The death of a partner in a mining equipment partnership has led to a legal dispute over a succession agreement that details the ownership of the $23 million business.
The death of a partner in a mining equipment partnership has led to a legal dispute over a succession agreement that details the ownership of the $23 million business.
Bunbury businessman James Cross and the late Darren Verwijmeren had a partnership, being equal shareholders of Cross Verwijmeren, an earthmoving and civil works business.
Mr Cross' company Iron Horse Machines has sued Olmate Holdings, a company once owned by Mr Verwijmeren, in the Supreme Court of Western Australia.
An issue over Mr Cross’ equity arose when Mr Verwijmeren died, with the pair’s business succession agreement at the centre of the legal proceedings.
Under the agreement, the surviving partner can acquire the entire business with the estate and family of the other partner receiving financial benefit from a fair market value of their equity, according to a WA Supreme Court judgment delivered today.
Iron Horse Machines sought a summary judgment, claiming the matter does not need to go to trial for Mr Verwijmeren's equity to be transferred to Mr Cross.
Mr Cross also claimed he was willing to pay about $2 million, which he considered is the correct valuation of the balance of the purchase price to acquire Mr Verwijmeren's equity in the business, the judgment shows.
According to the judgment, more than $10.5 million has already been paid.
"The plaintiff asserts that, whatever issues the defendant and the executors may have as to valuations and price, there is no good legal defence to the immediate transfer of the defendant's 'equity' to the plaintiff, to enable the plaintiff to move forward and run this successful business," the judgment reads.
“The accountant then determined the fair market value of the 'equity' as the average of the two values determined by the appointed valuers, being the figure of $23,429,261.”
But the executors for Mr Verwijmeren’s estate claimed the relevant amount still to be paid was calculated to be $4.5 million.
Supreme Court of WA Justice Michael Lundberg dismissed the application brought by Mr Cross' Iron Horse Machines, finding Mr Verwijmeren's estate had established there were issues to be decided in trial.
"Further, and more fundamentally, I am not satisfied the construction posited by counsel for the defendant is unarguable," he said in his judgment.
"I am also conscious that the Business Succession Agreement contains drafting errors which, although not necessarily impacting the functionality of the instrument, at least encourage a cautious approach to the construction exercise."
Justice Lundberg’s judgment revealed the parties mainly agreed Mr Cross would be the owner of the Cross Verwijmeren business.
“Although the parties are in dispute, and although the defendant strongly opposes the plaintiff's application for summary judgment, it is clear that all parties are singing from the same hymn sheet as to the ultimate, practical outcome of the ownership of the business,” the judgment reads.
“That is, the parties accept that, once the dust settles on the disputes, the plaintiff will be entitled to acquire full ownership of the defendant's 'equity' in the business, such that the plaintiff will have complete ownership and control of the 'Cross Verwijmeren' business.
“It is said by the plaintiff that all that remains in dispute is the amount of the balance of the payment."
