Waters and Others v Mercedes Holdings Pty Limited

The Full Federal Court heard an appeal in *Waters and Others v Mercedes Holdings Pty Limited*. The dispute concerned the interpretation of a clause in a deed of settlement, specifically whether it conferred a right to terminate the agreement upon a breach by the other party. The appellants, Waters and others, sought to enforce the deed, while the respondent, Mercedes Holdings Pty Limited, argued that it had validly terminated the deed due to a prior breach by the appellants.

The central legal issue before the Full Federal Court was whether the wording of clause 10 of the deed of settlement, which stipulated that "if any party commits a material breach of this Deed and fails to remedy that breach within 14 days of receiving notice in writing from the other party requiring it to remedy the breach, then the other party may terminate this Deed," conferred a right of termination upon a material breach, or if it merely provided a right to terminate for a failure to remedy a breach after notice.

The Court analysed the language of clause 10, considering the principles of contractual interpretation. It concluded that the clause required two conditions to be met before a party could terminate: first, a material breach must occur, and second, the breaching party must fail to remedy that breach within 14 days of receiving written notice. The Court found that the wording did not grant an immediate right to terminate upon the occurrence of a material breach, but rather a right to terminate only after the opportunity to remedy the breach had passed.

Consequently, the Full Federal Court dismissed the appeal, upholding the primary judge's finding that Mercedes Holdings Pty Limited had not validly terminated the deed as the preconditions for termination under clause 10 had not been satisfied.