Ottoway Engineering Pty Ltd v Westpac Banking Corporation

Ottoway Engineering Pty Ltd applied for an interlocutory injunction to restrain Westpac Banking Corporation from having recourse to a bank guarantee given by Ottoway to Bluenergy. The guarantee was intended to secure Ottoway's obligations under a subcontract for mechanical and piping installation and commissioning works at Cape Preston in the Pilbara region in Western Australia. Ottoway contended that the guarantee was a performance bond, whereas Westpac argued it was an ordinary commercial guarantee. The primary issue before the court was whether the guarantee should be construed as a performance bond or an ordinary commercial guarantee. A secondary issue was whether there was a serious question to be tried on the merits of the case and whether the balance of convenience favoured granting the injunction.

The court held that the guarantee was a performance bond, as it was intended to secure Ottoway's performance of its contractual obligations under the subcontract. The court noted that the guarantee was given to Bluenergy’s banker rather than Bluenergy itself, but this did not change its nature as a performance bond. The court also found that there was a serious question to be tried on the merits of the case, and the balance of convenience favoured granting the injunction. The court extended the injunction until trial or until further order, subject to the usual undertaking as to damages.