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

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 2) [2023] NSWSC 1405 Hearing dates: 25, 26 & 30 October 2023; further written submissions 2, 3 & 7 November 2023 Decision date: 20 November 2023 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Plaintiff's case fails; defendants and cross-claimant entitled to judgment against cross-defendant; submissions invited as to whether judgment should be stayed pending approach to the Chinese court or recognition of judgment in the Chinese Court. Catchwords: BUILDING AND CONSTRUCTION – contract –construction of residential unit development in Gosford – where builder agreed to fund first $37 million of development – where builder procured that its Chinese parent company caused its bank to issue standby letter of credit to secure that obligation – where builder contended it had provided the $37 million finance by entering into loan agreement – whether builder had performed its obligation to finance – where receivers appointed to developer – where developer by the receivers made demand under the letter of credit – whether demand invalid and of no effect CIVIL PROCEDURE – pleadings – Commercial List Statement – where case propounded was that developer not entitled to make demand under letter of credit because letter of credit security for provision of $37 million finance and that such finance had been provided by entry into loan agreement – whether builder had established that case BANKING AND FINANCE – instruments – standby letter of credit – proper law of letter of credit – letter of credit subject to Rules on International Standby Practices ISP98 – how ISP98 should be construed – whether Official Commentary available in aid of construction of ISP98 – where receivers appointed to beneficiary – where demand made under letter of credit by receivers – whether rules in ISP98 concerning transfer by operation of law engaged – whether bank entitled to suspend payment pending provision of documents by beneficiary PRIVATE INTERNATIONAL LAW – orders with extraterritorial effect – where Chinese Court made a Civil Ruling that bank suspend payment under standby letter of credit issued by bank in Shanxi in the People's Republic of China – whether this Court should order bank to make payment – whether judgment should be entered against bank – whether judgment should be suspended pending approach to Chinese Court or recognition of judgment in the People's Republic of China Legislation Cited: International Standby Practices ISP98 Law of Civil Procedure of the People's Republic of China Uniform Customs and Practice for Documentary Credits UCP600 Cases Cited: Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418; [1996] HCA 39 Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225; [1997] HCA 4 Attock Cement Co Ltd v Romanian Bank for Foreign Trade [1989] 1 WLR 1147 Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. t/as Rabobank, Hong Kong Branch v Bank of China [2004] 3 HKLRD 477 Fortis Bank SA/NV v Indian Overseas Bank [2011] 2 All ER (Comm) 288 Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782 Heytex Bramsche GMBH v Unity Trade Capital Ltd [2022] EWHC 2488 (Ch) Kredietbank NV v Sinotani Pacific Pte Ltd [1999] 1 SLR(R) 274 Mackender v Feldia AG [1967] 2 QB 590 Morgan v State of Victoria (2008) 22 VR 237; [2008] VSCA 267 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Offshore International S.A. v Banco Central S.A. [1977] 1 WLR 399 Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380 R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] AC 500 Ralli Brothers v Compania Naviera Sota y Aznar [1920] 2 KB 287 Sinotani Pacific Pte Ltd v Agricultural Bank of China [1999] 2 SLR(R) 970 United City Merchants (Investments) Ltd v Royal Bank of Canada (The American Accord) [1983] 1 AC 168 Texts Cited: A V Dicey, Dicey, Morris & Collins on the Conflict of Laws (15th ed, 2012, Sweet & Maxwell) J E Byrne, The Official Commentary on the International Standby Practices (2nd ed, 2005, ICC Publishing S.A.) M Davies, A S Bell, P L G Brereton and M Douglas, Nygh's Conflicts of Law (10th ed, 2020, LexisNexis Butterworths Australia) P Herzfeld and T Prince, Interpretation, (2nd ed, 2020, Thomson Reuters) Category: Principal judgment 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: A R Zahra SC with 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)