to this agreement. 5.2 The Board shall consist of three (3) members who shall comprise a nominee or appointee of each of the Shareholders. The Shareholders may nominate themselves. … 5.4 The decisions of the Board will bind the Joint Venturers. 5.5 The Board will meet as often as is necessary. Any of the Shareholders may call a meeting of the Board by giving not less than fourteen (14) days’ notice in that regard to the other Joint Venturer or such shorter notice as the parties may from time to time agree. 5.6 A resolution in writing signed by all members of the Board shall be as valid and effectual as if it had been passed at a duly convened meeting of the Board. 5.7 A quorum for a meeting of the Board shall be comprised of at least one member or alternate appointed by each Shareholder. 5.8 All meetings of the board shall be held at a place agreed by the parties provided that meetings will be deemed to have been duly held if the members required to constitute a quorum are in contact with each other simultaneously by conference telephone or live audio-visual transmission (or similar means). 5.9 Each nominee/appointee for a Shareholder present at a meeting of the Board shall be entitled to cast one (1) vote for each Share they hold. 5.10 No member of the Board shall be entitled to a casting vote in addition to his deliberative vote. … 5.16 Decisions of the Board (including borrowing and a decision to Dispose of any part of the Property) require a majority of greater than 50% of the votes to be cast. In the event of a deadlock in voting of the Board where only 50% of the votes have been cast in favour of the matter the subject of the vote, there is no casting vote and the Board will not proceed with the matter the subject of the vote.” [13] It has always been common ground between the parties that upon the exit of the Lago parties clause 5 operated as if there were two joint venturers (the Rankin parties and the Kendall parties) who each appointed a nominee director. Mr Kendall and Mr Rankin were, at times relevant to the dispute, the only directors. [14] By clause 6, the parties then covenanted with each other in these terms: -- 5 of 18 -- 6 “6. UNDERTAKING 6.1 Each of the parties undertakes with the other: (a) to take all necessary steps on its part to give full effect to the provisions of this Agreement; (b) not to engage (whether alone or in association with others) in any activity in respect of the Land except as provided or authorised by this Agreement or as agreed in writing by the parties; (c) not to do or cause or permit to be done any act matter or thing whereby in any way the continued enjoyment of the Land for the purposes of the Joint Venture might be jeopardised; and (d) to be just and faithful in all of its activities and dealings with the others. 6.2 Except in accordance with this agreement, no Joint Venturer shall sell, convey, assign, transfer, mortgage, pledge, charge, encumber, lease, sub-lease or otherwise dispose of or deal in or suffer or permit or cause to be sold, conveyed, assigned, transferred, mortgaged, pledged, charged, encumbered, leased, sub-let, disposed of or dealt with the whole or any part of the Joint Venture Assets or its Joint Venture interest whether by act or deed, amalgamation, merger or consolidation or by operation or law (save for death where it will pass at law) except with the written consent of the other Joint Venturers.” [15] Having brought the parties together by giving them joint control of BPC, the Property Agreement provided mechanisms whereby the parties could extricate themselves from the joint venture. Clause 3 determined the term of the joint venture. It provided, relevantly: “3. TERM 3.1 This document will commence on the Commencement Date and shall terminate on the earlier to occur of the following: (a) the completion of the Project; (b) the date mutually agreed by the Joint Venturers; (c) the occurrence of a Force Majeure Event; (d) the acquisition by one Joint Venturer of the Joint Venture Interest of all the other Joint Venturers; and (e) an Insolvency Event occurring in respect of the Company.11 11 A reference to Big Pineapple Corporation Pty Ltd. -- 6 of 18 -- 7 3.2 In the event that the Joint Venture terminates pursuant to sub- clause 3.1(a), (b) or (c) all of the Joint Venture Assets shall be realised under the supervision and control of the Board and after payment of all creditors the Gross Revenue less Outgoings shall be distributed amongst the Unitholders in accordance with their respective Units. …”12 (emphasis added) [16] Clause 3.1(a) refers to “the Project”. That term is defined as: “‘the Project’ means the acquisition and/or development, leasing, licensing and/or ultimate disposal of the Property (or any part of it) in accordance with the provisions of this document whether alone or in conjunction with any one or more third parties.” [17] As later explained, the Kendall parties sought to compulsorily acquire the interests of the Rankin parties pursuant to provisions of the Property Agreement. That eventuality is recognised by clause 3.1(d). Relevant to clause 3.1(d), are clauses 8 and 9, which provide: “8. DEFAULT A Joint Venturer may provide to another Joint Venture13 (Defaulting Party) written notice of an Event of Default. A copy of that notice must also be given to all other parties to this Agreement. 9. DEFAULT/WITHDRAWAL 9.1 Notwithstanding the constitution of the Company and the trust deed of the Unit Trust, in the event any: (a) Joint Venturer wishes to withdraw from the Joint Venture, the Joint Venturer shall be entitled to give written notice of sale to the other Joint Venturers; or (b) Joint Venturer has been provided a notice of an Event of Default under clause 8, then the Joint Venturer who has been provided with a notice of an Event of Default shall with effect from the date of the giving of that notice be deemed to have * written notice of sale to the other Joint Venturers;14 which notice shall grant and constitute an irrevocable offer by the Joint Venturer giving such notice (‘the Withdrawing Party’) to the other Joint Venturers (‘the Grantees’) to purchase the whole but not part of the Joint Venture Interest owned by the Withdrawing Party to the Grantees (‘the Purchasing Option’) in proportion to the Units then held by the Grantees when 12 In clause 3.3(b), there is reference to clause 19. That clause relates to confidentiality and is not relevant here. 13 “Venture” here should obviously be “Venturer”. 14 It seems that the word “given” should appear where I have placed the *. -- 7 of 18 -- 8 expressed as a percentage of the total of the Units held by those Grantees (‘Relevant Proportions’). 9.2 The purchase price for the Joint Venturer Interests arising from the Purchasing Option (‘the Sale Price’) shall be the value agreed upon by the Withdrawing Party and the Grantees and in default of such agreement within 10 days, the value determined by 1 practising Chartered Accountants (taking into account loans and equity interests) (who shall be entitled to appoint 2 Valuers one from LandMark White and one from CBRE for assistance in valuation of the Property, if required) to be appointed by the Board (and in the event of disagreement not resolved within 10 days by the President for the time being of the Queensland Law Society) who shall act as an expert and not as an arbitrator and whose decision as to the Sale Price shall be final. The date on which the value is determined will be the ‘Valuation Date’. 9.3 In the event of the Grantees wishing to exercise the Purchasing Option they shall give notice in writing of their intention so to do to the Withdrawing Party (with a copy of the other Grantees) on or before the expiration of forty five (45) days from the date of the Valuation Date. The Grantees may agree to exercise their Purchasing Option other than in proportion to their Relevant Proportions. If the Grantees do not agree to exercise their Purchasing Option other than in the Relevant Proportions and both Grantees give notice in writing of their intention to exercise the Purchasing Option then two separate acquisitions, each for the Relevant Proportions, shall arise. If one only of the Grantees gives notice in writing of its intention to exercise the Purchasing Option then one (only) acquisition of the whole of the Withdrawing part’s Joint Venture Interest shall be effected. 9.4 In the event of the valid exercise of the Purchasing Option the Withdrawing Party shall receive from the party acquiring the Joint Venturer Interest (‘the Acquiring Party'’) the Sale Price by a bank cheque on the date 75 days from the Valuation Date (‘the Settlement Date’). 9.5 In exchange for the Sale Price on the Settlement Date, the Withdrawing Party shall transfer to the Acquiring Party unencumbered (free of Security whatsoever) right, title and interest in and to its Joint Venture Interest and shall execute promptly all instruments of transfer and take such other action and steps as may be necessary or appropriate or as required by the Acquiring Party to evidence the Acquiring Party will secure unencumbered ownership of the Joint Venture Interest when transferred and such Acquiring Party may enforce specific performance of it in any Court of competent jurisdiction. … -- 8 of 18 -- 9 9.8 Upon and with effect from completion of the sale and purchase, each of the parties are to take such steps as may be necessary to procure the resignation from the Board or otherwise to remove from the Board without any claim against or outstanding liability on the part of the Company, the director appointed by the Withdrawing Party. 9.9 For the avoidance of doubt and for the purpose of giving effect to this clause the parties waive the pre-emptive rights in relation to the Shares afforded to them under the constitution of the Company or in relation to the Units under the trust deed of the Unit Trust. 9.10 In the event of the Purchasing Option not being exercised by the Grantees (or any of them) and all of the Withdrawing Party’s Joint Venture Interest not being acquired by the Grantees (or any of them), all of the Property will be sold at market on terms that provide for settlement of the Property within 6 months of the Valuation date. Any party or its Associates may bid or acquire the Property. The Gross Revenue from such sale will be dealt with in accordance with this agreement. …” (emphasis added) [18] Clause 8 refers to a “written notice of an Event of Default”. The term “Event of Default” is defined by clause 1.1(g) as follows: “(g) ‘Event of Default’ in respect of a Joint Venturer (‘The Defaulting Party’) means: (i) an Insolvency Event occurs in respect of that Joint Venturer; or (ii) that Joint Venturer fails to comply with its obligations under this Agreement and such failure is not remedied within twenty-eight (28) days after written notice requiring remedy has been given by any other Joint Venturer (‘the Non-defaulting Party’). The Non- Defaulting Parties must give a copy of that notice to all parties to this agreement.” (emphasis added) [19] By December 2019, the board of BPC had resolved to renovate some of the improvements on the land. Various consultants and contractors were retained to effect the renovation. The Rankin parties countermanded those resolutions of the board by ordering the consultants and contractors to cease work. The Kendall parties regarded that action as a breach of the Property Agreement. [20] On 16 January 2020, the Kendall parties sent a notice requiring the Rankin parties to remedy the default (the Default Notice). The Default Notice was given pursuant to clause 1.1(g)(ii). As the default was not remedied, a further notice styled “Notice of -- 9 of 18 -- 10 Event of Default” dated 26 February 2020 was sent by the Kendall parties to the Rankin parties. That was a notice sent pursuant to clause 8. [21] The Kendall parties contended that by force of clause 9.1 the Rankin parties had made an irrevocable offer to the Kendall parties to sell their interests in the joint venture. The Rankin parties disputed that contention. That dispute was tried in May of 2020 and judgment given in favour of the Kendall parties.15 On 9 December 2020, the following declarations were made in those proceedings: “2. It is declared: (a) that the “Default Notice” issued by the respondents16 to the applicants17 dated 16 January 2020 was a written notice requiring remedy within the meaning of clause 1.1(g) of the property agreement between the parties. (b) that the “Notice of Event of Default” issued by the respondents to the applicants dated 26 February 2020 was a “written notice of an Event of Default” within the meaning of clause 8 of the property agreement between the parties.” [22] An appeal from the making of those declarations has been launched by the Rankin parties. That appeal is listed to be heard by the Court of Appeal sometime in July 2021. [23] In the meantime, the parties agreed to appoint Mr Steven Sorbello, a Chartered Accountant, to value the Rankin parties’ joint venture interests. That is the valuation required by clause 9.2. The parties cannot agree on the instructions to be given to Mr Sorbello. This is because the parties are in disagreement as to the date Mr Sorbello should use to strike the valuation. I will call this “the valuation point”. There is no provision in the Property Agreement which expressly identifies the valuation point. The present application [24] The Kendall parties’ submission is that the value of the Rankin parties’ interests should be valued as at 28 February 2020. That is the date two days after the Notice of Event of Default was posted. By clause 14.3(b) of the Property Agreement, when 15 Rankin Investments (Qld) Pty Ltd & Anor v CMC Property Pty Ltd & Ors [2020] QSC 366. 16 The Kendall parties. 17 The Rankin parties. -- 10 of 18 -- 11 a notice is sent by post, it is taken to be received on the second business day after posting; here, 28 February 2020. [25] The Kendall parties seek the following declarations: “1. A declaration that the practising Chartered Accountant appointed by the Board to determine the value of Joint Venture Interests held by the First and Second Respondents in accordance with clause 9.2 of the Property Agreement between the parties is to determine the value of the Joint Venture Interests as at 28 February 2020.” [26] The Kendall parties submit that the valuation point should be 28 February 2020 because that is the date an irrevocable offer to sell was deemed to be made by the Rankin parties to the Kendall parties. [27] The Rankin parties resist the application. They took the view that, as contradictors to the application, it was not for them to press for any particular construction, but simply to resist the construction urged by the Kendall parties. Naturally though, in resisting the application, possible alternative constructions were proposed. [28] Firstly, the Rankin parties submitted that as the Property Agreement did not stipulate a valuation point, but authorised the appointment of an expert to determine the value, the identification of the appropriate valuation point is a matter for the expert. [29] Alternatively, it was submitted that the valuation point is more likely to be the “Valuation Date” as defined in clause 9.3 of the Property Agreement. That is the date upon which the expert announces his determination. It is only at that time that a limited period is then allowed to the non-defaulting party (the Kendall parties) to elect to accept the irrevocable offer. [30] During the course of argument, I put to Mr O’Brien QC, who led for the Rankin parties, that simply dismissing the Kendall parties’ application (if that was the case), but not determining the valuation point, may be an unsatisfactory result for the parties. It is necessary for the parties to have the valuation point determined so that the procedures in the contract can be carried out with confidence. Taking up that suggestion, Mr O’Brien then sought declaratory relief in these terms: “1. A declaration that, on the proper construction of the Property Agreement, the agreement does not specify the date as at which -- 11 of 18 -- 12 the Chartered Accountant, appointed by the Board to undertake a valuation of the Joint Venture Interest held by the First and Second Respondents in accordance with clause 9.2 of the Property Agreement, is to value that interests. 2. Alternatively, a declaration that, on the proper construction of the Property Agreement, the Chartered Accountant, appointed by the Board to undertake a valuation of the Joint Venture Interest held by the First and Second Respondents in accordance with clause 9.2, is to value that interest as at the date of the Chartered Accountant’s valuation report.” [31] Mr Hodge QC, who led for the Kendall parties, took no objection to Mr O’Brien QC seeking alternative declarations. Consideration [32] There was no dispute as to the approach to construction of the Property Agreement. In Electricity Generation Corporation v Woodside Energy,18 the principles were explained as follows: “Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption ‘that the parties … intended to produce a commercial result’. A commercial contract is to be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.”19 [33] The way the Property Agreement operates is: (a) If a party “fails to comply with its obligations under [the Property Agreement]”;20 and 18 (2014) 251 CLR 640 at [35]. 19 At [35]. Footnotes omitted from the passage; and see also Mt Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [46]-[52]. 20 Definition of “Event of Default”, clause 1.1(g)(ii). -- 12 of 18 -- 13 (b) A notice to remedy that failure is delivered to the defaulting party.21 (Here, that is the notice to remedy breach dated 16 January 2020); and (c) The defaulting party fails for 28 days to remedy the breach;22 then (d) Upon the failure to remedy the default, there is an “Event of Default” entitling the party alleging default to give the defaulting party a notice of an “Event of Default”.23 (Here, that is the notice of “Event of Default” dated 26 February 2020 and served on 28 February 2020); and (e) The delivery of the notice of “Event of Default” deems the defaulting party to have given a notice of sale to the party serving the notice of “Event of Default”;24 and (f) If the parties agree on the valuation of the defaulting party’s interest then the date of that determination becomes “the Valuation Date”;25 or (g) If, as here, the parties do not, within 10 days of the deemed offer, agree on a valuation, then a Chartered Accountant shall be appointed to value the interest of the defaulting party. The date the Chartered Accountant determines the value becomes the “Valuation Date”;26 and (h) Once the valuation is established, the non-defaulting party has 45 days from the Valuation Date to accept the irrevocable offer;27 (i) If the non-defaulting party accepts the offer, it must pay the purchase price within 75 days of the Valuation Date and the interests of the defaulting party are then transferred; (j) If the non-defaulting party does not accept the irrevocable offer, then the land is sold;28 and 21 Definition of “Event of Default”, clause 1.1(g)(ii). 22 Definition of “Event of Default”, clause 1.1(g)(ii). 23 Clause 8. 24 Clause 9. 25 Clause 9.2. 26 Clause 9.2. 27 Clause 9.3. 28 Clause 9.10. -- 13 of 18 -- 14 (k) The joint venture continues during the procedure I have described and only terminates upon payment of the purchase price and transfer of the defaulting party’s interest.29 [34] Mr O’Brien QC, in support of his submission that the ascertainment of the valuation point is a matter left to the expert, cited Central City Ltd v Nioka Corporation Pty Ltd & Anor.30 There, Martin CJ considered a similar set of clauses to those in issue here. The contract provided for the valuation of property to be undertaken by a valuer. The parties had entered into a contract in February 2006 and the valuer valued the property by reference to materials available to him at the time his valuation was prepared in October 2006. The valuer stated in the valuation that “the date of valuation is 1 February 2006 based on our complete inspection of 28 August 2006”. The question for his Honour was whether the valuation point (as I have described it) should be February or October or some other time. [35] His Honour held that the valuation was valid for two reasons. Firstly, his Honour held that had the valuation point been February 2006 or October 2006, the valuation so determined would not differ from that which the valuer had determined by taking into account later sales. Secondly, his Honour, after directing himself that the valuation could only be impugned if it was undertaken beyond the terms of the contract, concluded that would only be so if a term could be implied that the valuation point was a particular date. Ultimately, his Honour held on this point: “73 The second basis upon which it is said that there is to be a term implied into the contract between the parties to the effect that the valuation should be by reference to the date of inspection is that that is said to accord with commercial practice or expectation. 74 There is no evidence whatsoever to that effect, and I am unable to make any finding as to what the commercial expectation of the parties would have been in the circumstances in which they settled their dispute on 1 February 2006. It seems to me to be at least as open to conjecture that had they been asked at that time what the date of valuation was to be, they might well have said that it was to be as at the date upon which they settled. 75 So there is a quite insufficient foundation for the implication of a term as to the date upon which the land and business were to be valued. Because I have concluded that there was no term of 29 Clause 3.1(d). 30 [2007] WASC 126. -- 14 of 18 -- 15 the agreement between the parties requiring the valuer to undertake a valuation at a particular date, it follows that the valuation at which the valuer has arrived using a particular date cannot be said to fall outside the terms of the settlement contract. 76 The valuer's choice of the date of 1 February 2006 was a choice open to him on the basis of the instructions received. It cannot be said that in choosing that date he stepped outside the terms of the settlement contract between the parties, even if I were satisfied that the choice of another date would have made any material difference to the figure at which he arrived.” [36] In Central City Ltd, Martin CJ concluded that the contract was such that if the valuation point was mandated, then an implied term was required to mandate it. It does not follow that, in the present case, on a proper construction of the Property Agreement, a valuation point is not mandated notwithstanding the absence of an implied term. [37] Mr O’Brien QC’s primary submission should be rejected. The general proposition that the expert is left to determine the valuation fettered only by the terms of the contract, can be readily accepted.31 That, though, just poses the question as to what fetters the Property Agreement imposes. It simply cannot be that the expert is open to select any date as the valuation point. It is clear that the contract contemplates a valuation point some time after the procedures in clauses 8 and 9 have been instigated. There are clear indicators that a particular valuation point is contemplated by the Property Agreement. As later explained, the Property Agreement does mandate a valuation point and it is the Valuation Date as defined in clause 9.2. [38] As already observed, Mr Hodge QC submitted that the valuation point was 28 February 2020 being the date of the irrevocable offer. That, he submitted, is the date the Kendall parties gained a right to purchase the Rankin parties and therefore construing the contract against the context of it being a commercial transaction, that is the valuation point. [39] In support of that submission, Mr Hodge QC relied upon a decision of the New South Wales Court of Appeal in Network Ten Pty Ltd v TX Australia Pty Ltd.32 There, the Court of Appeal considered a contract very similar to the Property Agreement. 31 Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 at 334-336. 32 [2018] NSWCA 312. -- 15 of 18 -- 16 Indeed, it can be said that the provisions are practically equivalent. The court proceeded on the basis that the valuation point was the date of default being the date of the deemed irrevocable offer. However, as Mr Hodge QC properly acknowledged, the Court of Appeal was not called on to decide that issue. That was not an issue between the parties who, between them, assumed that the valuation point was the date of default. [40] On a proper construction of the Property Agreement, the valuation point is the Valuation Date being the date the expert declares his value. In other words, the expert declares the value as the current value being the date of his report. Several features of the Property Agreement point extricably to this conclusion. [41] Service of the notice of Event of Default gives rise to a right in a non-defaulting party to purchase. However, there is no obligation then upon that party to elect whether to accept the irrevocable offer then made. [42] That election does not arise until 45 days after the value has been determined. In the period between the service of the notice of Event of Default and the Valuation Date: 1. the project continues; 2. the joint venture remains in existence; 3. the board of BPC retains control of the project; 4. the board of BPC continues to operate and make decisions pursuant to clause 5 of the Property Agreement; 5. the parties are bound to carry out BPC’s decision made through the board of directors; 6. the property may be improved; 7. liabilities may be incurred. [43] It follows that by the time the value is struck (the Valuation Date), the value of the defaulting party’s interest may be significantly different to its value at the time of service of the notice of Event of Default. In practical terms, while the irrevocable offer is made at the time of service of the notice of Event of Default, the property is -- 16 of 18 -- 17 really offered at a price on the Valuation Date. It is hardly a commercial result33 that the non-defaulting party is offered the interest of the defaulting party at a price which might be significantly higher or significantly lower than its value at the Valuation Date. That would be the effect of the valuation point being the date of service of the Notice of Event of Default. Appropriate order [44] It follows, for the reasons that I have explained, that a declaration should be made in terms of the alternative sought by the Rankin parties. Costs [45] I heard the parties on the question of costs. [46] The parties properly agreed that if the declaration sought in the Kendall parties’ application was made, then the Rankin parties should pay the costs of the Kendall parties. Similarly, it was properly agreed that if a declaration was made in terms of the primary position adopted by Mr O’Brien QC, then the Kendall parties should pay the Rankin parties’ costs. Neither of those circumstances eventuated. [47] During the hearing, it became apparent that a realistic possibility was the making of a declaration in terms of the alternative proposed by Mr O’Brien QC. In those circumstances, Mr Hodge QC submitted that there should be no order as to costs and Mr O’Brien QC submitted that the Rankin parties should have their costs. [48] Neither party really pressed for the declaration which has ultimately been made. Mr Hodge QC actively resisted it and Mr O’Brien QC, as I have explained, only sought any declarations at all once it was suggested to him that it was appropriate to do so to settle the issue between the parties. His primary position was clearly enough that it was up to the expert to determine the valuation point. [49] Therefore, the valuation point has been struck largely contrary to the primary positions taken by both parties. In the ordinary course, the appropriate order would be no order as to costs. 33 Zhu v Treasurer (NSW) (2004) 218 CLR 530. -- 17 of 18 -- 18 [50] There is a complication though because of the pending appeal. This application was only necessary at all because the Kendall parties were successful in the first proceedings. If the Rankin parties are successful on the appeal, my preliminary view is that the Rankin parties should have their costs of the present application. [51] On that rationale, the appropriate orders as to costs would be: 1. no order as to costs of the applicants; 2. the costs of the respondents to be paid by the applicants in the event of success in the appeal in the BS 4624 of 2020 by the appellants to that appeal, being the current respondents. [52] I did not hear either party on the possibility that the costs in the present application might be influenced by the outcome of the appeal in the earlier proceeding. I should give the parties an opportunity to make submissions on that point. Orders 1. It is declared that, on the proper construction of the Property Agreement, the Chartered Accountant appointed by the board to undertake a valuation of the joint venture interest held by the first and second respondents in accordance with clause 9.2, is to value that interest as at the date of the Chartered Accountant’s valuation report. 2. The parties will be heard on the question of costs. -- 18 of 18 --