Perkins (WA) Pty Ltd v Weston [No 2]

[2022] WASCA 111

Western Australia Court of Appeal

Built by Barristers,
For Australian Law.

1. Building and Construction
2. › Building contracts
3. › Performance bonds and security
4. › Construction of provisions governing performance bond
5. › Contractual purpose of bond
6. › Whether contractor entitled to release of bond
7. › Whether principal had accrued immediate right of recourse to bond
8. › AS 2124 of 1992, cl 5.1, cl 42.8, cl 42.10, cl 42.11
1. Building and Construction
2. › Building contracts
3. › Performance bonds and security
4. › Recourse to security for unliquidated damages
5. › Whether claim for unliquidated damages was amount 'due otherwise than under the Contract'
6. › Whether quantification of amount required before recourse
7. › Whether failure to pay an amount required before recourse
8. › AS 2124 of 1992, cl 42.11
1. Building and Construction
2. › Building contracts
3. › Termination
4. › Effect of termination on security obligations
5. › Whether principal's rights in respect of bond survive disputed termination of contract
6. › Whether security must be released upon termination
1. Appeal
2. › New arguments on appeal
3. › Whether party permitted to advance new case on appeal
4. › Exceptional circumstances required

Under cl 42.11 of AS 2124-1992, the expression 'any money due otherwise than under the Contract' comprehends unliquidated damages for breach of the building contract (a secondary obligation arising by operation of law), not merely liquidated debts; however, an amount must have been identified and demanded before a party can be said to have 'failed to pay' it, so recourse to security requires quantification of the claim.
Security provided for 'the due and proper performance' of a building contract is not required to be released upon termination; the contract contains no express or implied term requiring release on termination, and the security survives a disputed termination until its contractual purpose is exhausted.
A principal's mere assertion of a claim for defect rectification costs, without quantification of an amount or a demand for payment, does not establish an immediate right of recourse to a performance bond.