SSABR Pty Ltd v AMA Group Ltd (No 3)

The case of SSABR Pty Ltd v AMA Group Ltd (No 3) involved the plaintiffs, SSABR, selling two smash repair businesses to the defendant, AMA, a large company with over 100 similar businesses. The dispute centred on the interpretation of an "earn out" provision in the business sale agreement. This provision determined the final purchase price based on the earnings before interest and tax (EBIT) "for the Businesses" over a specified period. The key issue was whether rebates and JobKeeper payments received by the corporate group should be included as earnings "for the Businesses".

The court was required to decide whether the term "for the Businesses" should be interpreted narrowly to exclude rebates and JobKeeper payments, or more broadly to include these payments. Additionally, the court had to consider whether accounting standards or generally accepted accounting principles should apply in determining what constitutes "earnings" within the agreement. The interpretation of these terms was crucial as it directly impacted the final purchase price.

The court concluded that the term "for the Businesses" should be interpreted narrowly. It held that the parties intended to use the term in a manner consistent with the ordinary and natural meaning, which excludes rebates and JobKeeper payments. The court found that the parties did not intend to incorporate accounting standards or generally accepted accounting principles into the agreement. Therefore, these payments should not be included in the calculation of EBIT.

As a result, the court held that the rebates and JobKeeper payments were not to be included in the calculation of the final purchase price. The court's decision was based on the ordinary and natural meaning of the terms used in the agreement and the intention of the parties at the time of the contract.