H & H

The Full Federal Court, comprising Kay, Holden, and Boland JJ, considered an appeal concerning the interpretation of a settlement agreement. The dispute arose between H and H, who were parties to a prior litigation that had been resolved by a settlement deed. The core of the disagreement lay in whether certain payments made by H constituted a breach of the terms of that settlement deed.

The primary legal issue before the Full Court was to determine the proper construction of clause 3(b) of the settlement deed. This clause stipulated that H would not "directly or indirectly be concerned in or engaged in any business which is in competition with the business of [H] carried on at the date of this Deed". The court had to ascertain whether H's subsequent involvement in a new business venture fell within the scope of this prohibition, thereby constituting a breach of the agreement.

The Full Court analysed the language of clause 3(b) in its commercial context, applying established principles of contractual interpretation. Their Honours considered the ordinary meaning of the words used, the surrounding circumstances known to the parties at the time of the agreement, and the purpose of the clause. The court concluded that the new business venture undertaken by H was indeed in competition with the business H had carried on at the date of the deed, and therefore constituted a breach of the settlement agreement. The appeal was accordingly dismissed.