Forex Capital Trading Pty Ltd (in liq) v Invesus Group Ltd

Forex Capital Trading Pty Ltd (in liq) (the appellant) appealed a decision of the Supreme Court of South Australia concerning the interpretation of a letter of comfort issued by Invesus Group Ltd (the respondent) in favour of the appellant's subsidiary. The dispute centred on whether the respondent was liable under the letter of comfort for debts of the subsidiary that had been admitted by the liquidators of the subsidiary, even though those debts arose from undetermined civil claims. The appeal was heard by Mitchelmore, Kirk and Adamson JJA of the Full Court of the Supreme Court of South Australia.

The central legal issue before the Full Court was the proper construction of the phrase "any debts" within the letter of comfort. Specifically, the court had to determine whether this phrase encompassed liabilities that had been admitted by the liquidators of the subsidiary in respect of civil claims that were still undetermined at the time of the admission. The appellant, as liquidator of the subsidiary, contended that the respondent was bound by the letter of comfort to pay these admitted debts.

The Full Court reasoned that the ordinary meaning of "debt" in a commercial context includes a present and existing obligation to pay a sum of money, even if the precise amount is yet to be quantified or is subject to a contingency. The court found that the liquidators' admission of proofs of debt, while relating to undetermined claims, created a present and existing liability of the subsidiary. Therefore, these liabilities fell within the scope of "any debts" as contemplated by the letter of comfort. The court applied principles of contractual construction, emphasising the importance of giving words their ordinary and natural meaning in the absence of clear indications to the contrary.

The appeal was dismissed, and the appellant was ordered to pay the respondent's costs of the appeal.