THE HIGH COURT
COMMERCIAL COURT
[2025] IEHC 296
RECORD NUMBER 2025 No. 29 SP
BETWEEN
PLAINTIFF
AND
TEQNION AB
DEFENDANT
JUDGMENT OF Mr. Justice Twomey delivered on the 23rd day of May, 2025
INTRODUCTION
1. The Supreme Court has described litigation as the 'the most protracted and expensive way imaginable of resolving' [1] a dispute between two parties. For this reason, it is entirely logical that parties do everything possible to have any disputes between them resolved, other than by litigation.
2. In this case, the plaintiff ("Sunward") and the defendant ("Teqnion") did exactly that. This is because they agreed that any future disputes between them would be resolved by an independent expert accountant, rather than by the courts.
3. However, once they had a dispute, and before the expert determination process had commenced, Sunward initiated court proceedings regarding that dispute.
4. In those proceedings, Sunward seek a declaration from this Court, that the expert is not entitled to refer to certain accounting standards in reaching her decision and that she is bound by a definition of "Gross Profit" contained in the agreement between the parties.
5. For Tequnion, in having to defend these proceedings brought by Suwnard, this means that it now finds itself incurring the very litigation costs which, when agreeing to alternative dispute resolution, it was due to avoid.
6. Since High Court litigation costs have been described by a former President of the High Court as 'prohibitive', [2] this raises an issue of considerable practical significance every person, who seeks to avoid these costs. It is whether the courts should:
· refuse to interfere in alternative dispute resolution, since the parties have agreed to resolve their disputes, in effect, without court interference, or
· should the courts interfere, even though this will result in the 'prohibitive' litigation costs which the parties were due to avoid in the first place, being imposed by, what might be termed, 'the backdoor'?
BACKGROUND
7. Reward Catering Limited ("RCL") is a company based in Co. Wicklow which commenced in business in 2018 as a manufacturer of mobile catering and food trucks. Its business grew rapidly during the Covid-19 pandemic.
8. This court was advised that within four years of RCL had become the largest manufacturer in Europe of mobile food trucks. As a result, RCL became an attractive target for other businesses and Teqnion, a Swedish conglomerate, acquired the entire share capital of RCL from Sunward under the terms of a Share Purchase Agreement dated 31 August 2022 ("the SPA"). Members of the Ward family (Kevin, Thomas, Anne and John) are described in the SPA as beneficial owners in the context of the mobile food truck business being sold by Sunward to Teqnion and Mr. Kevin Ward, who is a director of Sunward, provided sworn evidence in support of this declaration which Suwnard seeks from this Court.
9. Under the SPA, Sunward received a purchase price of €5,200,000 for RCL plus the Earn-Out (this term and other capitalised terms in this judgment have the meanings set out in the SPA).
10. The Earn-Out consists of three potential further payments, the calculation of which is governed by Schedule 7, Part 3 of the SPA. The first additional payment (referable to the Earn-Out Period of 1 September 2022 - 31 August 2023) amounted to €3,000,000 and this was duly paid by Teqnion to Sunward.
11. The present dispute relates to the calculation and payment of the second payment, known as the Second Earn-Out Amount. This is referrable to the Earn-Out Period from 1 September 2023 - 31 August 2024.
The relevant terms of the SPA
12. In relation to the calculation of this Second Earn-Out Amount, it is necessary to set out in some detail certain terms of the SPA:
"7.1. Subject to Clause 8 and Schedule 6, the Seller [Sunward] warrants to the Buyer [Teqnion] in relation to the company [RCL] that each of the Warranties is true, accurate and not misleading at the date of this Agreement, save as Disclosed.
7.2. The Seller acknowledges that the Buyer is entering into this Agreement in
reliance (inter alia) on each of the Warranties."
Schedule 5, Part 1 - Warranties
"4. FINANCIAL STATEMENTS
The Financial Statements the Company:
(a) have been prepared in accordance with the requirements of the Companies Act and applicable law and in accordance with the accounting principles, standards and practices generally accepted in Ireland and on a basis consistent with that adopted in prepared the financial statements of the Company for each of the three preceding financial periods"
Schedule 7, Part 1 - Definitions
1.1.13. Gross Profit means in respect of an Earn-Out Period, the revenue received by the Company less the cost of sales provided always that the methodology of calculating the Gross Profit is consistent with how the Gross Profit has been calculated by the Company prior to Completion;
1.1.14. Second Agreed Earn-Out Statement means the statement of the Second Earn-Out Period as finally agreed or determined in accordance with the provisions of Part 3 of this Schedule 7;
1.1.15. Second Draft Earn-Out Statement means the statement prepared and delivered by the Buyer to the Seller pursuant to paragraph 2.2 of Part 3 of this Schedule 7;
1.1.16. Second Earn-Out Amount means the statement prepared and delivered by the Buyer the Seller pursuant to paragraph 2.2 of Part 3 of this Schedule 7 [..]
1.1.20. Second Earn-Out Gross Profit means the Gross Profit for the Second Earn-Out Period as set out in the Second Agreed Earn-Out Statement.
Schedule 7, Part 3
2. Second Earn-Out Amount
2.1. The Second Earn-Out Amount shall be determined on the basis of the Second Agreed Earn-Out Statement.
2.2. Within sixty (60) days of the date of expiry of the Second Earn-Out Period, the Buyer shall prepare and deliver to the Seller, the Second Draft Earn-Out Statement setting out the Second Earn-Out Gross Profit. The Second Agreed Earn-Out Statement shall be agreed or determined (as applicable) in accordance with paragraphs 4 and 5 and below.
2.3. The Second Earn-Out Amount payable by the Buyer shall be the amount (if any) determined in accordance with paragraphs 2 and 3 of Part 3 of this Schedule 7 being the Second Earn-Out Amount payable to the Seller on the basis of the Second Agreed Earn-Out Statement (the Second Earn-Out Amount). [...]
4. Review of Draft Earn-Out Statement
4.1. During the period of fifteen (15) Business Days immediately following receipt of a Draft Earn-Out Statement by the Seller shall review the Draft Earn-Out Statement (the Earn-Out Review Period). [...]
4.5 The Buyer and the Seller shall each use their reasonable endeavours to agree any adjustments to the relevant Draft Earn-Out Statement. If the Buyer and the Seller cannot agree on any adjustment, the matter or matters in dispute (but no other matters) shall, upon the written request of either the Buyer or the Seller, be referred to the Expert in accordance with paragraph 5 below.
5. Expert Determination
5.1. The Expert shall:
5.1.1. base his opinion on the information provided to him by the Parties and on the basis of the accounting and other records of the Buyer;
5.1.2. be entitled to require oral or written representations as he sees fit; and
5.1.3. act as an expert and not as an arbitrator,
and the Draft Earn-Out Statement in the form approved by the Expert shall be deemed to be an Agreed Earn-Out Statement.
5.2. The determination of the Expert shall be given in writing within thirty (30) Business Days of receiving the reference pursuant to paragraph 4.5 above and, in the absence of manifest error or fraud, shall be final and binding on the Parties. [...]
5.4 The Parties agree to sign promptly the letter of engagement required by the Expert in order for him to perform his role in relation to this Agreement."
The actions and claims of the parties
13. By email dated 30 October 2024, Teqnion delivered a Second Draft Earn-Out Statement to Sunward in which it assessed the Second Earn-Out Gross Profit to be €2,797,076, reduced to €2,346,407. This reduction resulted from the fact that six invoices, which were issued in August 2024, were treated by Teqnion as income received in September 2024, rather than August 2024. Thus, Teqnion claims that they fall into the Third Earn-Out Period. Teqnion states that, although the invoices were raised during August 2024, the trucks, the subject of the invoices, were not delivered until September 2024 and so the income should be treated as income attributable to the Third Earn-Out Period, rather than the Second Earn-Out Period.
14. As a result of this change, Teqnioin claims that the Second Earn-Out Amount due to Sunward is €222,754, rather than the sum of €2,186,942.40, which Sunward claims it would be, if the six invoices had been treated as part of the revenue for the Second Earn-Out Period.
15. Teqnion points out that under the terms of the SPA, Sunward warranted that its financial statements had been prepared in accordance with accounting principles and practices generally accepted in Ireland. In this regard, Teqnion claims that these generally accepted practices would result in these invoices being excluded from the calculation of RCL's profits, on the basis that the trucks, while they were invoiced by August 2024, were not delivered by that date.
16. For its part Sunward claims that Teqnion impermissibly adjusted the gross profit in RCL's management accounts, by excluding these six invoices. In this regard, Sunward states that the definition of 'Gross Profit' in the SPA (as set out above), for the purposes of calculating the Second Earn-Out Amount, is stated to mean the revenue received by RCL provided that its calculation is consistent with how Gross Profit was calculated prior to Completion. In this regard, Sunward states that RCL has always recognised revenue when a product has been completed, which it says is when all costs have been assigned against it and invoices have been raised and not when products are delivered.
17. Thus, in brief the dispute between the parties comes down to whether when calculating RCL's profits, to determine how much of an Earn-Out is due to Sunward, the six invoices in question should be part of that profit or not.
A difference of circa €2 million depending on which Gross Profit figure is used
18. The approach taken by Teqnion for the purposes of calculating the Second Earn-Out Amount has significant financial consequences for Sunward. This is because Sunward claims that Teqnion's approach would result in Sunward receiving a Second Earn-Out Amount of €222,754. Yet, it points out that if the six invoices were included, Sunward would instead be entitled to a Second Earn-Out Amount of €2,186,942.40.
19. As is clear from the foregoing terms of the SPA, it makes provision for review by Sunward of the Draft Earn-Out Statement prepared by Teqnion within 15 days of its receipt. In the absence of agreement between the parties on the Draft Earn-Out Statement, the SPA also provides for a dispute resolution process, i.e. a referral to an Expert, for her to finalise the Earn-Out Statement, where the parties have failed to resolve any dispute relating to same.
The dispute between the parties
20. Despite extensive correspondence, the parties have been unable to resolve their differences regarding the Second Draft Earn-Out Statement and it was agreed that there was a 'dispute' between the parties as to whether adjustments should be made to the Second Draft Earn-Out Statement, within the meaning of para 4.5 of Schedule 7 of the SPA.
21. The parties also agreed to refer this dispute to an expert under the terms of the SPA. They also agreed that Ms. Deirdre McGrath, accountant, who is a partner in PwC Ireland, is to be the Expert.
The expert determination process has not commenced
22. Notwithstanding this agreement, the expert determination process has yet to commence. This is because Sunward first wants a declaration from this Court concerning the correct approach to any adjustments which might be made to the Draft Earn-Out Statement by the Expert. Sunward is seeking that declaration before the expert determination process has commenced and so before any submissions regarding the Draft Earn-Out Statement have been made to the Expert under the process expressly agreed between the parties as set out in the SPA.
23. In particular, Sunward seeks:
"A declaration that in the determination of any dispute regarding adjustments to the Draft Earn-Out Statement, the Expert appointed under Schedule 7, Part 3, paragraph 4.5 of the SPA shall be bound by the contractual definition of Gross Profit in Schedule 7, Part 1, paragraph 1.1.13 of the SPA and shall not have regard to other accounting standards, industry practices, and/or any other non-contractual considerations."
The proceedings, seeking this declaration were commenced by Sunward by Special Summons on 19 February 2025 and this Court heard the application on 6 May 2025, which Sunward notes is a period of just 10 weeks.
24. It is clear from the terms of the declaration sought that, despite the terms of the SPA providing for the Expert, and so not the courts, to decide the Agreed Earn-Out Statement, Sunward wants this Court to limit the discretion of the Expert in how she makes her determination, i.e. by limiting the accounting standards etc to which she can have reference and to dictate how the Expert would interpret the term 'Gross Profit' in reaching her determination.
25. This raises the question of the extent to which the courts can interfere, in advance of an expert determination process, in relation to a dispute which the parties have agreed should be resolved by that expert determination process and so, it seems, without court interference.
LAW APPLICABLE TO COURTS INTERFERING IN EXPERT DETERMINATIONS
26. The leading case on the law applicable to court intervention in the expert determination process is the case of Dunnes Stores v McCann [2020] 3 I.R. 1. Before considering the detail of that case it is worth noting that in its decision granting leave to appeal (Dunnes Stores v McCann [2018] IESCDET 197 at para 7 et seq), the Supreme Court specifically stated, that one of the reasons for the grant, by the Supreme Court, of leave to appeal was that Court's desire to 'remove any doubt as to the appropriate principles to be applied' in cases where a court is asked to interfere with an expert making a decision (where the parties had agreed to refer the dispute to an expert).
27. In this Court's view, the Supreme Court achieved its stated aim, as any doubt was removed by its judgment in the Dunnes case. The Supreme Court did so by making it very clear that it was inappropriate, save in exceptional circumstances, for a court to interfere in advance in the conduct of an expert determination.
28. As is noted in further detail below, the Supreme Court stated (at para 36), in effect, that if a party seeks to litigate matters which were agreed to be determined by an expert, before the expert even gets to make her decision, that party is engaging in a 'wasteful' pursuit, i.e. wasting their own and the other side's money (in legal costs) but more importantly (in this Court's view) that party is wasting court time.
29. The Supreme Court went further and noted that it was 'unsatisfactory' that Dunnes Stores, in that case, had sought a declaration from the Court regarding the issue to be determined by the expert, without waiting for the determination of the expert. On the facts of that case, the Supreme Court rejected Dunnes Stores' application for a declaration from a court on the very thing which the parties in dispute had agreed that the expert architect in that case would decide, namely that a public square was of a first class standard appropriate to a prestigious shopping centre.
30. In this case, Sunward issued proceedings seeking a declaration that the Expert should not have regard to accounting standards etc, as well as a declaration that the Expert is bound by a definition of Gross Profit set out in the SPA. However, at the hearing before this Court on 6 May 2025, counsel for Sunway stated that he 'was not pressing' for the first part of the declaration regarding accounting standards etc.
31. Yet, it should be observed that in relation to both parts of the declaration, one is dealing with the same issue. It is that a party to a dispute, which has been referred to expert determination, and not to litigation, is nonetheless seeking to litigate the dispute. This is because, before the Expert has even commenced the determination process, let alone issued her determination, Sunward issued proceedings to have a court determine an issue which is prima facie a matter for the Expert under the terms of the SPA providing for expert determination.
32. In the Dunnes case, the Supreme Court considered this issue. In rejecting Dunnes Stores' application, the Supreme Court declined to interfere in the expert determination process in that case. At para 37, Dunne J. laid down the following general rule:
"[I]t does seem to be clear that the general rule is that the courts should not intervene in the matter in which the parties agree to submit a dispute to an expert for determination in advance of the dispute resolution process provided for in parties' contract and should only do so in the case of exceptional circumstances [...]" (Emphasis in original)
Application of the law set down in Dunnes case to Sunward's application
33. The Dunnes judgment outlines several reasons for this general rule and for the rejection of Dunnes Stores' application on the facts of their case. These reasons are worth considering in order to see the extent of their application to Sunward's application.
(i) Wasteful and premature to litigate before Expert makes decision
34. It is clear from the Dunnes case that the first reason why a court does not interfere in the expert determination process, before a decision is taken, is because it is 'wasteful and premature to come to the court until [the expert] has made his decision' (per Hoffmann L.J. in Mercury Communications Ltd v Director General of Telecommunications & Anor [1994] C.L.C. 1125). This extract was quoted with approval by Dunne J. in the Dunnes case at para 36.
35. This reason is equally applicable to this case, as the Expert has not made her decision, yet this Court is being asked to make the declaration sought by Sunward. In the Dunnes case, the Supreme Court described as 'unsatisfactory' the approach that was taken by Dunne Stores in making an application to court 'without waiting for the determination of the' expert in that case.
36. This point is equally applicable to the application by Sunward in this case and so this is a reason in favour of the rejection of Sunward's application.
(ii) Parties' agreement should be respected
37. A second reason for non-interference by the courts in expert determinations is because the courts should respect the parties' agreement to refer their dispute to an expert determination process, and so not to litigate that dispute. As noted by Dunne J. at para 50 of the Dunnes judgment:
"Clearly, when two parties enter into a contract such as the one at issue in this case, in general, there is no reason why the parties should not be left to resolve their disputes in accordance with the manner in which they have agreed to do so. It will not be appropriate as a general proposition for the courts to intervene." (Emphasis added)
Just as the parties in the Dunnes case had agreed that their dispute would be resolved by an expert, so too Sunward and Teqnion had agreed that any dispute, regarding the adjustments to the relevant Draft Earn-Out Statement, would be determined by the Expert, and so not by the courts.
38. Accordingly, just as the Supreme Court concluded in the Dunnes case, that the parties' agreement should be respected, so too this Court concludes that the agreement of Sunward and Teqnion, that any adjustments to the Draft Earn-Out Statement will be determined by the Expert, should be respected. This means without the assistance of, or direction by, the courts, in advance, as to how the Expert is to do her job.
39. It seems clear to this Court from the Dunnes case that the parties' agreement to avoid litigation should be respected, irrespective of whether the appointed decision-maker is an expert in a particular field or not ('the parties should not be left to resolve their disputes in accordance with the manner in which they have agreed').
Particularly where the parties chose an expert in the field in which dispute has arisen
40. However, the reasons for respecting the agreement of the parties are even stronger when the decision-maker is an expert in a field in which the dispute has arisen. Thus, in this case, it is entirely logical that the parties have decided that an accounting issue should be decided not by a judge (who, after all, has no expertise in accounting), but by an accountant. After all, if a judge had to decide this accounting issue, this would mean that instead of one person (and independent expert accountant) being involved in the decision-making process, there would be three people involved, i.e., a judge and one expert accountant for one side and another expert accountant for the other side, with both giving expert evidence to a judge in an area in which the judge has no expertise. The parties have understandably decided to short circuit the decision-making process and they have agreed instead to have someone, with expertise in accounting, decide an accounting issue.
41. In this Court's view, it would defy all logic if one of those parties was entitled to get a judge to tell that accounting expert how to determine that accounting issue. Yet this is what Sunward is asking this Court to do. Accordingly, this is another reason which supports the rejection of Sunward's application.
(iii) No reason to believe Expert will not make a lawful decision
42. The third reason for the decision in the Dunnes case not to interfere in the expert decision-making process was because there was no indication in that case of what approach was going to be taken by the expert to his determination. Dunne J. noted at para 52 that:
"To a large extent, the court in this case has been asked to deal with a hypothetical situation given that the independent architect has not given any indication of his approach and there is nothing to suggest that he will venture outside the terms of his mandate."
Furthermore, as noted by Dunne J. at para 70, even 'if the expert goes outside the remit provided to him in the agreement, a remedy lies in that regard.'
43. Similarly in this case, there is no reason to suggest that the Expert will go outside her remit and even if she were to do so, Sunward would have a remedy, i.e. by challenging the legality of the decision in the courts, after it had been taken by the Expert. Therefore, this also supports the rejection of Sunward's application to interfere in the decision-making process, before even the decision maker has begun the decision-making process.
(iv) Policy reasons to encourage cheaper resolution of disputes rather than litigation
44. A fourth reason in the Dunnes case for the non-interference by the Supreme Court with the expert determination, and a reason of general application, is that there are very good public policy reasons why courts do not get involved in the expert determination process. In this regard, the Supreme Court, at para 67, adopted the following observations of Hogan J. in the Court of Appeal hearing in the Dunnes case (Dunnes Stores v McCann [2018] IECA 238 at para 44):
"But there are compelling policy reasons which warrant the courts respecting the choice of the parties to submit to adjudication by expert in commercial disputes of this nature. Accordingly, such respect means that the courts must - and will - accept a ruling from the duly nominated expert who is appointed with exclusive authority to determine a particular dispute. It also means the judicial acceptance that the expert should, in principle, at least, have full authority to determine all issues which require to be decided in order to determine the dispute, including questions of law and the interpretation of contractual terms." (Emphasis added)
After referring to this extract, Dunne J. noted at para 69 that:
"[T]here is a public policy interest in encouraging the use of alternative dispute resolution to provide potential litigants with a means of resolving the dispute in a way which is cheaper and more efficient than litigation through the courts and that such policy considerations would be undermined if the process provided for by the parties in an agreement can be halted by initiating court proceedings in order to seek a judicial determination of a legal dispute in the course of the expert determination process." (Emphasis added)
It also means a judicial acceptance that the expert should retain, in principle, at least, a full authority to determine all issues which require resolution.
45. In England, the avoidance of a waste of time and the costs associated with litigation is also given as a reason for courts to avoid interfering in the expert determination process. Thus, in the English Court of Appeal case of Thorne v Courtier [2011] EWCA Civ 104 at para 21, Moore-Bick L.J. stated that it is the 'accepted view' in that jurisdiction that a court should not interfere in an expert determination process 'in order to avoid unnecessary litigation with its attendant waste of time and costs'.
46. It is clear from the Dunnes case, that this is also the position in this jurisdiction. All of this means that any person agreeing to alternative dispute resolution will have that agreement respected by the courts for very good public policy reasons.
Cheaper and more efficient dispute resolution is strongly encouraged by the courts
47. Indeed, one of the reasons that the courts are so keen to encourage alternative dispute resolution is because judges, on a daily basis, see the negative effects of the enormous cost of High Court litigation (as distinct from District or Circuit Court litigation), yet the courts can do nothing about those costs. This is because the rules governing costs calculation are enacted by the Oireachtas (and applied by the Legal Costs Adjudicator) and the courts have no input into their amount or the manner of their calculation. All the courts can do regarding the high cost of High Court litigation is to call for the reform of these rules, which judges have done for many years, without success (see for example the instances of judges calling for the reform of litigation costs set out in Beakonford Limited v Stokes [2025] IEHC 22 at para 130).
48. However, there is one thing that the courts can do to assist parties in dispute faced with such costs. The courts can, and do, encourage the cheaper and more efficient resolution of disputes, i.e. without recourse to the courts. This means that if parties seek to avoid prohibitive litigation costs, by having their disputes resolved other than by litigation, the courts are alive, to cases like this one, where those prohibitive costs end up being applied to the resolution of the dispute through what might be termed the 'backdoor' - i.e. by seeking a court declaration in relation to a dispute which is prima facie to be resolved by an expert, without court intervention.
49. This is because, if this Court were to accept that it should interfere in the expert determination process and grant the declaration sought by Sunward, the real-life effect of this Court's decision would be to add 'prohibitive' costs (in the tens/hundreds of thousands of euro) to the cost of resolving this dispute, even though the dispute was due to be resolved without these prohibitive litigation costs.
50. To put it another way, Sunward, by agreeing to the expert determination process, agreed, in effect, not to inflict 'prohibitive' litigation costs on Teqnion, if there was a dispute over the adjustment to the Draft Earn-Out Statement. However, now that there is a dispute, which happens to have a major financial significance (since its resolution could mean a difference of circa €2 million to Sunward), Sunward has decided to force Teqnion to incur those 'prohibitive' costs.
51. This Court does not believe that it should facilitate or encourage such an approach. In other words, if one party has agreed, in effect, not to litigate a dispute (by virtue of agreeing to alternative dispute resolution), then that party should not be allowed to then litigate the dispute through what might be termed the 'backdoor', e.g. where one party applies for a declaration from a court regarding how the expert should conduct the determination. This is particularly so when the declaration is sought from the High Court, as distinct from say the District Court, and where the effect of the application would be to inflict the 'prohibitive' costs of High Court litigation, as well as the delays and inefficiencies involved, which were due to be avoided.
52. In this Court's view, these foregoing policy objectives are particularly compelling reasons to reject Sunward's application.
(v) Illogical if Expert not entitled to determine dispute without recourse to courts
53. The fifth reason for the Supreme Court's decision not to interfere with the expert's determination in the Dunnes case was because the Supreme Court held that the expert, in interpreting clauses in the agreement relevant to that dispute, was entitled to determine what was meant by those clauses. As noted by Dunne J. at para 68:
"How could it have been envisaged that [the expert] could have carried out his function if he was not in a position to decide what was meant by that clause? It would not have made sense for the agreement to provide a dispute should be referred to an independent architect for resolution whilst, at the same time, leaving open the need to go to court to interpret the terms under which he was to resolve the dispute." (Emphasis added)
54. Similarly, in this case, it would be entirely illogical for the Expert to be given the broad discretion she has been given by the terms of the SPA, and in particular paras 4 and 5.1 of Schedule 7, to determine the adjustment to the Draft Earn-Out Statement, while at the same time it being necessary to go to court to determine what is meant by Gross Profit or indeed any other term of the SPA.
55. To put it another way, what would be the point of an alternative dispute resolution process, i.e. as an alternative to the courts, if the parties could still ask the courts to effectively do the expert's job, i.e. interpret terms the Expert has to apply to reach her decision or decide which accounting standards she must apply?
56. The illogicality, of having an alternative dispute resolution process but also a right, which Sunward says exists, to go to court, before that process commences, is a further reason why Sunward's application should be rejected.
Application of all of these reasons to the current case
57. Before concluding on the application of the foregoing principles from the Dunnes case to this case, it is worth repeating that the aim of the Supreme Court in the Dunnes case, in enunciating those principles, was to 'remove any doubt as to the appropriate principles to be applied' regarding court interference in expert determinations.
58. It seems to this Court that the Supreme Court achieved its stated aim. This is because when these principles are applied to Sunward's application, there can be no doubt, in this Court's view, that its application should be rejected, despite the reasons given by Sunward for an exception to be made for it, which will be considered next.
Reasons why Sunward says court should interfere in advance in Expert's determination
59. The first reason Sunward claimed the grant of the declaration was justified was because it claimed that it was not asking the Court to tell the Expert what meaning to give to the term Gross Profit, but rather it was simply seeking to set out the parameters of the Expert's decision-making and in particular that she was bound by the definition in the SPA.
60. However, there was never any suggestion that the Expert will not have regard to the correct way in which to carry out her function or that she will not have regard to the wording of the SPA. As is clear from the Dunnes case, there is no basis for interfering, whether by giving guidance or otherwise, before the Expert has given her determination, save in the most exceptional of circumstances.
61. The second reason Sunward claimed that the declaration should be granted is because the parties are clearly in disagreement on an important issue (i.e. Teqnion refuses to confirm that the Expert is bound by the definition of Gross Profit in the way set out in the proposed declaration). However, if just because the parties to an expert determination process are in disagreement on an important issue were to mean that a court should intervene in that process in advance of the determination, this would mean that nearly every expert determination could be subject to court interference. This is because experts are appointed to resolve a dispute and it logically follows that the parties are invariably in disagreement, and usually on an important issue, since otherwise there would be no need to embark on an expert determination process. Thus, the fact that the parties are in disagreement on an important issue is not a basis for a court to interfere in an expert determination process.
62. Thirdly, Sunward claims that, unlike in the Dunnes case, where it was alleged that Dunnes Stores wanted to delay the decision being given by the expert, Sunward is not seeking to delay the resolution of the issue and it says that this favours the granting of the declaration. This is because Sunward wants to have the matter dealt with as soon as possible, since it is the party which is owed arguably €222,754 or €2,186,942.40. However, it is irrelevant if the party, seeking court interference with an expert determination process, wants the process slowed down or speeded up, the principle remains the same - the Expert should be allowed get on with the determination, without court interference.
63. Fourthly, Sunward claims that it is in the interests of efficiency to deal with this clear dispute between the parties regarding the adjustment to the Draft Earn-Out Statement before the Expert deals with it. By doing so, Sunward claims that the court can then avoid the possibility that the Expert will err (by applying the wrong definition of Gross Profit) and then will have her decision challenged successfully, and so avoid the Expert having to give a second decision. It claims that the court declaration would mean therefore that there would be just one Expert decision, rather than possibly two, which, it claims, would be cost-effective.
64. However, if this alleged cost-saving were a basis for a court interfering, it would mean that in practically every case there would be a basis for a declaration from a court in advance of an expert determination. This is because in most disputes there will be disagreements about how terms will be interpreted by the expert. Thus, there will invariably be the potential for the expert to make an error, which would then require a second determination. Yet, it is clear from the Dunnes case that an expert should nonetheless be permitted to get on with her job (even if the parties disagree as to how she should do it). If an error is then made, that can be dealt with after the event, and not in the context of a hypothetical error that the expert might make. Thus, Sunward's claim that the potential for efficiency in the expert decision-making process (i.e. one decision rather than possibly two if a court declaration is granted) is not a basis for court interference.
65. In any event, the alleged cost-effectiveness is not a particularly strong argument. This is because it is not known if the Expert will agree with Sunward's interpretation or not. Thus, looking at this matter from a cost-effective perspective, it is arguably inefficient of Sunward to expend time and costs in dealing with an issue that may never arise. In addition, of course, after the Expert's determination, even if Sunward were not happy with it, there are a myriad of reasons why neither party may challenge that decision, in which case the institution of these proceedings will have been an unnecessary expenditure of money.
The parties are in court after only 10 weeks so makes sense for court to give declaration?
66. The fifth and final reason Sunward claims that this Court should grant the declaration is that the parties were at hearing in the Commercial Court after only 10 weeks since the proceedings had issued. This, Sunward pointed out, was an exceptionally short time-period in which the parties might have an answer from the courts to the correct interpretation to be adopted by the Expert. In those circumstances, Sunward argues that as the parties are in court now, everyone, including the Expert, would benefit from the court going ahead and making its declaration on the issue.
67. The argument therefore appears to be that, as the parties have managed to get to a court hearing within 10 weeks of issuing proceedings, this Court should now interfere in the expert determination process since this should benefit everyone by facilitating a 'speedy resolution' of the dispute between the parties.
68. Firstly however, the fact this Court's interpretation of a term in the SPA might benefit everyone is not a basis for a court interfering in the expert determination process. However, secondly and more importantly, this argument on the part of Sunward presumes that litigation can provide a neat and a speedy resolution to a discreet issue between parties and so to a speedy resolution of a dispute between parties.
Litigation rarely if ever provides a speedy resolution to disputes
69. This view of litigation as providing a speedy resolution to discreet issues between parties could not be further from the truth.
70. Firstly, litigation rarely, if ever, provides a 'speedy resolution' of a dispute. This is perfectly illustrated by the recent Supreme Court case of Tweedswood Ltd & Anor v Power [2015] IESC 18 at para 2 et seq, where O'Donnell C.J. stated:
"The passage of time can sometimes appear to be measured differently in the context of explaining delays in litigation [....]
This case exhibits a number of features which cast a telling, and sobering, light on the conduct of receiverships, the use of interlocutory injunctions, and the manner in which the litigation process can all too readily lead to delay, stalemate, and expensive stasis, rather than the speedy resolution of disputes which result in either the sale of the property, the reduction or extinction of the debt, and the efficient conversion of the property into a productive asset in the hands of a purchaser or, where it is established that the receiver was invalidly appointed, the restoration of secured property to an owner. " (Emphasis added)
In that case, there was a very early hearing of an interlocutory injunction (not unlike the early hearing in this case), however, it took a full 15 years between that initial hearing and the final resolution by the courts of the dispute between the parties.
71. Thus, the fact, that the parties, in this case, got to the first hearing stage after only 10 weeks, is not a factor in this court's decision as to whether to intervene or not in the expert determination process. Indeed, the suggestion that it is a factor ignores the everyday reality of litigation. As noted by O'Donnell J. in the Lett case, litigation is the most 'protracted' process imaginable for resolving a dispute, no matter how quickly the parties have their initial hearing in court.
72. The reason why litigation does not provide a speedy resolution to a dispute is because once a party decides to get on the runaway train that is litigation, it can be difficult to get off. This is because a party can unilaterally, and so very easily, and at relatively little cost, decide to commence High Court litigation against another party. However, the enormous costs that are immediately incurred by both parties in running that litigation, means that in many cases, stopping the litigation is not so easy.
73. This is because, while starting litigation only involves one party, bringing litigation to an end will often require both parties to agree on who is going to be liable for both sets of costs. Because of the enormous costs of litigation, a lot of litigation that starts over a discrete legal issue can end up being about which party is going to pick up the tab for the costs and then because of the amounts involved, achieving agreement is rarely an easy matter.
74. Secondly, in the particular circumstances of this case, the fact that Sunward got a hearing within 10 weeks of issuing proceedings is completely irrelevant as to whether there will be a speedy resolution of whether a declaration should be granted or not. This is because this 10-week period could well be only the tip of the iceberg. There is always the possibility of an appeal, of this Court's decision, to the Court of Appeal, which could add to 12-18 months to the resolution of the parties' dispute, and indeed a further appeal to the Supreme Court, which might add an additional 12-18 months to the process. This of course takes no account of the type of additional delays which one sees in so much litigation, as vividly illustrated by the Tweedswood case. It is for this reason that in the Dunnes case, Dunne J. noted that alternative dispute resolution provides a 'more efficient', i.e. a much quicker, way to resolve disputes than litigation.
75. For these reasons, the fact that Sunward has managed to get an initial hearing in court very quickly after issuing proceedings is no indication that there will be a speedy resolution of the dispute. Accordingly, this is not a basis for this Court interfering with the expert determination process in this case.
76. For all of the foregoing reasons, this Court concludes that Sunward's application should be refused.
Most unsatisfactory that Sunward sought to litigate dispute that it agreed not to litigate
77. It remains to be observed that, in light of the clear terms of the Dunnes case and the similarities with this case, it must follow that, if the Supreme Court held that it was 'unsatisfactory' for Dunnes Stores to litigate, without waiting for the determination of the expert, then it is even more unsatisfactory for Sunward to have done so.
78. This is because at least Dunnes Stores could say that it did not have the benefit of a very clear statement of the law from the Supreme Court (whose clear purpose in clarifying the law was to prevent 'wasteful' applications such as this one i.e. a 'waste' of court time and a 'waste' of legal costs of the parties).
79. Unlike Dunnes Stores, Sunward had the benefit of the Supreme Court deciding to take the trouble to 'remove any doubt as to the principles to be applied' in cases where parties want a court to interfere in an expert determination process. Despite all of this, Sunward chose to issue these proceedings.
80. Of course, while, in this Court's view, the chances of a court granting the declaration were always remote, there was a lot of money at stake. This is because, depending on which interpretation is adopted by the Expert, it could mean the difference between Sunward being paid €222,754 and ten times that amount i.e. €2,186,942.40. In light of the huge amounts at stake, it may have seemed:
· worth taking the chance that Teqnion might wish to avoid the exposure to tens/hundreds of thousands of euro in legal costs, such that Teqnion might agree, prior to the hearing, to Sunward's limiting of the Expert's discretion (even though Teqnion was not legally required to do so), or
· worth taking the chance (albeit a remote chance, in this Court's view) that a judge would grant a declaration telling an expert, in advance of the expert determination process, how she should conduct that process.
81. While a very small risk of having to pay costs in the tens/hundreds of thousands might force individuals or small business to concede (even where they have strong legal grounds), this risk did not force Teqnion to concede to Sunward's demands. In this regard, in a letter of 17 February 2025 from its solicitors, Teqnion stated the matter succinctly, and as 11 letters went back and forth between Teqnion and Sunward between 17 February and 2 May 2025, Teqnion did not diverge from this view, which was that:
"We are not aware of any legal basis to predetermine and limit the expert's ability to make judgements as to their application of the agreed terms of the SPA. In our experience, separate from the clear provisions of the SPA relating to the appointment of the expert and the jurisdiction of the expert, it is unprecedented in both expert determination and arbitration processes to seek to obstruct the commencement of the process on the basis that one party has not confirmed that the expert arbitrator must be bound by their specific definition of a particular term before permitting the agreed process to proceed. In our analysis your proposal goes beyond the provisions in the SPA, subverts the agreed jurisdiction of the expert and we submit that there is no reasonable basis for your client to continue to obstruct the expert determination process with such demands.
Your client having already agreed to an expert determination process in accordance with the SPA is now effectively maintaining (without specifying any basis for doing so) that this agreement is conditional upon our client being required to confirm its agreement to certain terms being binding on the Expert notwithstanding that the SPA does not provide for our countenance this. At a level of principle, if this conduct were permissible than any party could effectively obstruct any expert determination process.
Should your client continue with this trip threatened litigation, please note that our client intends to rely of [sic] this letter and previous correspondence to seek to fix your client with the costs of such proceedings." (Emphasis added)
82. In the several letters from Sunward's solicitors after this letter, Sunward essentially said the same thing, namely that it required confirmation from Teqnion, and failing that, confirmation from the Court, that the Expert is bound firstly by the definition of Gross Profit as set out in the SPA and secondly that she should not refer to accounting standards etc.
83. However, in the final letter of 1 May 2025, Sunward did propose that it would not seek the second part of the declaration, but would limit itself to applying for the first part of the declaration regarding the interpretation of Gross Profit.
The final form of declaration sought and liability for legal costs incurred
84. In reality however this concession was not surprising since, in this Court's view, there was never any chance of the second part of the declaration being granted. This is because, quite apart from the principle of non-interference in expert determinations, the SPA is completely silent about the Expert not being entitled to use accounting standards etc in reaching her decision. Accordingly, it is not clear on what basis Sunward would be entitled to such a declaration. Indeed, if anything the SPA is closer to stating the opposite, since it states (at para 5.1.2 of Scheule 7, Part 3) that the Expert is entitled to require 'written representations' from the parties 'as [she] sees fit'. Thus, it seems clear that for the Court to go ahead and declare that the Expert could not have regard to accounting standards etc, as sought by Sunward, would involve this Court in a complete re-writing of the contract between the parties.
85. In any event, in its letter of 1 May 2025, just a few days before the hearing, Sunward dropped this part of its claim, but continued with its demand for the first part of its declaration regarding the definition of Gross Profit. Thus, before proceeding with the Expert determination process, Sunward required a declaration from this Court, albeit a much watered down one, i.e. only regarding how the Expert would interpret Gross Profit. In this letter, Sunward made clear that if Teqnion agreed to this Court making that declaration on consent of the two parties, there would be no need for a hearing and Sunward would agree to there being no order as to costs. This of course would mean Sunward would not be liable for Teqnion's legal costs in having to defend Sunward's application.
86. On one level, by the time this case came to hearing, the watered-down declaration which Sunward was looking for, as a pre-condition to the Expert determination commencing, was almost meaningless. This is because it was akin to a declaration that the Expert is bound by the terms of the SPA, which is almost as meaningless as saying that the Expert is bound by her terms of appointment. Even if there was an entitlement to go to court to seek a declaration in advance of the commencement of an expert determination process, which there is not (save in exceptional circumstances), it seems to this Court that there could be no basis for going to court to get a declaration on something so basic as one that states, in effect, that the Expert is bound by the terms of her appointment.
87. Indeed, it was for this reason that counsel for Teqnion asked this Court to see this letter for what he said it truly was. He claimed that Sunward, after failing to coerce Teqnion (with the threat of legal costs being ordered against it) into limiting the powers of the Expert, then sought to avoid a costs order being made against it by getting the Court to grant a self-evident or anodyne declaration on consent. Since in such a situation there would be no winner or loser of the litigation, there would be no need for a costs order against any of the parties. Teqnion stated that this was the real reason Sunward was now seeking an anodyne order on consent. In this regard, counsel for Teqnion also relied on the fact that the letter of 1 May 2025, which contains this concession regarding the second part of the declaration, is headed 'Proposal Governed by Section 169(1)(f) of the Legal Services Regulation Act, 2015'. That section allows a court to take into account 'whether a party made an offer to settle the matter' when deciding on costs.
88. However, whether or not this was the true reason for Sunward's concession and its pursuit of the watered-down declaration, the terms of that declaration, to which Teqnion refused to consent, still breached the general rule from the Dunnes case. This is because that case makes perfectly clear that there is no basis for court interference in advance of an expert determination, save in exceptional cases, and the granting of an anodyne declaration does not come anywhere close to being an exceptional case.
89. Accordingly, it follows that Teqnion was perfectly entitled not to agree any such form of declaration, whether anodyne or otherwise, and it was entitled to have the Court hear and reject that application, if Sunway insisted on pursuing it, which it did.
CONCLUSION
90. The Supreme Court has made it abundantly clear in the Dunnes case that in a case such as this one, an expert is entitled, without court interference, to interpret and apply the terms relevant to the determination of any dispute referred to that expert. This is because the parties have contractually agreed to have their disputes resolved other than by the courts and the courts require parties to honour their agreements.
91. It is clear therefore that the Expert in this case is entitled to apply her interpretation of Gross Profit to the facts of the dispute and to come up with her adjustments, if any, to the Draft Earn-Out Statement, without any interference, in advance, from the courts.
92. Thus, Sunward's application, for the courts to direct the Expert how it should interpret Gross Profit, is rejected.
93. While there may be very good commercial reasons (namely a difference of up to €2 million) why Sunward wanted to have the courts interfere in this case, in this Court's view, there was no legal basis for the approach it has taken.
94. In this Court's view, Sunward has done exactly what the Supreme Court wants parties to avoid doing, when that Court issued its clear statement of the law, namely Sunward has engaged in what the Supreme Court has described as 'wasteful and premature' litigation. It is important to note that no criticism is being made of Sunward's lawyers in relation to this application, since lawyers only act on the instructions of their client. In this regard, it was Sunward that agreed with Teqnion to resolve any future disputes by alternative dispute resolution, and so not by litigation. Yet when a dispute arose, which had a value of circa €2 million, Sunward decided to litigate an aspect of that alternative dispute resolution, in order to increase its chances of receiving an increased payment from Teqnion, despite the terms of its agreement with Teqnion. It is this Court's view that this application by Sunward should not have been taken. In line with what the Supreme Court said in Dunnes, it was wasteful', in the sense of it being a waste of time (i.e. the parties' time and the court's time), but also a waste of money (i.e. legal costs incurred by both parties) and it was 'premature' because the Expert has not even commenced the determination process.
The financial perspective of this dispute
95. It remains to be observed that most litigation comes down to money, i.e. the money alleged to be owed (or the value of the asset in dispute) but also the amount of money in High Court costs which will be incurred to resolve the dispute, and in particular the question of who will be liable for those 'prohibitive' costs.
96. This means that most disputes, although ostensibly about legal issues, are ultimately about money. This dispute is no different.
97. Looking at this case in financial terms therefore, the principle underlying it is that if a party has agreed to alternative dispute resolution, in order to avoid litigation (since litigation is 'the most protracted and expensive way imaginable of resolving' disputes), then that party should not be brought to court and subjected, through the backdoor, to the prohibitive costs of litigation. Accordingly, the courts will require parties to comply with their agreement to, in effect, resolve their dispute without litigation.
98. Furthermore, since costs usually follow the event, where person has been wrongfully brought to court, she will, in general, have the 'prohibitive' litigation costs, which she had been due to avoid in, paid by the party who brought her to court.
99. In this case, the party who was brought to court against its will is Teqnion and this Court concludes that it should not have been so brought. Thus, as well as rejecting Sunward's application, this Court's preliminary view is that Sunward should be liable for Teqnion's legal costs in successfully defending this application.
100. This case will be provisionally put in for mention at 10.45 a.m. a week from its delivery to deal with any final orders and costs. However, in order to facilitate the parties agreeing all outstanding matters, the parties have liberty to notify the Registrar if such a listing proves to be unnecessary. This is particularly so in light of the clear implication from Word Perfect Translation Services Ltd v Minister for Public Expenditure and Reform [2023] IECA 189 at para 94, that there is an onus on lawyers to take a broad-brush approach to costs and not to engage in the inefficient use of court resources and costly 'nit-picking'.
[1] Lett & Company Ltd v Wexford Borough Council & The Minister for Communications [2012] IESC 14 at para 14, per O'Donnell J.
[2] Bourbon v Ward [2012] IEHC 30 at page 40, per Kearns P.