- Ankar Pty Ltd v National Westminster Finance

Supreme Court of NSW|2024-09-20|Before: Black J

Solicitors: Allens (Plaintiff) File Number(s): 2024/270785

Nature of the application

By Amended Originating Process filed on 7 August 2024, the Plaintiff, Mr Kogan and Ms Sozou in their capacity as joint and several receivers and managers ("Receivers") of Press Australia Pty Ltd (recs and mgrs apptd) (in liq) (controllers apptd) ("Press Australia") in its own capacity and as trustee for the Lassab Trust, applies for leave to bring the proceedings against several companies that are in liquidation, directions under s 424 of the Corporations Act 2001 (Cth) ("Act') and declaratory relief. In particular, the Receivers seek a direction under s 424 of the Act that they are justified in proceeding on the basis that, under a document titled "Interlocking Guarantee and Indemnity" dated 4 April 2022 ("Interlocking Guarantee"), Press Australia has guaranteed the obligations of Xpress Fuel Australia Pty Ltd (recs and mgrs apptd) (in liq) ("XFA") under an "Invoice Finance Facility" ("IFF") granted by National Australia Bank Ltd ("NAB") to XFA on or around 4 April 2022. They also seek a declaration, under s 75 of the Supreme Court Act 1970 (NSW) or in the Court's inherent jurisdiction that, under the Interlocking Guarantee, Press Australia has guaranteed XFA's obligations under the IFF. An application for relief on a alternate basis was reserved pending the determination of this application. The application was served on interested parties, including a second ranking secured creditor and liquidators of the several companies, none of which have opposed the relief sought. The background to the receivership is noted in an earlier judgment of Williams J in Re Xpress Fuel Australia Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) [2023] NSWSC 692. I have drawn on the helpful submissions of Mr Hutton, with whom Mr Gerber appears for the Receivers, in this judgment.

Affidavit evidence

The Receivers read the affidavit dated 23 July 2024 of Mr Kogan which refers to the circumstances in which the Xpress group of companies were placed in receivership. Mr Kogan notes, by way of background, the Xpress group previously operated a petroleum business, primarily in New South Wales but also in Queensland and in Victoria; relevantly, Xpress Group Australia Pty Ltd (recs and mgrs apptd) ("XGA") owned and maintained logistic assets which were used for transportation of petroleum; Press Australia leased real properties, mainly to petrol station operators; XFA was a petrol wholesaler and supplied fuel to the operators of the petrol stations; and Xpress Transport Solutions Pty Ltd (recs and mgrs apptd) ("XTS") used XGA's assets and transported fuel from supply depots to XFA's customers. The sole director of each Xpress Group company was and is Mr Bassal. Mr Bassal was, until his bankruptcy, also the sole shareholder of each Xpress Group company other than XGA, which is wholly owned by Press Australia. Mr Bassal was made bankrupt by a debtor's petition on 12 June 2024.
Mr Kogan's evidence is that NAB provided financial accommodation to the Xpress group of companies under Master Asset Finance Agreements dated 21 December 2012 and 24 July 2019; a Finance Agreement dated 31 March 2022 with Press Australia, XFA and XTS with a combined limit of $22,506,925 ("Finance Facility") (Ex BFK1, CB 220); and the IFF which had a limit of $18 million. NAB in turn took guarantees and other securities in connection with the financial accommodation including a guarantee dated 4 April 2022 with a limit of $18 million plus certain costs ("Limited Guarantee") and the Interlocking Guarantee and mortgages and other securities. Mr Hutton rightly points out that the Interlocking Guarantee, the Limited Guarantee, the Finance Facility and the IFF were all entered into within a short period of each other; and that the limit of the Interlocking Guarantee corresponds with the limit of the Finance Facility ($22,506,925) and the limit of the Limited Guarantee corresponds with the limit of the IFF ($18,000,000).
Mr Kogan also sets out the then status of the receivership and to real properties owned by Press Australia. He notes the relevant properties could be realised for an amount in excess of Press Australia's residual liability to NAB, excluding any liability in respect of the IFF, but the amount realised from the sale of those properties would be less than Press Australia's liability to NAB if it is also liable under the IFF. Mr Kogan's evidence is that, if the Court makes the direction and declaration sought, the Receivers will sell the relevant properties and apply their proceeds towards XFA's outstanding liabilities under the IFF on the basis that payment of those liabilities is guaranteed by Press Australia under the IFF. If that relief is not granted, the Receivers would sell only certain of those properties, and then retire as receivers in respect of Press Australia, and place the remaining properties under the control of Press Australia's liquidators. By a second affidavit dated 19 September 2024, Mr Kogan updates the position in respect of the receivership and notes that the Receivers have made further recoveries and, if Press Australia has not guaranteed XFA's obligations under the IFF, then the funds already held by the Receivers are likely to be sufficient to cover Press Australia's remaining secured debt to NAB without the sale of further properties.
The Receivers read an affidavit dated 2 August 2024 of their solicitor, Ms Prinsloo which refers to notice of the application given to interested parties.

Submissions and determination

As I noted above, the Receivers seek leave to proceed against the First to Fifth Defendants under s 500(2) of the Act in respect of this application. Mr Hutton refers to Halley J's summary of the applicable principles to the grant of such leave in ZOLL Medical Australia, in the matter of Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd (in liq) [2022] FCA 167 at [25], where his Honour noted that the purpose of s 500(2) is to prevent a company's assets being dissipated by unnecessary litigation; the power to grant leave is discretionary; and that leave should generally be granted for a proprietary claim which cannot be accommodated within the proof of debt procedure; and a plaintiff seeking such leave must establish that the claim has a solid foundation and gives rise to a serious question to be tried. I am satisfied that this matter could not be resolved by the Receivers lodging a proof of debt in the liquidation of Press Australia, where it affects the manner in which the Receivers may deal with secured property, and the Receivers have plainly shown a solid foundation for their claim for the reasons noted below. I will therefore grant the Receivers leave under s 500(2) of the Act to proceed on the relief set out in the Amended Originating Process.
As I also noted above, the Receivers seek directions under s 424 of the Act, which permits a controller of property of a corporation to apply to the Court for directions in relation to any matter arising in connection with the performance or exercise of any of the controller's functions and powers as controller. A controller for the purpose of that section includes a receiver appointed under a power contained in an instrument: s 424(2); and the Receivers were here appointed to Press Australia by instruments dated 30 March and 11 April 2023. I recognise that, as Mr Hutton points out, that section permits a receiver "to apply to the court for a direction as to whether or not he may lawfully take a course which he proposes to do" and the Court's power to make directions under s 424 "is a broad one, intended to facilitate the work of receivers … and should be interpreted as widely as possible to give effect to that intention": North City Developments Pty Ltd; Ex Parte Walker (1990) 20 NSWLR 286 at 290F; Re Direct Acceptance Corporation Ltd (Receiver Appointed) (in Liquidation) (2019) 136 ACSR 245; [2019] NSWSC 395 at [35]. Such a direction may be sought, as here, where the lawfulness of the receiver's proposed course of action depends on the proper construction of an instrument: Re DSG Holdings Australia Pty Ltd [2020] NSWSC 644. Mr Hutton also rightly recognises that a direction under s 424 may protect a receiver from a claim for breach of duty (assuming full and fair disclosure is made), but is not binding on third parties, and the Receivers seek declarations of right on that basis: Korda v Silkchime Pty Ltd (2010) 243 FLR 269; [2010] WASC 155 at [35]-[36]; Heenan, Ruby Apartments Pty Ltd (in liq) v Ralan Paradise No 1 Pty Ltd (in liq) (No 2) (2021) 156 ACSR 86; [2021] FCA 1314 at [51]. I am satisfied that the Court here has power to give the direction and make the declaration sought, subject to its merits which I address below.
Mr Hutton also points out that the parties to the Interlocking Guarantee are Press Australia, XFA, XTS, XGA, Xpress AG and Press AG and Mr Bassal and NAB; the parties to the Limited Guarantee are XFA, XGA, XTS and Mr Bassal and NAB; and all of these parties have been joined as Defendants other than Xpress AG, which has been deregistered, and Mr Bassal, who is now bankrupt. The Receivers have brought the application to the attention of Mr Bassal's trustee in bankruptcy and another interested party and neither has sought to appear in the proceeding. Press Australia has filed a submitting appearance, save as to costs. Mr Hutton submits, and I accept, that as the primary party with an interest in opposing the application, Press Australia is a sufficient contradictor for the purpose of the declaratory relief sought even though it does not oppose it: Catholic Metropolitan Cemeteries Trust v Attorney General of New South Wales [2024] NSWCA 30 at [26]. NAB has also filed a submitting appearance, save as to costs, and other parties have not sought to be heard in opposition to the application.
Turning now to the merits of the relief sought, Mr Hutton points out that the Interlocking Guarantee and the Limited Guarantee are to be construed according to the principles of construction applicable to commercial contracts, supplemented by the "strictissimi juris" principle: Cherry v Steele-Park (2017) 96 NSWLR 548 ("Cherry") at [46]-[48]; [2017] NSWCA 295; CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [153]-[164]. He submits and I accept that "the task of identifying the legal meaning of provisions in a commercial contract is the task of identifying the imputed intention of the parties, by reference to the contractual text construed in light of its context and purpose" and "[t]he starting point and the ending point of the construction of a written commercial contract is the language chosen by the parties to record their bargain" (Cherry at [46], [72]); and "[t]he meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean" having regard to the language used understood with reference to "the surrounding circumstances known to the parties, and the purpose and object of the transaction": Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].
The "strictissimi juris" principle in turn recognises that "the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety": Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 561; [1987] HCA 15; Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 at [17]-[23]; [2004] HCA 28. However, that principle does not "mean that where parties to such a document [a guarantee] have deliberately chosen to adopt wording of the widest possible import that wording is to be ignored" and does not require that ambiguity "be detected where the natural and ordinary meaning of the language, taken in its contractual context, requires no such conclusion": Coghlan v S H Lock (Aust) Ltd (1987) 8 NSWLR 88 at 92; Nashco Pty Ltd v Yang [2022] NSWCA 137 at [30]-[32]; Cherry at [112]. Mr Hutton also submits and I would be inclined to accept that "all monies" or "all obligations" clauses are to be construed according to "ordinary principles of contractual construction (including those applicable to the resolution of an ambiguity)" and, in particular, by reference to "the language of the clause in the context of the express and implied terms of the instrument as a whole, the surrounding circumstances known to the parties when the instrument was executed, and the apparent purpose and object of the transaction": Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd (in liq) (2008) 36 WAR 342 at [43]; [2008] WASCA 80. However, the application of the principles identified in earlier cases dealing with all monies guarantees, as summarised, for example, in Meldov Pty Ltd v Bank of Queensland [2015] NSWSC 378, would not alter the result here.
In oral submissions, Mr Hutton points to the numerous borrowings that fall within the scope of the Finance Facility (Ex BFK1, CB 220) to which Press Australia is party and draws attention to the guarantee and indemnity in cl 27.1 of the General Conditions to that facility, which extends to a guarantee by each Obligor of that Obligor's obligations under the Finance Documents (as defined). He points to the terms of the IFF (Ex BFK1, CB 331) and to the securities identified in that document, which he recognises do not include the relevant properties owned by Press Australia. I accept that nothing turns on that, where that listing is not expressed as exhaustive and recognises both that future securities may be provided and that earlier securities continue to have effect. NAB's Business Lending Terms (Ex BFK1, CB 370) in turn provide for the actions that it may take on a default including enforcing any "Security", which extends beyond those specified to "any other Security Interest granted to or held by us from time to time in connection with a Facility or any Facility Amount Owing" (Ex BFK1, CB 379). The Limited Guarantee (Ex BFK1, CB 383) plainly supports the IFF, but it does not follow that it is the only security available to NAB in respect of the IFF.
Mr Hutton points out that, as I noted above, the Interlocking Guarantee (Ex BFK1, CB 401) is between NAB; Press Australia, XFA and XTS as Customers; and all of the Xpress Group companies (Press Australia, XFA, XTS, XGA, Xpress AG and Press AG) and Mr Bassal as Guarantors. I recognise that the "Basic Limit" in that guarantee (to which I refer below) is directed to the amount of the Finance Facility, but that also does not have the consequence that the Interlocking Guarantee is available only for that purpose.
Clause 1 of the Interlocking Guarantee is titled "Why you are giving us this guarantee" and provides that: "You are giving us this guarantee so that we will provide or continue to provide loans and other facilities to the Customer." "You" is defined in cl 27 as "each person named as a guarantor in the Details" and means "each [guarantor] separately and two or more [guarantors] jointly". "Us", "we" and "our" refer to NAB, its successors and assigns.
Clause 2 is titled "What's the amount you may have to pay" and provides that: "The amount you may have to pay us under this guarantee is limited to the Basic Limit. If there are more than one of you, then: (a) the Basic Limit is a collective limit that applies to all guarantors. If this guarantee states that a further limit applies to any individual guarantor, that guarantor's liability is limited to that amount; and (b) you may have to pay even if any of the other guarantors don't." The "Basic Limit" is defined in cl 27 as "the amount calculated as set out in the 'Amount You Agree to Pay' section of this guarantee", and that amount is $22,506,925 plus certain other amounts including interest and certain costs.
Clause 3 is titled "What you guarantee to pay". It provides that: "3.1 You guarantee that the Customer will pay us the Money Owed By The Customer. 3.2 If the Customer doesn't pay any Money Owed By The Customer on time, or on the terms we've agreed with the Customer, you agree to pay us the Money Owed By The Customer within 7 days when we ask (whether or not we've asked the Customer to pay before asking you to pay). 3.3 If the Money Owed By The Customer increases after we've asked you to pay, then when you pay, you must pay us any increased amount. We'll tell you the Amount You Owe Us at any time if you ask us."
Clause 4 is titled "What you indemnify us for" and provides, relevantly: "4.1 In addition, you indemnify us for any liability, loss or reasonable Costs we incur if: (a) the Customer doesn't have to, is unable to, or doesn't, pay us the Money Owed By The Customer. … … 4.2 You agree to pay us the amounts under this clause within 7 days when we ask. You agree to this as a separate and primary obligation that is not dependent on you being liable under any other clause in this guarantee." [emphasis added]
The term "Money Owed By The Customer" defined in cl 27.1 as follows: "Money Owed By The Customer means all money the Customer (either alone or together with another person) owes us, or may owe us in the future for any reason. This may include principal, amounts in the nature of principal, interest, Costs, taxes and any Economic Costs."
Mr Hutton points to the breadth of the first sentence of this definition, with its extension to money owed "for any reason". He points out that the second sentence elaborates upon but does not limit the first. He submits, and I accept, that this clause has no ambiguity to which the strictissimi juris principle could apply and extends to all money owed to NAB, whether at the time of executing the Interlocking Guarantee or after that time, by any one or more of the Customers, no matter the reason the money is owed. Where the definition of "Customer" in the Interlocking Guarantee includes XFA, then the term "Money Owed By The Customer" includes any money that XFA owes NAB under the IFF. It follows that, under cl 3 of the Interlocking Guarantee, Press Australia, as a Guarantor, is obliged to pay NAB that money within 7 days of being asked to pay it.

Orders

For these reasons, I make orders as set out in the Short Minutes of Order proposed by the Receivers.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 September 2024

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