SPENCER & KRONE

The parties to this proceeding were Spencer and Krone. The dispute concerned the interpretation of a clause within a deed of settlement, specifically regarding the calculation of a deferred payment. The matter came before Macmillan J of the Supreme Court of Victoria.

The central legal issue before the court was whether the deferred payment, which was contingent on the net profit of a business, should be calculated by reference to the profit of the business as a whole, or only the profit generated by a specific division of that business. This interpretation was crucial for determining the amount owed by Spencer to Krone under the settlement deed.

Macmillan J's reasoning focused on the plain language of the settlement deed. His Honour considered the ordinary meaning of the words used in the relevant clause, paying close attention to the defined terms and the context in which they appeared. The court determined that the deed clearly stipulated that the profit of the business as a whole was to be used for the calculation, and not the profit of a particular division. The legal principle applied was the established rule of contractual interpretation, which prioritises the literal meaning of the contract's terms, read in their context, unless such an interpretation would lead to an absurd or unreasonable result.

The court found in favour of Krone, ordering that Spencer was liable to pay the deferred sum calculated by reference to the net profit of the business as a whole.