Morgan and Others v BNP Paribas Equities (Australia) Limited and Another [2006] NSWCA 197

Morgan and Others v BNP Paribas Equities (Australia) Limited and Another [2006] NSWCA 197

A margin call was made on 15 August 2001 pursuant to the options trading agreement, using the additional facility under the July agreement, and SCC and Mr Morgan complied with it by purchasing 26,000 Telstra shares as collateral. The undisclosed reversal of the XXX entry did not itself create an effective margin call under the loan agreement. Because the 15 August call was met, there was no event of default under the options agreement and no occasion to consider a further 17 August call; BNP was not entitled on that basis to terminate and close out the facilities.

Jurisdiction
Australia
Judgment Date
24 July 2006
Procedural Posture
Banking and Contract Appeal Concerning Termination and Close Out of Margin Lending and Options Trading Facilities / Appeal From Supreme Court of New South Wales, Equity Division
Outcome
Appeal allowed with costs; cross-claim dismissed with costs; matter remitted for assessment of damages.
Legal Topics
['margin Lending Facility' 'options Trading Agreement' 'margin Call' 'contract Construction' 'close Out of Open Contracts' 'cross Claim']
['banking' 'contract' 'civil Procedure'] ['margin Lending Facility' 'options Trading Agreement' 'margin Call' 'contract Construction' 'close Out of Open Contracts' 'cross Claim']

Case Brief

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Procedural Posture

Banking and Contract Appeal Concerning Termination and Close Out of Margin Lending and Options Trading Facilities / Appeal From Supreme Court of New South Wales, Equity Division

Legal Issues

  1. 1 ['Whether BNP effectively made a margin call on 15 August 2001 and, if so, under which agreement.' 'Whether any margin call made on 15 August 2001 was met by the appellants through provision of collateral in the form of 26,000 Telstra shares.' 'Whether the undisclosed reversal of the XXX entry gave rise to a margin call under the loan agreement.' 'Whether, depending on the answers concerning the 15 August 2001 call, a further call was effectively made and not met on 17 August 2001.' 'Whether BNP was entitled to terminate the relevant facilities and close out outstanding options.']

Ratio Decidendi

A margin call was made on 15 August 2001 pursuant to the options trading agreement, using the additional facility under the July agreement, and SCC and Mr Morgan complied with it by purchasing 26,000 Telstra shares as collateral. The undisclosed reversal of the XXX entry did not itself create an effective margin call under the loan agreement. Because the 15 August call was met, there was no event of default under the options agreement and no occasion to consider a further 17 August call; BNP was not entitled on that basis to terminate and close out the facilities.

Court Disposition

Appeal allowed with costs; cross-claim dismissed with costs; matter remitted for assessment of damages.

Orders

  • ['Appeal allowed.' 'Judgment for Sydney Concrete & Contracting Pty Ltd under its Statement of Claim against BNP Paribas Equities (Australia) Limited and against BNP Paribas Equities Private (Australia) Limited filed in proceedings 50185/01, with damages to be assessed by remitting their assessment to a Justice of...