Flanagan v Handcock S43/2000

The High Court of Australia heard an appeal in *Flanagan v Handcock*. The dispute concerned the interpretation of a clause in a deed of settlement, specifically whether it imposed a personal obligation on the respondent, Mr Handcock, to pay a sum of money to the appellant, Ms Flanagan, or whether the obligation was confined to the assets of a particular trust.

The central legal issue before the High Court was whether the language of the settlement deed created a personal covenant by Mr Handcock to pay the sum of $100,000 to Ms Flanagan, or if his liability was limited to the extent of the assets of the Handcock Family Trust. This required the Court to consider the principles of contractual interpretation, particularly in the context of deeds and settlement agreements.

McHugh and Kirby JJ, in their joint judgment, found that the wording of the deed clearly indicated a personal undertaking by Mr Handcock. They reasoned that the use of the phrase "I hereby covenant" and the absence of any express limitation on his liability meant that he had assumed a personal obligation to pay the sum. The Court emphasised that where a party to a deed intends to limit their liability to the assets of a trust, this must be made explicit in the deed itself. The appeal was allowed, and the orders of the lower courts were set aside.