Central Petroleum Ltd v Century Energy Services Pty Ltd

[2011] WASC 211

CENTRAL PETROLEUM LTD -v- CENTURY ENERGY SERVICES PTY LTD [2011] WASC 211

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2011] WASC 211
Case No:	CIV:1540/2011	Heard:	5 JULY 2011
Coram:	KENNETH MARTIN J	Delivered:	28/09/11
No of pages:	26	Judgment Part:	1 of 1
Result:	Injunction refused
Category:	B
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Parties:	CENTRAL PETROLEUM LTD CENTURY ENERGY SERVICES PTY LTD
Catchwords:	Interlocutory injunction Attempt to restrain calling of banker's unconditional undertaking to pay Right to call Contractual construction of instrument providing for undertaking
Legislation:	Nil
Case References:	Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420 Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493; [2000] WASC 284 Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [2008] FCAFC 136; (2008) 249 ALR 458 Fletcher Construction Australia Ltd v Varnsdorf [1998] 3 VR 812 Jakudo Pty Ltd v South Australian Telecasters Ltd (No 2) (1997) 69 SASR 440 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283 McDonald v Dennys Lascelles Limited [1933] HCA 25; (1933) 48 CLR 457 Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158 Twomey v Eagle Star Insurance Co Ltd [1994] 1 Lloyds Rep 516 Wood Hall Ltd v Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : CENTRAL PETROLEUM LTD -v- CENTURY ENERGY SERVICES PTY LTD [2011] WASC 211 CORAM : KENNETH MARTIN J HEARD : 5 JULY 2011 DELIVERED : 28 SEPTEMBER 2011 FILE NO/S : CIV 1540 of 2011 BETWEEN : CENTRAL PETROLEUM LTD

Plaintiff

AND

CENTURY ENERGY SERVICES PTY LTD
Defendant

Catchwords:

Interlocutory injunction - Attempt to restrain calling of banker's unconditional undertaking to pay - Right to call - Contractual construction of instrument providing for undertaking

Legislation:

Nil

Result:

Injunction refused

(Page 2)

Category: B

Representation:

Counsel:

Plaintiff : Mr B Dharmananda
Defendant : Mr M N Solomon

Solicitors:

Plaintiff : Allens Arthur Robinson
Defendant : Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420
Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493; [2000] WASC 284
Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [2008] FCAFC 136; (2008) 249 ALR 458
Fletcher Construction Australia Ltd v Varnsdorf [1998] 3 VR 812
Jakudo Pty Ltd v South Australian Telecasters Ltd (No 2) (1997) 69 SASR 440
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283
McDonald v Dennys Lascelles Limited [1933] HCA 25; (1933) 48 CLR 457
Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158
Twomey v Eagle Star Insurance Co Ltd [1994] 1 Lloyds Rep 516
Wood Hall Ltd v Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443


(Page 3)

KENNETH MARTIN J:

Introduction

1 The plaintiff, Central Petroleum Ltd (the Applicant), seeks an interlocutory injunction to restrain the defendant from calling up monies claimed as due to it under an unconditional promise to pay, given on the Applicant's behalf to the defendant by a bank (Banker's Undertaking).

2 These proceedings were commenced on 30 March 2011. They have been entered in the CMC List. The defendant, under threat of an injunction, undertook, on an interim basis, not to make the call for monies it says are due to it pending the inter partes hearing of the Applicant's application for the interlocutory injunction. That consensual status quo has inured for some three months pending a listing of the matter for argument at a special appointment convenient to both sides' counsel, convened before me on 5 July 2011.

3 On 4 July 2011, the Applicant issued an Arbitration Notice to the defendant (who I will now refer to as 'Century'). The notice was expressed to be given to Century pursuant to subcl 30.2(a) of a written contract (the Drilling Services Contract) (number EP82-2010-002), dated 14 May 2010. Clause 30 in that contract is an elaborate dispute resolution provision, providing for an arbitral process.

4 Under sch 4 of the Drilling Services Contract, Century was to provide the Applicant with use of a drilling unit at various specified rates, including an Operating Daily Rate of $40,800. The drilling unit was required by the Applicant for use in exploration work at a remote location in the middle of Australia (north of the border between South Australia and the Northern Territory, and west towards the Western Australian border with the Northern Territory), known as 'Surprise-1'.

5 On 5 December 2010, an incident (referred to as the 'Monkey Board Incident') occurred that rendered the drilling unit, from that time, inoperable. Uncontroversially, the Monkey Board Incident appears to have arisen by reason of matters which are accepted as constituting a breach of the Drilling Services Contract by Century.

6 As a consequence of the 5 December 2010 incident, Century's drilling unit could not continue drilling the Surprise-1 well any deeper than the incomplete depth it had reached before the drilling unit became inoperable. On 14 December 2010, the Applicant, as was its contractual right under subcl 21.1(j), in the then prevailing circumstances of Century's

(Page 4)

breach, terminated all future performance by both parties of the Drilling Services Contract: see McDonald v Dennys Lascelles Limited [1933] HCA 25; (1933) 48 CLR 457, 476 - 477 (Dixon J).

7 From 5 December 2010, it has taken the Applicant until 4 July 2011 to start the ball rolling by invoking the arbitral dispute resolution process as set down under subcl 30.2(a) of the Drilling Services Contract.

8 At the time this litigation was commenced by the Applicant on 30 March 2011, Century had been threatening a call on the Banker's Undertaking it held under the Drilling Services Contract. Monies were claimed in respect of the drilling services Century provided to the Applicant from the use of the drilling unit in drilling the Surprise-1 well, in the period up to just before the Monkey Board Incident. So, the money claim foreshadowed was for a liquidated amount said to have fallen due to Century by the Applicant in the period before the future performance of the Drilling Services Contract was ended under the Applicant's termination notice on 14 December 2010.

9 At one point, Century was claiming monies due in the liquidated amount of $795,649.36 from the Applicant (see page 274 of the affidavit of John Phillip Heugh sworn 28 February 2011 and filed 6 April 2011). However, as the parties exchanged affidavits in preparation for argument on the Applicant's injunction application to restrain Century calling the Banker's Undertaking, Century reduced and modified the numerical money claim. By materials in the affidavit of Peter Leslie Goeldner, sworn on 6 May 2011, Century's claim for monies due by the Applicant for drilling services was seen to reduce significantly to $358,832.66, a reduction of $436,816.70. That reduction in Century's claim reflects what it now accepts, for the purposes of argument, as a proper delineation as between the invoiced amounts falling due prior to termination of the Drilling Services Contract as against amounts attributable to work or services (essentially demobilisation costs) performed subsequent to termination.

10 As the parties' argument unfolded on 5 July 2011, Century's claimed amount at issue was reduced even further by $46,550 (by reference to sch 4 of the Drilling Services Contract, concerning circumstances where a $0 daily rate could arguably apply in the Applicant's favour), effectively leaving only $312,282.66 (inclusive of GST) at threat of being called.

11 Thus, there was ultimately, viewed in overall commercial terms for this Court, a relatively modest sum at issue on the application, especially

(Page 5)

measured against what presents as an oppressive level of affidavit material filed on the opposed interlocutory argument (six affidavits on behalf of the Applicant, three affidavits on behalf of Century).

12 This is an action case managed in the CMC List, where a strong emphasis is directed towards proportionality of legal costs incurred in the attempted resolution of civil disputes: see Rules of the Supreme Court 1971 (WA) O 1 r 4B and Consolidated Practice Directions 4.1.2 [6] and [7]. In the present case, there was no suggestion from the Applicant that it was at all financially constrained from unilaterally and completely defusing all threat of the Banker's Undertaking being called (and so, in practical terms, removing a possibility of any potential prejudice to the Applicant's business reputation from such a call on a banker's undertaking) simply by paying out the presently disputed amount claimed by Century ($312,282.66) on a without prejudice basis, with a view to subsequent recovery should the Applicant's opposing position based on arguments of law be subsequently vindicated in arbitration or in litigation. That is particularly so in circumstances where the Applicant's statement of financial position, before me on the materials, as of 30 December 2010, shows a surplus of net assets over net liabilities of some $30 million plus. Moreover, there is no suggestion that Century presents as a bad long term financial risk regarding future potential recovery of any funds paid over to it from the Applicant.

13 However, the Applicant was adamant that as a matter of the proper contractual construction of the Drilling Services Contract and of the Banker's Undertaking provided for therein (under par 34, and see sch 10), that its unwavering stance was justified. It would not pay over any funds in dispute. This, it said, was manifestly proper and correct, with the consequence that Century must be restrained from calling on the Banker's Undertaking. The Applicant says that Century has no legitimate contractual or other rights to claim $312,282.66 at any time. According to the Applicant, if Century were to call the undertaking, Century would illegitimately obtain monies over which it has no lawful or arguable right. The small amount now at issue was therefore irrelevant.

14 The central issue in dispute therefore is one of contractual interpretation of the Drilling Services Contract. The Applicant invokes the third of three bases mentioned by the Full Federal Court (French, Jacobson and Graham JJ) in Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [2008] FCAFC 136 [77]; (2008) 249 ALR 458, arguing that as a matter of the correct (objective) construction of the Drilling Services Contract, the Applicant and Century effectively agreed

(Page 6)

that Century could not call on the Banker's Undertaking in circumstances which currently present.

15 The Applicant reminds the Court that there is no finite duration placed upon this Banker's Undertaking. So it is put that Century would suffer no prejudice in waiting (either voluntarily, or under an imposed interlocutory injunction until trial) whilst a foreshadowed substantial damages claim by the Applicant against Century, arising out of the Monkey Board Incident and events of 5 December 2010, is resolved (presumably in the arbitration now begun under the Applicant's Arbitration Notice of 4 July 2011).

16 In essence, the Applicant's position is that Century has no arguable contractual right at this time to call upon the Banker's Undertaking to any extent, even in respect of the modest amount now at issue.

17 Accordingly, the Applicant presses the case for an interlocutory injunction as its entitlement, in the auxiliary jurisdiction of this Court, for equitable relief.

Summary of the Applicant's position

18 It is convenient to assess the Applicant's position by reference to its own summary of the present dispute found in the Applicant's Arbitration Notice of 4 July 2011. Subparagraphs 2.5 - 2.11 say:

2.5 The Monkey Board Incident was caused by, or alternatively resulted in, a breach of the contract by [Century] ([Century's] Default).

2.6 On 14 December 2010 [the Applicant] terminated the Contract under cl 21.1 of the Contract.

2.7 Under cl 21.4(b) of the Contract, [the Applicant] is entitled to recover its additional costs incurred as a result of [Century's] default and other events giving rise to termination (ie, the Monkey Board Incident).

2.8 Further or alternatively, [the Applicant] is entitled to recover loss and damage (eg, its additional costs caused by the Monkey Board Incident) arising from [Century's] Default.

2.9 Further or alternatively, [the Applicant] is entitled to recover its loss and damage (eg, its additional costs caused by the Monkey Board Incident) arising from [Century] breaching a duty owed to [the Applicant] to exercise reasonable care and skill in operating the Drilling Rig.

(Page 7)

2.10 Accordingly, [the Applicant] claims that it is entitled to recover from [Century]:

(a) its costs incurred in relation to the Surprise-1 well from 2 pm on 5 December 2010 until demobilisation from the site in late December 2010; and

(b) its costs that will be incurred in re-entering Surprise-1 and restoring the well to its condition and depth on 5 December 2010 and any extra cost that will be incurred in drilling to the depth that was required.


2.11 [Century]:

(a) disputes that [the Applicant] is entitled to recover the costs, loss or damage referred to in paragraph 2.10 above; and

(b) claims that it is due payment from [the Applicant] under the Contract in the amount of $358,832.66, which claim is disputed by [the Applicant],

(the Dispute).

19 By reference to the Arbitration Notice, I would observe as to the dispute:

(a) The par 2.11(b) figure of $358,832.66 now needs to be read with reference to my observations about this amount being calculated by reference to the drilling services performed by Century prior to the Monkey Board Incident on 5 December 2010. In terms of how much of that liquidated sum is actually disputed, it would now appear, by reference to sch 4 to the Contract, that only the amount of $46,550 is at issue. That reduces the liquidated amount claimed by Century to $312,282.66.

(b) By reference to par 2.7 - par 2.10 inclusive of the Applicant's Arbitration Notice (and also from the written submissions of the plaintiff), it is apparent that the Applicant makes its claims for unliquidated damages against Century, arising out of the breach of the Drilling Services Contract, by reason of and evaluated in the financial aftermath of the Monkey Board Incident. At various places in the Applicant's written submissions these damages claims are referred to as sought to be 'set-off' against Century's liquidated claim.

(Page 8)

(c) The Applicant's unliquidated damages claims against Century fall under two conceptual heads, broadly reflected under par 2.10(a) and par 2.10(b) of the Applicant's Arbitration Notice. The first head relates to costs allegedly incurred by the Applicant in the immediate aftermath of the Monkey Board Incident, in a period between 2.00 pm on 5 December 2010 until demobilisation from the Surprise-1 site in late December 2010. During submissions this damages claim was referred to as a 'waste' claim. It could not, on my assessment, constitute a legal set-off as against Century's liquidated claim seeking money due on invoices rendered to the Applicant in respect of drilling services provided up to 5 December 2010, prior to the Monkey Board Incident. A waste unliquidated damages claim perhaps could fit more loosely under a category of damages counterclaim asserted by way of 'equitable set-off' against Century's liquidated claim. But a more detailed and thorough examination of all facts underlying the Applicant's damages for the wasted costs and expenses would need to be undertaken before reaching firmer views about that.

(d) The second broad category of unliquidated damages articulated by the Applicant under par 2.10(b) of the Arbitration Notice, is the cost of foreshadowed future work by the Applicant in re-entering, restoring, then continuing to drill in the Surprise-1 well.

20 During argument, it was suggested that the damages foreshadowed by the Applicant for wasted costs in the period 5 to 18 December 2010 could be quantified as likely to amount to $527,649.

21 It was explained that the Applicant's likely costs for re-entering, restoring and re-drilling the Surprise-1 well had not yet been incurred. The Applicant, however, was foreshadowing, particularly by regular disclosure reports made to the ASX, a looming further series of exploratory wells to be drilled in an area which would include Surprise-1. Depending on the nature and extent of any ultimate fresh outback drilling campaign yet to be decided upon, the parameters of this aspect of an unliquidated damages claim might approach, for a single well campaign at the Surprise-1 location, the order of $3,219,602. Alternatively, if the Applicant's future exploration drilling costs (so-called) were spread across a three well campaign, the likely damages exposure of Century would reduce to approximately $1,865,749.

22 These unliquidated damages estimates for the Applicant are found in the third affidavit of Damian Jude Theseira, sworn 29 June 2011. This

(Page 9)

affidavit was sworn in amplification and clarification of two earlier affidavits sworn by Mr Theseira, also relied upon by the Applicant: see earlier affidavits of 1 April and 9 May 2011. Mr Theseira is a drilling engineer employed by the Applicant.

23 In addition to Mr Theseira's affidavit, the Applicant relied on two affidavits sworn by its managing director, John Phillip Heugh, of 28 February and 16 May 2011 respectively, as well as an affidavit of Kristian Maley, affirmed 9 May 2011. Mr Maley is employed by the Applicant's solicitors. His affidavit essentially attaches the passing correspondence between his firm with the solicitors for Century in the period 11 February to 14 May 2010, including as to the threatened injunctive relief.

24 For Century, reliance was placed upon two affidavits sworn by its solicitor Mr Spencer Flay, of 19 April and 17 June 2011. Reliance is also placed upon an affidavit of Peter Goeldner, sworn 6 May 2011, to which I referred. Mr Goeldner is Century's chief financial officer.

Construction principles relating to calling performance guarantees

25 There was no real dispute between the parties about these principles during argument. They are found conveniently stated within the reasons of the Full Federal Court in Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd. Those joint reasons (of French, Jacobson and Graham JJ) deal with constructional principles at [75] - [85].

26 At [77] their Honours identify three 'principal exceptions' to what is referred to as the rule that courts usually do not enjoin an issuer of a performance guarantee, or bond, from performing an unconditional obligation to render payment. Their Honours state these principles by reference to an earlier New South Wales Supreme Court decision of Austin J in Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158, 164 - 165.

27 Two of the three exceptions, namely fraud and unconscionability, are not asserted as relevant to present circumstances.

28 It is only the third of the exceptions as identified by the Full Federal Court that carries present potential relevance. At [77] their Honours said of the third exception:

Third - the most important exception for present purposes, is that, whilst the court will not restrain the issuer of a performance guarantee from acting on an unqualified promise to pay:

(Page 10)

'… if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.' (Reed Construction Services 15 BCL at 164 (Austin J)).

It may be preferable not to describe this as an exception but rather as an overriding rule because it emphasises that the 'primary focus' will always be the proper construction of the contract: Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493 per Owen J at [30]. Stephen J recognised this in Wood Hall Ltd 141 CLR at 459 by observing that the provisions of the contract may qualify the right to call on the undertaking contained in a performance guarantee.

29 Relevantly to present circumstances, I am concerned with a banker's undertaking given by Westpac Banking Corporation on 27 April 2010. The undertaking follows the format of the pro forma Banker's Undertaking that is identified in sch 10 to the Drilling Services Contract. I will refer to some precise terms of the Banker's Undertaking in due course. But I observe now that the Applicant, quite properly, has made no suggestion that there is any prospect of it attempting to injunct Westpac Banking Corporation from performing a payment obligation under the undertaking, were it called upon by Century to do so.

30 The third exception can inhibit the favouree of a banker's undertaking (by potential interlocutory restraint against it) calling upon the undertaking, i.e. here any restraint sought to be imposed is sought only against Century.

31 In the context of the third exception, there is an important need to ascertain the policy rationale (objectively assessed) within the parties' contended bargain underlying the conferral of rights by the performance guarantee. This policy consideration emerges from the reasons for decision of the Victorian Court of Appeal in Fletcher Construction Australia Ltd v Varnsdorf [1998] 3 VR 812, 821 (Charles JA) and 826 (Calloway JA). The consideration was also recognised by Owen J in his reasons in Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493; [2000] WASC 284 [31]. In Bateman Project Engineering Pty Ltd there was on the facts an express statement of purpose seen within the security instrument 'for the purpose of ensuring the due and proper performance of the Contract'.

32 In Clough Engineering, by reference to those policy observations by Charles and Calloway JJA in Fletcher Construction, the Full Federal Court mentioned two commercial reasons potentially presenting as

(Page 11)

relevant to why a beneficiary of a performance guarantee may have stipulated to obtain such an entitlement. First and most obvious, is to provide security for a valid claim. Second, may be the more considered objective of seeking to 'allocate the risk between the parties as to who shall be out of pocket pending the resolution of a dispute between them'.

33 Determining the proper construction of the Banker's Undertaking requires me to objectively determine whether the performance guarantee was provided just by way of security, or was also some form of consensual 'risk allocation device' between the contracting parties. The Full Federal Court in Clough Engineering [79] approved the observations made by Calloway JA in Fletcher Construction at (827) as to agreed risk allocation:

Remembering that we are speaking of guarantees in the sense of standby letters of credit, performance bonds, guarantees in lieu of retention monies and the like, the latter purpose is often present and commercial practice plays a large part in construing the contract. No implication may be made that is inconsistent with an agreed allocation of risk as to who shall be out of pocket pending resolution of a dispute and clauses in the contract that do not expressly inhibit the beneficiary from calling upon the security should not be too readily construed to have that effect. As I have already indicated, they may simply refer to the kind of default which, if it is alleged in good faith, enables the beneficiary to have recourse to the security or its proceeds.

(my emphasis in bold)

34 By reference to that paragraph from Fletcher Construction, the Full Federal Court then observed [80]:

Thus, subject to the exceptions of fraud and unconscionability, the beneficiary of a performance guarantee granted in its favour as a risk allocation device, will be entitled to call upon the guarantee even if it turns out, ultimately, that the other party was not in default: Fletcher Construction [1998] 3 VR 827.

(my emphasis in bold)

35 Extracting principles from case authorities including Wood Hall Ltd v Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443, Fletcher Construction, Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420 and a Court of Appeal decision, Twomey v Eagle Star Insurance Co Ltd [1994] 1 Lloyds Rep 516, 520, the Full Federal Court continued [82]:

Notwithstanding the importance of commercial practice, the statements in these authorities do not suggest that the court should depart from the task of construing the terms of the contract in each case. What the

(Page 12)

authorities emphasise is that the commercial background informs the construction of the contract. In particular, as Calloway JA said in the passage quoted above, the court ought not too readily favour a construction which is inconsistent with an agreed allocation of risk as to who is to be out of pocket pending resolution of the dispute about breach.

(my emphasis in bold)

36 In a passage emphasised to me by counsel for Century, their Honours in Clough then observed the need for 'clear words' before inhibiting a beneficiary of a performance guarantee from calling upon that instrument in good faith. Their Honours said [83]:

It follows that clear words will be required to support a construction which inhibits a beneficiary from calling on a performance guarantee where a breach is alleged in good faith, i.e., non-fraudulently.

(my emphasis in bold)

Finally in Clough Engineering it was observed [85]:

The question of construction as to whether the underlying contract contains a qualification on the right to call upon the security must be determined in light of the contract and the form of the performance guarantee as contained in the contract. This accords with the basic principle of construction that the terms of an instrument must be read as a whole: Re Media Entertainment and Arts Alliance; Ex parte The Hoyts Corporation Pty Ltd (1993) 178 CLR 379 at 386 - 7. It also accords with the approach taken to the construction of the underlying contract in the leading authorities to which we have referred: See, eg, Wood Hall Ltd 141 CLR 443, at 445, 451, 457 - 8; Fletcher Construction [1998] 3 VR at 821 - 2.

(my emphasis in bold)

37 Bearing in mind these observations of the nature and scope of the construction exercise that is obviously required, I now turn to the terms of the Banker's Undertaking and the underlying terms of the Drilling Services Contract bearing upon it.

Drilling Services Contract: Contractual construction exercise

38 Mr Maley's affidavit contains as attachment KPM10 a copy of the Drilling Services Contract entered between Century and the Applicant on 14 May 2010. As I have observed, sch 10 to the Drilling Services Contract contains a form of banker's undertaking required to be provided to Century: see subcl 34.1(a) of the Drilling Services Contract. The Drilling Services Contract is also found as attachment JPH4 to

(Page 13)

Mr Heugh's affidavit of 28 February 2011. Attachment JPH5 to that affidavit is the executed form of the Banker's Undertaking given to Century (Century being referred to as the Favouree) at the request of the Applicant (which is referred to as the Customer).

39 The terms of the Banker's Undertaking provide:

… and in consideration of the Favouree accepting this Undertaking for 'Provision of Drilling Unit Package and Associate's Services for Exploration Drilling Programme (Amadeus Basin Wells)', WESTPAC BANKING CORPORATION (the 'Bank') unconditionally undertakes to pay on demand any amount or amounts which may from time to time be demanded in writing purporting to be signed by or on behalf of the Favouree, up to a maximum aggregate sum of $1,359,200 (the 'Amount').

Payment of the Amount or any part thereof will be made by the Bank to the Favouree without reference to the Customer and regardless of any notice from the Customer to the Bank not to pay any amount.

(my emphasis in bold)

40 Clause 34 in the Drilling Services Contract makes provision for this Banker's Undertaking. It provides:

34.1 Provision of banker's undertaking by Company

(a) The Company within 10 Business Days from the date of this Document shall provide a banker's undertaking ('Banker's Undertaking') in favour of the Contractor for an amount of A$1,359,200 in the form attached as Schedule 10.

(b) Should the Company not provide the Banker's Undertaking by the Earliest Commencement Date, the Contractor may suspend Drilling Operations until the Banker's Undertaking is provided by the Company.


34.2 Banker's Undertaking purpose and call down procedure

(a) The purpose of the Banker's Undertaking is to ensure payment due by the Company to the Contractor of all amounts due under this Document.

(b) Prior to being entitled to request payment of the Banker's Undertaking:


(i) the Contractor must be due a payment from the Company which remains unpaid and outstanding under the terms of this Document;

(Page 14)

(ii) the Contractor must provide the Company with written notice asserting an amount is due and outstanding; and

(iii) 5 Business Days has passed since the Contractor's notice under clause 34.2(b)(iii) [sic (ii)] was received by the Company and the amount due and outstanding has not been paid.

(my emphasis in bold)

41 I would observe by reference to cl 34, that although this section bears a general heading 'Banker's Undertaking', the grammar associated with sentences proximate to cl 34.1 and cl 34.2 seems to indicate that each subclause then contains its own further heading. These subclause headings should also be clearly recognised as headings, rather than as substantive provisions. That recognition is important, bearing in mind interpretation provisions in the Drilling Services Contract under subcl 1.2(b) which say that the index and headings in the contract are for convenient reference only and are to be 'ignored in construing the meaning of any of this Document'.

42 I also note, by reference to subcl 1.2(a) in the Drilling Services Contract, the significance of the Schedules as an 'integral part of this Document'. The prevailing rankings of Schedules are themselves ordered (note the absence of sch 10 in that hierarchy).

43 Echoing observations by Owen J in Bateman Project at [31], I already detect one expressly stated security purpose, articulated to ensure payment due by the Applicant to Century of 'all amounts due under this Document'. That security policy function of the Banker's Undertaking, within the overall contractual bargain, is immediately clear for the first of two key potential policy purposes, as identified in Fletcher Construction. Whether that securing arrangement for Century by the Applicant subsists alongside a risk allocation policy stance found in the contract in favour of Century, as a matter of the objective analysis of the provisions of the Contract as a whole, requires closer analysis of the provisions of the Drilling Services Contract and the context of that agreement.

44 Subclause 34.2(b)(ii), a provision requiring written notice regarding Century 'asserting' an amount due and outstanding by the Applicant, has a significance within the objective determination of a sentiment towards risk allocation in favour of Century over the Applicant as regards amounts due and outstanding. The term 'asserting' presents as more consistent, I think, with Century, as a contractor providing drilling services to the

(Page 15)

Applicant, being entitled to obtain and hold payment funds in circumstances where Century articulates a bona fide or good faith claim to the funds it contends are due, unpaid or remain outstanding for services Century has rendered to the Applicant, see Clough [83] and [85].

45 Against that policy sentiment being detected, counsel for the Applicant drew my attention to subcl 34.2(b)(iii), and from there to a five business day window that is allowed for the Applicant to receive notice of a claim by Century to a payment said to be due and which Century contends remains unpaid and outstanding. Subclause 34.2(b)(ii) envisages that the written notice required under that subclause does not explicitly provide that the notice contain any warning specifically of a potential calling of the Banker's Undertaking by Century. Rather, the subclause just envisages the notice of Century's assertion to the Applicant that an amount is due and outstanding.

46 The function of subcl 34.2(b)(iii) is to impose a five business day window before Century is entitled to request any payment under the Banker's Undertaking (or as I would interpolate, any sum less than or equal to the full amount of the undertaking, set at the outer limit of A$1,359,200).

47 It was submitted by counsel for the Applicant that the five business day window ought be assessed objectively as having been inserted to affirmatively facilitate the Applicant obtaining an interlocutory injunction against Century within the five day period, should the Applicant decide to follow that course. This characterisation, it was put, is some sort of indicator against a detection of the sentiment of payment risk allocation in favour of Century, as regards it calling the Banker's Undertaking.

48 However, despite the valiant efforts of counsel for the Applicant, the clause overall presents to me to be equivocal. A five business day window could serve a number of other purposes, including to facilitate investigation, negotiation, cooling off or even mediation between the parties in that time frame. For instance, the Applicant might well upon receipt of such a notice (which as I observed, does not need to even mention the potential calling of the Banker's Undertaking) make an internal decision to voluntarily render payment of the monies in dispute, before the undertaking is called (thereby itself unilaterally removing any threat of a calling of the Banker's Undertaking). Alternatively, five business days would afford the Applicant an opportunity of making suitable early notification arrangements with its bank or other financial institutions regarding the possible calling of the undertaking, in order to

(Page 16)

remove any element of surprise from such an event maturing and so limit or confine any undue embarrassment with its lending institutions.

49 In the end, the five business day window seems to me to be multifaceted and overall equivocal from a policy perspective.

Termination

50 Clause 21 in the Drilling Services Contract provides for scenarios of termination of the performance of the Drilling Services Contract.

51 It is uncontroversial that the Drilling Services Contract was validly terminated by the Applicant as to its future performance from 14 December 2010, by reason of Century's breach.

52 In that regard, cl 21.1 provides:

Without prejudice to other remedies that may be available to the Company, the Company may terminate all or any part of this Document immediately by notice in writing to the Contractor:

…

(j) if a breakdown of the Contractor Group Equipment, unless caused by the actions of the Company, results in the Contractor being unable to perform its obligations under this Document for a consecutive period of 5 days or more.

53 Termination by the Applicant under cl 21.1 has potential consequences. These are explicitly seen under cl 21.4, headed 'Consequences of Termination', which provides:

(a) In the event of termination under clause 21.1 the Company may obtain completion of the Drilling Operations or the relevant part thereof by other contractors.

(b) In the event of termination of all of the Drilling Operations or the Contract in accordance with clause 21.1, the following conditions apply:


(i) the Contractor must cease to be entitled to receive any money or monies on account of this Document until the costs of completion and all other costs arising as a result of the Contractor's default or other events giving rise to termination have been finally ascertained which in any event must not be more than 90 days;

(ii) thereafter and subject to any deductions that may be made under the provision of the Contract the Contractor is

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entitled to payment only as set out in clause 10 for the part of the Drilling Operations completed in accordance with the Contract up to the date of termination; and

(iii) any additional costs incurred by the Company as a result of the Contractor's default or other events giving rise to termination is recoverable from the Contractor except where termination occurs under clause 21.1(d). …

54 Clause 21.4(b) is at the heart of the parties' rival construction positions and so requires careful analysis.

55 Before doing so, however, it is necessary to set out some earlier provisions in cl 11 of the Drilling Services Contract, themselves relevant as regards invoicing and payment, particularly cl 11.3 dealing with withholdings and set-off. The Applicant places heavy reliance upon this provision to support its overall construction stance against Century.

56 Clause 11 provides:

11.1 Submission of Invoices

(a) Subject to the suspension of termination of the Drilling Operations in accordance with this Document, the Contractor must invoice the Company within 7 days after the end of each calendar month, with respect to the compensation payable as a consequence of Drilling Operations performed and reimbursable expenditure incurred during the preceding month. Invoicing for mobilisation and demobilisation must occur after each has been completed. No invoice received after 90 days of the related Drilling Operations is payable by the Company unless the invoice covers disputed amounts.

…


11.2 Payment by Company

(a) Except as otherwise stated herein, the Company must pay all sums due to the Contractor within 30 days after receipt by the Company of the Contractor's invoice given under clause 11.1.

(b) The making of any payment by the Company under this clause 11.2 is without prejudice to the Company's rights under this Document, nor is it deemed to constitute acceptance by the Company of any Drilling Operations which are not compliant with this Document.

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11.3 Withholdings and Set-Off

(a) The Company may withhold payment in respect of any part of an invoice submitted by the Contractor, without liability for interest, where the amount in question is the subject of a dispute or difference between the Company and the Contractor.

(b) The Company may set-off against any amounts due to the Contractor the full amount of any sums owed to the Company by the Contractor under or related to this Document.

(c) The Contractor may set-off against any amounts due to the Company the full amount of any sums owed to the Contractor by the Company pursuant to this Document.

57 From cl 11, I highlight the following features:

(a) A tight timeframe within which the Contractor's (Century's) invoices must be rendered, i.e. within seven days after the end of each calendar month.

(b) A cut-off period of 90 days imposed upon Century in respect of related drilling operations (save for disputed amounts).

(c) A firm obligation imposed upon the Applicant to pay all sums due within the relatively tight timeframe of 30 days of receipt of Century's invoice.

(d) Significant to my ultimate assessment here is the stipulation of the without prejudice status of any payments made by the Applicant to Century under subcl 11.2(b). This provision indicates that notwithstanding the payment by the Applicant (within the 30 day window envisaged), there can still be a later reckoning of accounts between the Applicant and Century regarding their overall positions. Amounts paid over beforehand may still be subject to being claimed back, on a recoupment of sums previously rendered, in satisfaction of invoices submitted. This sort of ultimate account reckoning arrangement, at final completion of a project, is a common commercial event between parties where there is a relationship requiring payments in steps over time before project completion. Arrangements to maintain cash flow to a contractor through a regular remitting of payments by a principal against a contractor's submitted invoices can still allow for required corrections or adjustments to be made at a later time. This

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accounting process happens with the benefit of greater insights, knowledge or reflection time to assist in a more considered final accounting analysis towards an obligation that may have already been met by payment, albeit on the (effectively) without prejudice basis in the interim until then.

(e) The principal enjoys a right to withhold a payment in respect of part of an invoice under subcl 11.3(a), in which case it may do so without liability for interest, in the face of dispute or difference. That scenario, however, deals with a dispute or difference over an 'amount in question' by reference to the contractor's invoice. In other words, the provision does not, as I assess it, envisage or extend to cover a scenario of a cross-claim brought by the principal seeking unliquidated damages from the contractor.

(f) Subclause 11.3(b) does deal with a set-off scenario, regarding the contractor's invoices for amounts due with reference to 'any sums owed to [the Applicant]'. Reference to 'sums owed' again connotes, in my assessment, a debt or other liquidated amount actually owed by Century to the Applicant, and so then falling within a framework of permissible set-off, under subcl 11.3(b). This subclause also on its face would not envisage a setting-off of an unliquidated damages claim articulated by the Applicant against Century (assuming a level of unliquidated damages sought was, at some point, capable of being quantified).


[One possible qualification however to this analysis under (f) might arise in the wake of an unliquidated damages claim by the Applicant against Century which is the subject of a final arbitral award, or judgment of a court. On that scenario, arguably, there might then be a sum or sums properly owed to the Applicant by Century. However, that scenario does not present.]

58 It is convenient at this point now to make some reference to dispute resolution provisions within the Drilling Services Contract, under cl 30.2. Subclause 30.2(a) says that disputes, controversies and differences arising 'must, if possible, be decided amicably by the Parties'. Absent amicable resolution within 30 days, a dispute is to be finally settled by three arbitrators appointed in accordance with the provisions of subcl 30.2(b).

59 Overall then, as regards invoicing, payment and disputes arising in that arena, I see little within the overall framework of cl 11 of the Drilling Services Contract which, as a matter of objective contractual construction,

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bears upon a court reaching the view that these parties had clearly erected in their commercial bargain some sort of constraint against the contractor's right to call, if otherwise entitled to do so, the Banker's Undertaking.

60 Clause 11.3 deals with the scenario of invoice disputes over liquidated amounts. The Applicant withholding payment under subcl 11.3(a) could well throw up circumstances generating a dispute that would require resolution by the contractual provisions applicable. There would be no entitlement to interest in the interim.

61 But in the present case, with the liquidated money claim by Century now distilled down to its present bounds ($312,282.66), cl 11.3, particularly subcl 11.3(b), does not, as I assess it, present as of potential relevance to undermining or negating Century's claim for that amount as due. To the extent that the Applicant is capable of finding some legitimate contractual basis to sustain the current non-payment of that amount, such basis does not seem to lie within cl 11.3.

62 If anywhere, it would need to be found within the framework of cl 21.4, to which I now return.

Clause 21.4

63 By reference to provisions of subcl 21.4(b) earlier set out, I observe upon:

(a) A 90 day cessation period, in terms of Century's entitlement to receive monies under the Drilling Services Contract, imposed under a scenario of termination predicated upon Century's breach. Attention was drawn by counsel for the Applicant to the phrase 'finally ascertained' in subcl 21.4(b)(i) as regards the costs of completion and all other costs arising as a result of the contractor's default. However, the meaning of the phrase 'finally ascertained' must be ascertained in the context of an equally definitive concluding phrase, 'which in any event must not be more than 90 days'. The latter phrase, in my assessment, takes priority in terms of a limited 90 day cessation that is imposed, as a reasonable but finite 'standstill' period, within which the Applicant might investigate its attitude to a claim post termination.

(b) But once the 90 day window closes by reason of subcl 21.4(b)(ii), the contractor is clearly entitled to payments due to it. Reference is made to cl 10 of the Drilling Services Contract. By that clause

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the contractor is to receive payment for its services, on a basis of it receiving 'full compensation' (see subcl 10(a)). That entitlement is qualified only by 'any deductions'. Such 'deductions' are referred to as deductions that 'may be made under the provision of the Contract'. This terminology is unclear. It could be referring to specific places within the Drilling Services Contract, where the Applicant is there given the express right to make 'deductions' from invoice claims for payment submitted by Century. (For instance, see by reference to claims and liens under cl 13.10 which uses the terminology 'and may deduct from payment due to the contractor or recover by other means as a debt due from the Contractor'). See also subcl 8.10(b), which uses the phrase 'and to deduct any costs or expenses thereby incurred from any sum due or which may become due to the Contractor under this Document or to recover the same as a debt'.

Alternatively however, it is possible that subcl 21.4(b)(ii) might be read more expansively to embrace an amount finally ascertained under the preceding subcl 21.4(b)(i) as a deduction favouring the Applicant. However, even that wider scenario can still only be on the basis of such a final ascertainment occurring within a finite 90 day window, as allowed following termination, by subcl 21.4(b)(i).

At the interlocutory level I am inclined to accept that wider interpretation as being potentially more generous towards the Applicant on this application. It also was the interpretation that counsel for Century, very fairly, was prepared for the purpose of the arguments on this application to accept as the proper construction of the subclause overall.

(c) Next, it is an uncontroversial fact, in present circumstances, that the 90 day window after breach and termination is now well and truly closed. It closed, as the communications passing between the parties' respective legal advisers make clear, on 14 March 2011 (90 days after termination of the Drilling Services Contract by the Applicant on 14 December 2010).

(d) It is also uncontroversial that within that now closed 90 day window before 14 March 2011, there was no communication from the Applicant to Century indicating that an amount had been finally ascertained under subcl 21.4(b)(i), and so was thereby the amount which could constitute the subject matter of a 'deduction'

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by the Applicant from amounts that were otherwise due to Century under subcl 21.4(b)(ii) (i.e. ascertained by the Applicant before the 90 day window had closed).

64 Despite the uncontroversial closing of the 90 day window afforded to it, the Applicant still points to and relies upon subcl 21.4(b)(iii) as regards additional costs the Applicant claims it has incurred around drilling of Surprise-1 by reason of Century's breach. Such additional costs, under subcl 21.4(b)(iii), are referred to as being 'recoverable from the Contractor'. This is used to sustain the Applicant's non-payment stance even beyond the closing of the 90 day window it enjoyed, but did not use.

65 My reading of subcl 21.4(b)(iii) is that it is a residual 'top up' provision. It does allow the Applicant to recover additional costs incurred by it as a result of Century's default, but the context must be in the final accounting reconciliation as between these parties. The 90 day window provision under subcl 21.4(b)(i) provides a first (but finite) opportunity for the Applicant to quantify and communicate to Century any waste costs or damages, asserted as arising from its contractor's default. In that window, an opportunity does arise for the Applicant to finally ascertain such amounts, then raise them against Century by communication, as 'deductions' against the contractor's entitlements under subcl 21.4(b)(ii). But if that does not occur, costs subsequently ascertained as having been incurred by the Applicant outside the 90 day window nevertheless can still be pursued and claimed by the Applicant in a final account reckoning between the parties. However, unlike the first 90 day window opportunity, the latter scenario, significantly to my end view, does not inhibit the contractor's entitlement to receive and hold payment. That is the operation of subcl 21.4(b)(ii).

66 On that analysis, the Applicant has eventually indicated by communications to Century made outside the 90 day window that it believes it has significant potential breach claims sounding in unliquidated damages. That belief however cannot inhibit or interrupt the Applicant's contractual obligation to render payment of liquidated amounts that are due to Century (effectively to be paid on a without prejudice basis). The Applicant must therefore meet Century's invoices for drilling services provided to it and attributable to drilling performed in the period preceding the Monkey Board Incident.

Conclusions

67 My overall analysis of the invoicing and payment provisions, the 30 day obligation imposed upon the Applicant to render payment upon

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invoices (albeit to the narrow potential interruption of that obligation for up to 90 days, under subcl 21.4(b)(i)), lead me to a construction conclusion that, as a matter of the overall objective interpretation of the Drilling Services Contract, the parties can objectively be taken to have applied their corporate minds to the issue of who should hold any funds claimed by Century during the pendency of a payment dispute, and decided that party should be Century.

68 On my analysis, it was open to the Applicant to have acted within the 90 day window afforded and thereby to have then generated a 'deduction', which possibly, by reason of the quantum of the 'deduction', would essentially deliver an extinction of a liquidated amount otherwise due to Century upon unmet invoices. But that did not occur. Nevertheless, in any ultimate accounting 'wash up', the Applicant remains at liberty to pursue claims for unliquidated damages, presumably now within the framework of the outcome of the arbitration commenced by its arbitration notice of 4 July 2011 (which it no doubt assumes will be in its favour).

69 By reference to my search for clear words to support a construction that would inhibit a beneficiary from calling upon a performance guarantee given to it (in an agreed absence of any assertion of fraud or unconscionability), where a claim is otherwise articulated by the contractors in good faith (as I find), there is on my overall interpretation of the Drilling Services Contract, no manifestation of words clear enough to support the Applicant's injunction position as regards a calling of the Banker's Undertaking. That is particularly so given the running of the 90 day period allowed to the Applicant under subcl 21.4(b)(i) without the Applicant invoking that opportunity provided to potentially identify a deduction to its advantage under the Drilling Services Contract.

70 Therefore, in the overall exercise of contractual construction engaged in, I can ascertain no serious question emerging in order to sustain the equitable restraint which is sought by the Applicant within the auxiliary jurisdiction of the court. I refer in that respect to Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 and observations of Gleeson CJ and Crennan J at [19], where their Honours said, by reference to earlier observations by Doyle CJ in Jakudo Pty Ltd v South Australian Telecasters Ltd (No 2) (1997) 69 SASR 440, 442 - 443:

[I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy,

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and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ (see pars [65] - [72]), and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 should be followed.

71 At a point during argument, I was invited particularly by counsel for Century to finally resolve issues of construction (see a decision of McClelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 535 - 536, especially 536A - C) and thereby, to express concluded views about the construction of this contract.

72 Alluring as that invitation may present, I am cognisant of the requirement that an exercise of contractual construction nowadays must take place within the environment of relevant surrounding extrinsic facts (see Hon J J Spigelman AC, 'Contractual Interpretation: A comparative perspective' (2011) 85 Australian Law Journal 412, 417 - 420). A contract must be construed within the context of its overall commercial purpose, background and origin or, as is sometimes referred, the genesis of the contract.

73 Here, I am not sufficiently satisfied at this point that all matters potentially bearing upon an overall final contractual construction have been canvassed. As yet, there are no pleadings setting a framework for me to attempt an exercise in final construction. By reference to Kolback (536), I do not see the present underlying dispute as to the amount sought to be called up by Century as being finally settled by this decision. The prospect of that issue still being live, in the context of a final accounting between the parties, remains. I do accept, obviously, that there may well be other cases in which the course towards finality is the more appropriate, as to which see observations by Young JA in Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283 [73] (his Honour of course being in dissent there, as regards the grant of an injunction in that case).

74 In the prevailing circumstances of assessing only the basis for an interlocutory injunction, I conclude that there is no serious question raised by the Applicant, given my (interlocutory) views as to construction. Issues over damages as a potentially adequate alternate remedy and the balance of convenience therefore do not arise for consideration. Had I needed to consider the balance of convenience, I would of course

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recognise that unlike the circumstances which confronted Owen J in Bateman Project v Resolute (see [83] - [87]), this is not a case where the duration of the Banker's Undertaking is about to expire.

75 Nevertheless, in circumstances where the overall dollar amount at issue has now distilled to a sum that is modest by reference to this Court's jurisdiction, and where the Applicant for injunctive relief suggests no financial constraint inhibiting it from rendering a payment of the monies claimed by the respondent (in circumstances where the parties' contractual arrangements effectively provide for the without prejudice payment of the contractor's invoices, so that any overpayments may be recovered in a final account reckoning), the Applicant is, as I assess matters, well capable of protecting its position here on its own initiative.

76 The task for this Applicant, in showing a balance of convenience favouring it (if it could find a serious question arguably favouring it on contractual construction) would be, as I would assess it, problematic. There is also no suggestion that if the Applicant paid to Century $312,282.66, effectively on a without prejudice basis pending a final account reckoning, the funds would be in any jeopardy of being lost in the interim.

77 Attachment SEF2 to Mr Flay's first affidavit at page 21 shows the Applicant's consolidated balance sheet as at 31 December 2010 indicating total current assets of $26.4 million and total current liabilities of $6.34 million. It also indicates the Applicant's net asset position at that date of $31.7 million.

78 Counsel for the Applicant's steadfast submission regarding the balance of convenience essentially sought to raise an asserted degree of prejudice to its business reputation to necessarily follow on from a calling of the Banker's Undertaking by Century. Those reputational observations are reliant upon a line of New South Wales authority identified by the majority in Lucas Stuart, see MacFarlane JA at [45] and [46]. But see contra, Young JA at [66] - [70].

79 I accept that there may well be instances where the cold calling of a performance guarantee may deliver reputational damage to the exposed party (who has caused the guarantee to be provided by the financial institution). Nevertheless, the present case seems to me to be not at all of that ilk, in terms of potential prejudice to the Applicant's business reputation. Here, it sits readily within the capacity and financial wherewithal of this Applicant to quickly and completely extricate itself

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from all potential threat of this Banker's Undertaking being called. It could in swift time (effectively on a without prejudice basis) render a payment of the relatively modest sum (assessed in a commercial context) to Century. The Applicant's damaged business reputation argument is a paradigm case of a party 'bootstrapping' towards its own asserted prejudice to achieve its end game of injunctive relief. This I assess to be unacceptable.

80 So, had I otherwise been persuaded that the Applicant could show a serious question to be argued, by reference to contractual construction arguments which arise, it is unlikely I would have been satisfied that the balance of convenience lay in the Applicant's favour. Relief by injunction being inherently equitable in nature, the present case is one where, as a matter of discretion, I would have been deeply troubled that a court of equity was asked to assist a party who could easily, but had deliberately chosen not to, assist itself.

81 For these reasons, the application of the Applicant for an interlocutory injunction against Century will be refused.

82 Nevertheless, it emerged during the course of argument that the liquidated amounts which had been communicated and claimed by Century at all times prior to the hearing before me had been for amounts greater than $312,282.66.

83 If Century now gives five business days fresh notice to the Applicant as to a precise (lesser) amount now being claimed as outstanding and remaining unpaid, in line with subcl 34.2(b)(ii), I would see at that point Century as effectively unconstrained in then calling the Banker's Undertaking to the extent of that reduced amount, should it remain outstanding (i.e. after an elapse of the five business days notice from Century to the Applicant, as identified under subcl 34.2(b)(iii)).

84 Prima facie, the Applicant should bear the costs of its substantive failure on this application and I would be inclined to order that those costs be fixed and made payable forthwith. If necessary, I will hear the parties as to the precise terms of orders dealing with the dismissal of the Applicant's application for injunctive relief and as to costs.