KVAERNER PROCESS SYSTEMS PTY LTD -v- AUSTRALIAN GASFIELDS LTD [2001] WASC 155

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 155
Case No:	CIV:1131/2001	Heard:	14 MARCH 2001
Coram:	PARKER J	Delivered:	20/06/01
No of pages:	23	Judgment Part:	1 of 1
Result:	Interlocutory injunction granted
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Parties:	KVAERNER PROCESS SYSTEMS PTY LTD (ACN 005 500 890) AUSTRALIAN GASFIELDS LTD (ACN 009 330 134)
Catchwords:	Contracts Building, Engineering and Related Contracts Security by way of unconditional Bank Undertaking to Pay Dispute as to underlying contract Whether beneficiary entitled to draw on security Proper interpretation of underlying contract
Legislation:	Nil
Case References:	Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420 Barclay Mowlem Construction Ltd v Simon Engineering (Australia) Pty Ltd (1991) 23 NSWLR 451 Bateman Project Engineering Pty Ltd & Ors v Resolute Ltd & Ors [2000] WASC 284 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 J H Evans (NT) Pty Ltd v Diano Nominees Pty Ltd [1989] NTSC 4 Pearson Bridge (NSW) Pty Ltd v The State Rail Authority of New South Wales (1982) 1 ACLR 81 Reed Construction Services Pty Ltd v Kheng Seng (Australia) Pty Ltd (1999) 15 BCL 158 Roehampton Developments Pty Ltd (in liq) v FAI General Insurance Co Ltd [2000] WASC 235 Selvas Pty Ltd v Hansen & Yuncken (SA) Pty Ltd & Anor (1987) 6 ACLR 36 Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443 Anaconda Operations Pty Ltd & Ors v Fluor Daniel Pty Ltd [1999] VSCA 214 Olex Focas Pty Ltd & Anor v Skodaexport Co Ltd & Anor (1996) 134 FLR 331

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : KVAERNER PROCESS SYSTEMS PTY LTD -v- AUSTRALIAN GASFIELDS LTD [2001] WASC 155 CORAM : PARKER J HEARD : 14 MARCH 2001 DELIVERED : 20 JUNE 2001 FILE NO/S : CIV 1131 of 2001 BETWEEN : KVAERNER PROCESS SYSTEMS PTY LTD (ACN 005 500 890)

Plaintiff

AND

AUSTRALIAN GASFIELDS LTD (ACN 009 330 134)

Defendant

Catchwords:

Contracts - Building, Engineering and Related Contracts - Security by way of unconditional Bank Undertaking to Pay - Dispute as to underlying contract - Whether beneficiary entitled to draw on security - Proper interpretation of underlying contract

Legislation:

Nil

Result:

Interlocutory injunction granted

(Page 2)

Representation:

Counsel:

Plaintiff : Mr P G Clifford

Defendant : Mr P F Riethmuller

Solicitors:

Plaintiff : Gadens

Defendant : Freehills

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

Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420
Barclay Mowlem Construction Ltd v Simon Engineering (Australia) Pty Ltd (1991) 23 NSWLR 451
Bateman Project Engineering Pty Ltd & Ors v Resolute Ltd & Ors [2000] WASC 284
Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812
Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545
J H Evans (NT)

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] WASC 155
Decision Date

CaseChat Overview and Summary

In the Supreme Court of Western Australia, Kvaerner Process Systems Pty Ltd (the plaintiff) brought an action against Australian Gasfields Ltd (the defendant) seeking declarations and an interlocutory injunction. The plaintiff sought declarations that the defendant's demands for payment on a Banker's Undertaking were made in breach of the contract and the Trade Practices Act 1974 (Cth). The plaintiff also sought an interlocutory injunction to restrain the defendant from receiving payment of $998,762 from the bank and requiring the defendant to revoke or withdraw the demands for payment it had made. The defendant resisted the application and counterclaimed for the amount of the Banker's Undertaking. The court considered the relevant terms of the contract, which provided for a security by way of a Banker's Undertaking to be provided by the plaintiff. The court also considered the dispute between the parties regarding the competence of the design and the performance of the processing plant, as well as other significant areas of dispute arising out of the contract. The court noted that the defendant had an entitlement to make deductions from the security provided by the Banker's Undertaking, but only if it had a bona fide claim to be entitled to make that deduction, notwithstanding that its claim was disputed by the plaintiff. The court found that the defendant had bona fide claims to make deductions under the contract, which exceeded the retention moneys held by the defendant. However, the court also found that the defendant's claims to make deductions under the contract were limited by a provision in the special conditions of contract, which limited the liability of the plaintiff to the cover provided under the insurances. The court held that the interests of justice were best served by continuing the force of the present injunction, which restrained the defendant from acting to pursue its entitlement to make a call on the Banker's Undertaking until such time as there was a final resolution of the respective rights of the parties in this action.

Orders