Sunbeam Corporation v Morphy-Richards (Aust) Pty Ltd

Sunbeam Corporation and Morphy-Richards (Aust) Pty Ltd were parties to litigation before Windeyer J in the Supreme Court of New South Wales. The dispute concerned the interpretation and effect of a deed of assignment, by which Sunbeam assigned to Morphy-Richards certain rights and obligations under a prior agreement. The central issue was whether the assignment effectively transferred to Morphy-Richards the benefit of a covenant given by Sunbeam to a third party, the Commonwealth of Australia, which Morphy-Richards sought to enforce against Sunbeam.

The court was required to determine whether the deed of assignment, on its proper construction, operated to assign to Morphy-Richards the benefit of Sunbeam's covenant with the Commonwealth. This involved considering whether the language of the assignment was sufficiently clear and comprehensive to encompass the assignment of this specific covenant, and whether such an assignment was legally permissible. The court also had to consider the nature of the covenant itself and its relationship to the broader agreement between Sunbeam and the Commonwealth.

Windeyer J reasoned that the deed of assignment, when read as a whole and in light of the surrounding circumstances, did not clearly and unequivocally assign the benefit of the covenant with the Commonwealth. His Honour applied principles of contractual interpretation, emphasizing that for a chose in action to be assigned, the intention to assign must be clearly demonstrated by the language used. The deed, while assigning rights and obligations under the principal agreement, did not specifically refer to or appear to encompass the covenant with the third party. Consequently, the court found that Morphy-Richards had not established that the benefit of the covenant had been validly assigned to it.