Yallourn v Enron Australia (in liq) [2005] NSWCA 326

Reported Decision : (2006) Aust Contract Reports 90-229

New South Wales Court of Appeal

CITATION: Yallourn v Enron Australia (in liq) [2005] NSWCA 326

HEARING DATE(S): 26 August 2005

JUDGMENT DATE: 20 September 2005

JUDGMENT OF: Giles JA at 1; Basten JA at 2; Campbell AJA at 55

DECISION: (1) Appeal allowed in part and declarations 1-3 made in the Equity Division be varied to read as follows; "THE COURT DECLARES that -; On the proper construction of the contract entitled ISDA Master Agreement between Enron Australia Finance Pty Limited ("Enron") and Yallourn Electricity Ltd ("Yallourn") dated 10 August 2001 ("the Contract"), and in the events which have happened:; (1) the amount required to be paid by Enron for the purposes of Part 1(g) of the Schedule to the Contract, in order to satisfy all its payment obligations under section 2(a)(i) with respect to all transactions and to have no future payment obligations to Yallourn whether absolute or contingent under section 2(a)(i), is:; (a) each payment specified in each confirmation to be made by Enron which has not been paid,; and does not include:; (b) interest, if any, payable or which would in any circumstances be payable by Enron under section 2(e);; (2) the amount required to be paid by Yallourn to avoid the occurrence of an Additional Termination Event, after Enron has satisfied all of its payment and delivery obligations under Part 1(g) of the Schedule to the Contract, is; (a) each amount that would have become payable by Yallourn under section 2(a)(i), but for the operation of section 2(a)(iii), and which remains unpaid;; and does not include:; (b) interest which would have been payable under section 2(e) but for the operation of section 2(a)(iii);; (3) If:; (a) an Additional Termination Event, as described in Part 1(g) of the Schedule to the Contract, occurs in respect of which Enron is Party X and Yallourn is Party Y, and; (b) Enron gives a notice to Yallourn designating an Early Termination Date in accordance with section 6(b)(iv),; the Unpaid Amounts owing to Enron (the Defaulting Party), as referred to in section 6(e)(i)(3), comprise the aggregate of:; (a) each amount that would have become payable by Yallourn under section 2(a)(i), but for the operation of section 2(a)(iii), and which remains unpaid,; together with; (b) interest from (and including) the date such amounts were or would have been required to have been paid (but for the operation of section 2(a)(iii)) to (but excluding) such Early Termination Date at a rate per annum equal to the cost to Yallourn if it were to fund such amounts."; (2) Set aside order 4 (as to costs) made in the Equity Division; (3) Order that each party bear its own costs of the proceeding below and of the appeal; (4) Grant liberty to the parties to apply within 14 days in relation to the form of the Declarations.