Can a business vendor claim post-settlement income?

Selling a business isn’t just about agreeing on a price. It’s about clearly defining who gets what—and when. A Supreme Court of NSW case, Dangerous Goods Training Centre Pty Ltd v South Pacific Training Group Pty Ltd [2025] NSWSC 1356, sheds light on a common yet often overlooked issue in business sales: the vendor’s entitlement to income received by the purchaser after settlement.

In this case, the Court was asked to decide whether the vendor of a registered training organisation (RTO) was entitled to revenue collected by the purchaser following the handover of the business. The vendor claimed these funds were contractually or beneficially theirs. The purchaser claimed full entitlement as the new business owner.

The Court sided with the purchaser—and the decision contains important lessons for any business owner looking to sell or buy a business in New South Wales.

Background: The Sale of an RTO Business

In 2023, Dangerous Goods Training Centre Pty Ltd (DGTC) sold its training business to South Pacific Training Group Pty Ltd (SPTG). The business provided accredited training for handling hazardous materials and operated as a registered training organisation.

The sale was documented in a Business Sale Agreement, under which SPTG purchased all business assets, goodwill, and ongoing operations. The agreement also provided for:

• The handover of course bookings,
• The transfer of intellectual property,
• And payments between the parties, including staged settlement amounts.

After settlement, however, DGTC alleged that SPTG had received income from courses that had been marketed or booked prior to the handover, and that it (DGTC) was still entitled to that revenue.

DGTC sought to recover those amounts in Supreme Court proceedings.

The Core Legal Issue

The question before the Court was this:

Is the vendor entitled to income received by the purchaser after settlement, when the services were delivered post-settlement but initiated beforehand?

DGTC claimed that these amounts were:

• Revenue from DGTC’s existing business pipeline, and
• Not part of the sale consideration, or at least not clearly transferred.

SPTG argued that:

• It acquired all rights to operate and profit from the business upon settlement, and
• All post-settlement revenue belonged to it, regardless of when the work was initiated.

DGTC’s Arguments

DGTC relied on three main points:

1. Constructive Trust or Fiduciary Duty
   It claimed that SPTG held the post-settlement funds on trust for DGTC, especially where bookings had been generated by DGTC or under DGTC’s RTO registration.
2. Interpretation of the Sale Agreement
   DGTC argued that the Business Sale Agreement did not clearly transfer the right to receive those specific income streams, and that revenue from pre-settlement leads or bookings should remain with the vendor.
3. Breach of Contract
   It further alleged that SPTG breached implied terms by not remitting payments to which DGTC believed it was entitled.

DGTC sought an order compelling SPTG to account for and repay the relevant revenue.

SPTG’s Response

SPTG denied all claims and argued that:

• Upon settlement, it acquired full beneficial ownership of the business, including goodwill, clients, and the right to derive income.
• The Agreement transferred "the business as a going concern", which by nature included future income.
• Any bookings or arrangements initiated prior to settlement but delivered afterward were part of the acquired goodwill.
• No trust relationship or fiduciary duty existed that would oblige it to account back to the vendor.

What the Court Had to Decide

Justice Cavanagh was required to:

1. Interpret the Business Sale Agreement to determine who held the entitlement to income post-settlement;
2. Assess whether a constructive trust or fiduciary obligation had arisen;
3. Determine whether there was any breach of contract or implied term;
4. Decide whether any of DGTC’s equitable claims (e.g. unjust enrichment) could succeed.

Key Findings of the Court

1. DGTC Had No Ongoing Entitlement to Income

The Court ruled that DGTC was not entitled to post-settlement income, even where it related to:

• Leads generated before settlement,

• Bookings secured under DGTC’s branding, or
• Clients who had previously trained with DGTC.

The business had been sold “as a going concern”, and SPTG was now the operator.

Justice Cavanagh found:

“It was clearly the intention of the parties that the purchaser would take over the business in its entirety, including its future income and operations.”

There was no ambiguity in the contract sufficient to imply a retained right to future income.

2. No Constructive Trust or Fiduciary Duty

DGTC’s argument that SPTG had a fiduciary duty to remit funds was rejected. The Court noted that the parties were commercial equals, and once the business was transferred, the purchaser owed no equitable duty to hold income for the vendor.

The Judge held:

“The relationship between the parties, post-settlement, was not one of trustee and beneficiary but of buyer and seller. The purchaser had full beneficial ownership of the business.”

3. No Breach of Implied Terms

DGTC argued that, even if not expressly stated, there should be an implied term that revenue from DGTC’s activities (e.g. advertising, pre-settlement marketing) should flow back to it.

The Court rejected this, noting that:

• Implied terms must be necessary to give business efficacy to the agreement.
• The contract functioned perfectly well without such an implication.

4. Equitable Claims Also Failed

DGTC raised alternative claims of:

• Unjust enrichment, and

• Knowing receipt.

These were similarly dismissed. Justice Cavanagh said:

“The enrichment, if any, was not unjust—it was exactly what the purchaser bargained and paid for.”

Why This Case Matters for Business Owners

This is a landmark decision for any vendor or purchaser involved in a business sale—especially in service-based sectors like education, consulting, or training.

1. Future Income Must Be Dealt with Expressly

If the vendor expects to retain revenue from post-settlement work (even if initiated before settlement), it must be spelled out in the agreement.

Any ambiguity will likely be resolved in favour of the purchaser, particularly where the business is sold “as a going concern”.

2. Don’t Rely on Implied Trusts or Fiduciary Duties

Commercial contracts between unrelated business parties rarely give rise to fiduciary obligations post-settlement. If you want ongoing entitlements, they need to be clearly negotiated and documented.

3. Client Lists and Goodwill Transfer Income Rights

Unless specifically excluded, the sale of goodwill includes the benefit of future income from that client base.

Even if clients originally came to the business because of the vendor’s efforts, they are part of the “asset” being sold.

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 The Supreme Court’s decision in Dangerous Goods Training Centre v South Pacific Training Group is a reminder that business sale agreements must be precise. If the vendor intends to retain revenue from services booked but not yet delivered, it must be documented—clearly and contractually.  Otherwise, that revenue will pass to the purchaser along with the rest of the business.

Buyers and sellers alike should seek legal advice during negotiations and avoid assumptions about income, obligations, or ownership of client pipelines.