Vos Construction & Joinery Qld P/L v Sanctuary Properties P/L

Vos Construction & Joinery Qld P/L filed an application against Sanctuary Properties P/L in the Supreme Court of Queensland, seeking to restrain the respondents from drawing down a bank guarantee under a construction contract. Alternatively, they sought an order for the sum to be paid into court. The application arose out of a dispute concerning security and retention funds under a construction contract, with Vos Construction arguing that the respondents should not be permitted to draw on the bank guarantee until certain conditions were met.

The central legal issue before the court was whether the contracting party becomes aware, or ought reasonably to have become aware, of their right to obtain the amount owed under the contract once they are aware of the conditions for the draw-down. Specifically, Vos Construction argued that the amount of liquidated damages owed to Sanctuary Properties did not accrue under the contract until the architect's final certificate was issued. The court had to consider whether the balance of convenience favoured Vos Construction, particularly in light of the potential reputational harm if it became known that their security had been drawn down by Sanctuary Properties.

The court examined the balance of convenience and found that it did not lie in favour of Vos Construction. It held that the applicant had not demonstrated that it would suffer significant reputational harm within its industry if the respondents drew down the security. Additionally, the court determined that there was not a serious question to be tried regarding the timing of when Vos Construction became aware, or ought to have become aware, of its right to the amount owed. Consequently, the application was dismissed, and the court invited further submissions regarding the orders for costs.