CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [No 2]

[2017] WASCA 123

Western Australia Court of Appeal

Built by Barristers,
For Australian Law.

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Interrogate

Catchwords

1. Building and Construction
2. › Performance bonds
3. › Right of recourse to performance bonds
4. › Proper construction of contract
5. › Whether recourse permitted when subcontractor disputes amount payable
6. › Whether 'payable' means objectively established or honest claim to immediate payment
1. Building and Construction
2. › Performance bonds
3. › Purpose of performance bonds in construction contracts
4. › Whether security against insolvency only or also risk allocation device pending dispute resolution
1. Contract
2. › Construction
3. › Meaning of 'payable' and 'due and payable'
4. › Whether disputed amounts are 'payable'
5. › Construction of contract as a whole including approved proforma bank guarantee
1. Contract
2. › Construction
3. › Void or unenforceable provisions
4. › Whether void provision may be considered in construing other provisions of the contract
5. › Ouster of court's jurisdiction

Quick Take

Where a construction contract provides that a party may have recourse to performance bonds to recover amounts 'payable', the word 'payable' does not require the amount to be objectively established by admission or arbitral/curial determination; it is sufficient that the party has an honest (bona fide) claim to immediate payment. The invocation of a contractual dispute resolution procedure does not, of itself, restrain the exercise of a contractual right to call on performance bonds. A contractual provision that is void as an ouster of the court's jurisdiction may nevertheless be taken into account in construing other provisions of the same contract.