CHANDLER & TENNANT

The parties to this proceeding were Chandler and Tennant. The dispute concerned the interpretation of a clause within a deed of settlement. The matter came before Burchardt J in the Supreme Court of Tasmania.

The central legal issue before the Court was whether the settlement deed, which contained a clause requiring the payment of a sum of money upon the occurrence of a specific event, imposed a penalty or a genuine pre-estimate of loss. The Court was required to determine the true nature of the obligation imposed by the clause in light of established legal principles concerning penalty clauses.

Burchardt J applied the principles established in *Ringrow Pty Ltd v BP Australia Ltd* and *Andrews v Australia and New Zealand Banking Group Ltd*. His Honour considered the language of the clause, the circumstances surrounding its creation, and the relationship between the parties. The Court found that the clause did not represent a genuine pre-estimate of loss but rather served as a deterrent to breach. Consequently, the clause was deemed to be a penalty and therefore unenforceable.

The Court ordered that the sum stipulated in the clause was not payable.