CHURCHILL & RASKE

In *Churchill & Raske*, the parties were Churchill and Raske. The dispute concerned the interpretation of a clause within a contract for the sale of a business, specifically regarding the calculation of the final purchase price. The matter came before Tree J of the Supreme Court of Victoria.

The central legal issue before the court was whether the vendor, Raske, was entitled to include certain amounts in the calculation of the final purchase price, as stipulated by clause 3.2 of the sale agreement. This clause dealt with adjustments to the purchase price based on the net tangible assets of the business at settlement. The court was required to determine the proper interpretation of "net tangible assets" and the scope of items to be included or excluded in its calculation under the contract.

Tree J reasoned that the plain and ordinary meaning of the contract's wording, particularly clause 3.2, dictated the method of calculation. The court considered the specific definitions and exclusions provided within the agreement itself, concluding that certain liabilities Raske sought to include were not properly characterised as deductions from net tangible assets according to the contract's terms. The legal principle applied was the objective approach to contractual interpretation, focusing on the words used by the parties in the context of the entire agreement.

The court found in favour of Churchill, determining that Raske had incorrectly calculated the final purchase price. Consequently, the court ordered that the purchase price be adjusted according to Churchill's interpretation of the contract.