AED Oil Ltd v Puffin FPSO Ltd (No 5) - [2011] VSC 60

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL LIST

No. 8380 of 2009

AED OIL LIMITED (ACN 110 393 292)	Plaintiff
V
PUFFIN FPSO LIMITED (COMPANY REGISTRATION NO. C37772) (INCORPORATED IN MALTA)	Defendant

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	14, 17, and 18 February 2011
DATE OF JUDGMENT:	10 March 2011
CASE MAY BE CITED AS:	AED Oil Ltd v Puffin FPSO Ltd (No. 5)
MEDIUM NEUTRAL CITATION:	[2011] VSC 60

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Injunction – Application to discharge – Applications to vary conditions – Changed circumstances – Stay of proceeding – Arbitration.

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APPEARANCES:	Counsel	Solicitors
For AED Oil Limited	Mr J J Gleeson SC with Mr A J Woods	Corrs Chambers Westgarth
For Puffin FPSO Limited	Mr J G Santamaria QC with Dr J P Moore	Freehills
For AED Services Pte Ltd	Mr A T Strahan	Mallesons Stephen Jaques

HIS HONOUR:

By summons dated 24 December 2010, the plaintiff, AED Oil Limited, sought orders for the return of money and bank guarantees deposited with the court as a condition for an injunction granted on 27 August 2009. The injunction restrained the defendant, Puffin FPSO Ltd, ‘until the hearing and determination of the proceeding or further order’, from acting upon an alleged event of default under a charge granted by AED Oil in favour of Puffin. Puffin threatened to appoint a receiver.

Guarantees to the value of $10,137,770.56 had been provided as security together with cash in the sum of $14,077,810.31. The security had been ordered in respect of some, but not all, of the amounts claimed by Puffin in notices of demand served on AED Oil under the charge. The notices were served on AED Oil, as guarantor of the obligations of AED Services Pte Ltd, a wholly owned subsidiary, under a Charter Contract dated March 2006 (as amended and restated on 17 May 2007) made between AED Services and Puffin. The Charter Contract set out the terms under which the ‘Front Puffin’, a floating production, storage and off-loading vessel (FPSO), was leased and chartered by Puffin to AED Services for deployment in an oil field located in the South Timor Sea.

Security, required as a condition of the injunction, had been confined to an amount referrable to Puffin’s claimed liability for Goods and Services Tax and unpaid invoices. Puffin had also sought security in respect of a further claim based on an estimate of its income tax liability for the financial years ended 30 June 2008 and 30 June 2009. The tax claims were based on provisions of the Charter Contract under which AED Services was obliged to indemnify Puffin for certain tax liabilities.

The basis for AED Oil’s application for a variation of the conditions and the release of the guarantees and cash, was its contention that the express purpose for which the security was provided had been satisfied or that Puffin no longer maintained a relevant claim to the ‘unpaid invoices’.

On 28 January 2011, Puffin…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] VSC 60
Decision Date: 10 March 2011

CaseChat Overview and Summary

AED Oil Ltd applied to discharge an interlocutory injunction and for variations to the conditions of the injunction. Puffin FPSO Ltd opposed the application. The parties were in dispute over the charter of an FPSO oil production vessel. The Federal Court considered the application and opposition. The primary legal issue was whether the change in circumstances warranted a discharge or variation of the injunction. The court considered whether the injunction was still necessary to preserve the status quo pending arbitration, given the changed circumstances. The court also considered whether the injunction's conditions could be varied to reflect the changed circumstances, while still preserving the status quo pending arbitration.

The court found that the change in circumstances did not warrant a discharge of the injunction. The injunction remained necessary to preserve the status quo pending arbitration. The court found that the injunction's conditions could be varied to reflect the changed circumstances, while still preserving the status quo pending arbitration. The court varied the conditions of the injunction accordingly. The court found that the parties' dispute should be resolved by arbitration, and stayed the proceeding pending the outcome of the arbitration.

The court discharged the injunction with liberty to reapply, varied the conditions of the injunction, and stayed the proceeding pending arbitration. The court ordered the parties to proceed with the arbitration in accordance with the terms of their charterparty agreement.

Orders