Proctor : May 2015
Construction law Consequently, his Honour noted that “[t]he 28 days referred to in s67J(2) does not begin to run until a time after the right of the owner to recover some amount from the building has actually accrued”.2 Keane JA held as follows:3 Further, “In the particular case of liquidated damages, the quantification of the amount owed is effected by the contract itself, so that the amount owed is quantified by the contract as and when the right to obtain that amount arises.” Notably, after Keane JA’s decision in Multiplex, s67J was amended to include the words ‘debt due’. In Saipem’s submission, this fortified Keane JA’s observations regarding the operation of s67J. GLNG Operations disagreed with this interpretation of s67J, but also argued that while the agreement provided for set-offs in its favour, it did not provide for any set-off capable of being relied on by Saipem. In response, Saipem argued that it would, in any event, be entitled to an equitable set-off. Finally, GLNG Operations argued that Saipem had no contractual right to the bonus payments. Because this application only came before his Honour on an application for interlocutory relief, his Honour did not directly resolve any of these disputes. His Honour instead resolved the matter by noting that an equitable set-off would arise when the claim is “bound up with and go[es] to the root of, challenge[s], call[s] in question, or impeache[s] the title of the claimant”,4 and on that basis considered that Saipem had a prima facie case of equitable set-off. In reaching this conclusion, plainly his Honour also took the view, although it is not expressly conveyed by the judgment, that Saipem had a prima facie case for its preferred construction of s67J. Balance of convenience and bank guarantees His Honour then turned to address the balance of convenience. Relevantly, his Honour observed that the considerations of a prima facie case and the balance of convenience “are often related and both need to be weighted in the balance when considering the appropriate order to be made”.5 His Honour held that the commercial purpose of guarantees was that they be regarded as equivalent to cash. In this regard, his Honour referred to the decision in Fletcher v Construction Australia Ltd v Varnsdorf Pty Ltd  3 VR 812, in which the Victorian Court of Appeal had emphasised that there were two reasons for stipulating a requirement for a bank guarantee in a contract: a. to provide security for a valid claim against the contractor, and b. to allocate the risk between the parties as to who shall be out of pocket pending the resolution of a dispute between them. In this context, his Honour also referred to the decision of the Full Court of the Federal Court in Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458 (Clough) in which their Honours identified three principal exceptions to the general rule that a court will not enjoin the issuer of a performance guarantee or bond, as follows:6 a. The court will enjoin the party in whose favour the performance guarantee has been given from acting fraudulently. b. The party in whose favour the performance bank guarantee has been given may be enjoined from acting unconscionably in contravention of s20 of the Australian Consumer Law. LEGAL PRACTICE MANAGEMENT COURSE Applying for a Principal Practising Certificate? The College’s Legal Practice Management Course meets the requirements of the Queensland Law Society for this purpose. DATE Enrol by Friday 8 May. The workshop runs from 28 to 30 May 2015. LOCATION The workshop is held at the College of Law in Brisbane CBD. REGISTER ONLINE www.collaw.edu.au/lpmc EMAIL US firstname.lastname@example.org CALL US 07 3234 4595 VISIT US collaw.edu.au 24 PROCTOR | May 2015 back to contents NEW!