SSABR Pty Ltd v AMA Group Ltd (No 3) [2024] NSWSC 1415

SSABR Pty Ltd v AMA Group Ltd (No 3) [2024] NSWSC 1415

JobKeeper payments received by AMA Group Solutions in respect of employees working for the Businesses are income for, of, or referable to the Businesses, and should be included in EBIT for the purposes of calculating the Earn-Out Amount under the Business Sale Agreement. Paint rebates and market incentives received at group level under a contract with the manufacturer predating the sale, which are not specifically attributable to the Businesses, are not for, of, or referable to the Businesses and thus not included in the EBIT calculation. Clause 5.1(b) of the Business Sale Agreement required application of accounting standards where applicable under the Corporations Act and, where not...

Parties
First Plaintiff: SSABR Pty Ltd; Second Plaintiff: HAAPRC Pty Ltd; First Defendant: AMA Group Ltd; Second Defendant: AMA Group Solutions Pty Ltd
Jurisdiction
Australia
Judgment Date
08 November 2024
Procedural Posture
Remittal Consequential Orders After Appellate Determination / Post Appeal, Remitted for Determination of Prayers 1 to 4 of the Summons
Outcome
Judgment for the plaintiffs.
Legal Topics
Business Sale Agreement, Earn Out Calculation, Accounting Standards, Job Keeper Payments, Paint Rebates, EBIT Calculation
Commercial Law Contract Law Equity Business Sale Agreement Earn Out Calculation Accounting Standards Job Keeper Payments Paint Rebates +1 more

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Parties

SSABR Pty Ltd

First Plaintiff

HAAPRC Pty Ltd

Second Plaintiff

AMA Group Ltd

First Defendant

AMA Group Solutions Pty Ltd

Second Defendant

Procedural Posture

Remittal Consequential Orders After Appellate Determination / Post Appeal, Remitted for Determination of Prayers 1 to 4 of the Summons

Legal Issues

  1. 1 Whether JobKeeper payments should be included as income in the calculation of EBIT for Earn-Out under the Business Sale Agreement
  2. 2 Whether paint rebates received by the corporate group should be included as earnings for the Businesses for EBIT purposes
  3. 3 Application of Australian Accounting Standards and generally accepted accounting principles to EBIT calculation under contract

Ratio Decidendi

JobKeeper payments received by AMA Group Solutions in respect of employees working for the Businesses are income for, of, or referable to the Businesses, and should be included in EBIT for the purposes of calculating the Earn-Out Amount under the Business Sale Agreement. Paint rebates and market incentives received at group level under a contract with the manufacturer predating the sale, which are not specifically attributable to the Businesses, are not for, of, or referable to the Businesses and thus not included in the EBIT calculation. Clause 5.1(b) of the Business Sale Agreement required application of accounting standards where applicable under the Corporations Act and, where not...

Court Disposition

Judgment for the plaintiffs.

Orders

  • Judgment for the plaintiffs in the amount of $2,174,640 plus interest from 10 January 2021 under s 100 of the Civil Procedure Act 2005 (NSW).
  • Parties to notify any errors or omissions within 7 days.