FEDERAL COURT OF AUSTRALIA
Sensis Pty Ltd v Bivami Pty Ltd [2013] FCA 1054
Citation: Sensis Pty Ltd v Bivami Pty Ltd [2013] FCA 1054 Parties: SENSIS PTY LIMITED ACN 007 423 912 and UNIVERSAL PUBLISHERS PTY LTD ACN 000 087 132 v BIVAMI PTY LTD ACN 003 020 166 and
AUSTRALIAN EXECUTOR TRUSTEES LIMITED AS CUSTODIAN FOR HYPERION PROPERTY SYNDICATES LIMITED ACN 007 869 794File number: NSD 1803 of 2012 Judge: GRIFFITHS J Date of judgment: 16 October 2013 Catchwords: CONTRACT – cross-claim – construction of indemnity – whether obligation under indemnity has been triggered by primary proceeding brought by applicants Cases cited: Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458
Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd (2010) 265 ALR 112Date of hearing: 14 October 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 36 Counsel for the first cross-claimant on the third cross-claim Mr T Maltz Solicitor for the first cross-claimant on the third cross-claim Swaab Attorneys Counsel for the first and second cross-respondents on the third cross-claim Mr M Izzo Solicitor for the first and second cross-respondents on the third cross-claim Hunt and Hunt Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1803 of 2012
BETWEEN: SENSIS PTY LIMITED ACN 007 423 912
First ApplicantUNIVERSAL PUBLISHERS PTY LTD ACN 000 087 132
Second ApplicantAND: BIVAMI PTY LTD ACN 003 020 166
First RespondentAUSTRALIAN EXECUTOR TRUSTEES LIMITED AS CUSTODIAN FOR HYPERION PROPERTY SYNDICATES LIMITED ACN 007 869 794
Third RespondentAND BETWEEN: AUSTRALIAN EXECUTOR TRUSTEES LIMITED AS CUSTODIAN FOR HYPERION PROPERTY SYNDICATES LIMITED ACN 007 869 794
First Cross-claimant on the First Cross-ClaimAND: UNIVERSAL PUBLISHERS PTY LTD ACN 000 087 132
First Cross-respondent on the First Cross-ClaimAND BETWEEN: AUSTRALIAN EXECUTOR TRUSTEES LIMITED AS CUSTODIAN FOR HYPERION PROPERTY SYNDICATES LIMITED ACN 007 869 794
First Cross-claimant on the Second Cross-ClaimAND: BIVAMI PTY LTD ACN 003 020 166
First Cross-respondent on the Second Cross-ClaimAND BETWEEN: BIVAMI PTY LTD ACN 003 020 166
First Cross-claimant on the Third Cross-ClaimAND: AUSTRALIAN EXECUTOR TRUSTEES LIMITED AS CUSTODIAN FOR HYPERION PROPERTY SYNDICATES LIMITED ACN 007 869 794
First Cross-respondent on the Third Cross-ClaimHYPERION PROPERTY SYNDICATES LIMITED
Second Cross-respondent on the Third Cross-Claim
JUDGE:
GRIFFITHS J
DATE OF ORDER:
16 OCTOBER 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The third cross-claim be dismissed.
2.The first cross-claimant on the third cross-claim pay the costs of the first and second cross-respondents on the third cross-claim.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1803 of 2012
BETWEEN: SENSIS PTY LIMITED ACN 007 423 912
First ApplicantUNIVERSAL PUBLISHERS PTY LTD ACN 000…
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- Case
- [2013] FCA 1054
- Decision Date
CaseChat Overview and Summary
The court needed to determine the scope and applicability of the indemnity clause in the context of the Lease and the contract. It considered whether the indemnity obligation was narrowly focused on specific defaults under the Lease, or if it extended to cover broader actions brought by the lessee against third parties. The court also needed to assess whether the indemnity clause could be construed in a manner that would make more commercial sense, despite deviating from the precise language used by the parties.
The court found that the indemnity clause should be construed narrowly, in line with the specific language used in the Lease and the contract, rather than broadly to include all actions brought by the lessee. The court emphasized that it was not at liberty to rewrite the agreements to make them more commercially sensible, adhering to the principle that the courts should not depart from the language used by the parties. Based on this reasoning, the court held that the indemnity obligation did not cover the costs associated with the cross-claims, and thus, Hyperion had no obligation to indemnify Bivami for those costs.
The court dismissed the third cross-claim and ordered the first cross-claimant to pay the costs of the first and second cross-respondents on the third cross-claim. This decision underscores the importance of interpreting contractual terms strictly according to their language and the context provided by the related agreements, without attempting to make them more commercially sensible by judicial interpretation.
Orders
Orders of the court
1. The third cross-claim be dismissed.
2. The first cross-claimant on the third cross-claim pay the costs of the first and second cross-respondents on the third cross-claim.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Thirdly, Hyperion submits there even if the Indemnity is given the broader construction as favoured by Bivami, it does not cover cross-claims and is confined to Bivami’s costs in respect of the primary application brought by Sensis and Universal. Consideration For the following reasons, I consider that the Indemnity has no application to the circumstances here with the consequence that Hyperion has no obligation under the Indemnity to indemnify Bivami for its costs in relation to either the primary proceeding or any of the cross-claims. First, I accept Bivami’s contention that the Indemnity is to be construed not only by reference to its own terms, but also by reference to relevant provisions of both the Lease and contract. Secondly, however, these matters simply serve to underline the correctness of Hyperion’s construction of the Indemnity. Clause 19 of the Lease requires the Lessee to provide an unconditional bank guarantee in favour of the Lessor to secure the Lessee’s obligations under the Lease and losses or damages suffered by the Lessor pursuant to breach by the Lessee or termination of the Lease arising from such breach. The authority of the Lessor to make a demand on the guarantee is dealt with in cl 19.4 of the Lease. That authority is predicated on the Lessee defaulting in paying rent, defaulting in the performance or compliance with any of the other obligations under the Lease, or breaching any other obligation, term, condition or covenant under the Lease. If any of those events occur, the Lessor is entitled to demand payment to it under the guarantee of such amount which, in the reasonable opinion of the Lessor, may be due to it as a result of such default, breach or non-observance by the Lessee or termination of the Lease pursuant to it. Although cl 19 of the Lease operates by reference to a range of contingencies, including defaults in payment of rent or performance of other obligations, as well as breaches and non-observance of obligations under the Lease, special condition 18 of the contract employs narrower language, which focuses only on defaults by the Lessee under the Lease. Similarly, the Indemnity not only makes express reference to special condition 18 of the contract, it also operates by reference to loss or damage suffered as a result of the default of the Lessee as referred to in special condition 18. Hyperion’s obligation under the Indemnity to indemnify Bivami relevantly relates to any actions commenced by the Lessee against Bivami claiming that no default had occurred which enlivened Bivami’s entitlement to call upon the guarantee. The obligation to indemnify is expressed in more narrow terms than cl 19 of the Lease. It does not extend to all actions brought by the Lessee against Bivami in respect of the Lease. Bivami may well consider now that it would make more commercial sense (at least from its perspective) if the contract and the Indemnity had matched the language of the Lease. But they do not. And I do not consider that the court is at liberty to stretch the language of special condition 18 of the contract or the Indemnity. As Basten JA observed in Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 at [18]:The courts have no mandate to rewrite agreements, so as to depart from the language used by the parties, merely to give a provision an operation which, as it appears to the court, might make more commercial sense: see Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Weston Export Services Inc [2011] NSWCA 137 at [55]-[56] (Macfarlan JA, Young JA and Tobias AJA agreeing); Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 at [27]-[31] (emphasis in original).