Thera Agri Capital No 2 Pty Ltd v BCC Trade Credit Pty Ltd t/as The Bond & Credit Co [2022] NSWSC 669

Supreme Court New South Wales

Medium Neutral Citation: Thera Agri Capital No 2 Pty Ltd v BCC Trade Credit Pty Ltd t/as The Bond & Credit Co [2022] NSWSC 669 Hearing dates: 21-23 March 2022 Date of orders: 31 May 2022 Decision date: 31 May 2022 Jurisdiction: Equity - Commercial List Before: Rees J Decision: Judgment for the plaintiff in the amount of $7,224,043.04. Catchwords: INSURANCE – trade credit insurance, description at [2] – financier insured for default of customer's guarantor – construction of insurance policy, principles at [135]-[144] – construction of defined terms, principles at [145]-[147] – relevance of post-contractual conduct at [149]. SHIPPING – bills of lading – "to order" – negotiable bills – principles at [78]-[79] – significance of "notify party" at [80]. FINANCE – supply chain finance to commodities trader – Sharia-compliant Murabaha facility, description at [21] – trader submits sham commodity contracts in support of drawdown requests – financier and trader did not strictly comply with finance documents when advancing funds – transactions not Sharia-compliant – trader goes into liquidation – guarantor defaults – insurer denied indemnity on basis of non-compliance with Sharia principles and finance documents. PRIVATE INTERNATIONAL LAW – choice of law clause in favour of New South Wales (NSW) law – non-exclusive jurisdiction clause in favour of the Dubai International Financial Centre (DIFC) in United Arab Emirates (UAE) – policy required insured to comply with "applicable material laws" – DIFC would apply chosen law – arguable in DIFC that NSW law displaced by public policy of UAE – where public policy of UAE based on Sharia principles of Islamic law – UAE public policy not "applicable material law" within the meaning of the policy. WORDS AND PHRASES – "material", "material default", "applicable material laws" at [186]-[188], [209]. Legislation Cited: Civil Code (UAE) DIFC Law No 3 of 2004 on the Application of Civil and Commercial Laws of the DIFC (UAE) Federal Law No 8 of 2004 regarding the Financial Free Zones (UAE) Insurance Contracts Act 1984 (Cth) Cases Cited: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 AIG Australia Ltd v Kaboko Mining Ltd [2019] FCAFC 96 Androvitsenas v Members First Broker Network [2013] VSCA 212 Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99 Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 Bond v Chief Executive, Department of Environment and Heritage Protection [2018] 2 Qd R 112; [2017] QCA 180 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) [2022] VSC 13 Celtech International Ltd v Dalkia Utility Services plc [2004] EWHC 193 (Ch) Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24 Commissioner of Taxation v Douglas (2020) 282 FCR 204; [2020] FCAFC 220 CRO Travel Pty Ltd v Australia Capital Financial Management Pty Ltd [2018] NSWCA 153 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 Elders Ltd v EJ Knight Co Pty Ltd [2009] NSWSC 1462 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Fal Oil Co v Sharjah Electricity and Water Authority [2019] DIFC ENF 221 General Reinsurance Australia Ltd v HIH Casualty & General Insurance Ltd (in liq) [2009] NSWCA 22 Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 Gold Coast City Council v Sunland Group Ltd (2019) 1 QR 304; [2019] QCA 118 HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104 NSWLR 634; [2020] NSWCA 296 Horsell International Pty Ltd v Divetwo [2013] NSWCA 368 Impact Funding Solutions Ltd v AIG Europe Insurance Ltd [2017] AC 73; [2016] UKSC 57 Kelly v R (2004) 218 CLR 216; [2004] HCA 12 Liberty Mutual Insurance Company Australian Branch (t/as Liberty Specialty Markets) v Icon Co (NSW) Pty Ltd [2021] FCAFC 126; (2021) 154 ACSR 126 Loralia Group LLC v Landen Saudi Co [2018] DIFC ARB 004 McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579; [2000] HCA 65 MGICA Ltd v United City Merchants (Australia) Limited (1986) 4 ANZ Ins Cas 60-729 Minister for Immigration, Local Government and Ethnic Affairs v Dela Cruz (1992) 34 FCR 348 Mobileciti Pty Ltd v Vodafone Pty Ltd [2009] NSWSC 899 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Onley v Catlin Syndicate Ltd (as the underwriting member of Lloyd's Syndicate 2003) (2018) 360 ALR 92; [2018] FCAFC 119 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323 San v Rumble (No 2) [2007] NSWCA 259 Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431; [2015] NSWCA 156 Shamil Bank of Bahrain v Beximco Pharmaceuticals Ltd [2004] 4 All ER 1072; [2004] 1 WLR 1784 Star Entertainment Group Limited v Chubb Insurance Australia Ltd [2022] FCAFC 16 The Luna [2022] 1 Lloyd's Rep 216; [2021] SGHC 84 The Rafaela S [2005] 2 AC 423; [2005] UKHL 11 The Starsin [2003] 1 Lloyd's Rep 571; [2004] 1 AC 715 Vincent Nominees Pty Ltd v Western Australian Planning Commission [2012] WASC 28; (2012) 187 LEGRA 303 Waters Lane v Sweeney [2007] NSWCA 200 Watson v Scott [2016] 2 Qd R 484; [2015] QCA 267 Whitworth Street Estates v Miller [1970] AC 583 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 YYY Ltd v ZZZ Ltd [2017] DIFC ARB 005 Texts Cited: Accounting and Auditing Organisation for Islamic Financial Institutions, Sharia Standard No 8 on Murabaha (issued 16 May 2002) Bernard Eder, et al, Scrutton on Charterparties and Bills of Lading (25th ed, 2015, Sweet and Maxwell) Dicey and Morris on the Conflict of Laws (10th ed, 1980, Stevens & Sons Limited) vol 2 Greg Pynt, Australian Insurance Law: A First Reference (4th ed, 2018, LexisNexis) Martin Davies and Anthony Dickey, Shipping Law (4th ed, 2016, Thomson Reuters) Carole Murray, et al, Schmitthoff's Export Trade: The Law and Practice of International Trade (12th ed, 2012, Sweet and Maxwell) Category: Principal judgment Parties: Thera Agri Capital No 2 Pty Ltd (Plaintiff) BCC Trade Credit Pty Ltd t/as The Bond & Credit Co (Defendant) Representation: Counsel: Mr J Giles SC / Mr J Byrnes (Plaintiff) Mr R Scruby SC / Mr B Smith (Defendant)