The Court held that a principal's recourse to bank guarantee security under a clause permitting a call where the principal 'claims to be owed monies' does not interfere with the operation of the Building and Construction Industry Security of Payment Act 1999 (NSW), even where the principal seeks to recover amounts already paid pursuant to an adjudicator's determination, and is not void under s 34 of the Act. The Court confirmed that such a clause is a risk allocation device and that a principal will only be restrained from calling on security if the claim is fraudulent, made in bad faith, unconscionable, or where it is clear beyond serious argument that no entitlement exists. The Court also held that the reference to being 'owed moneys' in the security clause extends to claims for unliquidated damages for breach of contract, including claims for defect rectification costs.
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