Wollongong Coal Ltd v Gujarat NRE India Pty Ltd

Wollongong Coal Ltd appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning a dispute with Gujarat NRE India Pty Ltd. The central issue revolved around a provision within a tripartite deed where Wollongong Coal, as a guarantor, purported to irrevocably waive its right of indemnity against Gujarat NRE India, the primary obligor. Wollongong Coal sought to enforce this waiver, while Gujarat NRE India argued it was unenforceable.

The Court of Appeal was required to determine whether the provision in the deed, by which Wollongong Coal irrevocably waived its right of indemnity against Gujarat NRE India, was enforceable by Gujarat NRE India. This involved considering whether the fact that both parties were signatories to the deed was sufficient to permit Gujarat NRE India to rely on the provision, and whether the doctrine of privity allowed for such reliance. The court also had to assess whether the provision, on its true construction, amounted to a unilateral renunciation of the right of indemnity and whether its clarity and unambiguous nature rendered it enforceable. Furthermore, the court considered whether a debt owed by a parent company to Wollongong Coal could be set off in equity against Gujarat NRE India's debt to Wollongong Coal.

The Court of Appeal found that the primary judge had erred in making a declaration that Wollongong Coal was not entitled to exercise its right of indemnity. The Court held that the provision in the deed did not, on its true construction, amount to a unilateral renunciation of the right of indemnity by Wollongong Coal, nor was it enforceable by Gujarat NRE India. The court reasoned that the deed did not create a direct right for Gujarat NRE India to enforce the waiver of indemnity. Regarding the equitable set-off, the Court agreed with the primary judge that the debt owed by the parent company did not impeach the debt owed by Gujarat NRE India to Wollongong Coal, and therefore, set-off was not made out.

Consequently, the appeal was allowed in part, and the declaration made by the primary judge was set aside. The cross-appeal was dismissed. The parties were directed to file agreed orders or submissions regarding further orders and costs.