CASE SUMMARY

Qintex Australia Finance Ltd v Schroders Australia Ltd (1990) 3 ACSR 267
Court: NSW Supreme Court Commercial Division

Judge/s: Rogers CJ

Judgment Date: 27/11/1990 Plaintiff: Qintex Australia Finance Ltd (QAFL)

Defendant: Schroders Australia Ltd (Schroders)
This case involves the channelling of funds between a group of companies.
Facts:
1. Schroders offered to conduct foreign currency transactions for the Qintex group.
2. On 1 August 1989 on behalf of a member of Qintex, the defendant sold 1.2 billion Japanese yen
for proceeds of A$11,560,693.64 payable to Qintex Television Ltd (QTL). Instead, the proceeds
were incorrectly paid to Qintex Australia Finance Ltd (QAFL).
3. At the same time, the defendant was told to buy a futures contract for 1.2 billion Japanese yen
at the prevailing exchange rate on 4 December 1989. However, on 4 December 1989 the
contract was closed on a loss of $1.377 million approximately.
4. This amount became payable to the defendant. To cover the loss, the defendant used funds
already held by it on behalf of the plaintiff (QAFL).
5. The plaintiff sued. It argued that another Qintex group entity was responsible for the loss.
Issue: Here the issue was whether Schroders could offset the loss using the funds from the Qintex
subsidiary, which would depend on whether Schroders was acting for that subsidiary while the loss
was incurred. Therefore, was the defendant permitted to ignore their separate legal identities,
treating all of the groups companies as a single business enterprise and consequently their debts as
well?
Held: The plaintiff was not a contracting party (either principle or agent). Usage of its funds by the
defendant to offset the loss was not justifiable.
Rogers CJ:
-

The fact that the defendant could not produce evidence pointing to the plaintiffs
involvement as a principle contracting party was persuasive. What evidence there was,
indicated Schroders business control measures were lax and that there were no measures
taken to designate a contracting party.
o Instructions on the transactions were received solely from treasurers in the Qintex
group (referred to only as Qintex) and not a specific entity of the group. Deal slips
filled out by employees of the defendant show this. Furthermore, none of the
entities had individual client codes, and only a general one was used by the
defendant.

In this case the court recognised the difficulty in applying the law which specified strict boundaries
between entities in a corporate group because the commercial reality was such that those same
corporate groups did not maintain those boundaries in practice.