Innua Australasia Pty Ltd v Fortis Bank (Nederland) NV & anor [2009] NSWSC 179

New South Wales Supreme Court

CITATION : Innua Australasia Pty Ltd v Fortis Bank (Nederland) NV & anor [2009] NSWSC 179

HEARING DATE(S) : 25 February 2009 JURISDICTION : Equity Division Duty Judge List

JUDGMENT OF : Brereton J

EX TEMPORE JUDGMENT DATE : 25 February 2009

DECISION : Orders varied to remove any doubt as to interpretation, and to give effect to original intent. Interim regime that would jeopardise defendant's proprietary interests refused.

CATCHWORDS : Interlocutory injunction – variation – where doubt as to interpretation – in order to remove doubt – balance of convenience – jeopardy to proprietary rights of one party against risk of insolvency of other

CATEGORY : Procedural and other rulings

Innua Australasia Pty Ltd (plaintiff) PARTIES : Fortis Bank (Nederland) NV (first defendant) Brian Silvia (second defendant)

FILE NUMBER(S) : SC 1107i/09

Mr R Harper SC (plaintiff) COUNSEL : Stevenson SC w A Lo Surdo (first defendant) F Austin (second defendant)

HWL Ebsworth Lawyers (plaintiff) SOLICITORS : Norton White Lawyers & Notaries (first defendant) Paul Bard Lawyers (second defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

BRERETON J

Wednesday 25 February 2009

1107/09 Innua Australasia Pty Ltd v Fortis Bank (Nederland) NV & anor JUDGMENT (ex tempore) 1 HIS HONOUR: The plaintiff Innua Australasia Pty Ltd is a subsidiary of the Normandy Group SA which has, since at least the early 2000s, had banking and financing facilities with the first defendant Fortis Bank (Nederland) NV, most recently under a facility agreement of 27 May 2008 by which the bank provided a facility of $US45 million to Normandy. As part of the documentation that contains Normandy's arrangements with the Bank, a joint and several liability agreement of 9 October 2001 makes Innua jointly and severally liable for any facility made available by the Bank to Normandy. That joint and several liability is supported by a fixed and floating charge granted by Innua to the Bank on 11 December 2002 which, inter alia, operates as a fixed charge in respect of assets described as a "nominated collections account" and "receivables". The nominated collections account is an account in the name of Fortis with Westpac into which payments by customers of Innua are remitted and in respect of which is imposed a charge to Fortis. The receivables are the amounts owing to Innua by its customers. 2 Innua says that a subsequent arrangement between the parties had the effect that 20 per cent of its receipts from receivables was effectively "carved out" of the security, so that the charge operated only in respect of 80 percent of what was received into the nominated collections account ("the 80/20 arrangement"). Fortis accepts that there was some arrangement between the parties pursuant to which some of the amounts received into the nominated collections account would be ultimately remitted to Innua, but the terms of that arrangements are in dispute. For present purposes, most importantly, Fortis says that the arrangement was to operate only so long as Innua was not in default under the security documentation. Fortis contends that such arrangement as there was left a substantial discretion in Fortis as to what if any amount it would remit. 3 In December 2008, Fortis asserted that Innua was in default under the security documentation in several respects. It thereupon ceased to permit any of the receipts into the nominated collections account to be remitted to Innua – thus effectively cutting off Innua's income stream and depriving it of the ability to pay its creditors including the Australian Taxation Office. Innua contends that this action was in breach of the 80/20 arrangement to which I have referred. Further, Fortis contends that even if there were a binding 80/20 arrangement (which it denies), it was entitled to take the action it did as a result of Innua going into default under the security documentation.