Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd

1. [1]

   THE COURT: The Gosford Pty Ltd (“Gosford”) and Shinetec (Australia) Pty Ltd (“Shinetec”) were parties to a “Design and Construction Head Contract”, which provided that Shinetec would fund the first $37,000,000 of construction costs of a property development in Gosford, New South Wales. Shinetec agreed to provide a standby letter of credit in the amount of $37,000,000 to secure its funding obligation. Shinetec’s parent company, Shanxi Construction Investment Group Co Ltd (“Shanxi”), procured a standby letter of credit in that amount in favour of Gosford from the Bank of China Ltd, Shanxi Branch. The standby letter of credit expired on 31 July 2021. On 26 July 2021 receivers were appointed to Gosford by a secured creditor (Gemi 149 Pty Ltd). The receivers served a demand on the standby letter of credit on Bank of China on Friday 30 July 2021. The standby letter of credit and the demand are annexed to this judgment.

2. [2]

   Some three years later, Bank of China has neither honoured nor dishonoured that demand. That is not said by way of criticism of the Bank. It came about because on Monday 2 August 2021, Shinetec sought and obtained interlocutory relief from the Supreme Court of New South Wales, and on the same day Shanxi applied for relief from the Taiyuan Intermediate People’s Court, obtaining an order suspending payment the following day. The orders made by the Supreme Court of New South Wales were made ex parte, and remained in force for a few days, but thereafter continued, consensually, pending the trial, against parties other than Bank of China. The orders made by the Taiyuan Intermediate People’s Court were also made ex parte. They have been extended subsequently, and presently remain in place until 24 July 2024. They have at all times bound the Bank of China. In March 2023, Bank of China itself approached the Shanxi Higher People’s Court to seek a revocation of the orders, but its application was refused.

3. [3]

   Two proceedings were tried over three days last November in the Commercial List of the Supreme Court of New South Wales.

   1. (1)

      First, Shinetec by summons sued Gosford, its receivers and their bank Macquarie Bank Ltd, seeking to maintain that there was no entitlement to serve the demand on Bank of China. Shinetec had originally joined Bank of China but withdrew its claim against that Bank well before trial. Shinetec did not contend that Gosford or anyone acting on its behalf had committed fraud when making a demand on the standby letter of credit. Shinetec sought a declaration that the demand was “invalid and of no effect” and an order that the standby letter of credit be returned.

   2. (2)

      Secondly, Gosford by a cross-claim sued Bank of China. Gosford said that Bank of China was in breach of its obligations under the standby letter of credit. It sought judgment in the amount of the standby letter of credit, $37,000,000. The Bank’s defences relied on the demand being signed by Gosford’s receivers, and the order of the Taiyuan Intermediate People’s Court. It did not allege fraud.

4. [4]

   The primary judge dismissed Shinetec’s case and entered judgment on the cross-claim in favour of Gosford against Bank of China: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 2) [2023] NSWSC 1405.

5. [5]

   The Bank of China has not appealed from the $37,000,000 judgment entered against it. However, on 14 March 2024 Shinetec appealed (within the time permitted by the Uniform Civil Procedure Rules 2005 (NSW)), and it was subsequently permitted to join as the second appellant its parent company Shanxi, which had obtained the standby letter of credit, and to which the Bank of China would look for payment following a demand.

6. [6]

   Normally an appellant submits that the primary judge was wrong to reject its submissions. Unusually, a substantial aspect of this appeal concerns arguments sought to be advanced by Shanxi and Shinetec which were not advanced by Shinetec at trial. In particular, Shanxi and Shinetec contend that Gosford’s demand on the standby letter of credit was invalid, or void, or of no effect because Gosford was subject to an “implied negative stipulation” in the Construction Contract that was breached when the demand was made.

7. [7]

   At the commencement of the hearing at first instance, and again at its conclusion, senior counsel who appeared for Shinetec at trial had sought to make that argument, but Shinetec was refused leave to do so. Shinetec and Shanxi also sought to advance in their appeal substantially the same arguments which had been made on behalf of Bank of China in response to Gosford’s cross-claim concerning why the Bank was not required to make payment pursuant to the standby letter of credit. Gosford said that Shinetec should not be permitted to make arguments which it had not been permitted to make at trial, nor should Shinetec and Shanxi be permitted to make arguments which had been made by Bank of China but which the Bank chose not to make in this appeal.

8. [8]

   The facts that Shanxi was not party to the proceedings at first instance and that Shinetec seeks to advance different arguments which had not been run at trial mean that a deal of the parties’ submissions on appeal are procedural. We shall address them in due course. Unfortunately, the need to describe aspects of the procedural history of this litigation necessarily lengthens these reasons. Indeed, the parties’ submissions about whether the appellants should be permitted to run new submissions occupied at least as much time at the hearing of the appeal as submissions about the substantive points themselves. We have concluded that Shinetec and Shanxi should not be permitted to run those arguments, because some were outside the issues argued and others were disavowed by Shinetec at trial. However, against the possibility that we are wrong, and because it is better that the parties’ dispute be resolved substantively, rather than merely by reason of the procedural choices made along the way, we have also considered the arguments on their merits.

9. [9]

   We have also concluded that the substantive arguments advanced by Shinetec and Shanxi are without foundation. They misapprehend when a demand on a letter of credit can be resisted, the nature of the appointment of receivers and the nature of interlocutory relief.

10. [10]

    The relevant law is not especially complicated.

11. [11]

    First, it was not contended either at trial or in this appeal that there was any fraud or unconscionability on the part of Gosford or its receivers when it made its demand. Even if Gosford had promised to Shinetec that it would only call on the standby letter of credit in certain circumstances, that did not mean that its call on the letter of credit was invalid or void or of no effect. As between the beneficiary of the standby letter of credit and the issuing bank, it is not to the point that a beneficiary of a letter of credit is in breach of contract when it makes a demand. It is axiomatic that absent fraud or unconscionability, the bank must pay if the documents presented are compliant. Of course, if the beneficiary is in breach, it will be liable in damages to its contracting party, but that gets determined at a trial, and is not a reason for the bank not to comply with its undertaking to pay. Any other position is antithetical to the basic notion of a standby letter of credit.

12. [12]

    Secondly, it is also true that, in the absence of fraud or unconscionability, an injunction may issue to prevent the beneficiary of a standby letter of credit from making a demand, where the beneficiary has promised only to make a demand in certain circumstances. Decisions to that effect were at the forefront of Shinetec’s and Shanxi’s submissions in this Court. But equity intervenes to prevent the demand being made, not because it is invalid (or “void” or “of no effect”) as between beneficiary and bank, but because the beneficiary has promised its counterparty that it will only call on the security in certain circumstances. Equity will enforce that promise by an injunction, assuming it can be shown that damages are not an adequate remedy for the breach. Most of the cases are cases of quia timet injunctions – where an injunction has issued before the demand has been made. There are occasional cases where an injunction has issued shortly after a demand has been made obliging the beneficiary to withdraw its demand, and we accept that in principle equity may command a beneficiary to withdraw or countermand its demand upon the issuing bank. But neither Shinetec nor Shanxi ever sought such relief, either at trial or on appeal.

13. [13]

    Thirdly, the result is that when a compliant demand is presented upon a bank which has issued a standby letter of credit, in the absence of an allegation of fraud or unconscionability or an injunction, it must pay in accordance with its undertaking. This is the basal flaw in much of Shinetec’s submissions at trial, and much of the submissions of Shanxi and Shinetec on appeal.

14. [14]

    Fourthly, the appointment of receivers to a beneficiary does not change the beneficiary’s name. Nor does it mean that the receivers are authorised transferees of the beneficiary. The receivers act as agents of the company, getting in the company’s property. When the Bank of China received confirmation from Gosford’s bank that the demand was made on Gosford’s letterhead and on its behalf, albeit signed by receivers acting for Gosford, there was no proper basis for the Bank of China not to comply, save for the order made by the Taiyuan Intermediate People’s Court.

15. [15]

    Fifthly, the order obtained by Shanxi from the Taiyuan Intermediate People’s Court which “suspended” the Bank of China’s obligation to pay under the standby letter of credit did not extinguish the debt owed by the Bank to Gosford. It merely prevented the Bank from making payment for the time being. The order was interlocutory, expressed in the language of “suspending”, was made without hearing from Gosford, and made it plain on its face that after the suspension expired, the Bank would have to pay.

16. [16]

    Finally, when Shanxi sued Gosford in China, Shanxi said that Gosford had committed fraud. At trial in Australia, Shinetec disavowed any allegation of fraud. On appeal, neither Shinetec nor Shanxi maintained that Gosford or anyone acting on its behalf had committed fraud. Nonetheless, in this Court, Shinetec and Shanxi insisted that they were permitted to litigate in China irrespective of the outcome of the litigation in Australia.

17. [17]

    Thus there are parallel proceedings in Australia and China, commenced on the same day by Shinetec and Shanxi, respectively, against Gosford. In Australia there has been a trial and an appeal, and there has been no allegation of fraud. Yet in China, Shanxi has alleged that Gosford has committed fraud, and relied on that basis in order to obtain orders suspending its bank’s obligation to make payment to Gosford under the standby letter of credit. Shinetec and Shanxi maintain that they are permitted to litigate the validity of Gosford’s demand in Australia without alleging fraud, and yet reserve to themselves an entitlement to run a further trial in China on the validity of Gosford’s demand, this time on the basis that there is fraud.

18. [18]

    Gosford said that this was an abuse of process. Shinetec and Shanxi said that there was no abuse of process. We agree with Gosford. Indeed, we regard this as a very clear case. Litigants are not permitted to bring parallel proceedings in two countries, and litigate some but not all of the issues in one country, reserving to themselves the right to litigate other aspects of the dispute in the second country. Doing so is unfair to other parties, and if left unchecked may bring the legal systems of both countries into disrepute.

19. [19]

    The foregoing summarises our reasons for dismissing this appeal. The balance of these reasons takes the following form. First, we summarise the factual background, and then explain in some detail the events at the end of July and the beginning of August 2021 in which receivers were appointed to Gosford, a demand was made on the standby letter of credit, and the litigation commenced in New South Wales and China by Shinetec and Shanxi. Secondly, in light of the submissions to the effect that the case advanced on appeal diverged from what was run at trial, we summarise aspects of the trial. Thirdly, we summarise those parts of the reasons of the primary judge insofar as they are relevant to the appeal. Fourthly, we address each of the grounds of appeal pressed by Shanxi and Shinetec.

Factual background

1. [20]

   The dispute arises from a failed property development of land in central Gosford owned by the first respondent, Gosford. (Subsequent to the events giving rise to this litigation, in around June 2022 the land was sold to a third party for $32,000,000.)

2. [21]

   Gosford had the benefit of a development consent described as “Approved Mixed Use Development, Commercial/Retail, Supermarket, Hotel and Shoptop Housing Development”, granted by the local council. By letter dated 18 November 2019, the council modified that consent pursuant to s 4.55(1A) of the Environmental Planning and Assessment Act 1979 (NSW) (being of the view that doing so was a minor modification able to be done without further public consultation), so as to permit certain development, including “demolition of existing structures” to occur prior to the issue of a construction certificate.

3. [22]

   By “Design and Construction Head Contract” made on 15 June 2020 (“Construction Contract”), Gosford as “Principal” agreed with Shinetec as “Contractor” to design and construct the development. The “Formal Instrument of Agreement” stated that the Guaranteed Maximum Price (or GMP) was $185 million plus GST, and the rights, entitlements, liabilities and obligations of the parties were suspended until all conditions precedent were satisfied. One of the conditions precedent was “the Principal securing finance (on terms acceptable to the Principal) sufficient to meet the finance amount”.

4. [23]

   Clause 37.1A, titled “Contractor funded payment”, acknowledged and agreed that:

5. [24]

   The “funding amount” was defined to be the amount in item 6A of an annexure. That definition took the following form:

6. [25]

   The words “Terms & Conditions of funding subject to the loan agreement” were written in hand immediately after that definition.

7. [26]

   So far as the evidence disclosed, there was no extant loan agreement at the time the Construction Contract was entered into. A “Loan Agreement” dated 26 November 2020 identified the development site and its purpose was to assist with Gosford’s construction funding for that site. The Loan Agreement referred to an entitlement on the part of Gosford as borrower to draw down funds from time to time for the loan purpose. It was in the amount of $37,500,000 but nothing was said to turn upon the $500,000 discrepancy.

8. [27]

   Returning to the Construction Contract, cl 37.2 referred in broadly familiar terms to the making of progress claims and their assessment by a superintendent, following which they were to be paid. However, cl 37.2(d) provided:

9. [28]

   The appellants maintained that the Construction Contract and the Loan Agreement were to be read together. When Shinetec performed construction work and made a progress claim, the effect of cl 37.2(d) was to deem there to have been a payment by Gosford of the amount, as well as a draw down notice under the Loan Agreement pursuant to which Shinetec would be paid using its own funds. The practical effect of the deeming for which Shinetec contended is that, for the first $37,000,000 of work done by Shinetec for Gosford, it would be taken to have been paid by monies borrowed by Gosford from itself, and would emerge as if those progress claims had been paid in full but nonetheless Gosford owed Shinetec that amount under the Loan Agreement.

10. [29]

    That construction is not without its difficulties, not least insofar as its effect appears to be to circumvent the regime established by the Building and Construction Industry Security of Payment Act 1999 (NSW), but they were not the subject of argument and may be passed over for present purposes. We proceed on the basis of the operation of the Construction Contract and Loan Agreement for which the appellants contend, noting that in any event, nothing turns on this.

11. [30]

    The definition of funding amount in item 6A of the annexure of the Construction Contract not merely identifies the amount of $37,000,000 plus GST, but also includes an acknowledgement and an executory promise by each party. The drafting is less than ideal, but the meaning is clear.

12. [31]

    Shinetec complied with its obligation to provide a standby letter of credit, and it is the call upon that letter of credit which gives rise to this dispute. Its parent Shanxi applied to the Bank of China, Shanxi Branch. Its application included, as part of what was described as a “solemn commitment”, the following:

13. [32]

    The standby letter of credit had a transaction reference number of “GC0377020000874”. It was addressed to “The Gosford Pty Limited (ACN 630 253 557)” and then stated Gosford’s address in Sydney. It stated that “Bank of China Ltd, Shanxi Branch”, hereinafter called the “Guarantor”, “have agreed to give the standby letter of credit on behalf of the Contractor”. The Contractor was defined to be Shinetec. There followed:

14. [33]

    The standby letter of credit also provided:

15. [34]

    The reference in that passage to “your bank” was a reference to Gosford’s advising bank, Macquarie Bank Limited. Macquarie Bank sent the Bank of China such a confirmation on 30 July 2021.

16. [35]

    The standby letter of credit was said to be “only personal to you and is not assignable or transferable”. It was expressed to be subject to “ISP 98”, which is a reference to “International Standby Practices 98”, being rules issued by the International Chamber of Commerce in 1998. This Court (coincidentally including two of the judges hearing the present appeal) considered the operation of those rules upon a standby letter of credit in Griffin Energy Group Pty Ltd (Subject to Deed of Company Arrangement) v ICICI Bank Ltd [2015] NSWCA 29; 317 ALR 395. It was common ground between the experts on Chinese law that the wording was sufficient to incorporate those provisions.

17. [36]

    The standby letter of credit made no provision for its governing law. The primary judge considered that Chinese law was the proper law, reflecting the legal system with which it had the closest connection. No party challenged that finding.

18. [37]

    The standby letter of credit was expressed to expire on, relevantly, 31 July 2021.

19. [38]

    Following the modification of the development consent, various work including demolition occurred on the site and two progress claims were lodged by Shinetec and approved by the superintendent. They were in the amounts of $3,193,225.42 (including GST) and $2,035,668.23 (including GST), and were dated 4 December 2020 and 21 January 2021 respectively.

20. [39]

    Work thereafter ceased and an exchange of correspondence including show cause notices ensued. No fewer than three sets of receivers were appointed to Gosford. The circumstances in which the first appointment occurred were not fully explained in the evidence, but the appellants said, seemingly uncontroversially, that they were appointed “by a party unrelated to this litigation”. Shinetec appointed Messrs Albarran and Kijurina as receivers and managers of Gosford on around 6 April 2021 seemingly pursuant to an unregistered second mortgage. However, on 26 July 2021 the second and third respondents were appointed receivers, pursuant to a first ranking registered mortgage granted by Gosford in favour of its lender, Gemi 149 Pty Ltd. Correspondence between the receivers was to the effect that the latter, appointed by a first ranking secured creditor, displaced the former; a position which accords with what was said in comparable circumstances in In re Metropolitan Amalgamated Estates Ltd; Fairweather v Metropolitan Amalgamated Estates Ltd [1912] 2 Ch 497 at 502 (“It is clear, however, that notwithstanding the order appointing Whitehill, the first mortgagees were entitled to come in and displace him”). In any event, no challenge was made to the validity of their appointment. The receivers appointed by Gemi 149 caused the demand upon the standby letter of credit to be made. It was common ground that the demand was served on the Shanxi Branch of the Bank of China on 30 July 2021.

21. [40]

    The demand was a lengthy document, as may be seen from the attachment to these reasons. It concluded as follows:

22. [41]

    The demand was headed as being made by “The Gosford Pty Ltd (Receivers and Managers Appointed)”. It was signed by each of the Receivers as “Joint Receiver & Manager” on behalf of “The Gosford Pty Ltd (Receivers & Managers Appointed)”. It used, including in the passage reproduced above, the term “Gosford”, defined to mean “The Gosford Pty Limited (ACN 630 253 557)”.

23. [42]

    By SWIFT message dated 30 July 2021, Macquarie Bank confirmed:

The steps taken thereafter in Australia

1. [43]

   On Monday 2 August 2021, Shinetec approached the Duty Judge in the Equity Division of the Supreme Court of New South Wales ex parte, appearing by solicitor and counsel. As is usual in this country, orders were made on an interim basis, meaning that they expired of their own force on Friday 6 August unless renewed beforehand, and the onus lay on Shinetec to demonstrate a sufficient reason for their continuation. This was explained by McLelland J in Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 and confirmed in Minister for Local Government v Blue Mountains City Council (2018) 97 NSWLR 1132; [2018] NSWCA 133 at [47]. As is usual in this country, orders were made requiring all five defendants (Gosford, its receivers, Macquarie Bank and Bank of China) to be served promptly with all of the material relied on by Shinetec. As is usual in this country, Shinetec gave the “usual undertaking as to damages”, exposing it to an unlimited liability to anyone (including third parties) if it turned out that the injunctive relief should not have been given and loss was thereby sustained. On that basis, Shinetec obtained temporary orders preventing Gosford, the receivers, the Bank of China and Macquarie Bank from taking any further steps on the demand, or from issuing any further demand. The orders are quite elaborate, including eight substantive injunctions, but all deal with the transfer of money pursuant to the demand and any future demand. All that presently matters is that none required Gosford or its receivers to withdraw or countermand the demand.

2. [44]

   On the same day, Shanxi approached the Taiyuan Intermediate People’s Court, filing a civil complaint. The defendant was Gosford, and Bank of China Shanxi Branch was identified as the “third party”. As translated, the “Complaint reason” was “Dispute over fraud in relation to letter of credit” and the “Claims” were:

3. [45]

   As translated, the “Facts and Grounds” for the proceeding referred to the Construction Contract and the standby letter of credit, and then stated as follows:

4. [46]

   It is not clear whether it was Gosford’s sole director Mr Walker, or the receivers Messrs Hurst and Sampson, or all of them, who were alleged to have known that when they caused Macquarie Bank and their solicitors to present the demand, they had no entitlement to do so and were committing a fraud. During the hearing of the appeal, members of the Court asked, and Mr Gleeson SC who appeared for Gosford and the receivers asked, repeatedly, if proper particulars of fraud had ever been provided. The appellants’ response was to point to the translation reproduced above. To be fair, there is also a similarly worded letter from Shanxi to the Bank of China Shanxi Branch, which relevantly states:

5. [47]

   On 3 August 2021, the Taiyuan Intermediate People’s Court issued a “Civil Ruling”. A copy of the original ruling was in evidence, and two translations of it. The entirety of the material parts of the ruling, in the translation favoured by the appellants, was as follows:

6. [48]

   There was also an “Enforcement Assistance Notice” issued to the Bank of China, Shanxi Branch. It, like the Civil Ruling, was sealed by the Taiyuan Intermediate People’s Court. Once again according to the translation preferred by the appellants, it stated:

7. [49]

   Both the Civil Ruling and the Enforcement Assistance Notice referred to the allegation of fraud by Shanxi against Gosford. The appellants’ preferred translation of the Civil Ruling recorded that the application was made “on the reason of existing fraud in relation to letter of credit”, and the Enforcement Assistance Notice referred to the dispute “over fraud in relation to letter of credit”. If there was evidence accompanying Shanxi’s application, it was not made available to this Court. The documents do not suggest that there was any evidence supplied, or any perceived need to give reasons for the ruling beyond that it complied with the provisions of two Chinese statutes.

8. [50]

   The Civil Ruling was not expressed to be limited in time. The Enforcement Assistance Notice requested payment to be suspended for 12 months, until 4 August 2022. This Court was told that the suspension has subsequently been extended, and currently expires on 24 July 2024. This Court was also told that Gosford had not to date been served with process from the Chinese Court.

9. [51]

   In Australia, an ex parte application is accompanied by an obligation of candour, whereby the moving party is required to point out any salient matter which might tell against the granting of relief. This Court said in Young v Cooke [2017] NSWCA 33 at [27], citing High Court authority, that:

10. [52]

    It is unclear whether there is a similar obligation in China. It is also unclear whether there is an equivalent of the usual undertaking as to damages.

11. [53]

    All competent Australian legal practitioners are aware of the obligations to which they are subject before alleging fraud. In Odtojan v Condon [2023] NSWCA 129 at [30], two of us restated, by reference to an earlier decision of this Court, the nature of those obligations:

12. [54]

    It is unclear whether the same strictures against alleging fraud as apply in Australia apply in China. Indeed, to be fair, it is unclear whether any lawyer was involved in Shanxi’s application to the Taiyuan Intermediate People’s Court. So far as appears from the original documents and their translations in the appeal books, it seems that Shanxi itself wrote directly to the Court under its own seal. In contrast, a company is not permitted without leave to file an originating process in the Supreme Court of New South Wales in its own name as the sole plaintiff unless it does so by a legal practitioner: UCPR, r 7.1(2).

13. [55]

    To be quite clear about it, we have made the foregoing observations contrasting the procedures in New South Wales and China not with a view to saying that one jurisdiction is better or worse than another, but in order to provide some explanation for what occurred in each place, which may assist readers who are familiar with one jurisdiction and not another.

14. [56]

    As noted above, the proceedings pending in the Taiyuan Intermediate People’s Court remain undetermined. There is some evidence that attempts have been made, in early 2024, to serve Gosford. This Court was told that service had not as yet been effected. The orders suspending payment on the standby letter of credit have repeatedly been extended.

15. [57]

    The proceedings in the Supreme Court of New South Wales returned to the Duty Judge later that week, and on 13 August 2021 the interlocutory orders were continued until further order by consent, once again upon Shinetec by its counsel giving the usual undertaking as to damages. On the same date the proceedings were transferred into the Commercial List.

16. [58]

    It is not quite clear why it took slightly more than two years for the proceedings to be listed for trial. In part it was a consequence of an unsuccessful application for a stay by Bank of China, based on forum non conveniens principles. The Bank’s motion was filed on 10 October 2021, heard on 1 February 2022 and dismissed for reasons occupying 107 paragraphs on 4 February 2022: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd [2022] NSWSC 59. In part it will have been because the dispute extended to a number of issues of Chinese law, leading to Shinetec and Gosford retaining experts. In part it was because both Shinetec and Gosford advanced claims for damages which were withdrawn before the trial. We are not seeking to attribute blame for the delay between the resolution of the application for a stay in February 2022 and the hearing in October 2023. We wish merely to note that in circumstances where injunctive relief had been obtained preventing payment pursuant to a letter of credit, one would ordinarily have expected the proceedings to have been listed for hearing more swiftly than occurred.

17. [59]

    One other matter which occurred prior to trial should be noted. In March 2023, the Bank of China approached the Shanxi Higher People’s Court to seek a revocation of the Civil Ruling made by the Taiyuan Intermediate People’s Court. The ruling of that Court was in evidence, as was a translation. The latter records that the Bank submitted that its standby letter of credit was “in essence an independent guarantee”, that the terms of the Chinese statutes were not met, in that contrary to Article 14 of the PRC Independent Guarantee Provisions, “Shanxi Construction Investment failed to sufficiently prove the existence of a high probability of fraud described in Article 12 of the PRC Independent Guarantee Provisions”. The entirety of the reasoning of the Court (as opposed to reproducing the background and Bank of China’s submissions) was as follows:

18. [60]

    We note, lest the position be misunderstood, that the Supreme Court of New South Wales had not “ruled” that there be any suspension of payment pursuant to the standby letter of credit. Orders which had initially been made ex parte for a period of four days were thereafter extended by consent pending trial.

The trial of Shinetec’s summons

1. [61]

   In light of grounds 1 and 4 of the appeal, it is necessary to summarise some aspects of the case presented by Shinetec at trial.

2. [62]

   The trial commenced on Wednesday 25 October 2023 and the evidence was complete on Thursday 26 October. As is usual in the Commercial List, the parties had supplied written submissions in support of their cases in advance of the trial (they were dated 20 October). The parties provided written submissions in advance of oral addresses on Monday 30 October. The parties were also granted leave to supply supplementary submissions shortly after the trial, the last of which was supplied on 7 November.

3. [63]

   Shinetec’s case at trial was that the demand upon the standby letter of credit was invalid. It sought a declaration that the demand was “invalid and of no effect”, and an order for the return of the letter of credit. In its opening written submissions, dated five days before the trial commenced, it abandoned its claim for damages.

4. [64]

   Shinetec’s further amended summons, filed 3 April 2023, which was the form of the originating process which went to trial, joined Gosford as the first defendant, the receivers as the second and third defendants, and Macquarie Bank as the fifth defendant. There was no fourth defendant. Although Bank of China had originally been joined, Shinetec did not proceed against Bank of China at trial. Bank of China was present at trial, but only as a cross-defendant on Gosford’s cross-claim.

5. [65]

   At the commencement of a submission made after the conclusion of the trial, Shinetec explained that its decision not to sue Bank of China was deliberate, and that it affected the relief that it sought:

6. [66]

   Shinetec’s claim that the demand was “invalid” had two bases:

   1. (1)

      first, an allegation that there were false, but not fraudulent, statements in the demand from Gosford to the Bank of China, and

   2. (2)

      secondly, an allegation that the sole purpose of the standby letter of credit, as between Shinetec and Gosford, was to secure Shinetec’s obligation to advance $37,000,000 for the project, which obligation had been satisfied by Shinetec entering into the Loan Agreement for $37,000,000 (irrespective of performance under it).

7. [67]

   The Commercial List Statement did not allege fraud. Shinetec’s position was made perfectly clear at the outset of the trial:

8. [68]

   Gosford’s response was that: (a) even if false statements were made in the demand, provided they were not fraudulent, they could not invalidate the demand as between Gosford and the Bank of China; (b) even if, which was denied, Shinetec had fully satisfied the sole obligation which the standby letter of credit was to secure as between Shinetec and Gosford, that could not have any impact on the validity of the demand between Gosford and Bank of China.

9. [69]

   Shinetec unsuccessfully attempted to amend its Commercial List Statement at the commencement of the trial to expand its case to allege the existence and breach of an implied negative stipulation of the construction contract. This was the subject of ground 5 of the appeal, and it is convenient to defer for the moment an account of what was said in support of and in opposition to that application.

10. [70]

    Shinetec confirmed on 2 November 2023, following the close of oral submissions, that it had not brought a case of breach of contract. Its written submissions, signed by senior and junior counsel, included:

11. [71]

    Shinetec’s position in its closing submissions was that it would obtain relief if it could establish either (a) that the demand was invalid as between Shinetec and Gosford, or (b) that Gosford was “not entitled” under the Construction Contract to make the demand which it did on the Bank of China.

12. [72]

    Extraordinarily, Shinetec submitted at the close of trial that the interim injunctions made by Lindsay J should remain in force until a final determination of the rights and obligations of the parties under the Construction Contract which, save for the demand, were not the subject of the proceedings. This was done in paragraphs 23 and 25 of its written submissions after the conclusion of evidence as follows:

13. [73]

    There is no way of describing this other than to say that it was misconceived. To be sure, we did not understand that any attempt was made by counsel now retained by the appellants to defend this aspect of the case advanced by their predecessors. The fact that such a submission could be made at all warrants our making the following points.

14. [74]

    The purpose of interlocutory relief is to maintain an appropriate position pending the final resolution of the parties’ rights at trial. There is never any occasion for a defendant to “foreshadow” an application to vary interlocutory relief at the conclusion of a final trial on all issues. If a plaintiff loses at trial, then it will ordinarily follow that it should never have been entitled to the interlocutory relief. It will also follow that the plaintiff may be exposed to a claim by the defendant or a third party on the usual undertaking as to damages.

15. [75]

    Further, the course sought to be advanced by Shinetec was procedurally unfair. Its Commercial List Summons had, consistently with the standard form of that document, identified the relief it sought on an interlocutory basis and the relief it sought on a final basis. In the latter category was the declaration and order for the return of the standby letter of credit, but no other injunctive relief. (Also included in the final relief was a claim for damages, but that was abandoned in advance of trial.) The defendants were entitled to proceed on the basis articulated in Shinetec’s Commercial List Summons.

16. [76]

    The notion that because interlocutory relief is expressed to be “until further order” means that it will survive a final hearing on all issues is simply wrong. The position was clearly explained by Parker J in Shun Sheng Pty Ltd v Lei (No 2) [2023] NSWSC 1623 at [25] and [28] in terms with which we respectfully agree:

17. [77]

    As his Honour further observed, there are exceptions to the general rule set out above. But what was proposed on behalf of Shinetec at trial was squarely contrary to the general rule and ordinary practice of this Court.

18. [78]

    Shinetec’s submissions proceeded to explain that there might be other litigation as between it and Gosford on the Construction Contract. But that litigation was not part of the claims which went to a final hearing between those parties, and had not been commenced more than two years after Shinetec had commenced proceedings.

19. [79]

    Senior counsel then appearing for Shinetec elaborated the position at the conclusion of oral addresses on 30 October 2023.

20. [80]

    The primary judge was treating courteously a submission which was palpably bad in law.

21. [81]

    Mr Assaf SC, who had not appeared at trial but who appeared for Shinetec and Shanxi on appeal, at one stage submitted that, if the implied negative stipulation for which he now sought to contend was made out, a final injunction should issue, relying on the claim that had been made by his predecessor for such relief:

22. [82]

    After an attempt to rely upon the interlocutory relief in the summons, counsel continued:

23. [83]

    It suffices to say that it would have been procedurally unfair, even if Shinetec were otherwise entitled to relief, for a final injunction to issue following a trial during which until final addresses Shinetec had abandoned damages and sought merely declaratory relief and an order that the standby letter of credit be returned to it. Moreover, as will be explained below, the submission does not attend to the new rights and liabilities which arise, as between issuing bank and beneficiary, upon the service of a compliant demand under a standby letter of credit. As Mr Gleeson submitted, after addressing the way in which Shinetec had advanced its claim for injunctive relief:

24. [84]

    We shall return to this in the course of addressing ground 4.

The reasons of the primary judge

1. [85]

   It is not necessary to summarise the reasons of the primary judge in great detail, principally because Shinetec (now joined by Shanxi) in large measure does not seek to reagitate on appeal the submissions it made without success at trial. It suffices to note that the primary judge dealt with the substance of the two grounds relied upon by Shinetec as follows.

2. [86]

   First, even if the demand contained false statements, as they were not alleged to be fraudulent, his Honour concluded that they could not affect the validity of the demand. The primary judge recorded the various matters which Shinetec contended made the demand false at [141], saying that it falsely asserted that the conditions precedent had been satisfied, Shinetec had failed to perform its obligations, Shinetec had ceased construction work at the site in or about October 2020 and had unlawfully suspended all activity on the site and abandoned the work, and had committed various breaches, including fundamental breaches, of the Construction Contract, and that Gosford had suffered loss and damage of at least $67,000,000 as a result of Shinetec’s alleged breaches.

3. [87]

   The primary judge recorded at [142] that, by alleging that those matters were “false”, Shinetec was not alleging fraud:

4. [88]

   Further, the primary judge recorded with some precision what Shinetec meant by its claim that the demand was invalid. It is important to bear in mind that Shinetec was not proceeding against Bank of China. The primary judge said at [143]-[146]:

5. [89]

   The primary judge thereafter gave reasons which were not challenged on appeal and are, with respect, impeccable. A false but not fraudulent statement made by Gosford in its demand does not disentitle it from making the demand or from the Bank of China from paying in accordance with the standby letter of credit. As the primary judge noted at [147], that is confirmed by r 1.06 of ISP 98, which provides that “an issuer’s obligations [under a standby letter of credit] depends on the presentation of documents and an examination of required documents on their face”. The primary judge concluded on this aspect of Shinetec’s case at [151]-[152]:

6. [90]

   On the second basis on which Shinetec advanced its claim at trial, the primary judge rejected Shinetec’s contention that by entering into the Loan Agreement, and without more, it had “provided” the $37,000,000 finance. His Honour did so at [126]-[137], and no challenge was made to any aspect of that reasoning.

7. [91]

   The primary judge attended to Gosford’s cross-claim at [154]ff. Most of the issues there addressed arise in connection with grounds 6 and 7 of the appeal, and a more detailed summary is best deferred until we reach those grounds. By way of summary, his Honour summarised the standby letter of credit and the demand and the relevant provisions in ISP 98, before proceeding as follows:

   1. (1)

      at [165]-[175], his Honour concluded that the proper law of the standby letter of credit was the law of China;

   2. (2)

      at [187]-[201] his Honour addressed the debate as to the principles to be applied when construing ISP 98, and at [202]-[213] noted the debate concerning how if at all regard may be had to the Official Commentary, concluding that it was not necessary for him to express any final view on that issue;

   3. (3)

      at [214]-[239], his Honour rejected the submission that the receivers were transferors to which r 6.11 of ISP 98 applied – this reasoning is challenged in ground 6;

   4. (4)

      at [240]-[257] his Honour considered the effect of the order of the Taiyuan Intermediate People’s Court, concluding at [257] that “the mere entry of judgment in favour of Gosford against the Bank would not, itself, cause the Bank to contravene the Civil Ruling”, after noting at [256] that Bank of China did not dispute that entry of judgment did not impose an obligation upon it do something, and

   5. (5)

      finally, at [259]-[260] his Honour expressed an inclination to enter judgment against Bank of China but to stay that judgment pending a further approach to the Taiyuan Intermediate People’s Court.

8. [92]

   Following the receipt of written and oral submissions after publication of that judgment, the primary judge published a further judgment on 15 December 2023, which made orders according to the intention expressed above: Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd; The Gosford Pty Ltd v Bank of China Ltd (No 3) [2023] NSWSC 1596. Relevantly, his Honour stated at [31]:

9. [93]

   That occurred. The response appears to be that the Civil Ruling was extended, and Shanxi’s case has been set down for hearing in September 2024. As will be seen, subsequently Gosford took steps to respond to Bank of China Shanxi Branch’s request for information concerning the demand on the standby letter of credit.

The appeal to this Court

1. [94]

   Appeals lie from judgments and orders, not reasons. Orders were made on 15 December 2023 following delivery of the second reasons for judgment. Shinetec lodged a notice of intention to appeal, extending the time within which it could appeal for three months. On 14 March 2024 it filed a notice of appeal. That document went through various iterations, but ultimately grounds 1, 4, 5, 6 and 7 of a further amended notice of appeal were pressed. In further answer to ground 6, Gosford and the receivers sought, by notice of contention, to rely upon an attempt to present documents in around April 2024, in belated answer to Bank of China’s request for information concerning the identity and status of Gosford.

2. [95]

   Grounds 6 and 7 reiterate points made by the Bank of China at first instance in response to Gosford’s cross-claim, and which were not made by Shinetec, which withdrew its claim against Bank of China. It was common ground that the appellants needed leave to advance grounds 6 and 7.

3. [96]

   Well in advance of the hearing of this appeal, in written submissions dated 24 May 2024, Gosford and the receivers made their position abundantly clear:

4. [97]

   Shinetec and Shanxi resisted those submissions, saying in written submissions dated 31 May 2024 there could be no suggestion that the maintenance of proceedings could be vexatious or oppressive when Shanxi does not advance any claim for relief in Australia, but rather “[Shanxi] is merely seeking to seeking to stand in the shoes of the Bank of China by seeking leave to continue to resist the active respondents’ cross-claim in circumstances where the Bank of China has chosen not to appeal”.

5. [98]

   We shall return to those submissions.

Ground 5 – error in refusing leave to amend?

1. [99]

   The logical starting point is ground 5 of the appeal, which challenged the primary judge’s refusal, at the outset of the trial, to permit Shinetec to amend its Commercial List Statement so as to advance a case based upon an implied term of the Construction Contract.

2. [100]

   Importantly, in its written submissions dated 20 October, five days before the trial commenced, Shinetec had confirmed that it sought a declaration that the demand was invalid and the return of the standby letter of credit, and costs, adding that “The claim for damages is not pressed”.

3. [101]

   The proposed amended document (MFI-1) seems to have been supplied in the late afternoon of 24 October, the day before the trial was to commence. It alleged, for the first time, that “[i]t was an implied term of the Construction Contract that The Gosford was only entitled to make a demand pursuant to the standby letter of credit when there was a contractual entitlement to do so under the Construction Contract”. It was then alleged that there was a new precondition to the making of a valid demand on the standby letter of credit. As sought to be amended, paragraph 23 provided:

4. [102]

   The amendment was raised at the outset of the trial. Senior counsel explained why the amendment was sought:

5. [103]

   His Honour responded:

6. [104]

   Counsel for Shinetec submitted that the amendment “doesn’t give rise to any new evidence, or any additional submission beyond really a legal submission”.

7. [105]

   There were two aspects to the opposition to the amendment from senior counsel who then appeared for the Gosford and the receivers, who stated that the proposed amended Commercial List Statement was served at around 5.30pm the previous day. The first turned on the explanation for the amendment which had been provided by Shinetec:

8. [106]

   Secondly, in answer to his Honour’s question whether the term was said to be implied by law or fact, counsel responded:

9. [107]

   The totality of the response from Shinetec was as follows:

10. [108]

    It will be seen that counsel for Shinetec, far from disavowing an absence of reliance upon a claim for damages, confirmed that in the contingency he had identified, there was being advanced a claim for loss and damage, contrary to what had been said expressly in the written submissions supplied prior to the trial.

11. [109]

    Further, counsel for Shinetec identified “two documents already in evidence” which were relied upon in support of the alleged implied term. He added “there’s no further evidence that I propose to rely upon”. At no stage did he disavow that the submission was going to draw upon documents other than the Construction Contract itself, nor did he refute the submission that in order to respond to it, Gosford would have to prepare evidence.

12. [110]

    The primary judge ruled immediately saying:

13. [111]

    His Honour’s statement that “It’s a Commercial List Statement” was a reference to the expeditious approach taken to all issues of case management in litigation in that list.

14. [112]

    It may also be noted that the amendment was not accompanied by any evidence, including evidence explaining why notice of it had only been supplied on the afternoon of the day before the trial commenced, or why Shinetec now sought to depart from its abandonment of any claim for damages.

15. [113]

    In his reasons for judgment, delivered with characteristic promptness a fortnight after the conclusion of written submissions, the primary judge referred to the amendment application, counsel’s statement that he would be prejudiced if the amendment was allowed and that he was not in a position to meet it, and added that he “refused leave on that basis”: at [105].

16. [114]

    There is nothing in this ground of appeal. The appellant’s submission was that the primary judge erred in failing to have regard to the mandatory requirements of s 58 of the Civil Procedure Act 2005 (NSW). The only points identified in oral submissions in support of this ground were that the trial had been set down for seven days, that there was no particularisation of the claimed prejudice, and that the implied negative stipulation involved a mere question of law.

17. [115]

    None of those points was made by senior counsel’s predecessor before the primary judge. The decision was discretionary, reviewable on the grounds identified in House v The King (1936) 55 CLR 499; [1936] HCA 40. It is difficult in the extreme to find reviewable error in the refusal to allow a late amendment unaccompanied by any explanation for the delay on the first day of the trial based on submissions which were not made to the primary judge.

18. [116]

    But in any event, we would not accept the submissions. The most important matter is that counsel then appearing for Shinetec said both in support of the amendment and in response to Gosford’s opposition that a claim for damages was being put forward, albeit contingently. It was not necessary for anything more to have been said by counsel for Gosford concerning prejudice or inability to meet the claim. What was sought to be advanced was an elaborate alternative position, to which Gosford was entitled to more notice than it was given.

19. [117]

    It was plain from what was said immediately thereafter that Gosford had served witness statements, including from its sole director Mr Walker, but had indicated that it was unlikely that they would be read as evidence. Senior counsel then appearing for Gosford said that that would depend upon Shinetec’s opening. It is plain that the claim for damages might give rise to a need to adduce evidence. Aside from anything else, it is perfectly clear that there was at least an argument that if the conditions precedent had not been satisfied, they had been waived (or, alternatively, the parties were estopped from insisting that they had not been satisfied), for it is perfectly clear that Shinetec caused demolition and other preparatory work to be undertaken on the site. As much is obvious from photographs of the cleared site in evidence, and the two progress claims for millions of dollars of such work served by Shinetec. It is also obvious that some of that work preceded the execution of the Loan Agreement (which was dated 26 November 2021, only a fortnight before the first progress claim was served). Thus, Shinetec’s submission at trial that the Construction Contract was suspended sits ill with what actually happened in the performance of work pursuant to the Contract. Mr Walker had served witness statements and had been required for cross-examination and was the obvious person to give evidence about the circumstances in which that construction occurred, as one aspect of a response to a claim for damages.

20. [118]

    There is with respect some small force in the proposition that the reasons given by the primary judge were brief, especially bearing in mind that they would have been read representatives of a Chinese corporation, not likely to be familiar with practices in the Supreme Court of New South Wales. However, for the reasons given above, which would be familiar to any practitioner in the Commercial list, the decision was self-evidently correct. This ground is not made out.

21. [119]

    In any event, nothing turns upon this ground because, for the reasons which follow, the point is bad in law.

Grounds 1 and 4 – was the demand invalid because of breach of some provision of the Construction Contract?

1. [120]

   These grounds may conveniently be addressed together. They have the same form: both maintain that by reason of a promise made by Gosford to Shinetec in the Construction Contract, Gosford’s demand is “invalid” (or void or of no effect). In the case of ground 1, the point is said to be that the non-satisfaction of the conditions precedent has the result that the parties’ rights and obligations were suspended. In the case of ground 4, the point is said to be that the demand was issued contrary to an implied negative stipulation. But in both cases, the express or implied provisions of the Construction Contract are said by the appellants to render the demand on the standby letter of credit invalid (or void or of no effect).

2. [121]

   Ground 1 maintains that because the conditions precedent of the Construction Contract were not satisfied, the parties’ rights and obligations under it were suspended, such that neither Gosford nor its receivers had power to make the demand upon the standby letter of credit. The consequence is said to be that the demand was “invalid and/or void and of no effect, for all purposes”. This ground says that the primary judge erred in finding that the Commercial List Statement did not assert any link between the conditions precedent of the Construction Contract and Shinetec’s contention that the demand was invalid, and erred in failing to determine whether the conditions precedent had been satisfied.

3. [122]

   Gosford says that this ground was not advanced at trial, that it could have been met by evidence, and that in any event is it misconceived.

4. [123]

   Ground 4 seeks leave to advance the ground which was the subject of the amendment rejected at the outset of the trial, namely, that there was an implied negative stipulation to which Gosford was subject, such that a valid demand could not be made unless Shinetec had failed to perform its obligation to lend $37,000,000. The appellants say that in making the demand, Gosford was in breach of the implied negative stipulation, and that the demand was consequently “invalid and/or void and of no effect”.

5. [124]

   Gosford says that this ground is not available unless ground 5 succeeds, and in any event it is misconceived.

6. [125]

   We have concluded that ground 5 should fail, and we agree that it would not be appropriate to grant leave in respect of ground 4, so as to permit the appellants to advance a ground which was correctly rejected at trial. It is to be borne in mind that Shanxi and Shinetec’s application was far from an ordinary case of an appellant wishing to raise a new point on appeal. Shinetec’s case at trial was diametrically opposed to the case now sought to be presented in this Court. This was not merely a case where the implied negative stipulation was outside the issues framed in the pleadings. As the primary judge recorded at [106], significantly, after the conclusion of the trial:

7. [126]

   Of course, subsequent to the trial Shinetec has appointed new solicitors and new counsel to conduct this appeal. But where a litigant consciously chooses not to advance a case at trial, it is no small thing to permit the same point to be advanced on appeal.

8. [127]

   We also note that ground 1, at least as drafted, maintained that the demand was “invalid and/or void and of no effect, for all purposes”. That seems to amount to an application to determine this appeal in a way that binds the Bank of China, which is antithetical to the limited way in which Shinetec’s challenge was cast at trial, explicitly not so as to bind the Bank of China (against which Shinetec did not proceed). The divergence between how the argument was advanced at trial and how it was sought to be advanced on appeal was emphasised by Mr Gleeson:

9. [128]

   Still further in relation to ground 1, the appellants contend that the primary judge was bound to resolve the question whether the conditions precedent were or were not satisfied. Their submissions characterise this as “error in the judicial reasoning process – the learned primary judge failed to determine all relevant factual and legal issues, thereby failing to make all appropriate factual findings material to the disposition of the case”. This puts the position too high.

10. [129]

    Shinetec cites this Court’s decision in Wolfenden v International Theme Park Pty Ltd (trading as Wonderland) [2008] NSWCA 78 at [6], but the passage cited discloses the basic fact that a court need not decide every point presented by the parties for determination. Giles JA said:

11. [130]

    It is true that, as the appellants point out, there is at least one occasion on which a trial court has expressed the obligation to determine all relevant factual and legal issues as unqualified: Collier v Country Women's Association of NSW [2017] NSWSC 1573 at [308]. But that is to go further than was stated in Wolfenden. More recently than either of those decisions, in PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 at [15] this Court confirmed that a litigant is not entitled to insist that a trial court determine non-dispositive issues and give reasons for doing so.

12. [131]

    Generally a court at first instance should determine non-dispositive issues, and generally if it chooses not to do so it should explain why it is taking that course. There are litigants who raise a panoply of points, all of them hopeless, where no useful purpose is served by disposing of all of them (often but not invariably such litigants are unrepresented). It will be a question of judgment in every case, bearing in mind the desirability of minimising the risk of the need for a new trial if an appeal succeeds. We also note that an appellate court is likewise under no obligation to address all issues raised by the parties: see Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150 at [36]-[41].

13. [132]

    As will be seen, the primary judge rightly regarded the legal submission advanced by Shinetec, one element of which was non-satisfaction of the conditions precedent, as misconceived, and on that basis resolved the case expeditiously. We see no error in his having taken that course.

14. [133]

    But the most fundamental reason why these grounds must fail is that they misconceive how the standby letter of credit operates.

15. [134]

    First, contrary to the premise of ground 1, the Construction Contract is not the source of the power to issue a demand under the standby letter of credit. If as Shanxi and Shinetec contend, the conditions precedent were not satisfied, and the parties’ rights and obligations under the Construction Contract were suspended, that did not mean that Gosford could not make a demand on the standby letter of credit. Making a demand involved presenting particular documents upon the Bank of China Shanxi Branch. Gosford’s entitlement to do so did not depend on the Construction Contract. It was independent of the Construction Contract.

16. [135]

    Shanxi and Shinetec sought to escape that proposition by relying on a variety of decisions in other areas of the law. Thus they submitted that their contention was “consistent with authorities to the effect that where essential conditions precedent to the exercise of a contractual right to renew or exercise an option have not been fulfilled, the purported exercise of a contractual right is ‘ineffectual’”, citing BS Stillwell & Co Pty Ltd v Budget Rent-A-Car System Pty Ltd [1990] VR 589 at 599. They submitted that “an analogy may be drawn to cases where a company passes a resolution where a condition precedent for that resolution (such as quorum) has not been satisfied. In such circumstances, the resolution will be void and of no effect for all purposes”, citing (among others) Eastone Mining Pty Ltd v Eastone Holding Pty Ltd [2019] NSWSC 1850; 142 ACSR 38 at [43]. And they submitted that “[a] further analogy may be drawn to conditions precedent in insurance contracts: where a condition precedent has not been satisfied, any claim for indemnity pursuant to an insured’s rights under the contract is ineffective for all purposes”. But none of this is to the point. The standby letter of credit gave rights to Gosford as against the Bank of China, independently of the Construction Contract.

17. [136]

    Secondly, Shanxi and Shinetec submitted that a demand on the standby letter of credit by Gosford which was in breach of the negative implied stipulation was itself “void and/or invalid and/or of no effect”. That is not the law. The question for the Bank was whether the demand was made prior to 31 July 2021 and presented to the Bank of China Shanxi Branch by formal document on behalf of Gosford. There were certain circumstances which permitted the Bank to make enquiries (these are addressed below). But it is no element of the validity of the demand that Gosford be not in breach of any of the terms of the Construction Contract.

18. [137]

    The standby letter of credit explicitly incorporated ISP 98. Clauses 1.06 and 1.07 of the ISP 98 warrant reproduction, in light of Shanxi’s and Shinetec’s submissions. They describe the nature of a standby letter of credit:

19. [138]

    Repeatedly throughout his address in chief and in reply, Mr Assaf insisted that he did not challenge the “independence principle”. But the point of that principle is that save in the case of fraud or unconscionability, an issuer must honour its standby letter of credit after being presented with documents which on their face are valid. These grounds fly in the face of the nature of a standby letter of credit as an independent documentary undertaking.

20. [139]

    In United City Merchants (Investments) Ltd v Royal Bank of Canada [1983] 1 AC 168 at 183, Lord Diplock said:

21. [140]

    Thus one leading text which endorses that passage, states that the “doctrine of autonomy is a key principle in letter of credit transactions”, and notes that the “bank’s obligation to pay the beneficiary under the credit is independent of the underlying contract between the beneficiary and the applicant”: P Elligner and D Neo, The Law and Practice of Documentary Letters of Credit (Hart Publishing, 2010) at 138.

22. [141]

    True it is, as was submitted during the hearing of the appeal in an attempt to explain why the appellants’ submissions were not inconsistent with the independence principle, that there are circumstances when a beneficiary may, expressly or by implication, bind itself not to make a demand on a letter of credit or other security, and in such cases injunctive relief will be available, including on a quia timet basis, against that party. The Court was taken at length to Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443; [1979] HCA 21, Dedert Corporation v United Dalby Bio-Refinery Pty Ltd (2017) 59 VR 607; [2017] VSCA 368, Kawasaki Heavy Industries Ltd v Laing O’Rourke Australia Construction Pty Ltd (2017) 96 NSWLR 329; [2017] NSWCA 291 and Universal Publishers Pty Ltd v Australian Executor Trustees Ltd [2013] NSWSC 2021 at [13]-[14]. Relevantly for present purposes, all are to the same effect. The position was explained in Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136; 249 ALR 458 at [77]:

23. [142]

    The first and second exceptions, fraud and unconscionability, were not asserted. (For completeness, at one stage in the appeal, Shinetec sought in this Court, for the first time, to advance by proposed ground 5A a submission that the making of the demand was unconscionable, but this was withdrawn a few days prior to the appeal being heard.) The third “exception” is noted in Dedert at [102] and in Universal Publishers at [14].

24. [143]

    We respectfully agree with the point made by French, Jacobson and Graham JJ in Clough Engineering that the third “exception” is not so much an exception as an over-riding rule. Normally a party can bind itself not to exercise a private right. That includes the right to make a demand on a standby letter of credit. The consequence of a beneficiary making a demand on a standby letter of credit contrary to its promise not to do so is that the beneficiary will be in breach of contract, and liable to its contracting party for damages for any loss caused by the breach. That is not all. An injunction may also be available to prevent a beneficiary who threatens to make a demand contrary to the beneficiary’s promise, if it can be shown that damages will not be an adequate remedy.

25. [144]

    The cases do show that, albeit rarely, mandatory injunctive relief may lie against the beneficiary who has made a demand requiring it to withdraw it. One example may be seen in Kawasaki Heavy Industries at [26]-[28]. It seems that on 15 March 2017, an ex parte injunction was sought to restrain the beneficiary Kawasaki from calling on security bonds, contrary to a (claimed) contractual provision. The reasons do not make it clear, but it seems that it was at least possible that a call had been made prior to service of the ex parte injunction. The Court’s judgment records at [28]:

26. [145]

    A similar instance may be seen in Kell & Rigby Holdings Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2010] NSWSC 777 at [17]. We accept that, in principle, such relief is possible. Gosford acknowledged as much. But there is a world of difference between obtaining injunctive relief against the beneficiary of a letter of credit who has promised not to call upon it except in certain circumstances, and obtaining injunctive relief against a bank following the presentation of a valid demand.

27. [146]

    Interlocutory mandatory injunctions are only available in “limited” or “unusual” circumstances, to use the language in Merton v Bank of Queensland Ltd [2013] NSWCA 68 at [4] and Tavcol v Valbeet [2014] NSWSC 1563 at [30]. One problem was indicated by McDougall J in the latter decision at [11], because there may be circumstances where the granting of a mandatory injunction – especially as here imminently before the expiry of the standby letter of credit – would have the effect in a practical sense of determining the substance of the matter. Putting the difficulty in obtaining such relief to one side, the dispositive point is that despite the variety of ways in which Shinetec advanced claims for relief throughout the litigation, it has never sought orders requiring Gosford to withdraw or countermand its demand.

28. [147]

    The appellants were given full opportunity to respond to this basal difficulty in their case. Before the luncheon adjournment on the first day of the appeal, there was the following exchange:

29. [148]

    Counsel did not return to the point, save to note that in Kell & Rigby Holdings, Hammerschlag J had held that the defendant was not entitled to call on certain Advance Payment Bonds and was entitled to declaratory and injunctive relief against the beneficiary. That is, with respect, no answer to the question, which was directed to the validity (or “voidness” or lack of efficacy) of the demand as between Gosford and Bank of China.

30. [149]

    The claim that a demand is “invalid” (or “void” or “of no effect”) because there is a breach of the Construction Contract is bad in law. It is inconsistent with the nature of a standby letter of credit. These grounds should be dismissed.

Ground 6 – the operation of ISP 98 rr 6.11 – 6.13 following the appointment of receivers

1. [150]

   This ground reflects an aspect of Bank of China’s defence of the cross-claim at trial, and is not maintained by that bank on appeal. The ground turns on rr 6.11-6.13 of ISP 98 and the receivers’ signatures on Gosford’s demand. The short point is that the appellants seek leave to contend that because the demand was signed by the receivers, Bank of China was entitled to request further information, which was not supplied, and in the meantime it was entitled neither to honour nor to dishonour the demand. The respondents seek to uphold the reasons of the primary judge, to the effect that ISP 98 rr 6.11-6.13 are not engaged by the appointment of receivers. They further say, by way of fallback, that it was the interlocutory relief obtained by Shinetec which prevented a response being given, and that when that relief was discharged after final judgment was given, they provided an amply sufficient response to Bank of China’s request.

2. [151]

   This ground challenges the reasoning of the primary judge at [235]-[239]:

3. [152]

   Rules 6.11-6.13 of ISP 98 relevantly provide:

4. [153]

   Shinetec and Shanxi said that the primary judge was wrong to find that the second and third respondents, the receivers Messrs Hurst and Sampson, were not claiming to be successors to Gosford for the purposes of r 6.11, including by reference to the principle of “strict compliance” to be derived from ISP 98 rr 1.03 and 1.11. They said that the rule was engaged, and that the Bank of China’s obligation to pay was suspended pending a response to its request to Macquarie Bank dated 3 August 2021:

5. [154]

   Gosford and the receivers said that neither Shinetec nor Shanxi should be permitted to run arguments which Shinetec had not run at trial. They said that if the appellants were permitted to run the arguments, they wished to adduce fresh evidence of what occurred, which was to the effect that:

   1. (1)

      Macquarie Bank had been prevented, by the orders obtained by Shinetec on 2 August 2021, from passing on the SWIFT message to Gosford until those orders were discharged on 14 December 2023.

   2. (2)

      Following Shinetec filing a notice of appeal on 14 March 2024, a Chinese law firm was engaged to provide a belated response to Bank of China’s request for documents.

   3. (3)

      On 11 April 2024 an attempt was made to deliver a legal opinion confirming that “The Gosford Pty Ltd (Receivers and Managers Appointed)” was the same legal entity as “The Gosford Pty Limited (ACN630253557)” and was not a successor, an ASIC search of the company and the General Security Deed and Deed of Appointment by which the receivers were appointed. However, apparently on the basis that the documents were not transactional, delivery could not be effected and the solicitor was told to deliver them to Bank of China’s lawyers.

   4. (4)

      On 15 April 2024, the documents were supplied to Bank of China’s (Australian) solicitors, King & Wood Mallesons.

6. [155]

   Gosford said that if Shinetec and Shanxi were permitted to run the argument, and if ISP 98 was engaged such that Bank of China was entitled to request documents, then the documents supplied in April 2024 satisfied that request, as a result of which the time for honouring or dishonouring the demand had elapsed.

7. [156]

   Shinetec and Shanxi say that Gosford should not be permitted to rely on the fresh evidence. They say that although it post-dated the trial, in fact it was open to Gosford to take precisely those steps in advance of the trial, either because the orders did not prevent those steps being taken or, if they did, that it was open to Gosford to apply to have the injunction varied.

8. [157]

   Subject to one point, we would permit Shanxi and Shinetec to argue this ground. Shanxi and Shinetec assert, and we accept, that they will ultimately be liable for any sum paid by Bank of China. There is no evidence of that, but there is no reason to doubt that Bank of China will look to Shanxi to meet the payment made pursuant to a letter of credit issued at its request, and to the extent that the payment discharges indebtedness of Shinetec, Shanxi will be entitled to an indemnity from its subsidiary. Accordingly, both are “aggrieved” or “sufficiently interested” in the judgment against Bank of China to entitle them to seek leave to appeal, within the meaning of the authorities collected in Talifero v Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107; [2018] NSWCA 227 at [19].

9. [158]

   The point was live before the primary judge, although Shinetec did not argue it at trial. However, telling against the grant of leave is the fact that, at trial, Shinetec chose not to sue Bank of China (it had originally been joined but was removed when on 31 March 2023 a Further Amended Summons was filed which did not include the Bank). Mr Gleeson SC characterised this as “a deliberate decision not to make claims which would determine the rights between them, us and Bank of China” (transcript, 12 July 2024, p 63), to which the appellants made no response. Accordingly, he maintained that if Shinetec of Shanxi were permitted to run these points, it would be an abuse of process. It was said on the first day of the appeal at the outset of its submissions:

10. [159]

    We will return to the alleged abuse of process, because there are other aspects to the abuse relied on in connection with the orders obtained from the Taiyuan Intermediate People’s Court which arise in connection with ground 7. Save for the submissions concerning abuse of process, we would be minded to grant leave to the appellants which are directly affected by the judgment against Bank of China to run the points the Bank ran at trial.

11. [160]

    However, the points were rightly rejected by the primary judge.

12. [161]

    The standby letter of credit issued by the Bank of China was “only personal to you and is not assignable or transferable”. Nonetheless, it was expressed to be “subject to the International Standby Practices ISP 98”. It was common ground that that language was sufficient, for the purposes of Chinese law, to incorporate ISP 98.

13. [162]

    Rule 6.11 mentions receivers, but the rule is only engaged if the person “claims to be designated by law to succeed to the interests of a beneficiary”. In that case, if the person “presents documents in its own name as if it were the authorised transferee of the beneficiary”, the rules on which the appellants rely will apply. The heading of r 6.11 “Transferee by Operation of Law” is apt: the rule applies where the entitlement to call on the letter of credit has been transferred to another legal person.

14. [163]

    The short point is that there is no successor to which Gosford’s property has been transferred by operation of law. The receivers did not issue the demand in their own name. They did not seek payment to themselves. They made the demand in their capacity as receivers of Gosford, and the funds were to be paid into Gosford’s bank account.

15. [164]

    Messrs Hurst and Sampson were appointed receivers pursuant to a “Deed of Appointment of Receivers and Managers by Secured Party” dated 26 July 2021. Clause 2.3 of the deed provided that, save in circumstances when Gosford was sought to be wound up, “to the extent permitted by law, the Receivers are and acts as the agent of the Grantor”. The Grantor was Gosford, which had pursuant to cl 22.3 of a General Security Deed with its creditor Gemi 149 Pty Ltd agreed that the creditor might appoint a receiver as Gosford’s agent.

16. [165]

    The position that a privately appointed receiver is the agent of the grantor until such time as it is wound up reflects the distinction drawn in Gosling v Gaskell [1897] AC 575 and as stated by Dixon J (with whom Gavan Duffy CJ and McTiernan J agreed) in Australian Mutual Provident Society v George Myers & Co Ltd (in liq) (1931) 47 CLR 65 at 82; [1931] HCA 31, holding that despite the receiver being in control of the company’s premises, the company remained in occupation. Dixon J said that:

17. [166]

    The agency is said to be “special” because the receivers are not subject to Gosford’s control. That was the point of Rigby LJ’s dissenting judgment in Gaskell v Gosling [1896] 1 QB 669 which was affirmed by the House of Lords (“Of course the mortgagor cannot of his own will revoke the appointment of a receiver, or that appointment would be useless. For valuable consideration he has committed the management of his property to an attorney whose appointment he cannot interfere with”). The judgment of Dawson, Gaudron and Gummow JJ in Sheahan v Carrier Air Conditioning Pty Ltd (1997) 189 CLR 407 at 432-433; [1997] HCA 37 confirmed that the receiver is in law the agent of the mortgagor. And in any event, the point is put beyond argument by s 420(2)(k) of the Corporations Act 2001 (Cth), which confirmed that in addition to any powers conferred by the instrument under which they were appointed, Messrs Hurst and Sampson had power “to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation”.

18. [167]

    Mr Assaf advanced this submission in his address in chief:

19. [168]

    We agree that the “critical concept” in the rule is the presentation of documents by a person other than the named beneficiary as if it were the beneficiary’s authorised transferee. There was then the following exchange:

20. [169]

    However, that point was answered by Gosford’s submission:

21. [170]

    One way of appreciating the force of the obstacles confronting the appellants’ submissions was to consider the position where there is a change in the composition of a company’s board of directors after the standby letter of credit has been issued, and the new directors, acting in that capacity, issue a demand. Mr Assaf said that if new directors had been appointed to Gosford, and acting as directors they issued the demand in the name of their company, then r 6.11 would not apply. That concession was rightly made. He was then asked how his submission concerning a receiver was any different:

22. [171]

    Parts of this submission were advanced inadvertently, because Professor Gao’s opinion on this point had been rejected at trial. As soon as that was pointed out, counsel withdrew the submission. Nothing else was said in response to Gosford’s oral submissions.

23. [172]

    That leaves only Mr Assaf’s point that receivers are “specifically mentioned by r 6.11”. But that goes nowhere. It is not sufficient in order to engage r 6.11 that the status of the person making a demand be listed in the rule. What engages the rule is not that persons are appointed as receivers, but instead that they present documents in their own name on the basis that they are an authorised transferee of the beneficiary. In response, the appellants said that the receivers “specifically mention their names on the letter of demand”. So they do. It would have been a criminal offence for their status not to have been disclosed. Australian law requires that Gosford set out in every public document after its name a statement that receivers and managers have been appointed: Corporations Act, s 428(1). Failing to do so is an offence. But the obligation to include the words “(receivers and managers appointed)” confirms that it is not the receivers personally, but rather the company, albeit a company to which receivers and managers have been appointed, that was making the demand.

24. [173]

    In order to reach that conclusion, it has not been necessary for us to have regard to the Official Commentary on the International Standby Practices by Professor Byrne, as to which there was an unresolved dispute as to whether, in accordance with Chinese law, regard might be had. But we heard full submissions on the passages on which the appellants sought to place reliance, and they do not alter our conclusion. Nor is it necessary to address the notice of contention, and it is inappropriate to do so, in circumstances where the Court was told that there were issues (including whether documents could be presented years after a request had been made) as to the efficacy of what had occurred. It follows that the fresh evidence is not relevant, and the notice of motion will be dismissed, but with its costs being the parties’ costs in the appeal.

Ground 7 – the effect of the order of the Taiyuan Intermediate People’s Court

1. [174]

   This ground maintained that the primary judge erred in entering judgment against Bank of China, and ought to have found that “no right to payment ever from [the Bank of China] ever accrued to [Gosford] under the Letter of Credit” and accordingly dismissed the cross-claim. The appellants said that this was because:

   1. (1)

      the Bank of China’s “obligations to honour or give notice of dishonour were suspended from 3 August 2021 until the requested documentation under r 6.13 of ISP 98 was provided”; and/or

   2. (2)

      “the Shanxi branch of the [Bank of China] was prevented, by no later than 4 August 2021, from making any payment under the Letter of Credit pursuant to the Civil Ruling of the Taiyuan Intermediate People’s Court dated 3 August 2021 and Enforcement Assistance Notice dated 4 August 2021.”

2. [175]

   The first half of this ground takes the matter no further than ground 6. For the reasons given above, rr 6.11-6.13 of ISP 98 were not engaged when the receivers acting as agents of Gosford called on the standby letter of credit for funds to be paid to Gosford.

3. [176]

   The second half of this ground involves a question of construing the effect of the order of the Taiyuan Intermediate People’s Court dated 3 August 2021.

4. [177]

   The primary judge addressed this at [248]-[260]. His Honour noted at [248] that there was a dispute between the experts about whether the Bank of China was bound, or merely the Shanxi Branch, and a dispute whether the effect of a judgment of the Supreme Court of New South Wales would cause the Civil Ruling to be suspended or terminated. His Honour did not resolve the dispute between them. However, his Honour noted at [250] that the experts were agreed that the Civil Ruling was binding, at least, on the Shanxi Branch of the Bank of China, and that the ruling was under Chinese law in the nature of an interim and not a final ruling.

5. [178]

   The primary judge said that the Bank of China did not dispute Gosford’s submission that entry of judgment does not in terms impose an obligation upon the defendant to do something: at [256]. The result was that:

6. [179]

   His Honour entered judgment in favour of Gosford but stayed it pending further approach by Gosford or the Bank to the Chinese Court.

7. [180]

   Shinetec and Shanxi submitted that the Civil Ruling and Enforcement Assistance Notice should have been found to have had the effect “that no right in debt ever accrued”. They relied on the propositions that a debt only becomes payable if the time for payment has arrived and an action to recover it can be maintained by the creditor. Because of the orders made by the Taiyuan Intermediate People’s Court, the amount was not payable. They said that the Civil Ruling and the Enforcement Assistance Notice should have been found to produce the effect “that no right in debt ever accrued”. It is best to reproduce the submissions advanced verbatim:

8. [181]

   We cannot accept these submissions. The errors in them may be seen in a number of ways.

9. [182]

   First, to take a commonplace matter of Australian law, a judgment is regularly stayed pending appeal. The existence of the stay – which carries with it the entitlement of the judgment debtor not to pay, and a denial of the rights of the judgment creditor to execute the judgment – does not mean that there is no debt. The appellants do not point to anything in the Civil Ruling which might bring about a different result.

10. [183]

    Secondly, the Civil Ruling is not a final ruling. It remains in place for a period of time (in fact it has been continued until 24 July 2024). That is inconsistent with it having substantive effect to deny the debtor creditor-relationship brought about by the presentation of an erstwhile valid demand upon the bank. Another way of putting this is that it is inherent in the ruling that once the suspension expires, the bank will no longer have a basis for declining to make the payment. A third way of making the point is that if the ruling had the force of extinguishing the indebtedness, as opposed to the obligation to make payment, then there would be no need for the suspension to operate over a period of time.

11. [184]

    Thirdly, the Civil Ruling is obviously to be read together with the Enforcement Assistance Notice. Both were issued on the same day, and both were sealed by the Court. The translation of the Enforcement Assistance Notice is:

12. [185]

    It is thus not merely the presence of the verb “suspend” which carries with it an absence of finality, but also the fact that the Bank of China Shanxi Branch was told that payment may resume after the suspension had come to an end. This is inconsistent with the order bringing the debt to an end.

13. [186]

    Fourthly, the ruling applies only to the payment of money. It does not purport to prevent the Shanxi Branch of the Bank of China issuing a notice of dishonour. That is a powerful illustration of how the parties’ underlying rights are unaffected by the interim suspension of payment.

14. [187]

    Fifthly, there is confusion between the primary rights and obligations as between the parties, and the interlocutory orders made by courts. The Bank of China was obliged to make payment following presentation of the demand. It was excused, for the time being, from doing so following the granting of injunctions. But that did not mean that the $37,000,000 was not due and payable for the purposes of determining whether there was a debt. Instead, it meant that, for the time being, the Bank was unable to pay.

15. [188]

    Once again, the position may be contrasted with the relief which had not been sought. If an injunction had issued in advance of the presentation of the demand, there would be no debt. Further, if an injunction had issued required Gosford to withdraw or countermand its demand, then there would be no debt. But that did not occur.

16. [189]

    Sixthly, this submission well illustrates the problems brought about by the parallel proceedings commenced by Shanxi and Shinetec. Shinetec deliberately did not sue Bank of China in Australia. The issue as to whether the order obtained by Shanxi from the Taiyuan Intermediate People’s Court affected the debtor-creditor relationship between the Bank as guarantor and Gosford as beneficiary was therefore an issue raised only on Gosford’s cross-claim against Bank of China. It is no small thing for Shanxi or Shinetec to be permitted to reagitate that issue on appeal when Shinetec had not sought to run that argument at trial, when Shinetec chose not to continue proceedings against Bank of China, and when the person most directly affected, the Bank of China itself, does not challenge the order against it.

17. [190]

    We agree with Gosford’s submission:

Abuse of process

1. [191]

   The arguments advanced in support of ground 7 acutely illustrate the parallel litigation which has been commenced by Shanxi and Shinetec. Shanxi and Shinetec seek to say that the primary judge erred in entering judgment against Bank of China because of an interim order Shanxi obtained in China, based on an allegation of fraud, when in the proceedings brought by Shanxi and Shinetec in this Court, fraud has been expressly disavowed.

2. [192]

   Not all parallel proceedings are vexatious or oppressive. The joint judgment of the High Court of Australia in CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 393-394; [1997] HCA 33 distinguished cases of parallel proceedings which were vexatious or oppressive from those which are not:

3. [193]

   What then is the additional remedy that could not be obtained from the New South Wales courts so as to prevent there being “complete correspondence” in the parallel proceedings commenced by the appellants? Mr Assaf correctly appreciated that this was a matter of importance and commenced his address in reply with the topic. It warrants extensive reproduction.

4. [194]

   No adequate answer was given to the matters raised by the Court in those exchanges, for the good reason that there is no answer to them. There is no reason that a claim for fraud could not have been made in the proceedings in New South Wales, assuming there is a proper basis for one. There is no reason why any of the relief sought by Shanxi in the Taiyuan Intermediate People’s Court could not have been sought in the Supreme Court for New South Wales, assuming there was a proper basis to do so.

5. [195]

   We have indicated above Shinetec’s candid submission at trial that it did not join the Bank of China in order to prevent there being an abuse of process. But the course adopted on appeal has made the abuse quite clear. There is one process in this Court: the amended notice of appeal. Bank of China is a respondent, and Shanxi sought to be, and was permitted to be, joined as a second appellant. Shinetec and Shanxi together seek to argue points so as to obtain a binding decision in their favour against both Gosford and Bank of China. Yet they insist that Shanxi is entitled to litigate in China the fraud case which was consciously eschewed in New South Wales. That is the clearest possible case of Gosford being vexed twice in different jurisdictions by the same party in circumstances where, to use the language in Carron Iron Company v Maclaren (1955) 5 HL Cas 416; 10 ER 961 and as adopted by the High Court of Australia in CSR v Cigna, “complete relief” is available in the local proceedings.

6. [196]

   We are conscious that our conclusion that arguing grounds 6 and 7 amounts to an abuse of process is a serious one, to which s 140 of the Evidence Act 1995 (NSW) applies. But we think this is a very clear case. We also note that Shanxi and Shinetec have had ample knowledge that it was a conclusion which this Court might reach. It was explicitly sought in Gosford’s written submissions filed in May 2024.

7. [197]

   We have also reproduced above Shinetec’s submission made at first instance explaining that it did not sue Bank of China because it would have exposed it to claims of it being an abuse. Much of what Shinetec contended at trial was wrong, but that submission was correct. Yet in this Court, Shanxi is a party, and the Bank of China has been joined as a respondent, and Shinetec and Shanxi wish to advance claims against the Bank, and have the Bank bound by the outcome, but refuse to undertake to discontinue the proceedings pending in China on the same demand under the same letter of credit involving the same parties, or to abide by this Court’s decision. We agree with Gosford that to permit Shanxi and Shinetec to advance grounds 6 and 7 would be an abuse of process.

Conclusion and orders

1. [198]

   In summary, the substantive grounds raised by Shanxi and Shinetec based on the Construction Contract somehow rendering Gosford’s demand invalid or void or of no effect (grounds 1 and 4) are bad in law, because they misapprehend the nature of a standby letter of credit. Further, the primary judge was correct to refuse to permit Shinetec to advance the ground based on an “implied negative stipulation” on the first day of the trial (ground 5), and as a matter of discretion, those grounds should not be permitted to be run.

2. [199]

   Grounds 6 and 7 are arguments which were made by Bank of China in defence of the cross-claim. At trial, Shinetec had not proceeded against the Bank, which was present only as a respondent to Gosford’s cross-claim. Bank of China accepts the correctness of the rejection of those grounds. However, in this Court, Shanxi has been joined, and both Shanxi and Shinetec wish to advance those grounds, in circumstances where they refuse to undertake to be bound by the outcome of this Court’s decision in the pending proceedings between Shanxi, Gosford and Bank of China in China. The grounds are wrong as a matter of law, because they misapprehend the nature of the appointment of receivers and of interlocutory orders. And further, we have accepted Gosford’s submission that it would be an abuse of process to permit Shanxi and Shinetec to advance these grounds.

3. [200]

   During the hearing of the appeal, Mr Gleeson at one stage suggested that other orders should be made if this Court accepted his submission that there was an abuse of process. However, as was indicated at the time, in the absence of any formal application, we regard it as inappropriate to accede to that request. As we understand it, the stay of the judgment against the Bank of China ordered by the primary judge on 14 December 2023 remains in place, and application may be made to his Honour consequent upon the dismissal of this appeal.

4. [201]

   For those reasons, the entirety of the appeal (save for those grounds which were dismissed on 11 July 2024 when they were abandoned by the appellants) must be dismissed. Because we have addressed the grounds substantively, in addition to dealing with the submissions pertaining to the grant of leave, and since the appellants have already filed a notice of appeal, it is not necessary for us separately to address the grant of leave. We have not determined the notice of contention, but that needs no separate order dealing with it. It has been unnecessary to resolve Gosford’s notice of motion to adduce fresh evidence, which should be dismissed (but with its costs being costs in the appeal). No party sought to be heard against an order that costs of the appeal followed the event.

5. [202]

   The Court’s orders are: