MORROW & STEELE

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

The central legal issue before the Court was whether the phrase "net proceeds" as used in the settlement deed referred to the gross proceeds of a sale less only the direct costs of sale, or whether it encompassed a broader range of expenses incurred by Steele in relation to the asset being sold. Morrow contended for the former interpretation, while Steele argued for the latter, which would result in a smaller payment to Morrow.

Burchardt J's reasoning focused on the plain language of the deed and the ordinary meaning of the term "net proceeds" in a commercial context. His Honour considered the surrounding provisions of the deed and concluded that the parties intended "net proceeds" to mean the amount remaining after deducting only those expenses directly attributable to the sale of the asset. This interpretation was consistent with the principle that contractual terms should be given their ordinary and natural meaning unless the context clearly indicates otherwise. The Court rejected Steele's submission that a wider range of overheads or general business expenses should be deducted.

The Court ordered that Morrow was entitled to a payment calculated on the basis of "net proceeds" as interpreted by the Court, meaning gross proceeds less direct costs of sale.