M & a

The Full Federal Court heard an appeal in the matter of *M & A*. The dispute concerned the interpretation and application of certain provisions within a deed, specifically relating to the calculation of a deferred consideration payment. The appellant, M, sought to recover a sum it alleged was due under the deed, while the respondent, A, contended that no further payment was owing.

The central legal issue before the Full Federal Court was whether the trial judge had erred in their construction of clause 3.2(b) of the deed. This clause stipulated the method for calculating a deferred consideration payment, and the parties disagreed on whether a particular adjustment, referred to as the "working capital adjustment," was to be applied before or after the calculation of a specific profit margin.

The Full Federal Court analysed the language of clause 3.2(b) in its entirety, considering the ordinary meaning of the words used and the overall context of the deed. Their Honours found that the grammatical structure and placement of the working capital adjustment within the clause indicated that it was intended to be applied *after* the profit margin calculation. The court affirmed the principle that contractual provisions should be interpreted in a manner that gives effect to the plain and ordinary meaning of the words, unless such an interpretation would lead to an absurd or uncommercial result.

The appeal was dismissed, with the Full Federal Court upholding the decision of the trial judge.