Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Contract; interpretation of terms; preference for commercially convenient interpretation.
Facts: The Australian Broadcasting Commission (ABC) bound itself by contract to pay the Australasian Performing Right Association (APRA) an annual licence fee for certain musical works performed on radio and television. The contract laid down a formula for the calculation of the fee. After some years, APRA contended that the agreement was intended to provide against depreciation in the value of money, and the formula as implemented was not doing so. It argued that the formula must be interpreted differently, to ensure the constant value of the licence fee.
Issue: Was it open to the court to interpret the formula differently?
Decision: It is not the function of a court to attribute to the parties an intention for which their express words do not provide.
Reason: The words in which the formula was expressed were clear and gave rise to no ambiguity. The courts construe such agreements uncritically in accordance with the text. Gibbs J said (at [3]):
"If the words used are unambiguous, the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust."