Broughton v B & B Group Investments Pty Ltd

In Broughton v B & B Group Investments Pty Ltd, the court was called upon to interpret the terms of a contract for the sale of a business, specifically addressing whether a special condition allowing the purchaser to terminate the contract after due diligence required a causal link between the information obtained during due diligence and the decision to terminate. The purchaser, after completing due diligence, terminated the contract and subsequently brought an action for specific performance. The vendor counterclaimed for damages. The primary legal issues before the court were the interpretation of the termination clause, the appropriate measure of damages for the breach, and the implications of a significant allegation not being put to the purchaser during the trial.

The court examined the contract and found that the termination clause did not require a causal link between the due diligence findings and the decision to terminate. The court held that the purchaser had the right to terminate the contract based on the information obtained during due diligence, without needing to demonstrate a causal connection. Regarding the measure of damages, the court held that the appropriate date for assessing the value of the business was the date of trial, as there was no evidence of the business’s value at the date of breach or the date the purchaser abandoned the application for specific performance. This decision was influenced by the cases of Clark v Macourt and Ng v Filmlock Pty Ltd, while distinguishing the approach in Johnson v Agnew.

Further, the court addressed the issue of an important allegation not being put to the purchaser during the trial, which related to the vendor’s creditworthiness. The court considered whether the judge’s findings, influenced by the assessment of the purchaser’s credit, should be disturbed on appeal. The court found that the judge’s assessment did not warrant disturbing the findings, applying principles from Robinson Helicopter Co Inc v McDermott. Ultimately, the court affirmed the lower court's decision, with the purchaser's appeal dismissed and the vendor's counterclaim for damages upheld.