Dunell v Kerr

In *Dunell v Kerr*, the Supreme Court of New South Wales was asked to determine a dispute between the plaintiff, Dunell, and the defendant, Kerr, concerning the interpretation of a clause within a deed of settlement. The core of the disagreement lay in whether the defendant was entitled to a further payment under the settlement deed, contingent on the plaintiff's successful acquisition of certain shares.

The primary legal issue before the Court was the construction of clause 5(b) of the deed of settlement. This clause stipulated that the defendant would receive an additional payment if the plaintiff acquired "all of the issued shares in the capital of [a specified company]". The Court had to ascertain whether the plaintiff's acquisition of a majority, but not all, of the issued shares satisfied the condition precedent for the defendant's entitlement to the further payment.

Egan J interpreted the plain language of clause 5(b), finding that the phrase "all of the issued shares" was unambiguous and required the acquisition of 100% of the shares. The Court rejected the defendant's argument that acquiring a controlling interest was sufficient, holding that the wording of the clause did not permit such a flexible interpretation. The principle applied was that contractual terms should be given their ordinary and natural meaning unless there is a clear indication to the contrary.

Consequently, the Court found that the condition precedent for the additional payment had not been met. The plaintiff was therefore not obliged to make the further payment to the defendant under the deed of settlement.