Donkin, C.J. v A.G.C. (Advances) Ltd

[1991] FCA 479

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DISTRICT m	) No. G107 of 1989
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BETWEEN c N and

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Applicants

AND :  &G*c. fADV- Respondent

AND r E.G.C. (ADVAN-
Cross-claimant

AND r JOHN D m I N and

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lX!&w	Beaumont J.
m ;	9 Auguet 1991

HkaBm: Brisbane

conferred by C1.26(c) of the Finance
dated 28 April 1986. 15 AU6 1991

That the purchase of Swiss Francs deecribed in the letter from AGC to the National Auetralia Bank dated

S June 1990 wae made by AGC pursuant to the powers

RAL COURT OF AUSTRALU )

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D DISTRICT REGISTRY	) No. G107 of 1989
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BETWEEN:	COLIN JOHN DONKIN and W H E R KAYE D O U
Applicants

AND :  I A D V A N C E S I T E D

Respondent

AND r &.G.C. IADVANCESI L I H I W

AND :  JOHN DONKIN and

!x?iw: Beaumont J.

m :  9 August 1991

W O N S FOR JUDGMENT (No. 7 1

JOn c 0

In the context of the cross-claim, a question has

arieen as to the construction of the Finance Facility Deed

("the Deed") dated 28 April 1986 as follows.

By c1.13 of the Deed, it is provided that the borrower may draw a foreign currency advance on any banking day by giving to the lender not less than five banking days' notice of its intention to draw. It appears that on or about 28 May 1986, the applicants gave that notice. By a memorandum to Mr. Stagg dated 4 June 1986 from AGC's head office, it was noted that AGC had arranged to borrow an amount from Fuji Bank

Ltd., Singapore, for SWF 2,057,000:  that this loan was "on-

lent* to the applicants; that the Swiss Francs were sold at apot rate 1.3715 and the proceeds of AU$1,498,817.72 were credited to AGC's bank account with Weatpac in Brisbane.

By c1.22 of the Deed, it is provideda

"Repayment or prepayment of a Foreign Currency Advance shall be effected by the Borrower paying to the Lender the amount of A Dollars required to purchase the Foreign Currency Amount of such Foreign Currency Advance calculated at the Applicable Rate of Exchange on the day of payment."

By c1.26(c) of the Deed, it is provided:

"(c) At any time after the Borrower defaults hereunder or under the Securities and the default is subsisting, the Lender may require the Borrower to prepay any Foreign Currency Advance. If the Borrower does not do so within the time required by the Lender, the Lender may without further notice to the Borrower do so on the Borrowerv~ behalf. In so doing the Lender may enter into as the Borrower's agent a spot or forward foreign exchange contract or contracts for the purchase with A Dollar8 of the Current A Dollar Amount of euch Foreign

Currency Advance. The Lender may settle any	euch foreign exchange contract and will utilise
the amount of the Foreign Currency so purchased to repay or prepay the Foreign Currency Advance on the maturity date of such spot or forward foreign exchange contract."

Although the Deed itself did not refer to the term of the advances to be made under it, by the letter of approval dated 27 March 1986, it was provided that the term of the foreign currency facility was to be five years with six monthly roll overa.

On or about 25 September 1989, AGC eerved a notice of demand upon the applicants, alleging default by the applicants and demanding, inter alia, payment of the Australian dollar equivalent of SWF 2,057,000. In October 1989, these proceedings were commenced by the applicants.

In April 1990, a judge of the Court dealt with an application by the applicante for interim relief. This application wae adjourned upon the parties giving certain croee-undertakings, including an undertaking by AGC not to enforce its mecurities until 4 June 1990 and an undertaking by the applicants to pay AGC all monies owing under the eecurities by

4 June 1990.

It ie common ground that, by 5 June 1990, the

applicante were in default under the Deed. On that day, AGC

purchased certain Swiss Francs. According to its version (but	thio is disputed by the applicants), AGC did this pursuant to
the provisions of c1.26(c) of the Deed.
The only evidence before the Court of this traneaction is a letter from AGC dated S June 1990 ae follows:

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hslral~an Guaranlee C o r p r a l ~ -.ntled

h a m m e 4 n " S W

130 Phlll~p	Slrecl Sydn	NSW 2000
GW	BOX 3274 ~ y d n e ~ % ~ W	mt

- Australian ~uaranted

~ i l e ~ h o n e	231 l122
Tel	rams Tororp Telex W 6 6 1 2

~ ~ ? 1 2 9 FAX 2% 1225

5th June 1990

Anne t t e	Fol l e t t
??ationaf A u s t r a l i a	Bank
Ground	Floor

255   George S t r e e t

SYDNEY NSW 2000

Dear Annet t e ,

FURCHASE OF SWISS FRANCS

P l e a s e f i n d enc lo sed a bank cheque f o r $1 ,937 ,228 -59 be ing a purchase of

Swiss Francs f o r v a l u e 5 / 6 / 9 0 .

The dea l was t r a n s e c t e d w i t h Amanda Curham from your f o r e i g n exchange

d e a l f n g room and t h e bookiag number f o r t h e deal i s I S 57.

A l s o enc lo sed a r e c o p i e s o f t85e N A B ' S confirr;;a:jon t e l e x e s .

Your s f a i t h f u l l y

SENIOR MONEY MARKET DEALER

On behalf of the applicants it is now submitted that this acquisition of Swiss Francs by AGC was not something done pursuant to c1.26(c), that is, the applicants argue, AGC was not "prepaying" the advance on behalf of the applicants and entering into, as the applicants' agent, an appropriate foreign exchange transaction. Rather, the applicants submit, what AGC was doing on 5 June was repaying its own borrowing from Fuji Bank.

I cannot accept this analysis. In my opinion, the proper inference, in all the circumstancee, is that AGC was availing itself of the powers given to it by c1.26(c). In this respect, in my view, the timing is significant. The date of acquisition of the Swiss Francs, 5 June, was the day after the expiration of the interlocutory undertakings. The applicants had failed to make the payments there undertaken by

4 June. The roll-over was due on 4 June. Theee surrounding

circumstances point to the likelihood that on 5 June AGC chose

question is one of fact but, on the material available, the	to proceed to exercise its default powers under c1.26(c). The
inference that the acquisition of the foreign currency was referable to the Fuji loan to AGC is not, I think, open. There is no evidence (except the brief reference in the AGC memorandum in June 1986 already mentioned) of the Fuji transaction. In the absence of any evidence as to its details and status ae at 5 June 1990, it is not possible to eay that AGC's purchase of Swiss Francs on 5 June 1990 was something done by way of repayment of its borrowing from Fuji. In my opinion, it is more likely that this acquisition was made by
AGC pursuant to c1.26(c). I propose so to declare.

I hereby certify that this and the

preceding five ( 5 ) pages are a true copy of the Reasons for Judgment of his Honour Mr. Justice Beaumont.

Associate ,\&%h ~ ~ ' ? U < L L C C L L )

\J

pated: 9 August 1991

Counsel and Sol lc l tors A. Harrlson Q.C. with T. Saners

f o r Applicants	instructed by Hempenstall O'Donoghue
Counsel and Sollcl tors	R. Morr~son Q.C. wlth J.C. Sheahan
fo r Respondent	instructed by Feez Ruthnlng