Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 3)

Case •

[2023] NSWSC 1596

•

15 December 2023

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 3) [2023] NSWSC 1596
Decision date: 15 December 2023
Jurisdiction:Equity - Commercial List
Before: Stevenson J
Decision:

Judgment entered in favour of cross-claimant against cross-defendant stayed until further order; parties to undertake further steps in respect of Civil Ruling

Catchwords:

PRIVATE INTERNATIONAL LAW – where judgment that cross-defendant pay cross-claimant $37 million under letter of credit issued by cross-defendant in the People’s Republic of China – where cross-defendant enjoined by order of Court in the PRC from making payment under letter of credit – orders with extraterritorial effect – whether judgment should be stayed pending approach to a court of competent jurisdiction in the PRC to discharge its order and pending application by cross-claimant to have this Court’s judgment recognised in the PRC – where respectful request made by this Court to a court of competent jurisdiction in the PRC to consider its reasons for entering judgment against the cross-defendant and whether its orders should now be discharged

CIVIL PROCEDURE – interest to judgment – where judgment debtor enjoined by order of Court in PRC from paying the amount the subject of the judgment

Cases Cited:

Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 2) [2023] NSWSC 1405

AES-3C Maritza East 1 Eood v Credit Agricole Corporate and Investment Bank (previously known as Calyon Corporate and Investment Bank) [2011] EWHC 123 (TCC)

Ralli Brothers v Compania Naviera Sota v Aznar [1920] 2 KB 287

Category:Consequential orders
Parties: Shinetec (Australia) Pty Ltd (Plaintiff)
The Gosford Pty Ltd (First Defendant/Cross-Claimant)
David Anthony Hurst (Second Defendant)
David Anthony Sampson (Third Defendant)
Macquarie Bank Limited (Fifth Defendant)
Bank of China Limited (Cross-Defendant)
Representation:

Counsel:
M Galvin (Plaintiff)
R G McHugh SC with R J May (First Defendant/Cross-Claimant, Second and Third Defendants)
N J Owens SC with J B Kay Hoyle SC (Cross-Defendant)

Solicitors:
Walker Hedges Forestville (Plaintiff)
Johnson Winter Slattery (First Defendant/Cross-Claimant, Second and Third Defendants)
King & Wood Mallesons (Cross-Defendant)
File Number(s): 2021/220732

JUDGMENT

  1. I published my principal judgment in this matter on 20 November 2023. [1] I shall use the same abbreviations here.

    1. Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 2) [2023] NSWSC 1405 (“Principal Judgment”).

  2. I invited submissions as to the further steps necessary to be taken in the proceedings.

  3. I have received those submissions and have heard oral argument.

  4. It was common ground that I should make the following orders and enter the following judgment:

  1. Order that the plaintiff’s claim be dismissed with costs.

  2. Order that orders 7 to 14 of the orders made by Lindsay J on 2 August 2021 and extended on 13 August 2021 be discharged.

  3. Judgment be entered against the cross-defendant in favour of the cross-claimant in the amount of AUD 37,000,000.

  1. I did that on 14 December 2023.

  2. There are three remaining questions.

Interest up to and from entry of judgment

  1. Gosford seeks interest at court rates on the $37,000,000 from 10 August 2021, being the date on which the Bank was obliged to dishonour the Letter of Credit, or pay. [2]

    2. Principal Judgment at [165].

  2. On 10 August 2021 the Bank, or at least its Shanxi branch, was constrained by the Civil Ruling from paying the amount of the Letter of Credit.

  3. I have held that the Bank was not entitled to defer payment by reason of the “Transfer by operation of law” provisions in ISP98. [3]

    3. Principal Judgment at [176]-[239].

  4. But for the Civil Ruling and assuming, as I have found, that the Bank was not entitled to rely on the “transfer by operation of law” provisions in ISP98, the Bank would have paid the $37,000,000 to Gosford’s advising bank, Macquarie Bank.

  5. The effect of the orders made by Lindsay J on 2 August 2021 was that Macquarie Bank would have been restrained from dealing with such funds had it received them.

  6. However, I think it reasonable to infer that, as Macquarie Bank was Gosford’s banker, the funds paid to Macquarie Bank in this hypothetical circumstance would have been placed on interest bearing deposit.

  7. In substance, Gosford has been kept out of its money and the Bank has not yet been obliged to pay that money.

  8. Although the Bank, or at least the Shanxi branch, remains bound by the Civil Ruling, now that judgment has been entered, interest should run on it from 10 August 2021.

  9. I order that the cross defendant pay interest on the judgment entered against it on 14 December 2023 at Court rates from 10 August 2021.

Should the judgment be stayed?

  1. This Court will not enforce a contract where performance of the contract is forbidden by the law of place where it must be performed. [4]

    4. Principal Judgment at [254]-[255].

  2. The Bank, or at least its Shanxi branch, remains constrained by the Civil Ruling from making payment under the Letter of Credit.

  3. The Bank submitted that the judgment should be stayed until the earlier of the discharge of the Civil Ruling or the recognition of this Court’s judgment by a court of competent jurisdiction in the People’s Republic of China.

  4. The Bank pointed to the decision of Ramsey J in AES-3C Maritza East 1 Eood v Credit Agricole Corporate and Investment Bank (previously known as Calyon Corporate and Investment Bank).[5]

    5. [2011] EWHC 123 (TCC).

  5. In that case, injunctions issued by the Tribunal de Commerce de Nanterre prevented payment under the bond in question, but were silent as to a payment that took a different form, for example payment pursuant to a judgment.

  6. In those circumstances, Ramsey J concluded:

“What the French injunctions do is to prevent Calyon from currently complying with their obligations under the Bond or that judgment. What Ralli Bros[6] establishes is that the English court will not, in such circumstances, require Calyon to act in a manner which is illegal under French law because of the existence of the injunctions.

The expectation would be that on the basis of this judgment, handed down by a court which has jurisdiction to determine liability under the Bond, the French Court would discharge the injunction. That however is matter for the French Court.”[7]

6. Ralli Brothers v Compania Naviera Sota v Aznar [1920] 2 KB 287.

7. At [67].

  1. The Bank should be encouraged to do what it can to draw this Court’s decision to the attention of the Chinese Court and, now that the merits of the parties’ competing contentions concerning the Letter of Credit have been determined in Gosford’s favour, seek to have the Civil Ruling discharged.

  2. The Bank is the “Third Party” named in the Civil Complaint and is bound by the Civil Ruling. Although in one sense it might be thought not to be in the Bank’s interest to seek to have the Civil Ruling discharged, it is my expectation, now that I have decided the case adversely to it, that it will do all that it can to achieve that result.

  3. I am confident that this will be the Bank’s position.

  4. It will be recalled that in March 2023, and independently of these proceedings, the Bank sought to have the Civil Ruling discharged. [8]

    8. Principal Judgment at [76].

  5. Gosford has not yet been served with the Civil Complaint although Mr Galvin, who appeared for Shinetec on 14 December 2023, stated that this would shortly occur.

  6. Whether Gosford would be seen by the Chinese Court as having standing to make an application for the discharge of the Civil Ruling is by no means certain.

  7. But what Gosford can do is now to seek to have the judgment entered in its favour recognised in a court of competent jurisdiction in China.

  8. In those circumstances, yesterday I ordered that the judgment against the Bank be stayed until further order.

  9. I now make the following directions:

  1. Direct that the parties notify my Associate by 1 March 2024 of such steps as have been taken in relation to the Civil Ruling and for the recognition of this Court’s judgment in China and the outcome of those steps.

  2. List the matter for directions before me at 9.30am on 8 March 2024 for the purpose of considering whether the stay on the judgment should be lifted.

  1. I respectfully invite the Taiyuan Intermediate People’s Court of Shanxi Province and, if appropriate, the Shanxi Higher People’s Court, to consider this Court’s reasoning for concluding that Gosford is entitled to judgment against the Bank arising from the Letter of Credit, and to consider whether the Civil Ruling should be discharged, now that the parties’ competing contentions concerning the Letter of Credit have been dealt with and determined by this Court.

Costs

  1. The Bank wishes to make submissions as to the extent to which it should bear Gosford’s costs of the proceedings in circumstances where, at hearing, Gosford did not press a number of contentions that it had hitherto agitated.

  2. Gosford and the Bank will now agree a timetable for any evidence, and short submissions on that topic.

  3. I will deal with that question on the papers, unless either party seeks a hearing.

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Endnotes

Decision last updated: 15 December 2023

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