Primebroker Securities Ltd v Fortis Clearing Sydney Pty Ltd (No 3)

[2011] VSC 182

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST B

No 4526 of 2009

PRIMEBROKER SECURITIES LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 081 178 645)	Plaintiff
v
FORTIS CLEARING SYDNEY PTY LTD (ACN 081 279 889)	Defendant

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JUDGE:	JUDD J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 April 2011
DATE OF JUDGMENT:	10 May 2011
CASE MAY BE CITED AS:	Primebroker Securities Ltd v Fortis Clearing Sydney Pty Ltd (No 3)
MEDIUM NEUTRAL CITATION:	[2011] VSC 182

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Corporations – Securities lending agreement – Valuation of securities – Securities suspended from trading – Requirement to agree upon a market value – Parties unable to agree – Parties agreed that court decide market value.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N O’Bryan and Mr H Austin	Blake Dawson
For the Defendant	Mr P R Whitford SC	Corrs Chambers Westgarth

HIS HONOUR:

1. This dispute between the plaintiff, Primebroker, and the defendant, Fortis, is near final resolution.  Following judgment delivered on 28 August 2009[1] the parties required time to undertake the necessary calculations to arrive at the ‘balance of the account’ under cl 8.2 of the Australian Master Securities Lending Agreement (AMSLA).  They were unable to reach agreement on the Relevant Value of securities in Blue Energy Ltd, Luminas Ltd and Octavia Ltd for the purpose of applying cl 8.2 of AMSLA.  On 19 August 2010,[2] I held that the shares held by Fortis in Blue Energy and Luminus were capable of valuation by reference to a Bid Price on 7 July 2008 and that it was possible to arrive at a Relevant Value.

   [1]Primebroker Securities Ltd v Fortis Clearing Sydney Pty Ltd [2009] VSC 364.

   [2]Primebroker Securities Ltd v Fortis Clearing Sydney Pty Ltd (No 2) [2010] VSC 358.

1. The position in relation to the securities held by Fortis in Octavia Ltd was not so straightforward.  The securities in Octavia had been issued by Octavia Investment Notes Ltd.  The Notes were unsecured, although carried a guarantee of repayment by Octavia.  Each Note had a face value of $100.  It was common ground that because there was no evidence of a Bid Price as at the close of business on 7 July 2008 the mechanism in cl 8 of AMSLA failed to provide a basis to value the Notes for the purpose of arriving at the ‘balance of the account’ between Primebroker and Fortis. 

1. As at 4 July 2008 trading in notes had been suspended by the ASX for around six months.  On 31 July 2009 provisional liquidators were appointed to Octavia and on 9 September 2009 liquidators were appointed by order of the Supreme Court of Queensland.  In Primebroker Securities Ltd v Fortis Clearing Sydney Pty Ltd (No 2) I conclude,

31.In my opinion, cl 7A is designed to deal with the kind of  situation confronting the parties in relation to the Octavia Notes.  There is no reason why it cannot operate to arrive at a value…