Cohen v Bennette

The dispute in *Cohen v Bennette* concerned the interpretation of a clause within a deed of settlement. The parties, Cohen and Bennette, had entered into this deed to resolve prior litigation. The core of the disagreement lay in whether a specific payment obligation, described as a "royalty," was intended to be a genuine royalty or a disguised loan repayment. The matter came before the Full Court of the Supreme Court of New South Wales.

The primary legal issue before the Full Court was to determine the true character of the payment obligation. Specifically, the Court had to ascertain whether the payment was contingent upon the success of a particular venture, as would be characteristic of a royalty, or if it was an unconditional obligation to repay a sum of money, akin to a loan. This determination was crucial for understanding the parties' rights and obligations under the deed.

The Court's reasoning focused on the language used in the deed and the surrounding circumstances at the time of its execution. It applied established principles of contractual interpretation, emphasising the importance of giving effect to the plain meaning of the words used by the parties. The Court considered whether the payment was truly dependent on the profitability of the venture or if it was a fixed sum payable regardless of outcome. Ultimately, the Court found that the payment was not contingent and therefore did not constitute a genuine royalty, but rather a repayment obligation.