Coco v Westpac Banking Corporation - [2010] NSWCA 305

New South Wales

Court of Appeal

CITATION: Coco v Westpac Banking Corporation [2010] NSWCA 305

HEARING DATE(S): 29 October 2010

JUDGMENT DATE:
12 November 2010

JUDGMENT OF: Allsop P at 1; Giles JA at 37; Sackville AJA at 38

DECISION: 1. Set aside the separate questions, the answers thereto and the declaration made by the Court on 14 May 2010.
2. Declare that:
“On the proper construction of the Westpac Guarantee Portfolio Service Asset Allocation Advisory Agreement between the appellant and the respondent, the definition of “Fixed Income Portfolio Value” in the definitions in the Asset Allocation Rules in the said agreement should be construed such that the part of the definition being ‘which is to be calculated by multiplying the number of Units invested in zero coupon bonds by the market value for such zero coupon bonds’ means that the number of Units invested in zero coupon bonds is multiplied by the market value per Unit for such zero coupon bonds, which latter value is to be derived by dividing the market value of the zero coupon bonds at the relevant date by the number of Units sold in order to invest in the zero coupon bonds”.
3. Otherwise dismiss the appeal.
4. The appellant pay the respondent's costs.

CATCHWORDS: CONTRACT – construction – commercial agreement – structured equity investment – Guaranteed Portfolio Service – meaning of “fixed income portfolio value” – meaning and effect of formula to calculate value of zero coupon bonds

LEGISLATION CITED: Australian Securities and Investments Commission Act 2001 (Cth), s 12GM
Supreme Court Act 1970 (NSW), s 75

CATEGORY: Principal judgment

CASES CITED: Coco v Westpac Banking Corporation [2010] NSWSC 457
Forster v Jododex Australia Pty Ltd [1972] HCA 61; 129 CLR 421
Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 264 ALR 15
Ross v Ice TV Pty Ltd [2010] NSWCA 272
Whitlock v Brew (No 2) [1967] VR 803
Whitlock v Brew [1968] HCA 71; 118 CLR 445

PARTIES: Salvatore Coco (Appellant)
Westpac Banking Corporation (Respondent)

FILE NUMBER(S): CA 2009/298753

COUNSEL: J Kelly SC, E Finnane (Appellant)
I Jackman SC, C Colquhoun (Respondent)

SOLICITORS: Uther Webster & Evans (Appellant)
Mallesons Stephen Jaques (Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): 2009/298753

LOWER COURT JUDICIAL OFFICER: Tamberlin AJ

LOWER COURT DATE OF DECISION: 14 May 2010

LOWER COURT MEDIUM NEUTRAL CITATION: Coco v Westpac Banking Corporation [2010] NSWSC 457

2009/298753

ALLSOP P
GILES JA
SACKVILLE AJA
Friday 12 November 2010

COCO v WESTPAC BANKING CORPORATION

Judgment

Mr Salvatore Coco and Westpac Banking Corporation have a commercial dispute about the operation of a structured equity investment known as the “Westpac Guaranteed Portfolio Service” entered into by Mr Coco and Westpac in June 2007. It matures in June 2012. As part of the resolution of that dispute, over the opposition of Westpac, the learned primary judge (Tamberlin AJ) answered separate questions and made a declaration as to the proper construction of a clause in the…

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.

Continue reading Coco v Westpac Banking Corporation

Details

AGLC: Coco v Westpac Banking Corporation [2010] NSWCA 305
Case: [2010] NSWCA 305
Decision Date: 12 November 2010

CaseChat Overview and Summary

The appeal in *Coco v Westpac Banking Corporation* concerned the construction of a commercial agreement for a structured equity investment known as the Guaranteed Portfolio Service. The dispute centred on the interpretation of the definition of "Fixed Income Portfolio Value" within the agreement's Asset Allocation Rules, specifically how the value of zero coupon bonds was to be calculated. The matter was heard in the Court of Appeal of New South Wales, with judgment delivered by Allsop P, Giles JA, and Sackville AJA.

The primary legal issue before the Court of Appeal was to determine the correct construction of the formula provided in the agreement for calculating the value of zero coupon bonds. This involved ascertaining whether the "market value for such zero coupon bonds" referred to the market value per unit or the total market value of the bonds. The court was required to resolve ambiguity in the contractual language to give effect to the parties' intentions as expressed in the agreement.

The Court of Appeal reasoned that the definition of "Fixed Income Portfolio Value" required the number of units invested in zero coupon bonds to be multiplied by the market value per unit. This market value per unit was to be derived by dividing the total market value of the zero coupon bonds at the relevant date by the number of units that were sold to acquire those bonds. The court found that this interpretation gave a coherent and commercially sensible meaning to the contractual provisions. Consequently, the Court of Appeal set aside the separate questions, answers, and declaration made by the primary court and substituted its own declaration regarding the construction of the agreement. The appeal was otherwise dismissed, with the appellant ordered to pay the respondent's costs.

Orders

Orders of the court

1. Set aside the separate questions, the answers thereto and the declaration made by the Court on 14 May 2010.

2. Declare that:

“On the proper construction of the Westpac Guarantee Portfolio Service Asset Allocation Advisory Agreement between the appellant and the respondent, the definition of “Fixed Income Portfolio Value” in the definitions in the Asset Allocation Rules in the said agreement should be construed such that the part of the definition being ‘which is to be calculated by multiplying the number of Units invested in zero coupon bonds by the market value for such zero coupon bonds’ means that the number of Units invested in zero coupon bonds is multiplied by the market value per Unit for such zero coupon bonds, which latter value is to be derived by dividing the market value of the zero coupon bonds at the relevant date by the number of Units sold in order to invest in the zero coupon bonds”.

3. Otherwise dismiss the appeal.

4. The appellant pay the respondent's costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Coco v Westpac Banking Corporation [2010] NSWCA 305
HEARING DATE(S):	29 October 2010
JUDGMENT DATE:	12 November 2010
JUDGMENT OF:	Allsop P at 1; Giles JA at 37; Sackville AJA at 38
DECISION:	1. Set aside the separate questions, the answers thereto and the declaration made by the Court on 14 May 2010. 2. Declare that: “On the proper construction of the Westpac Guarantee Portfolio Service Asset Allocation Advisory Agreement between the appellant and the respondent, the definition of “Fixed Income Portfolio Value” in the definitions in the Asset Allocation Rules in the said agreement should be construed such that the part of the definition being ‘which is to be calculated by multiplying the number of Units invested in zero coupon bonds by the market value for such zero coupon bonds’ means that the number of Units invested in zero coupon bonds is multiplied by the market value per Unit for such zero coupon bonds, which latter value is to be derived by dividing the market value of the zero coupon bonds at the relevant date by the number of Units sold in order to invest in the zero coupon bonds”. 3. Otherwise dismiss the appeal. 4. The appellant pay the respondent's costs.
CATCHWORDS:	CONTRACT – construction – commercial agreement – structured equity investment – Guaranteed Portfolio Service – meaning of “fixed income portfolio value” – meaning and effect of formula to calculate value of zero coupon bonds
LEGISLATION CITED:	Australian Securities and Investments Commission Act 2001 (Cth), s 12GM Supreme Court Act 1970 (NSW), s 75
CATEGORY:	Principal judgment
CASES CITED:	Coco v Westpac Banking Corporation [2010] NSWSC 457 Forster v Jododex Australia Pty Ltd [1972] HCA 61; 129 CLR 421 Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 264 ALR 15 Ross v Ice TV Pty Ltd [2010] NSWCA 272 Whitlock v Brew (No 2) [1967] VR 803 Whitlock v Brew [1968] HCA 71; 118 CLR 445
PARTIES:	Salvatore Coco (Appellant) Westpac Banking Corporation (Respondent)
FILE NUMBER(S):	CA 2009/298753
COUNSEL:	J Kelly SC, E Finnane (Appellant) I Jackman SC, C Colquhoun (Respondent)
SOLICITORS:	Uther Webster & Evans (Appellant) Mallesons Stephen Jaques (Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	2009/298753
LOWER COURT JUDICIAL OFFICER:	Tamberlin AJ
LOWER COURT DATE OF DECISION:	14 May 2010
LOWER COURT MEDIUM NEUTRAL CITATION:	Coco v Westpac Banking Corporation [2010] NSWSC 457