Herskope & Ors. v Perpetual Trustees (W.a.) Limited

[2002] NSWCA 153

NSW Court of Appeal

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Interrogate

Catchwords

1. Interpretation of Instruments
2. › Rules of construction
3. › Deed of settlement
4. › Apparently inconsistent provisions
5. › Whether instrument operates as a release or as a covenant not to sue
6. › Intention of parties to be discerned from the whole instrument
1. Equity
2. › Trusts
3. › Distribution of trust fund
4. › Rule in Cherry v Boultbee
5. › Whether person entitled to participate in fund also bound to contribute
6. › Whether obligation to contribute extinguished by deed of settlement
1. Equity
2. › Release and covenant not to sue
3. › Distinction between release and covenant not to sue
4. › Effect on co-debtors and assignees
5. › Reservation of rights against other parties

Quick Take

A deed of settlement that refers to the creditor 'foregoing its right to sue and receive' a debt, contains admissions that the debt would exist but for the deed, and preserves the creditor's right to prove for the full debt in a winding up, operates as a covenant not to sue rather than a release of the debt. The rule in Cherry v Boultbee continues to apply to an assignee of the debtor's rights in such circumstances.