International Petroleum Investment Company -v- Independent Public Business Corporation of Papua New Guinea [2014] NSWSC 1289

Supreme Court New South Wales

Medium Neutral Citation: International Petroleum Investment Company -v- Independent Public Business Corporation of Papua New Guinea [2014] NSWSC 1289 Hearing dates: 8, 9,10, 11 & 12 September 2014 Decision date: 31 October 2014 Jurisdiction: Equity Division - Commercial List Before: Hammerschlag J Decision: The Court declares that the RBC valuation is not binding on the parties. IPBC's cross-claim is dismissed. Catchwords: CONTRACT - construction - Bond Deed Poll incorporating terms and conditions of Exchangeable Bonds - Bonds to be exchanged on maturity into shares listed on the Australian Securities Exchange calculated by reference to their Current Market Value - if the amount of the Bonds plus interest exceeds the Current Market Value of the shares the defendant must pay the plaintiff a Cash Settlement Amount equivalent to the shortfall - Current Market Value in the first instance is the volume weighted average price (VWAP) over 20 trading days prior to Maturity Date - if the Issuer reasonably considers VWAP Value not to reflect Current Market Value it may issue an Alternative Valuation Notice - the terms and conditions include a procedure for the parties each to appoint an Independent Valuer to assess market value and the average of the two valuations is taken - defendant issued an Alternative Valuation Notice - each of the parties appointed an Independent Valuer - whether Alternative Valuation Notice was invalid as being out of time or because defendant did not reasonably consider that VWAP value was not market value of the shares - whether valuations by the Independent Valuers are not binding on the parties as not being in accordance with the Bond Deed - HELD Alternative Valuation Notice valid - valuation by Independent Valuer appointed by defendant not binding - valuation by Independent Valuer appointed by plaintiff binding Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Spencer v The Commonwealth (1907) 5 CLR 418 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 HTW Valuers Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 MMAL Rentals Pty Ltd v Brunning (2004) 63 NSWLR 167 Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2013] QCA 271 Mio Art Pty Ltd v Mango Boulevard Pty Ltd [2012] QSC 348 Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 701 Holt v Cox (1997) 23 ACSR 590 Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1942) 65 CLR 572 Ronnoc Finance v Spectrum Network Systems Ltd (1997) 45 NSWLR 624 Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 Airservices Australia v Canadian Airlines International Ltd (2000) 202 CLR 133 Elkington v Shell Australia Ltd (1993) 32 NSWLR 11 Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 National Provincial Bank Ltd v Bradberry [1943] 1 Ch 35 Willis v The Commonwealth (1946) 73 CLR 105 Gould v Vaggelas (1985) 157 CLR 215 Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 Sudbrook Trading Ltd v Eggleton [1983] 1 AC 444 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Candoora No.19 Pty Ltd v Freixenet Australasia Pty Ltd [2008] VSC 478 Category: Principal judgment Parties: International Petroleum Investment Company - Plaintiff Independent Public Business Corporation of Papua New Guinea - Defendant Representation: Counsel: J.R.J. Lockhart SC with J.C. Hewitt - Plaintiff C.A. Moore SC with E.M. Peden and A. Hochroth - Defendant Solicitors: Clifford Chance - Plaintiff Herbert Smith Freehills - Defendant File Number(s): 2014/74705