Sapphire (SA) Pty Ltd (trading as River City Grain) -v- Barry Smith Grains Pty Ltd (In Liquidation) [2012] NSWSC 771

Sapphire (SA) Pty Ltd (trading as River City Grain) -v- Barry Smith Grains Pty Ltd (In Liquidation) [2012] NSWSC 771

An Insolvency Event occurred on 19 September 2007. The defendant failed to notify the plaintiff as required, breaching Rule 17.6.2a) of the NACMA Trade Rules. The plaintiff, as the non-defaulting party, is entitled to declare the contracts closed out at the Fair Market Price on the first business day after the date of the Insolvency Event to avoid the defendant benefiting from its own breach. The actual exercise of this option and the precise Fair Market Price on that date require further submissions.

Jurisdiction
Australia
Judgment Date
10 July 2012
Procedural Posture
Appeal Against Arbitral Award / Post Arbitration, Appeal Pursuant to S 38(4) Commercial Arbitration Act 1984 (nsw)
Outcome
Decision deferred with directions to hear further submissions regarding the exercise and effect of the plaintiff's option and the determination of Fair Market Price as at 20 September 2007.
Legal Topics
['construction of Trade Rules' 'contracts for Sale and Purchase of Grain' 'fair Market Price Determination' 'consequences of Insolvency in Contract']
['commercial Arbitration' 'contract Law'] ['construction of Trade Rules' 'contracts for Sale and Purchase of Grain' 'fair Market Price Determination' 'consequences of Insolvency in Contract']

Case Brief

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Procedural Posture

Appeal Against Arbitral Award / Post Arbitration, Appeal Pursuant to S 38(4) Commercial Arbitration Act 1984 (nsw)

Legal Issues

  1. 1 ['Whether an Insolvency Event occurred prior to appointment of provisional liquidators' 'Whether proper notice was given as required by NACMA Trade Rules' 'Effect of failure to give notice of an Insolvency Event on contract close out and Fair Market Price determination' 'Proper construction of NACMA Trade Rules regarding insolvency and notice procedures']

Ratio Decidendi

An Insolvency Event occurred on 19 September 2007. The defendant failed to notify the plaintiff as required, breaching Rule 17.6.2a) of the NACMA Trade Rules. The plaintiff, as the non-defaulting party, is entitled to declare the contracts closed out at the Fair Market Price on the first business day after the date of the Insolvency Event to avoid the defendant benefiting from its own breach. The actual exercise of this option and the precise Fair Market Price on that date require further submissions.

Court Disposition

Decision deferred with directions to hear further submissions regarding the exercise and effect of the plaintiff's option and the determination of Fair Market Price as at 20 September 2007.

Orders

  • ['Parties invited to make further submissions on option exercise and Fair Market Price determination.' 'Directions to allow parties to agree on Fair Market Price or provide further evidence to the Court.']