Ampolex Limited v Perpetual Trustee Company (Canberra) Limited

Ampolex Limited (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation of a deed of covenant and indemnity entered into between Ampolex and Perpetual Trustee Company (Canberra) Limited (the respondent), which related to the sale of shares in a company.

The primary legal issue before the Court of Appeal was whether the deed of covenant and indemnity imposed a personal liability on Ampolex to indemnify Perpetual Trustee against any loss or damage arising from a breach of warranty by the vendor of the shares, or whether it merely created a charge over certain shares held by Ampolex as security for that indemnity.

The Court of Appeal, comprising Gleeson CJ, Handley JA and Cole JA, analysed the language of the deed, particularly the operative clauses and the surrounding context. The Court concluded that the deed clearly established a personal covenant by Ampolex to indemnify Perpetual Trustee. The presence of a charge over shares was found to be an additional security, not a limitation of Ampolex's personal liability. The Court applied principles of contractual interpretation, emphasizing the importance of giving effect to the plain meaning of the words used in the deed, whilst also considering the commercial context in which it was made.

The appeal was dismissed, and the decision of the Supreme Court was affirmed.