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[2000] FCA 612
Federal Court of Australia
2000-05-05
Heerey J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The Full Court has remitted the question whether the appropriate discount rate for the purposes of cl 4(b) of the Master Discount Agreement should be chosen (i) on the basis of the interest rates agreed by experts and used in connection with the calculations appearing at appeal book 1663 to 1664, or (ii) using discount rates based on a rate or rates derived from the agreement and from the leases entered into pursuant thereto. 2 The context in which this question arises and the relevant terms of the agreement and lease are fully set out in the reasons for judgment of the Full Court delivered on 20 July 1999 [1999] FCA 978 and it is not necessary to repeat them. Likewise, I shall not repeat the detailed and helpful written submissions which have been filed by the parties. 3 I do not agree with Esanda's submission that "net present value" is a technical term which the court cannot define for itself. On the contrary, it is in my opinion an expression of ordinary commercial usage, like "written down value", "FOB" or "sinking fund". The concept conveyed by the expression is that of the value today of a payment or payments that will not be received until some time in the future. Of necessity, the net present value is less than the face value of such payment or payments. The question I have to decide is how the expression operates in the particular context of this case. 4 I do not think the word "present" has the significance for which Esanda contends. It does no more than direct attention to the point in time at which cl 4 operates.
5 Clauses 6 and 11 of the lease have the effect that a particular rate can be ascertained for a particular lease in order to calculate amounts payable when a vehicle is voluntarily returned or repossessed. It makes commercial sense to impute to the parties an intention that when cl 4(b) applies in relation to a particular leased vehicle, the same rate applies. As counsel for EMCL points out, the cl 4 process was intended to take place on the day of disposal, this being an event which would be contemplated as occurring frequently, perhaps on a daily basis, over a number of years. It is unlikely the parties would have intended that expert or extrinsic evidence would be required.
6 As to the argument that the parties would not have intended the possibility of a windfall depending on future movements in interest rates, it can be pointed out that the same possibility exists in relation to each individual lease as between lessor and lessee. After all, what has been sold, as it were, under the agreement are rights under individual leases. It is consistent with the underlying purpose of the agreement to value these rights for all purposes in the same way, whenever such rights accrue. 7 It is true that there is not a precise concordance between the terms "recoverable amount" and "discount rate" in the lease and "net present value" in the agreement. However, the language of commercial documents not infrequently contains infelicities of expression. Sometimes different parts of a document or documents do not fit together with the precision of a Swiss watch. But the task of a court is to give the words used by the parties a workable construction, consistent with the overall purpose of their transaction. 8 In my opinion EMCL's construction should be adopted. I do not find it necessary to consider whether the various extrinsic matters relied on by EMCL, such as accounting standards and Esanda's subsequent conduct, may be relied upon.
I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.
Associate: Dated: 5 May 2000 Counsel for the Applicant: Mr P K Searle
Solicitor for the Respondent: Corrs Chambers Westgarth
EMCL
Esanda Finance Corp Ltd