BB Retail Capital Pty Ltd v Alexandria Landfill Pty Ltd [2015] NSWCA 319

BB Retail Capital Pty Ltd v Alexandria Landfill Pty Ltd [2015] NSWCA 319

The put option deed did not expressly or by necessary implication vary the Terms of Issue, and the pre-contractual correspondence was not admissible to prove the negotiated method of calculating the option price as an aid to construction; accordingly, the Tranche B convertible notes converted according to cl 7.5(a). The $14.7 million borrowed to enable redemption of convertible notes was raised and used directly or indirectly for the general business of the enterprise, namely repayment of debt, and therefore constituted Organic Debt for the purposes of the conversion formula.

Jurisdiction
Australia
Judgment Date
15 October 2015
Procedural Posture
Appeal and Cross Appeal Concerning Contractual Construction of Convertible Note Terms and Admissibility of Extrinsic Evidence / Court of Appeal From Orders of Stevenson J in the Supreme Court of Nsw, Equity Division – Commercial List
Outcome
Appeal allowed; cross-appeal dismissed.
Legal Topics
['construction of Commercial Agreement' 'variation of Contract' 'convertible Notes' 'put Option Deed' 'organic Debt' 'admissibility of Pre Contractual Negotiations' 'extrinsic Material in Contractual Construction']
['contract' 'evidence'] ['construction of Commercial Agreement' 'variation of Contract' 'convertible Notes' 'put Option Deed' 'organic Debt' 'admissibility of Pre Contractual Negotiations' 'extrinsic Material in Contractual Construction']

Case Brief

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Procedural Posture

Appeal and Cross Appeal Concerning Contractual Construction of Convertible Note Terms and Admissibility of Extrinsic Evidence / Court of Appeal From Orders of Stevenson J in the Supreme Court of Nsw, Equity Division – Commercial List

Legal Issues

  1. 1 ['Whether Tranche B convertible notes held by BB converted at the rate specified in cl 7.5(a) of the Terms of Issue or whether ALF and BB had otherwise agreed to convert them on a $1 to 1 note basis.' 'Whether correspondence and term sheets exchanged before execution of the put option deed were admissible to demonstrate how the put and call option exercise prices were calculated.' 'Whether borrowings of $11.8 million from investors and a $2.9 million increase in a Westpac overdraft used to redeem convertible notes constituted Organic Debt for the purposes of the conversion formula in cl 7.5(a) of the Terms of Issue.']

Ratio Decidendi

The put option deed did not expressly or by necessary implication vary the Terms of Issue, and the pre-contractual correspondence was not admissible to prove the negotiated method of calculating the option price as an aid to construction; accordingly, the Tranche B convertible notes converted according to cl 7.5(a). The $14.7 million borrowed to enable redemption of convertible notes was raised and used directly or indirectly for the general business of the enterprise, namely repayment of debt, and therefore constituted Organic Debt for the purposes of the conversion formula.

Court Disposition

Appeal allowed; cross-appeal dismissed.

Orders

  • ['Appeal allowed.' 'Cross-appeal dismissed.' 'Set aside the orders made by Stevenson J on 23 October 2014.' "Order that the second respondent pay the appellant's costs of the appeal and cross-appeal and have a certificate under the Suitors' Fund Act 1951 (NSW), if eligible." "Order that the second respondent pay the...