Dangerous Goods Training Centre Pty Ltd v South Pacific Training Group Pty Ltd

Legislation Cited: Conveyancing Act 1919 (NSW), s 12
Duties Act 1997 (NSW), ss 304(1), 304(2)

Cases Cited: Brighton v Australia and New Zealand Banking Group Ltd [2011] NSWCA 152
Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295
Chief Commissioner of State Revenue v Tasty Chicks Pty Ltd [2012] NSWCA 181
Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91
Goldsborough Mort & Co v Tolson (1909) 10 CLR 470; [1909] HCA 80
HDI Global Specialty SE v Wonkana No. 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296
Huntlee Pty Ltd v Sweetwater Action Group Inc; Minister for Planning and Infrastructure v Sweetwater Action Group Inc [2011] NSWCA 378
Metal Manufactures Pty Limited t/as TLE Electrical v WesTrac Pty Limited [2025] NSWCA 97
Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited; Wright Prospecting Pty Limited v Mount Bruce Mining Pty Limited (2015) 256 CLR 104; [2015] HCA 37
Owners of Strata Plan 5290 v CGS & Co Pty Ltd [2011] NSWCA 168
R v Hicks [2019] ACTSC 331
Sanmik Food Pvt Ltd v Alfa Laval Australia Pty Ltd [2025] NSWCA 7
The Trust Company Ltd v Commonwealth of Australia [2025] NSWSC 502

Texts Cited: Nil

Category: Principal judgment

Parties: Dangerous Goods Training Centre Pty Ltd (First Plaintiff)
John Kells (Second Plaintiff)
South Pacific Training Group Pty Ltd (Defendant)
SAS (Vic) Pty Ltd v Urban Ecological Systems Ltd [2021] VSCA 335

Representation: Counsel:
J O’Sullivan (Plaintiffs)
B McManus (Defendant)
Solicitors:
Penhall & Co (Plaintiffs)
Harris Freidman Lawyers (Defendant)

File Number(s): 2024/00457856

Publication restriction: Nil

JUDGMENT

1. This judgment involves an appeal from part of the decision of Magistrate Towney in the Local Court in relation to a deed of settlement and concerns the sum of $55,526.22.

2. The first plaintiff is Dangerous Goods Training Centre Pty Ltd (Dangerous Goods). The second plaintiff is John Kells (Kells). For convenience of understanding, I shall refer to both plaintiffs as Dangerous Goods except where John Kells is separately mentioned. Within the deed of settlement, the first plaintiff is referred to as Kells, and the second plaintiff is referred to as John. Both plaintiffs are represented by J O’Sullivan of counsel. The defendant is South Pacific Training Group Pty Ltd (SPTG) and is represented B McManus of counsel.

3. The parties relied on a joint court book consisting of three volumes marked as exhibit A1, A2 and A3 respectively.

Background

4. Dangerous Goods conducted a business training workers in the handling of dangerous goods and equipment (business). Kells was the sole director of Dangerous Goods and its head trainer. He negotiated with SPTG to sell the business to SPTG.

5. The parties fell into a dispute that resulted in the commencement of Federal Court proceedings numbered NSD861/2021. On 3 March 2022 (contract date), the parties executed a deed of settlement (the deed) in full and final settlement of the Federal Court proceedings (CB 943). The deed provided for the sale of the business, being the first plaintiff, from Dangerous Goods to SPTG on the terms of sale in Annexure B to the deed (the sale terms) (CB 943). It is the terms of the deed and the sale terms that form the bases of this current dispute.

6. The sale was completed on 1 April 2022 (the completion date) (CB 943). The purchase price was $200,000 (sale terms cl 39; CB 72), of which, “goodwill” comprised $190,000 (sale terms cl 39; CB 72) and a maximum of $50,000 for “stock” (sale terms cl 15; CB 67).

7. In the Local Court, SPTG alleged that Dangerous Goods had committed three breaches of the deed, a subject to which I will return to below.

8. On 8 November 2024, Magistrate Towney (the Magistrate) delivered an ex-tempore judgment in favour of SPTG (reasons for judgment). The Magistrate ordered that Dangerous Goods pay SPTG the sum of $58,861.53 as well as costs and interest.

The issues that were in dispute in the Local Court

1. SPTG claimed that Dangerous Goods breached the confidentiality clause in the deed (cl 17; CB 62). Nominal damages of $100 were awarded (CB 41; reasons for judgment T10 [11]-[12]). This issue is not in dispute on appeal.

2. SPTG claimed that Dangerous Goods breached a restraint of trade clause in the deed (cl 37; CB 70). The Magistrate awarded $3,235.08 (CB 43; reasons for judgment T12 [45]-[47]). This issue is also not in dispute on appeal.

3. SPTG alleged that there was non-payment by Dangerous Goods of money owed to SPTG after the completion date. The Magistrate found that Dangerous Goods had breached the deed by retaining payments in the sum of $55,526.22 made by customers of the business to Dangerous Goods directly or that SPTG remitted to Dangerous Goods (the disputed payments).

4. Hence, the only issue for determination on this appeal is whether Dangerous Goods was entitled to retain the disputed payments. The resolution of this issue turns upon the construction of the deed and the sale terms.

Summons filed on 6 December 2024

10. Some of these grounds of appeal frame the same issue by different formulations and some of them are, more strictly speaking, reasons in support of the actual grounds of appeal. By summons filed on 6 December 2024, Dangerous Goods seeks the following orders:

11. Appeal allowed.

12. Order 1 be varied as follows: “Decision for the plaintiff [SPTG] in the sum of $3,335.31.” [I note that this amount should in fact be $3,235.08.]

13. Orders 2 and 3 be set aside.

14. That SPTG pay 90% of Dangerous Goods’ costs in the Court below.

15. Dangerous Goods appeals on the following grounds:

16. The Magistrate erred in law:

(a) In construing the definition of the “assets” used in cl 35 of Annexure B to the deed between the parties dated 3 March 2022. Under the deed, Dangerous Goods was to sell its business to SPTG. Completion of the sale occurred on 1 April 2022. The Magistrate erred in finding that the “assets” to be sold included accounts receivable for work done or services supplied by Dangerous Goods before completion of the sale on 1 April 2022 (“erroneous construction”). Dangerous Goods contends that her Honour ought to have construed the “assets” as excluding book debts for work done and services supplied by Dangerous Goods before completion on 1 April 2022 (Appeal Ground 1). (b) In construing the definition of “assets” in cl 39(n) of Annexure B to the deed in absolute terms and not in the context of the deed as a whole and subject to the ejusdem generis principle (Appeal Ground 2).

2. The Magistrate’s construction of the deed:

(a) Was contrary to the objective mutual intentions of the parties in that cl 35 expressly only applied to funds received by Dangerous Goods for goods and/or services supplied or to be supplied by SPTG, which could only occur after completion of the sale on 1 April 2022, and did not apply to accounts receivable arising from invoices issued before 1 April 2022 for services supplied by Dangerous Goods during the period from execution of the deed on 3 March 2022 and before completion of the sale on 1 April 2022 (Appeal Ground 3). (b) Does not reflect the objective intentions of the parties because it would give rise to uncommercial, unjust outcomes. It could not have been their intention that if Dangerous Goods did the work or supplied the service and incurred the cost of so doing, SPTG would get the benefit of payment for them and thereby be unjustly enriched. Kells, as a key person, was required to continue to run the business as a going concern up to completion on 1 April 2022, during which time he was remunerated by Dangerous Goods. After completion, Kells was to continue working for the business as a paid consultant to SPTG. It could not have been the parties’ mutual objective intention that Dangerous Goods was expected to incur the costs of running the business whilst working for free (Appeal Ground 4). (c) Does not reflect the objective intentions of the parties because it would give rise to uncommercial outcomes in that the parties could not have intended that their entitlement to payment depended upon the caprice of a third-party debtor. On the erroneous construction, if a debtor happened to pay a debt on 31 March 2022, Dangerous Goods was entitled to retain the payment as remuneration for the work done. If the debtor happened to pay on 2 April 2022, SPTG would be entitled to retain the payment and obtain a windfall gain. It is unlikely that commercial parties intended such a bargain but intended rather, consistent with the express wording of cl 35, that Dangerous Goods would be paid for work it did up to completion. On and from completion, SPTG would take over running the business and paying its expenses and be entitled to retain payment for that work (Appeal Ground 5).

3. The Magistrate erred in not construing cl 35 and sub-cl (n) of the definition of “assets” in cl 39 of Annexure B to the deed in the context of the deed as a whole, including the following matters (Appeal Ground 6):

(a) the deed provided for the sale of assets, not shares; (b) clauses 7 and 8 of Annexure B to the deed provided that the business was to be sold as a going concern and was to continue to run in the usual manner from 3 March 2022 to 1 April 2022; (c) the deed did not expressly purport to effect any assignment from Dangerous Goods to SPTG of any chose in action; and (d) if SPTG wished to collect the debts, it would likely require assignment under s 12 of the Conveyancing Act 1919 (NSW) but the deed made no provision for this.

4. If it is necessary to examine the parties’ conduct, SPTG conducted itself consistently with the construction for which Dangerous Goods contend. After completion, SPTG’s accounts clerk directed SPTG’s customers to pay invoices issued before completion to Dangerous Goods, not SPTG (Appeal Ground 7).

5. The Magistrate erred in not construing the deed contra proferentem. This ground of appeal is not pressed (Appeal Gound 8).

6. The Magistrate erred in admitting the deed into evidence contrary to s 304(1) of the Duties Act 1997 (NSW) since it had not been stamped and no arrangement was made to transmit the deed to the Chief Commissioner in accordance with arrangements approved by the Court pursuant to s 304(2) of that Act (CB 773-775). However, Dangerous Goods acknowledged that this irregularity could be overcome if SPTG were to be granted leave to adduce evidence on the appeal to tender the deed subject to appropriate undertakings to pay stamp duty being given. SPTG undertook to this Court that it would pay the stamp duty on the deed and transmit the deed to the Chief Commissioner pursuant to s 304(2) of the Duties Act (T24 [48]-T25 [15]. This issue is no longer pressed (Appeal Ground 9).

7. Dangerous Goods conceded that SPTG is entitled to retain damages for breach of the restraint of trade clause in the deed in the sum of $3,235.08 but that Dangerous Goods is entitled to retain the disputed payments in the sum of $55,526.22.

8. For reasons set out later in this judgment, it is not necessary to examine the parties’ objective intentions as the terms of the deed and sale term are clear and unambiguous. Hence, appeal grounds 3, 4, 5, 7, 8, and 9 need not be dealt with. As appeal grounds 1, 2 and 6 relate to the proper construction of the deed and the sale terms, I will deal with all the appeal grounds together.

The deed and sale terms

14. The parties to the deed are South Pacific Training Group Pty Ltd (referred to as SPTG), and Training Centre Pty Ltd and John Kells (referred to collectively as Dangerous Goods in this Judgment).

15. The relevant terms of the deed and terms of sale are set out below (CB56-73):

The deed dated 3 March 2022

16. The relevant clauses of the deed are as follows:

17. Clause 1.2 of the deed refers to interpretation. It relevantly provides:

“…

(e) a reference to any thing includes any part of that thing.

…

(k) no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of this Deed or any part of it.

…

(n) a reference to includes or including must be construed without limitation…”

2. Clauses 12 and 18 provide:

“12. ENTIRE AGREEMENT

This Deed represents the entire agreement between the parties in respect of the subject matter of the Deed and there is no other understanding, agreement, representation or warranty, whether express or implied, in any way extending, modifying or qualifying any of the provisions of this Deed.

…

18. VARIATION

No provision of this document or a right conferred by it can be varied except by Deed in writing signed by the parties.”

Annexure B to the deed (the sale terms)

17. Under this heading, cll 2-8 of the sale terms provide:

“2. The definitions and rules of interpretation set out in the Deed of Settlement are adopted in this annexure unless the context otherwise requires.

Background

3. Kells [Dangerous Goods] is the owner of the Business.

4. John [Kells] is the sole director and head trainer of the Business.

5. Kells [Dangerous Goods] has agreed to sell, and SPTG agreed to purchase, the Business and its Assets on the terms and conditions set out in this deed, and subject to the parties duly entering into this Deed.

6. John [Kells] has agreed to the terms and conditions of this Deed and will use his best endeavours to ensure that Kells [Dangerous Goods] complies with its obligations under this Deed.

Sale of the Business

7. Kells [Dangerous Goods], as beneficial owner, sells to SPTG, which purchases from Kells [Dangerous Goods], the Business as a going concern with effect from Completion.

8. Between the date of execution of this Deed and Completion, Kells [Dangerous Goods] will continue to run the Business in its usual manner as a going concern.”

18. Clause 17 relevantly provides:

“17. At Completion:

…

(b) Kells [Dangerous Goods] must:

(i) deliver up to or at the direction of SPTG control of the Business together with all things in Kells’ [Dangerous Goods’] possession or control that are necessary for SPTG to operate the Business as a going concern;

…

(iv) deliver to SPTG possession of all Assets.

…

(d) the title to, and risk in, the Assets passes to SPTG,

(e) possession and control of the Assets passes to SPTG; and

(f) the Assets must be made available to SPTG at the Business Premise an no costs to SPTG.”

19. Clause 19 provides:

“Going Concern

19. The parties acknowledge and agree that the sale of the Business from Kells [Dangerous Goods] to SPTG represents a sale of all the things necessary for SPTG to continue running the Business, and that this transaction is therefore a going concern for tax purposes.”

20. Clauses 34 and 35 provide:

“Remittance of erroneously paid funds

34. On and from Completion, SPTG will do all things necessary to notify all persons dealing with the Business of the new bank account details of the Business.

35. If, after Completion, Kells [Dangerous Goods] and/or John [Kells] receive funds erroneously or inadvertently for goods and/or services supplied (or to be supplied) by SPTG in the course of running the Business or that is otherwise rightly the property of SPTG, Kells [Dangerous Goods] and/or John [Kells] agree to remit those funds to SPTG forthwith upon receipt and to indemnify SPTG for any loss associated with a failure to remit such funds.”

21. Clause 39 of the sale terms is headed “Definitions” and relevantly provides (CB 70-73):

“…

Assets means:

…

(k) the rights to and title in all agreements, registrations, and licenses in respect

of the Business;

…

(m) the Goodwill of the Business;

(n) all other assets, current or non-current, tangible and intangible of Kells and/or John which form part of or are used in connection with the Business.

Business means the business or businesses operated by Kells [Dangerous Goods] under the Business Names involving the supply of training and/or assessment services, consultancy services, and safety product/equipment and includes without limitation the Assets and all other things that are necessary for the continued operation of the business enterprise.

…”

The law

22. While the parties quoted a number of authorities, it is not necessary to go beyond Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited*;* Wright Prospecting Pty Limited v Mount Bruce Mining Pty Limited (2015) 256 CLR 104; [2015] HCA 37 (‘Mount Bruce Mining’).

23. The legal principles of the construction of a contract are not in dispute. In Mount Bruce Mining, French CJ, Nettle and Gordon JJ said at [46]-[52] (footnotes omitted):

“[46] The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47] In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48] Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

[50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.

[51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

[52] These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [[1982] HCA 24; (1982) 149 CLR 337] and Electricity Generation Corporation v Woodside Energy Ltd [[2014] HCA 7; (2014) 251 CLR 640]. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd [[2011] HCA 45; (2011) 86 ALJR 1; 282 ALR 604].”

24. Paragraphs [46]-[49] above were recently cited by Griffiths AJA in Sanmik Food Pvt Ltd v Alfa Laval Australia Pty Ltd [2025] NSWCA 7 at [152].

25. In Mount Bruce Mining, Kiefel and Keane JJ said at [108]-[110] (footnotes omitted):

“[108] That regard may be had to the mutual knowledge of the parties to an agreement in the process of construing it is evident from Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [[1982] HCA 24; (1982) 149 CLR 337]. Mason J, with whom Stephen and Wilson JJ agreed, accepted that there may be a need to have regard to the circumstances surrounding a commercial contract in order to construe its terms or to imply a further term. In the passages preceding what his Honour described as the ‘true rule’ of construction, his Honour identified ‘mutually known facts’ which may assist in understanding the meaning of a descriptive term or the ‘genesis’ or ‘aim’ of the transaction. His Honour had earlier referred to the judgment of Lord Wilberforce in Prenn v Simmonds [[1971] 1 WLR 1381; [1971] 3 All ER 237], where it was said that:

‘[t]he time has long passed when agreements … were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations.’

[109] In a passage from DTR Nominees Pty Ltd v Mona Homes Pty Ltd [[1978] HCA 12; (1978) 138 CLR 423], to which Mason J referred, it was said that the object of the exercise was to show that ‘the attribution of a strict legal meaning would “make the transaction futile”’. In Electricity Generation Corporation v Woodside Energy Ltd [[2014] HCA 7; (2014) 251 CLR 640], French CJ, Hayne, Crennan and Kiefel JJ explained that a commercial contract should be construed by reference to the surrounding circumstances known to the parties and the commercial purpose or objects to be secured by the contract in order to avoid a result that could not have been intended.

[110] The ‘ambiguity’ which Mason J said may need to be resolved arises when the words are ‘susceptible of more than one meaning.’ His Honour did not say how such an ambiguity might be identified. His Honour's reasons in Codelfa are directed to how an ambiguity might be resolved.”

The Magistrate’s ex-tempore decision dated 8 November 2024

26. The Magistrate delivered ex-tempore reasons for judgment on 8 November 2024, where she said:

“I will move on to the substantive part of the claim which is non-payment of monies received by the defendants after the date of completion which the plaintiff said they are owed also referred to as "book debts". The plaintiff’s claim is in relation to 42 separate payments that the defendants received after 1 April 2022 in relation to goods or services provided up to or before 31 March 2022. These come to a total of $55,526.22. The defendants admit to receiving this amount but deny that they were contractually required pay this to the plaintiff. The issue is a contractual interpretation of the deed of settlement and annexed terms of sale of business. The arguments are set out in the statement of claim when the defence filed and written submissions filed on 23 and 24 September.

The submissions put forward by the defendant was that the business was sold as it was at the date of the contract or the deed being 3 March 2022 and book debts involved the sale of goods and services between this date and the date of completion being 1 April 2022 are not included. This was not accepted by the Court as the business was sold as a going concern as read out earlier and in the deed and the assets include under cl K, "The rights to [and title] in all agreements in all other assets current and non-current tangible and intangible of Kells and/or John which form part of or are used in connection with the business".

In addition, the business includes without limitation, "The assets and other things that are necessary for the continued operation of the business enterprise". The court finds the business conducted between 3 March 2022 and the completion date of 1 April 2022 is included whether or not they were outstanding. The court finds the deed to be unambiguous. However, if it was ambiguous it is to be read in relation to clause 1.2(e) 'reference to anything includes a part of that thing" and K, "no rule of construction is to be applied to the disadvantage" and cl N, "it is to be read without limitation".

A further submission made by the defendant was that it did not make sense to read that defendant one and defendant two should continue to work without payment between 3 March 2022 and 1st April 2022 as it fails a business efficacy test. The Court finds there is a merging of the first and second defendant in this argument. The Court finds defendant one, the business, has continued to operate as a going concern whether or not it makes a profit that month.

The second defendant is an individual and a director. Whatever provisions he had made between himself and the company during the period 3 March 2022 and 1 April 2022 in relation to his wages, commissions, reimbursement or any other payment that he was to receive was the responsibility of the second defendant prior to the completion and it does not pass on to the plaintiff on completion. That is, the second defendant stopped work for the first defendant on 31 March 2022 and did not work for the plaintiff apart from that set out in the deed of settlement of post-completion training cl 26 to 32. Money that was owed for work to the company between 3 March 2022 and 31 March 2022 was owed to the business, the first defendant, and this debt was part of an asset or business that passed on to the plaintiff on completion on 1 April 2022. Any monies outstanding to the business on 1 April 2022 were owed to the business which was then owned by a new owner.

The defendant also submitted that the goodwill of the business was sold for [$190,000] and the [plant and] equipment for $10,000 making a total purchase price of $200,000. This submission indicates there was nothing further in the transaction apart from goodwill and [plant and] equipment. This reading down of the contract would make the rest of the contract obsolete. The Court does not accept this reading of the contract. The Court finds that the contract is detailed and includes assets. However, the Court again notes that if the contract was found to be ambiguous it would not be read down to the disadvantage of the plaintiff.

The defendant also submitted that the first defendant continued to pay staff, superannuation, etc. up until the date of settlement. They also paid bills that came in prior to this date and were therefore entitled to any money earned during this period. This is not accepted by the Court. The Court finds the first defendant paid staff as per a specific clause in the agreement and paid third parties such as for bills as part of a going concern. This does not mean that the first and/or second defendant are entitled to any debts owed to the company at the date of settlement or completion. It was not led in evidence that either the first or the second defendant had asked for and/or paid any bills up until 31 March 2022 as in the bill that covered that period not the bill that came in before that. In addition, the Court also notes the deed was not ambiguous but if it was it would not be read to limit the plaintiff’s entitlement.

It was submitted there was a delay in the claim by the plaintiff but the plaintiff submitted they were unaware that these outstanding monies had been paid to the first and/or second defendant and this is accepted by the Court. The first and/or second defendant admitted receipt of $55,526.22 and the Court finds when the plaintiff took ownership of all assets it also took the so-called "book debts" that were outstanding as at 1 April 2022.” (T8 [25]-T10 [7]; CB 39-41)

27. The Magistrate further explained:

“…In relation to the two submissions put forward by the defendant, the first one being that Ms Kellie Kells organised the payments or followed up the payments to him. The Court notes under the deed cl 14 this, 'any rights or obligations cannot be assigned to a third party".

So he was under the obligation not Ms Kells and the Court also notes that under the deed the first and second defendant were both obliged to repay any money that was inadvertently or erroneously paid to them so he's also covered by the obligation…” (T10 [49]-T11 [6]; CB 41-42)

28. The Magistrate decided:

“…the plaintiff has established the claim in the three areas. It proposes to make orders in favour of the plaintiff. The nominal amount in relation to the first claim to be $100*,* the amount in relation to the second claim to be $8088.26 and in relation to the third claim to be $55,226.22…” (T10[9]-[14]; CB 41)

29. Her Honour subsequently amended the amount awarded in relation to the second claim to $3,235.08 due to a mathematical oversight (T12[46]-[47]; CB 43).

Construction of the deed and sale terms

Dangerous Goods’ overall submissions

30. Dangerous Goods submitted that where it did work and issued an invoice for it to a customer, it acquired a debt, being a chose in action. As such, the accounts receivable were intangible assets of Dangerous Goods. For example, in Metal Manufactures Pty Limited t/as TLE Electrical v WesTrac Pty Limited [2025] NSWCA 97 Gleeson JA, with whom Mitchelmore JA and Basten AJA agreed, described a chose in action at [71]-[72]:

“[71] The performance on 25 and 26 October 2022 of SES’s primary obligation to supply and deliver all panels onsite, generated a monetary obligation owed by Verdia to SES under cl 6.1 and Schedule 3 in the amount of the third milestone payment, less retention monies, being an amount of $306,269.23 inclusive of GST. That right to payment is a ‘chose in action’ in the primary sense of that phrase, as explained by Rich J in Loxton v Moir (1914) 18 CLR 360 at 379; [1914] HCA 89:

‘The phrase “chose in action” is used in different senses, but its primary sense is that of a right enforceable by an action. It may also be used to describe the right of action itself, when considered as part of the property of the person entitled to sue. A right to sue for a sum of money is a chose in action, and it is a proprietary right.’

[72] A chose in action is personal property. It is a personal right of property which can only be claimed or enforced by action, as distinct from taking physical possession. A chose in action is discharged by payment.”

31. Read in isolation, the effect of cll 5 and 7 of the sale terms read with the definition of “assets” in cl 39(n) might be that Dangerous Goods sold these intangible assets to SPTG. This construction is difficult if not impossible to reconcile with cl 35, which required Dangerous Goods to remit payments for work done by SPTG to SPTG, but did not require it to remit payment for work done by Dangerous Goods to SPTG.

32. The tension between cl 35 and cll 5 and 7 is best reconciled by reading cl 35 as a “carve out” for debts derived from work done by Dangerous Goods before the completion date. The “carve out” should extend equally to the more general words that appear in cl 35: “or that is otherwise rightly the property of SPTG”. The tension between cll 5 and 7 and cl 35 can be reconciled by reading the document as a whole, so that the general provisions of cll 5 and 7 yield to the specific provisions of cl 35.

33. If cl 35 were intended to require Dangerous Goods to remit payment for work done by it before the completion date, as SPTG contends, it would have to be rewritten to read “If, after Completion, Kells [Dangerous Goods] and/or John [Kells] receive funds erroneously or inadvertently for goods and/or services supplied by Kells [Dangerous Goods] in the course of running the Business…”. However, cl 35 instead refers to “goods and/or services supplied (or to be supplied) by SPTG in the course of running the Business…”. It is common ground that the disputed payments were made for work done by Dangerous Goods, not SPTG. Accordingly, there was no contractual obligation for Dangerous Goods to remit payments made to it for work done by it to SPTG.

34. In oral submissions counsel for Dangerous Goods submitted that the parties intended, through cl 35, to deal specifically with the issue of outstanding debts with trade debtors and to provide a mechanism for allocating trade debts, namely that if the purchaser supplied or was going to supply the goods or services it would get paid for that.

35. The disputed payments could not be “money had and received” as SPTG pleaded in the second further amended statement of claim (pars 38-41; CB 14) because Dangerous Goods had done work and incurred the cost of sales necessary to earn the disputed payments.

SPTG’s overall submissions

36. An account receivable created prior to completion is an “intangible asset”. Dangerous Goods does not contest this. “Intangible assets” are a defined asset in cl 39(n) of the sale terms and were accordingly sold to SPTG pursuant to cll 5, 7 and 17 of the sale terms.

37. Choses in action and debts are non-current intangible assets. In Owners of Strata Plan 5290 v CGS & Co Pty Ltd [2011] NSWCA 168 at [44], the Court of Appeal said:

“[44] Torkington v Magee [1902] 2 KB 427 is frequently cited as an authoritative definition of ‘chose in action’. In that case, Channell J was actually considering the expression ‘debt or other legal chose in action’ used in s 25(6) of the Judicature Act 1873 (UK). His Lordship said (at 430-431):

‘“Chose in Action” is a known legal expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession. It is an expression large enough to include rights which it can hardly have been intended should be assignable by virtue of the sub-section in question, as, for instance, shares, which can only be transferred as provided by the Companies Acts. It is probably necessary, therefore, to put some limit upon the generality of the words; but I think that the necessary limitation is shewn by the considerations to which I have already referred, and also by the words of subs. 6 itself. I think the words “debt or other legal chose in action” mean “debt or right which the common law looks on as not assignable by reason of its being a chose in action, but which a Court of Equity deals with as being assignable”.’”

38. It is not difficult to reconcile cll 5 and 7 with cl 35. Namely, cl 35 contains the obligation to remit property that is “otherwise rightly the property of SPTG” which may include the obligation to remit payment for work done by Dangerous Goods to SPTG.

39. There are two scenarios to which cl 35 might apply:

40. Where Dangerous Goods received funds erroneously for goods or services which SPTG supplied (that is, post completion, as SPTG was not running the business before that date). This is not relevant here; and

41. Where after completion, Dangerous Goods and/or Kells receives funds erroneously or inadvertently for goods and/or services that are “otherwise rightly the property of SPTG.”

42. SPTG submitted that this may be construed asking what, after completion, is “rightly the property of SPTG”. When looking at the list of assets it may be noted that cll 5, 7 and 17 have the effect of transferring those assets on completion. The choses in action are an asset so must be transferred.

43. The tension between cll 5 and 7 and cl 35 to which Dangerous Goods refers is manufactured because it does not give meaning to the words “that is otherwise rightly the property of SPTG”.

44. SPTG submitted that there is no logical reason why cl 35 should be regarded as a “carve out” for work done by Dangerous Goods before the completion date. The first scenario above does not refer to work done by Dangerous Goods, only SPTG. It is difficult to understand what Dangerous Goods means by this “carve out” being extended to the more general words “that is otherwise the property of SPTG”.

45. Clause 35 would not need to be “rewritten” for it to require Dangerous Goods to remit payments for work done before completion to SPTG, as the obligation already exists to remit funds “otherwise rightly the property of SPTG.”

46. Clause 35 must be construed according to its natural and ordinary meaning. That the words used are unambiguous and therefore cannot be ignored simply to reach a result that is allegedly commercially convenient. As per HDI Global Specialty SE v Wonkana No*.* 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296 at [22]:

“[22] The language is construed according to its natural and ordinary meaning: Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510-511. As Lord Mustill said in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 384 “the inquiry will start, and usually finish, by asking what is the ordinary meaning of the words used”. Where the words are unambiguous, they cannot be ignored simply to reach a result that is apparently more commercially convenient: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36.”

The definition of “assets”

Dangerous Goods’ submissions

45. Sub-clause 39(n) in the definition of “assets” is a “catch all” provision that refers to “all other assets, current and noncurrent, tangible and intangible of Kells [Dangerous Goods] and/or John [Kells] which form part of or are used in connection with the Business”.

46. Dangerous Goods submitted that SPTG relies upon cl 39(n) to contend that the that the disputed payments fall within the definition of “assets”.

47. Clause 39 is prefaced with the words: “Unless the context otherwise requires, the following words have the following meanings…”. Here, the context includes the specific provisions of cl 35, requiring it to be read as a “carve out” to the more general provisions of cll 5, 7 and 39(n).

48. Further, cl 39(n) is the last sub-clause in a long list of sub-clauses that identify specific assets, such as stock, trademarks and trade secrets, plant and equipment. It is therefore open to the Court to call in aid the ejusdem generis principle to construe cl 39(n).

49. In Huntlee Pty Ltd v Sweetwater Action Group Inc; Minister for Planning and Infrastructure v Sweetwater Action Group Inc [2011] NSWCA 378, Sackville AJA, with whom Beazley JA and Tobias AJA agreed, said at [127] (‘Huntlee’):

“[127] The ejusdem generis rule of construction is a principle that allows general words in the statute to be restricted to the same genus as the specific words that precede them: The King v Regos and Morgan [1947] HCA 19; 74 CLR 613, at 623, per Latham CJ. Before the rule can be applied it is necessary to identify some genus which comprehends the specific case for which provision is made in the statute: Regos, at 623; Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; 57 NSWLR 113, at 143 [126], per Spigelman CJ (with whom Handley and Hodgson AJA agreed). But, as Dixon J explained in Cody v J H Nelson Pty Ltd [1947] HCA 17; 74 CLR 629, at 649, the ejusdem generis principle of construction is not to be applied mechanically. It is a guide in the process of interpretation which must take into account the whole instrument and the subject matter: see, too, [Deputy Commissioner of Taxation] v Clark, at 143 [127]-[129].”

50. In Brighton v Australia and New Zealand Banking Group Ltd [2011] NSWCA 152 Campbell JA, with whom Giles and Hodgson JJA agreed, said at [96]-[97] (‘Brighton v ANZ’):

“[96] Sometimes, if general words are accompanied by a list of examples which all fall within some genus that is narrower than the general words, that can provide a reason for restricting the general words. This approach to construction is well enough known, and old enough, to have Latin labels - the ejusdem generis rule is a subcategory of the noscitur a sociis rule. But there are well-recognised limitations on the use of such an aid to construction (eg Deputy Commissioner of Taxation v Dick [2007] NSWCA 190; (2007) 242 ALR 152; (2007) 64 ACSR 61 at [12]-[14]; National Roads and Motorists' Association v Whitlam [2007] NSWCA 81 at [63]-[64] and cases there cited). In particular, it is necessary to be able to identify some more limited category in the examples before the general words are limited. It is not possible to identify a limited category of the general words of the chapeau, in the list of examples in Clause 4.

[97] As well, as the ejusdem generis rule is only an aid to construction, it is possible for the parties to a contract to agree that that aid will not apply. The parties in the present case have so agreed…”

51. In Chief Commissioner of State Revenue v Tasty Chicks Pty Ltd [2012] NSWCA 181, Meagher JA, Barrett JA and Sackville AJA agreeing, said at [54] (‘Tasty Chicks’):

“[54] The ejusdem generis rule is one of a number of guides which may be used in the process of interpreting a statutory provision. That process directs attention to the provisions being construed and its context as well as the scope and purpose of the statute: Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69], [70], [78]. The rule provides a grammatical justification for reading general words down so as to limit their operation. For its application it requires that there be an enumeration of things of a particular kind or class so that the general words might then be read as applying only to things of the same kind or class as those enumerated: Cody v JH Nelson Pty Ltd [1947] HCA 17; 74 CLR 629 at 648-649; Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; 57 NSWLR 113 at [125]- [130].”

52. The list of assets in cl 39 all form part of the same genus, being assets used in connection with the business.

53. The parties did not agree to exclude the operation of the ejusdem generis principle. The “catch all” definition of “assets” in cl 39(n) does not contain any words designed to defeat the application of that principle such as the typical formulation: “Without limiting the generality of the foregoing…”.

54. Clause 2 of the sale terms provides that: “The definitions and rules of interpretation set out in the Deed of Settlement are adopted in this annexure unless the context otherwise requires.” Clause 1.2 of the deed headed “Interpretation” does not expressly exclude the application of the ejusdem generis principle. Instead, it states in sub-clause 1.2(n): “A reference to includes or including must be construed without limitation.” Clause 39(n) does not use the words “includes or including” at all. Therefore cl 39(n) should be read ejusdem generis, as was submitted at the hearing below.

55. Clause 39(k) refers to “the rights to and title in all agreements, registrations, and licences in respect of the Business”. A chose in action is not an agreement, registration nor a licence. Rather, it is a proprietary right, enforceable by an action, quite distinct from an agreement.

56. The list of assets that precedes cl 39(n) makes no reference to “debts”, “book debts”, “receivables”, “accounts receivable”, “trade debtors”, “outstanding invoices”, “choses in action” or similar. If cl 39(n) is read ejusdem generis, then it cannot be referring to debts attributable to work done by Dangerous Goods before completion.

57. The parties acknowledged that they had received independent legal advice in relation to its terms and effect: deed cl 7. Mr Christodolou, the director of SPTG was himself admitted to practice as a solicitor. Legally advised parties with commercial and legal acumen could have included a sub-clause in the definition of “assets” in cl 39 that specified “accounts receivable” or similar but did not. Therefore, the objective intention of the parties must have been to exclude such debts from the general definition of assets in cl 39(n), consonant with the specific provisions of cll 34 and 35.

58. The disputed payments were paid to Dangerous Goods for work done by Dangerous Goods pursuant to agreements entered into by Dangerous Goods and the business’ customers, but payment was received after the completion date. Dangerous Goods submitted that on the proper construction of the deed and the sale terms, Dangerous Goods was entitled to retain the disputed payments.

59. In oral submissions, counsel for Dangerous Goods submitted that payments done for work pre-completion were not necessary to run the business going forward. The definition of “business” in the deed is subject to the qualification that the things that form the business are necessary for the continued operation of the business enterprise (T30 [37]-[39]). In cl 39, “business” is defined to include “without limitation … the assets and all other things that are necessary for the continued operation of the business enterprise”. Counsel for Dangerous Goods orally submitted that choses in action for debts are not necessary for the continued operation of the business and so the disputed transactions fall outside of the definition of “business” (T31 [7]-[9]).

SPTG’s submissions

60. SPTG does not solely rely upon cl 39(n) to contend that the disputed payments fall within the definition of “assets”, but also cl 39(k) and the reading of the contract as a whole.

61. The reading of cl 35 does not need to be confined to a “carve out” for work done by Dangerous Goods before the completion date. There is no context that requires “assets” to be interpreted otherwise than in accordance with the definition provided in cl 39(n).

62. “[T]he ejusdem generis principle of construction is not to be applied mechanically. It is a guide in the process of interpretation which must take into account the whole instrument and the subject matter”: Huntlee at [127].

63. It is necessary to identify some more limited genus or category within the specific listed examples that is narrower than the general words: see Brighton v ANZ at [96] and Huntlee at [127].

64. There are other well recognised limitations to the ejusdem generis rule. As Elkaim J noted in R v Hicks [2019] ACTSC 331 at [17], citing Tasty Chicks, “[t]he first thing to be stated about the rule is that it is not of universal or mandatory application.”

65. As Spigelman CJ noted in Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 at [126]: “It is essential for the application of the ejusdem generis rule that some common characteristic capable of being described as a genus is able to be identified.”

66. Dangerous Goods is incorrect in limiting the references in cl 39 to certain specific physical or intellectual property assets. In the present case “assets” are defined to mean a wide range of assets related to the business. They are not assets of a narrow, particular category, in contrast with, for example, that in Goldsborough Mort & Co v Tolson (1909) 10 CLR 470; [1909] HCA 80 where a reference to “chattels and effects” at the end of a list of farm property items was read ejusdem generis to be limited to physical items, and not to include a chose in action.

67. The list at cl 39(k) includes “the rights to and title in all agreements ... in respect of the business”. A chose in action is not an agreement. A chose in action is a right to an agreement. There was an agreement between the business and the customer to provide a certain service and rights arose in relation to that agreement. The chose in action is a right to that particular agreement (that is, to insist upon payment) and therefore is an asset under cl 39(k).

68. The “genus” of assets within the list preceding the general cl 39(n) specifically already includes choses in action.

69. In T**asty Chicks, the Court of Appeal said at [55]:

“[55] The ejusdem generis rule cannot be applied in relation to s 16C(4) because the specific matters referred to do not possess any common feature which enables a single genus to be identified…”

70. Clause 39(n) is in very specific terms itself, referring to:

“… all other assets, current and non-current, tangible and intangible, of Kells [Dangerous Goods] and/or John [Kells] which form part of or are used in connection with the Business.”

71. These words are to be interpreted in the normal course in accordance with the construction rules set out above:

72. “All” is of the widest import and on its own goes close to making the ejusdem generis argument irrelevant in the present case.

73. The use of the words “non-current” and “intangible” must encompass choses in action. A chose in action is one of the foremost examples of an intangible asset. These words are unambiguous and plain.

74. “In connection with” are additional words of wide import.

75. In oral submissions, SPTG contended that the words “which form part of or in connection to the Business” in 39(n) offers more information as to how the clause should be interpreted, as “business” is subsequently defined as including “without limitations the assets…”. This is itself an indication that the ejusdem generis rule does not apply.

76. The words in 39(n) can be contrasted to mere general terms such as “other assets”. The general words to which Dangerous Goods attempts to apply the ejusdem generis rule to are specific and meaning must be given to those words.

77. The words used have an unambiguous meaning, and it is not to the point that more specific words could have been used when all-encompassing terms such as those used in cl 39(n) were in fact used.

78. In Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295, Leeming JA stated at [72]:

“[72] … The starting point and the ending point of the construction of a written commercial contract is the language chosen by the parties to record their bargain … As I have said, “very often, nothing in the context will come close to displacing the ordinary grammatical meaning of the legal text”: Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [74].”

The commercial context

Dangerous Goods’ submissions

76. If any ambiguity as to the construction of the sale terms remains, it can be resolved by examining their commercial context and purpose.

77. The sale effected by the deed was a sale of specific assets, not a sale of shares in Dangerous Goods that would transfer the entirety of the assets and liabilities of the business. The deal was for a sale of the business as a “going concern”. Clause 8 of the sale terms required Dangerous Goods to conduct the business in the “usual manner” from the contract date to the completion date. Most of the disputed invoices that yielded the disputed payments were issued during this period.

78. It would be commercially and objectively wholly unreasonable for the parties to expect Dangerous Goods to run the business during the period between the contract date and the completion date in the “usual manner”, incurring the cost of sales (including wages, rent, utilities, the cost of acquiring goods and services, income tax and GST liabilities) while having no assurance that it would be paid for its labour and expenditure in the “usual manner”. Support for this construction is found in cl 34 (immediately preceding cl 35) that provided that SPTG was to notify customers of the change in bank details from Dangerous Goods’ bank account to SPTG’s bank account from the completion date, not from the contract date, so that customers were expected to pay Dangerous Goods for work done up to the completion date.

79. On SPTG’s construction, whether or not Dangerous Goods got paid for the work it had done, would be held hostage to the caprice of third party customers who may or may not pay their invoices before or after the completion date (being something beyond Dangerous Goods’ control). For example, if a debtor happened to pay a debt on 31 March 2022, Dangerous Goods was entitled to retain the payment as remuneration for the work done. If the debtor happened to pay on 2 April 2022, SPTG would be entitled to retain the payment as a windfall gain. It is unlikely that, objectively, these commercial parties intended such a bargain but rather, consistent with the express wording of cl 35, Dangerous Goods was not obliged to remit payments it received for work it did up to the completion date and only to remit to SPTG, payments received “erroneously” for work done by SPTG after the completion date. For example, where SPTG had provided goods or services to a customer after the completion date, but the customer had erroneously made payment for them by payment into Dangerous Goods’ bank account having not been given or overlooked any notification of the change in bank account details contemplated in cl 34.

80. The construction for which SPTG contends would render the price for the agreement ambulatory, and would be “a very strange agreement for the parties to make” (T32[9]-[10]).

SPTG’s submissions

81. There is no ambiguity, so there is no remit to examine the commercial context and purpose.

82. Even if this was the case, while the construction for which Dangerous Goods contends is one that they may prefer commercially, it does not reflect the words used in the agreement.

83. In The Trust Company Ltd v Commonwealth of Australia [2025] NSWSC 502 Rees J recently considered some of the authorities on the question of commercial context and the focus on the text of the contract at [67]-[70]:

“[67] Where both parties submitted that their proffered construction was supported by the commercial context and accorded with business commonsense, it remains the case that primacy must be given to the text of a contract, “The starting point and the ending point of the construction of a written commercial contract is the language chosen by the parties to record their bargain”: Cherry v Steele-Park (2017) 96 NSWLR 548 at [72]. Leeming JA there repeated his observations in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 at [74]: “Very often, nothing in the context will come close to displacing the ordinary grammatical meaning of the legal text”. His Honour concluded, “The ultimate question is whether the written language of the contract, when considered in light of legitimately relevant surrounding circumstances, permits a constructional choice to be made between two different legal meanings”: Cherry v Steele-Park at [75].

[68] Similarly, in McGrath v Sturesteps; Sturesteps v HIH Overseas Holdings Ltd (in liq) (2011) 81 NSWLR 690, Bathurst CJ observed at [17]: (citations omitted)

‘Whilst it is correct in my opinion that context and the surrounding circumstances known to both parties can be taken into account, even in cases where there is an absence of apparent ambiguity, that does not permit the Court to depart from the ordinary meaning of the words used by the parties merely because it regards the result as inconvenient or unjust.’

[69] Or as Moshinsky, Derrington and Colvin JJ put it in Star Entertainment Group Limited v Chubb Insurance Australia Ltd (2022) 400 ALR 25; [2022] FCAFC 16, “reasoning by reference to commerciality has its limits”: at [11]. This is because what is ‘business commonsense’ is itself a topic on which minds may differ and in respect of which an imputed consensus is impossible: Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [43]. Nor are judges best placed to assess the commerciality or otherwise of a particular construction: Cirrus Real Time Processing Systems Pty Limited v Jet Aviation Australia Pty Limited [2023] NSWCA 280; 113 NSWLR 80 at [87]-[88] (Leeming JA, who also noted that the High Court was divided as to whether a construction accorded with commercial commonsense in Ecosse). As the Full Court cautioned in Rockment Pty Ltd t/a Vanilla Lounge v AAI Limited t/a Vero Insurance (2020) 282 FCR 561 at [56]:

‘… references to a commercial result are not intended to invite a consideration of the actual financial consequences for each of the parties of a particular construction in the events which have occurred by the time that a dispute arises. Such inquiries would quickly descend into an assessment with hindsight as to what a fair and reasonable contract might provide given the circumstances that have unfolded. It would be contrary to the very certainties that the law of contract seeks to provide as to the allocation of risks, rights and obligations, if the meaning of agreements were to be adjudicated by reference to such an imprecise foundation.’

[70] Similarly, in Newey v Westpac Banking Corporation [2014] NSWCA 319, Gleeson JA (with whom Basten and Meagher JJA agreed) said at [91]:

‘… there is no licence for ‘judicial rewriting’ of an agreement. The ability of courts to give commercial agreements a commercial and business-like interpretation is constrained by the language used by the parties. If, after considering the contract as a whole and the background circumstances known to both parties, a court concludes that the language of a contract is unambiguous, the Court must give effect to that language unless to do so would give the contract an absurd operation.’”

84. In SAS (Vic) Pty Ltd v Urban Ecological Systems Ltd [2021] VSCA 335 at [66]:

“[66] These cases underline the obvious importance of the contractual text to the contract’s construction. The inquiry remains what a reasonable business person would understand the actual terms to mean, not what a reasonable business person would consider the most appropriate commercial terms to be.”

85. The deal that was reached, for the price it was reached, is reflected in the sale terms. It is not a matter for the Court to descend into deciding it was uncommercial, especially when a price is involved. Perhaps a deal along the lines of what Dangerous Goods suggests might have been reached but at a completely different price.

86. The entire agreement provision in cl 12 of the deed precludes any understanding, agreement, representation or warranty that the provisions of the deed are modified or qualified by their commercial context or purpose.

87. Counsel for SPTG submitted orally that it is unnecessary and inappropriate to consider what a particular commercial interpretation of a clause might be in light of clear and unambiguous wording, and that the wording in cll 35 and 39 are clear and unambiguous, as cl 39(n) specifies that “assets” includes “[a]ll other assets, current and non-current, tangible and intangible”.

Resolution

88. The central dispute between the parties depends on the proper construction of the terms “business” and “assets” and the interpretation of cl 35 of the sale terms that are annexed to the deed.

89. The document is to be read as a whole and given the ordinary grammatical meaning of the legal terms. Clause 1.2 of the deed refers to interpretation. Clause 1.2(n) stipulates that a reference to includes or including must be construed without limitation. Clauses 7 and 8 of the sale terms refer to the sale of the business as a going concern with effect from completion and that between the date of the execution of the deed and completion, Dangerous Goods is to continue to run the business in its usual manner as a going concern.

90. Clause 35 of the sale terms provides:

“Remittance of erroneously paid funds

…

35. If, after Completion, Kells [Dangerous Goods] and/or John [Kells] receive funds erroneously or inadvertently for goods and/or services supplied (or to be supplied) by SPTG in the course of running the Business or that is otherwise rightly the property of SPTG, Kells [Dangerous Goods] and/or John [Kells] agree to remit those funds to SPTG forthwith upon receipt and to indemnify SPTG for any loss associated with a failure to remit such funds.”

91. Clause 39(n) defines assets as other assets, current or non-current, tangible and intangible of Dangerous Goods which form part of or are used in connection with the business. The definition of “assets” contained in cl 39 is wide. An intangible asset includes a chose in action.

92. In her ex-tempore reasons, the Magistrate said that SPTG’s claim was in relation to 42 separate payments that Dangerous Goods received after 1 April 2022 in relation to goods or services provided up to or before 31 March 2022. These came to a total of $55,526.22. The business was sold as a going concern in the deed, and the assets include cl 39(k): “The rights to [and title] in all agreements in all other assets current and non-current tangible and intangible of Kells and/or John which form part of or are used in connection with the business”. In addition, the business includes without limitation, “[t]he assets and other things that are necessary for the continued operation of the business enterprise”. The Magistrate found that the business conducted between 3 March 2022 and the completion date of 1 April 2022, was included whether or not they were outstanding. The Magistrate found the deed to be unambiguous.

93. I agree with her Honour’s reasoning. The terms of the deed were clear and unambiguous. I agree with her Honour’s findings concerning the terms of the deed including the sale terms. It is my view that her Honour’s interpretation was correct.

94. So far as ejusdem generis is concerned, it is to be used as an aid to construction. It does not assist the construction of the deed and sale agreement here in circumstances where the definitions of the words “assets” and “business” are very wide. “Assets” are defined to include choses in action. The description of “assets” does not fall into a narrow, particular category. The application of ejusdem generis is not applicable here. The words contained in cl 35 cannot be read as “creating a carve out”.

95. It is also my view that it is unnecessary to refer to surrounding circumstances or post-contractual conduct.

96. The plaintiffs’ grounds of appeal fail. The result is that the appeal is dismissed. As such, the costs order in the Local Court remains the same.

Costs

97. The costs of this appeal are discretionary. Costs normally follow the event. The plaintiffs are to pay the defendant’s costs.

Orders

98. The Court orders that:

99. The decision of the Magistrate dated 8 November 2024 is affirmed.

100. The appeal is dismissed.

101. The summons dated 6 December 2024 is dismissed.

102. The plaintiffs are to pay the defendant’s costs.

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