Enron Australia Finance Pty Limited (in Liquidation) v Integral Energy Australia [2002] NSWSC 753

New South Wales Supreme Court

CITATION : Enron Australia Finance Pty Limited (in Liquidation) v Integral Energy Australia [2002] NSWSC 753 FILE NUMBER(S) : SC 50042/02 HEARING DATE(S) : 19/08/02, 20/08/02, 21/08/02, 22/08/02, 23/08/02 JUDGMENT DATE : 3 September 2002

Enron Australia Finance Pty Limited (in Liquidation) (Plaintiff) PARTIES : Integral Energy Australia (Defendant)

JUDGMENT OF : Einstein J

Mr D Hammerschlag SC, Mr V Kerr (Plaintiff) COUNSEL : Mr R Ellicott QC, Mr D Knoll (Defendant)

SOLICITORS : Blake Dawson Waldron (Plaintiff) Corrs Chambers Westgarth (Defendant) CATCHWORDS : Contract - Construction - Principles applicable to construction of commercial contracts - Necessity for attention to the language used by the parties, the commercial circumstances which the document addresses and the objects which it is intended to secure - ISDA Master Agreement as varied for application to a series of electricity swap agreements in Australian context - Early termination mechanism - Meaning and operation of "Market Quotation" as defined - Whether experts/Reference Market-makers carried out their task in accordance with the terms of the contract - Natural justice - Procedural fairness - Whether rules of natural justice applicable to appointment of experts/Reference Market-makers Arbitration Act 1973 (Queensland) LEGISLATION CITED : Energy Service Corporations Act 1995 (NSW) Evidence Act 1995 (NSW) Arenson v Arenson [1977] AC 405 Baber v Kenwood Manufacturing Co Ltd [1978] 1 Lloyds Rep 175 Belchier v Reynolds (1749) 96 ER 1318 Capricorn Inks Pty Ltd v Lawter International (Australasia) Pty Ltd [1989] 1 Qd R 8 (and on appeal [1989] 1 Qd R 22) Dixon v Commonwealth [1981] 3 ALD 289 Fredericks and Pelhams Timber Buildings v Wilkins [1971] 3 All ER 545 Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 Kioa v West (1985) 159 CLR 550 Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 CASES CITED : McCann v Switzerland Insurance Australia Limited (2000) 75 ALJR 325 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Prenn v Simmonds [1971] 1 WLR 1381 R v Australian Broadcasting Tribunal; Exparte 2HD Pty Ltd (1979) 144 CLR 45 Scragg v U.K. Temperance & General Provident Institution [1976] 2 Lloyds Rep 227 Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363 Spencer v Commonwealth (1907) 5 CLR 418 Sutcliffe v Thackrah [1974] AC 727 Wamo Pty Ltd v Jewel Food Stores Pty Ltd (1983) ANZ Conv R 50 Wilson v Anderson [2002] HCA 29 WMC Resources Ltd v Leighton Contractors Pty Ltd (1999) 20 WAR 489 DECISION : Construction put by the plaintiff upheld. The ISDA (Australia) required the Reference Market-makers in furnishing quotations to strive to determine or assess the market value of a replacement transaction.