HUTCHINS & GRAY

The parties to this proceeding were Hutchins and Gray. The dispute concerned the interpretation of a clause within a deed of settlement, specifically regarding the calculation of a payment due from Hutchins to Gray. The matter came before Sexton J of the Supreme Court of Tasmania.

The central legal issue before the Court was whether the phrase "net profit" as used in the deed of settlement was to be calculated by reference to the accounting standards generally accepted in Australia (AAS) or by reference to a more specific, potentially narrower, method of calculation that Gray contended was implied by the context of the agreement.

Sexton J reasoned that the ordinary and natural meaning of "net profit" in a commercial context, absent any express or implied modification, would ordinarily refer to profit as determined by applicable accounting standards. His Honour found no sufficient indication within the deed of settlement to displace this ordinary meaning. The Court applied the principle that contractual terms should be given their plain and ordinary meaning unless the context clearly dictates otherwise.

The Court ordered that the calculation of "net profit" was to be undertaken in accordance with Australian Accounting Standards.