May 29, 2012 - Ltd as against Semantic Software Asia Pacific Ltd. In May 2012 ... technology company to acquire its inte
Judgment Summary Supreme Court New South Wales
Ebbsfleet Pty Ltd as trustee for Ebbsfleet Superannuation Fund v Semantic Software Asia Pacific Ltd (No 3) [2017] NSWSC 78 Stevenson J The Supreme Court has awarded damages in favour of Ebbsfleet Pty Ltd and McGee Pty Ltd as against Semantic Software Asia Pacific Ltd. In May 2012, Mr Vinson, director of Ebbsfleet, received an “Investor Pack” prepared by Semantic which contained various documents, including an Information Memorandum. Mr Vinson then attended a meeting held by Semantic on 29 May 2012. Based on what he was told at that meeting by Mr Bradley, director of Semantic, and the material contained in the Investor Pack, Mr Vinson caused Ebbsfleet to subscribe for shares in Semantic. Acting as agent, Mr Vinson also caused his wife’s company, McGee, to purchase shares in Semantic. By 10 agreements dated between 31 May 2012 and 26 March 2013, Ebbsfleet and McGee subscribed for 6.5 million shares in Semantic at 25 cents per share. The main issue before the Court concerned a promise made by Mr Bradley and Semantic in each of the Share Issue Agreements that the shares in Semantic would triple in value within two years of their issue. The Court found that far from the shares having tripled in value within two years, they were, and still are, almost worthless. That determination rendered Mr Bradley and Semantic in breach of the promise made in the Share Issue Agreements. Mr Bradley admitted that he had represented that the shares would triple in value within two years. The question then, was whether that representation was made without reasonable grounds and, for that reason, was misleading. The Court held that the evidence put before it did not constitute a sound or reasonable basis upon which Mr Bradley could have made the representation that the shares in Semantic would triple in value within two years. This was because, throughout the relevant period, Semantic had no income; had secured no contracts to commercialise its products; and had not obtained commitment from any technology company to acquire its intellectual property or invest in Semantic. The Court held that but for the giving of the promise and the making of the representation, Ebbsfleet and McGee would not have invested their funds in Semantic. Accordingly, the damages awarded to Ebbsfleet and McGee are those calculated as to put each of them in the position they would have been in had the promise been fulfilled; namely that their shares in Semantic had tripled in value within two years of issue. As to the loss suffered by Ebsfleet and McGee by reason of the misleading or deceptive conduct, that loss was the value of their investment.
This summary has been prepared for general information only. It is not intended to be a substitute for the judgment of the Court or to be used in any later consideration of the Court’s judgment.
