Nauru Phosphate Royalties Trust v Harris

The High Court of Australia considered an appeal by the Nauru Phosphate Royalties Trust (NPRT) against a decision of the Supreme Court of Victoria. The dispute concerned the proper construction of a deed of settlement entered into between the NPRT and Mr Harris, a former trustee of the NPRT. The NPRT sought to recover moneys it alleged were due to it under the deed.

The central legal issue before the High Court was whether the deed of settlement imposed an obligation on Mr Harris to pay to the NPRT the full amount of certain legal costs incurred by the NPRT, or whether his obligation was limited to paying only such proportion of those costs as was attributable to his own conduct. This question turned on the interpretation of clause 4(a) of the deed.

Hayne J, delivering the judgment of the Court, reasoned that the language of clause 4(a) was clear and unambiguous. The clause stipulated that Mr Harris "shall pay to the Nauru Phosphate Royalties Trust the sum of $1,000,000". His Honour held that this was an unconditional obligation to pay the full sum, and that there was no basis within the wording of the clause, or elsewhere in the deed, to imply a qualification that the payment was contingent upon or limited by the extent of Mr Harris's personal culpability. The Court therefore concluded that the Supreme Court of Victoria had erred in its construction of the deed.

The High Court allowed the appeal and ordered that Mr Harris pay the sum of $1,000,000 to the NPRT.