C & C

The Full Federal Court, comprising Kay, Warnick, and May JJ, considered an appeal concerning the interpretation of a settlement agreement. The dispute arose between C and C, who were parties to a prior litigation that had been resolved by a settlement deed. The core of the disagreement lay in whether certain payments made by C constituted a breach of the terms of that settlement deed.

The primary legal issue before the Full Court was to determine the proper construction of clause 3(b) of the settlement deed. Specifically, the court had to ascertain whether the payments made by C to a third party, in circumstances where that third party was related to C, fell within the scope of the restrictions imposed by that clause. This involved an analysis of the language used in the deed and the intention of the parties at the time of its execution.

The Full Court reasoned that the interpretation of the settlement deed should be undertaken by reference to the ordinary meaning of the words used, read in their context and against the background of the commercial circumstances known to the parties. Applying this approach, the court concluded that the payments made by C did not breach clause 3(b) of the settlement deed. The court found that the clause was intended to prevent C from circumventing its obligations under the deed by making payments to entities directly controlled by C, which was not the case with the payments in question. The appeal was therefore dismissed.