Saipem Australia Pty Ltd v GLNG Operations Pty Ltd

Saipem Australia Pty Ltd sought to restrain GLNG Operations Pty Ltd from calling on the proceeds of performance securities to recover the costs of rectification work on a pipeline, arguing that GLNG was not entitled to do so. The Federal Court was required to determine whether the costs of rectification work were recoverable immediately upon being incurred and whether there were serious questions to be tried. The court found that the costs of rectification work were recoverable immediately upon notice being given and could be recovered from the performance securities. The court found that s 67J of the Queensland Building and Construction Commission Act 1991 applied to unliquidated amounts, requiring notice of the proposed use of the securities and the amount of the costs within 28 days of their being incurred. The court found that notice was not given in breach of s 67J and that the exception in s 67J(4), where work is taken out of the contractor’s hands, applied. The court found that there were serious questions to be tried, but the balance of convenience favoured GLNG. The court refused the application for an injunction and ordered Saipem to pay GLNG’s costs.