The Court held that a breach of a separate Deed of Undertaking and Guarantee did not constitute a breach of the underlying design and construct contract, and therefore did not enliven the contractual right to have recourse to security under cl 5.6 of the General Conditions, because the Deed was not a variation of the Contract — it dealt with a specific past topic, did not expressly amend the Contract, and the guarantor provisions confirmed the obligations were confined to the Deed alone. Even assuming the breach was a breach of the Contract and that cl 5.6 operated as a risk allocation clause, the Principal's claim for loss and damage of $1,616,903.43 was irrational and misconceived where: part of the claimed amount had already been paid to subcontractors by the Principal's own solicitors; the Principal had directed the Contractor to pay the balance into its solicitors' trust account rather than directly to subcontractors; and the Contractor had in fact paid the directed amount into that trust account. The interlocutory injunction was granted restraining recourse to the bank guarantee and retention money.
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