JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: GR ENGINEERING SERVICES LTD -v- INVESTMET LTD [2021] WASCA 136
CORAM: QUINLAN CJ
MURPHY JA
BEECH JA
HEARD: 25 JUNE 2021
DELIVERED : 29 JULY 2021
FILE NO/S: CACV 3 of 2020
BETWEEN: GR ENGINEERING SERVICES LTD
Appellant
AND
INVESTMET LTD
First Respondent
SQUIRE PATTON BOGGS (AU)
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: TOTTLE J
Citation: GR ENGINEERING SERVICES LTD -v- INVESTMET LTD [2019] WASC 439
File Number : CIV 2140 of 2017
Catchwords:
Contract - Construction of contracts - Escrow agreement - Where escrow agent obliged to release escrow property subject to limited provisos - Where interpleader clause in favour of escrow agent concerning 'disputes ... with respect to the escrow arrangements' in the escrow agreement - Where party with benefit of escrow agreement demanded escrow agent release the escrow property - Where escrow agent instead invoked interpleader clause - Whether in the circumstances escrow agent was entitled to interplead
Legislation:
Nil
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | M L Bennett |
| First Respondent | : | No appearance |
| Second Respondent | : | M N Solomon SC & K A T Pedersen |
Solicitors:
| Appellant | : | Bennett + Co |
| First Respondent | : | In person |
| Second Respondent | : | Jackson McDonald |
Case(s) referred to in decision(s):
AVWest Aircraft Pty Ltd v Clayton Utz [No 2] [2019] WASC 306
Beesly v Hallwood Estates Ltd [1961] Ch 105
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
GR Engineering Services Ltd v Eastern Goldfields Ltd [2018] WASC 19
GR Engineering Services Ltd v Investmet Ltd [2019] WASC 439
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27
R v Wright; Ex parte Waterside Workers' Federation of Australia (1955) 93 CLR 528
Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 260 CLR 85
Sino Iron Pty Ltd v Mineralogy [2019] WASCA 80; (2019) 55 WAR 89
Smith v Allan (1993) 31 NSWLR 52
State Government Insurance Office (Qld) v Rees (Liquidators of KD Morris & Sons Pty Ltd) (1979) 144 CLR 549
Tame v New South Wales [2002] HCA 35; (2002) 211 CLR 317
Terrapin International Ltd v Inland Revenue Commissioners [1976] 1 WLR 665
Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609
Watkins v Nash (1875) LR 20 Eq 262
Windsor Refrigerator Co Ltd v Branch Nominees Ltd [1961] Ch 375
QUINLAN CJ & BEECH JA:
Introduction
The appellant (GR Engineering) challenges the primary judge's decision dismissing its claim against the second respondent (SPB), solicitors, for breach of an escrow agreement under which SPB was the escrow agent. In that capacity, SPB held a share transfer executed by the first respondent[1] (Investmet) in favour of GR Engineering in respect of shares constituting security for a debt owed by…
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- AGLC
- GR Engineering Services Ltd v Investmet Ltd [2021] WASCA 136
- Case
- [2021] WASCA 136
- Decision Date
CaseChat Overview and Summary
The court examined the language and context of the Escrow Agreement to ascertain the true purpose and object of the parties. It was established that the agreement was intended to be autonomous and insulated from disputes under other documents. The court found that the narrow interpretation of clause 8.1, which restricted its application to disputes concerning the Escrow Agreement, was consistent with the principle of autonomy. The court also determined that clause 4.2's obligation to release the Share Transfer Form was strict, subject only to the condition that there were no reasonable grounds to doubt the genuineness of the notice. Since Investmet Ltd did not contest the genuineness of the notice, the court found that GR Engineering was entitled to the release of the Share Transfer Form.
The court concluded that the wide interpretation of clause 8.1, which would allow it to apply to disputes concerning the Guarantee Deed, was inconsistent with the purpose and object of the Escrow Agreement. Therefore, the court held that clause 8.1 did not extend to such disputes and that clause 4.2 remained enforceable. The court ruled in favour of GR Engineering, ordering Investmet Ltd to release the Share Transfer Form as per the terms of the Escrow Agreement.
Orders
Orders of the court
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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
GR Engineering contended that, in the context of the mutually known background facts:(1)The purpose and object of the Escrow Agreement was to provide further security to GR Engineering in addition to the Guarantee Deed, and that the Escrow Agreement was to be 'autonomous and insulated from any dispute' under the Contract and the Guarantee Deed. In other words, part of the purpose and object of the Escrow Agreement was that it should give effect to the principle of autonomy, analogous to commercial documents such as Bank Guarantees and Letters of Credit.[33](2)A proper consideration of the purpose and object of the Escrow Agreement would have reinforced the narrow reach of cl 8.1, which is that the dispute must be 'with respect to the escrow arrangements contained in' the Escrow Agreement. Clause 8.1, including read in the context of cl 6.2(b), does not in its terms extend to disputes concerning the Guarantee Deed.[34](3)The strict obligation on SPB to release the Share Transfer Form pursuant to cl 4.2 was subject only to the proviso in cl 4.2(a) that, acting reasonably, there were no grounds for SPB to believe that the notice from GR Engineering, or the matters set out in the notice, were not genuine.[35] SPB at trial conceded that there was no issue as to the genuineness of the notice.[36][33] Reference was made to Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 260 CLR 85 [2] ‑ [10]; appeal ts 10, 21.[34] Appeal ts 20, 21 ‑ 22.[35] See also appeal ts 7.[36] Appeal ts 9 ‑ 10, 11. Before the primary judge, GR Engineering's primary case was that cl 8.1 does not qualify SPB's obligations under cl 4.2.[37] However, in oral submissions on appeal, GR Engineering accepted that, when engaged, cl 8.1 operates in a manner that, in effect, qualifies cl 4 in that when a dispute within cl 8.1 has arisen, SPB's right to interplead means that it is not obliged under cl 4.2 to release the Share Transfer Form. The focus of GR Engineering's submissions was on the circumstances in which cl 8.1 would be engaged. That directs attention to the meaning of the phrase in cl 8 'a dispute … with respect to the escrow arrangements contained in' the Escrow Agreement. In this regard, GR Engineering submitted that, properly construed, the phrase is limited to disputes in relation to matters contained in the Escrow Agreement, as distinct from disputes as to its validity or as to the Parties' underlying obligations. Counsel submitted that disputes in relation to matters contained in the Escrow Agreement was likely to be limited to disputes under cl 4.2(a) and cl 4.2(b) of the Escrow Agreement conditioning the obligation to release the Share Transfer Form.[38] [37] See [60] above.[38] Appeal ts 8, 10, 12 ‑ 14, 20 -21. GR Engineering sought to demonstrate that SPB's and, by implication, the judge's, wider construction of cl 8.1 was untenable. GR Engineering said, for example, the consequence of the wide construction is that the interpleader rights would be enlivened upon any suggestion that the notice to release is not effective, no matter how meritorious.[39] Such a wide interpretation of cl 8.1 'denudes' cl 4.2.[40][39] Appeal ts 52.[40] Appeal ts 53.