Griffin Energy Group Pty Limited (Subject to a Deed of Company Arrangement) & Anor v ICICI Bank Limited (Singapore Branch) & Ors [2015] HCATrans 174 (7 August 2015)

Last Updated: 11 August 2015

[2015] HCATrans 174

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S52 of 2015

B e t w e e n -

GRIFFIN ENERGY GROUP PTY LIMITED (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)

First Applicant

CARPENTER MINE MANAGEMENT HOLDINGS PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)

Second Applicant

and

ICICI BANK LIMITED (SINGAPORE BRANCH)

First Respondent

STANDARD CHARTERED BANK

Second Respondent

NATIONAL AUSTRALIA BANK LIMITED

Third Respondent

LANCO RESOURCES AUSTRALIA PTY LIMITED

Fourth Respondent

LANCO INTERNATIONAL PTY LIMITED

Fifth Respondent

LANCO INFRATECH LIMITED

Sixth Respondent

Application for special leave to appeal

BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 AUGUST 2015, AT 9.55 AM

Copyright in the High Court of Australia

____________________

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR J.C. GILES, for the applicants. (instructed by Norton Rose Fulbright Australia)

MR N.J. YOUNG, QC: If the Court pleases, I appear with my learned friend, MR J.R. WILLIAMS, for the first respondent. (instructed by Quinn Emanuel Urquhart & Sullivan)

MR A.S. BELL, SC: If the Court pleases, I appear with my learned friend, MR M.A. IZZO for the fourth to sixth respondents. (instructed by Allen & Overy)

BELL J: Yes, Mr Jackson.

MR JACKSON: Thank you, your Honours. Your Honours, this is a case where it is submitted the interests of justice merit the grant of special leave. It is a visitation case, your Honours, if one chooses that terminology. May I take a moment to go to the basic facts and then turn to the argument as to the correctness of the decision in the court below?

There were, as your Honours will be aware, three letters of credit, each for $50 million, but in two different forms. The two different forms may be seen set out in the judgment of the primary judge at page 6, paragraph 18, first, where he sets out the terms of the, what are called the first and third letters of credit, and at page 8, paragraph 19 where he sets out of the second letter of credit.

Could I go to the first and third letters of credit for a moment, at paragraph 18, where the central obligation is set out at the bottom of page 7 of the application book and it requires the confirming bank, which is Standard Chartered, as appears, your Honours, in the - - -

GAGELER J: It is the bottom of page 6, I think.

MR JACKSON: I am sorry; I just lost it. Yes, it appears on the preceding page, your Honours, I am sorry. Standard Chartered to pay the beneficiary within four business days and that confirming bank is in Singapore. As your Honours will see from paragraph 1 on page 7, a draft is to be delivered to Standard Chartered, Singapore office, and the beneficiary, your Honours will see on page 6, halfway down the page, is the applicant in Perth.

In the case of the second letter of credit, which is at page 8, commencing at the bottom of the page, your Honours will see that the issuing bank, which is ICICI, is in Singapore. The draft is to be presented to it in Singapore – that is page 9, about line 45. The beneficiary, again, is in Perth, and as clause 3 on page 10 about line 25 makes clear:

the Issuing Bank will pay the Beneficiary within 4 Business Days –

after receipt of the document. Now your Honours, the start of the matters that gave rise to the issues appears from paragraph 2(F) of each letter of credit, where your Honours will see – and if I could look, for example, at page 7, about line 44, the draft on delivery for payment must include a declaration that:

The amount claimed is due and payable to the Beneficiary by the Account Party.

Now, your Honours, the account party was, your Honours will see, Lanco Resources - page 6, about line 28. There was a sale from us, in effect, to Lanco. The sale agreement provided – sorry, there had to be a statement, as your Honours will see from 2(F), that the amount claimed was due and payable to us by Lanco.

Your Honours, the amount was payable on a day – 28 February 2015 – which was a Saturday. The sale agreement provided in those circumstances, and your Honours can see the relevant provision at page 42, paragraph 22 of the Court of Appeal’s decision - it then provided for the amount to be payable on the next business day as defined in that agreement and, your Honours, because of the definition of “business day” and the fact that the Monday was the Labour Day holiday in Western Australia, but not elsewhere in Australia, the 150 million was not due and payable until Tuesday, 3 March.

Your Honours, those are the basic facts. Could I come now to the terms of the letters of credit? As your Honours will see on page 6, at about line 45, the letters of credit had an expiry date - 1 March, that is, the Sunday. Each also provided – and your Honours will see this from, for example, clause 7(A) at page 8, about line 25, that the letter of credit was subject to the terms of the:

International Standby Practices – ISP98 –

Those rules are provided in rule 3.13, which your Honours will see set out at page 131 in the left column just under line 20. They provided, to put it shortly:

(a) If the last day for presentation . . . is not a business day of the issuer . . . then presentation made there on the first following business day shall be deemed timely -

with the term “business day” being defined – your Honours will see, at page 127 in the left column about line 25. The direct operation of those two provisions would mean that the last date of presentation was Monday, 2 March, still a day too early for us. But, your Honours, rule 1.04 – which your Honours will see at page 126, about line 44, recognised that a particular letter of credit might vary the position otherwise obtaining and there was such a variation. Each letter of credit contained a definition of “business day” and your Honours will see it, for example, at page 9 about line 37 and it said:

Any day (other than a Saturday or a Sunday) on which banks are open for general business in Singapore or Australia.

Now, your Honours, the Court of Appeal in our favour – differing from the primary judge in this regard – held that that definition applied to rule 13.3(a), and your Honours will see the judge’s conclusion on this issue at page 64, paragraph 77.

GAGELER J: As I understand it, that would be put in issue by notice of contention.

MR JACKSON: Yes, indeed, your Honour, yes. Your Honour, we have sought to deal with the enthusiasm of the contention as now put at this stage of the proceedings in our submission in reply.

GAGELER J: Yes.

BELL J: But the issue that divides you on your application is the effect of the bespoke definition.

MR JACKSON: Quite, your Honour. What I am just going to say about that - I would refer your Honours to paragraphs 77 and 78 and then go on to say that the position which emerges is really this. The expiry date set out is Sunday, 1 March. That is not a business day. Rule 13.3 treated as amended by that definition thus came into play. That meant that the appropriate date of presentation was a day on which banks were open for general business in Singapore and Australia. Both were required. If one comes down to the heart of the case, we would say why should the reference to “open for general business in Australia” not refer to the part of Australia where the beneficiary was located, namely - - -

BELL J: This part of your argument depends on taking the second letter of credit as the relevant document in this respect, insofar as if one were to look at the first and third, you have a reimbursing bank located in Victoria.

MR JACKSON: Your Honour, could I just say that the answer to what your Honour is putting to me is, with respect, no. We say the same situation obtains in relation to the first, second and third, and recognise that there might be some difficulties in saying you should construe one and three simply by reference to two, and vice versa, of course.

BELL J: Yes.

MR JACKSON: But the point we would seek to make, your Honours, is this, that it is true – and this is getting to the second part of what your Honour was just putting to me – it is true that as the summary of argument on behalf of ICICI says at page 106, paragraph 10, there are other addresses referred to in the first and third letters of credit. If one looks, for example, at page 7, you will see the reference to NAB as the “Reimbursing Bank” and its address in Melbourne. It is true also if you look at page 8, paragraph 7(B), about line 28, the governing law applicable is to be that of New South Wales, and true it is also, your Honours, if one looks at paragraph 1 of each of the letters of credit, and that is if one looks, for example, at page 7, about line 24, that a beneficiary may nominate a particular account, which could be anywhere.

Having said that, your Honours, once one takes the view that the definition of “business day” applies throughout the letters of credit, its most obvious meaning, we would submit, is that the part of Australia where banks are to be open for general business is where the beneficiary is located, namely, in Western Australia.

Your Honours, the heart of the Court of Appeal’s reasons, if I could go to that, can be seen at page 69 in paragraph 93, and then most relevantly at page 71, paragraphs 97 and 98. Your Honours will see particularly paragraph 98. Could we just submit, your Honours, that that reasoning is, with respect, erroneous in this way. If your Honours look at paragraph 98, you will see that it refers, particularly in the last sentence of it, to the “hypothetical observer”, but we would submit that a hypothetical observer, acting consistently with this Court’s approach to construction of commercial agreements, would respond to that question by saying what is the context in which the question arises?

If the answer to that question was that it arose under letters of credit, where the paying party was in Singapore and the party to be paid was in Western Australia, we would submit that the hypothetical observer would answer the question referred to in the last sentence of paragraph 98 by saying in that context the answer depends on the position in Western Australia and it would be no.

GAGELER J: What about paragraph 96? It is the nature of modern banking practice that appears to have been common ground.

MR JACKSON: Well, so be it. Your Honour, it may well be that banks are open, let us say, in five States, and not in one on a particular day. The money could be paid into a bank. But if one is talking about a situation between, fundamentally, two parties with in one case another party or parties joined in and looking to see when the definition speaks of banks being open, in Singapore and Australia, prima facie it would be somewhere immediately relevant to the persons involved.

GAGELER J: Mr Jackson, you said that this was a visitation case.

MR JACKSON: Yes.

GAGELER J: Do you mean anything more than that the wrong decision was reached?

MR JACKSON: Well, I mean that of course, your Honour. But what I was going to say was that it is one where we would submit special leave should be granted for the reasons we have set out in our submissions in reply, at page 141, paragraph 21. Could I just say this, your Honour? It does involve a large sum of money, a large sum of money where the fundamental understanding of letters of credit is that they are to be paid, in effect, without inquiring into what has gone on behind them.

Now, of course, one understands that letters of credit do not involve the paying body for more than they have undertaken. That is a question of importance, in our submission, recognising, as we say in paragraph 21, that it arises in particular circumstances. Your Honour, I do not think I can take it beyond that.

BELL J: Thank you, Mr Jackson. Yes, thank you, we do not need to hear from you, Mr Young or Dr Bell.

This application concerns the construction of a bespoke definition in a contract. No question of principle suitable for the grant of special leave is raised. Nor do the interests of the administration of justice in the particular case warrant the grant of special leave. Special leave is refused with costs.

The Court will now adjourn to reconstitute.

AT 10.11 AM THE MATTER WAS CONCLUDED