SSABR Pty Ltd v AMA Group Limited [2024] NSWCA 175
Hearing dates:
24 June 2024
Date of orders:
23 July 2024
Decision date:
23 July 2024
Before:
Ward P at [1]; Stern JA at [2]; Price AJA at [210].
Decision:
(1) Allow the appeal.
(2) Dismiss the notice of contention.
(3) Set aside the orders of Rees J made on 15 December 2023 and in lieu thereof dismiss the cross-claim cross-summons filed by the respondents on 22 October 2021.
(4) Set aside the orders of Rees J made on 2 February 2024.
(5) Remit prayers 1-4 of the summons filed by the appellants on 8 September 2021 to the primary judge for determination.
(6) Order that the respondents pay the appellants’ costs of the appeal.
(7) Direct that the parties exchange submissions on the issue of what order should be made as to the costs of the proceedings at first instance:
(a) Parties file submissions of no more than 3 pages by 4.00pm on 30 July 2024;
(b) Parties file reply submissions of no more than 2 pages by 4.00pm on 6 August 2024.
Catchwords:
CONTRACTS – Rectification by construction – whether primary judge erred in failing to find that properly construed, cl 5.1 of Business Sale Agreement provided for an earn-out calculation based on “average annual” earnings before interest and tax
EQUITY – Rectification in equity – onus and standard of proof – whether respondents had shown by clear and convincing evidence that cl 5.1 of Business Sale Agreement did not correctly record the common intention of the parties – whether primary judge erred in ordering rectification of cl 5.1
EVIDENCE – Jones v Dunkel inference – whether primary judge erred in failing to draw Jones v Dunkel inferences in respect of respondents’ failure to call several witnesses involved in the transaction culminating in the Business Sale Agreement – whether primary judge erred in drawing Jones v Dunkel inference against the appellants for failing to call its solicitor to give evidence
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
SSABR Pty Ltd v AMA Group Limited [2024] NSWCA 175
Case
[2024] NSWCA 175
Decision Date
CaseChat Overview and Summary
The appeal concerned the interpretation and rectification of clause 5.1 of a Business Sale Agreement between SSABR Pty Ltd (appellants) and AMA Group Limited (respondents). The dispute centred on whether the clause, as written, provided for an earn-out calculation based on "average annual" earnings before interest and tax, or if it should be rectified to reflect a different common intention of the parties. The primary judge had ordered rectification of the clause.
The Court of Appeal was required to determine whether the primary judge erred in failing to find that the agreement, properly construed, provided for an average annual earn-out calculation. It also had to consider whether the respondents had discharged the onus of proving by clear and convincing evidence that clause 5.1 did not accurately record the parties' common intention, thereby justifying equitable rectification. Furthermore, the court was asked to assess whether the primary judge erred in drawing certain inferences under the principles established in *Jones v Dunkel* regarding the failure of parties to call specific witnesses.
The Court of Appeal allowed the appeal, finding that the primary judge had erred in ordering rectification. The court determined that the language of clause 5.1, when properly construed, did not support the respondents' claim for an average annual earn-out calculation. The court also found that the respondents had not met the high standard of proof required for equitable rectification, as they had not demonstrated by clear and convincing evidence that the written agreement failed to reflect the parties' true common intention. The court set aside the primary judge's orders for rectification and remitted certain aspects of the proceedings to the primary judge for determination.
Orders
Orders of the court
(1) Allow the appeal.
(2) Dismiss the notice of contention.
(3) Set aside the orders of Rees J made on 15 December 2023 and in lieu thereof dismiss the cross-claim cross-summons filed by the respondents on 22 October 2021.
(4) Set aside the orders of Rees J made on 2 February 2024.
(5) Remit prayers 1-4 of the summons filed by the appellants on 8 September 2021 to the primary judge for determination.
(6) Order that the respondents pay the appellants’ costs of the appeal.
(7) Direct that the parties exchange submissions on the issue of what order should be made as to the costs of the proceedings at first instance:
(a) Parties file submissions of no more than 3 pages by 4.00pm on 30 July 2024;
(b) Parties file reply submissions of no more than 2 pages by 4.00pm on 6 August 2024.