Alstef Australia Pty Ltd v Brisbane Airport Corporation

The Court held that it is strongly arguable that performance bonds provided under a construction contract operate as 'risk allocation devices' where the contract requires unconditional undertakings, contains no clause specifying or limiting the circumstances in which the principal may have recourse to them, and qualifies the obligation to release security by reference to the principal's 'right to have recourse to security'; on that construction, the balance of convenience did not favour restraining the principal from calling on performance bonds pending final determination of disputed claims. However, the Court held there was a strong prima facie case that a contractual clause requiring a contractor to provide additional unconditional bank guarantees equal to the value of unfixed goods and materials as a precondition to receiving progress payments for those materials is of no effect under s 200(2) of the BIF Act (Qld), because it effectively sterilises the contractor's statutory right to progress payments under s 70, and that retention of such bonds in those circumstances would be unconscionable under s 21 of the Australian Consumer Law. The Court also held it reasonably arguable that the contractual time-bar clause (clause 16.5) does not apply to claims not capable of being calculated and stated as an amount, such as claims for return of bank guarantees.