AMA Group Limited v Assk Investments Pty Limited

The dispute in *AMA Group Limited v Assk Investments Pty Limited* concerned the interpretation of a Binding Heads of Agreement (HOA) between AMA Group Limited (the Appellant) and Assk Investments Pty Limited (the Respondent). The central issue was whether the Appellant's promise to enter into Business Sale Agreements was conditional upon the approval of the Respondent's Board, and whether this condition could be withheld capriciously. The matter came before the Court of Appeal of New South Wales.

The Court of Appeal was required to determine whether the primary judge had erred in their construction of the HOA, specifically regarding the condition precedent of Board approval. Further questions arose as to whether the consideration for the HOA was illusory, and whether the primary judge's interpretation aligned with commercial common sense. The Court also had to consider whether the primary judge had been correct in ordering specific performance of the HOA.

The Court of Appeal found that the primary judge's construction of the HOA was incorrect. It held that the condition precedent requiring the Respondent's Board to approve the transaction was not capable of being satisfied or waived by the Respondent, and that the Board was entitled to withhold approval for any reason, including capriciously. Consequently, the Court concluded that the promise to enter into the Business Sale Agreements was not enforceable. The appeal was allowed, the primary judge's orders were set aside, and the proceedings at first instance were dismissed with costs. The parties were directed to make submissions regarding the costs of the appeal.