Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : CPB CONTRACTORS PTY LTD -v- JKC AUSTRALIA LNG PTY LTD [2017] WASC 112

Injunction - Urgent application for interlocutory injunction pending determination of appeal - Application to restrain respondent from calling on bonds to satisfy a liquidated damages claim - Turns on own facts

CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [2017] WASC 112

Mercanti v Mercanti [2015] WASCA 206

(This judgment was delivered extemporaneously on 27 April 2017.)

1 This is an interlocutory application by the appellant to restrain, in effect, the respondent from calling certain bonds given by a financial institution to the respondent in connection with the performance of the appellant's obligations under a contract for the engineering, procurement, construction and commissioning of certain works associated with the Ichthys LNG Project. The contract in question is a subcontract between the appellant as subcontractor, and the respondent as head contractor. The respondent claimed liquidated damages for alleged delay under the subcontract.

2 An injunction to similar effect had been sought in the primary proceedings. The primary judge, Le Miere J, dismissed that injunction application and, it appears, the primary proceedings. The primary judge's reasons are CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd.[1] It is that decision which is the subject of the appeal herein.

3 For present purposes, it is unnecessary to set out in detail the appellant's grounds of appeal but, in essence, at the core of the appeal is the proposition that the judge erred in construing cl 35.3(a) of the subcontract which provides:

Contractor may have recourse to the Bank Guarantee(s) at any time in order to recover any amounts that are payable by Subcontractor to Contractor on demand.

4 The appellant contended before the primary judge, and contends in this appeal, that the respondent is only entitled to call on the relevant bonds under cl 35.3(a) to satisfy a liquidated damages claim if the amount is 'actually, objectively and indisputably' payable by the appellant, such as where the amount is admitted by the appellant or has been determined pursuant to the arbitral dispute resolution process under the subcontract.

5 The judge rejected that construction and found that the appellant had not made out a prima facie case that the respondent was not entitled to call on the bonds, and, in any event, that the balance of convenience favoured the refusal of an interlocutory injunction.

6 The appellant's application for injunction in this court is sought pending, in effect, the determination of the appeal from the primary judge's decision. The relevant principles are set out in Mercanti v Mercanti.[2]

7 The application was heard yesterday on an urgent basis. Also, yesterday, this court made orders that the appeal itself be listed urgently for hearing on 25 May 2017. The evidence before this court included affidavits sworn by Mr Zeb on 20 March 2017 and 30 March 2017, filed in the primary proceedings. Certain objections were taken by the respondent to certain paragraphs of those affidavits in the primary proceedings, but it appears that the primary judge did not rule on the objections. Insofar as the objections are pressed in this application, they go to weight rather than admissibility. In particular, insofar as the respondent objects to the expressions of opinion by Mr Zeb, we are satisfied that he has deposed sufficiently to his experience and expertise upon which to express the opinions.

8 In our view, having considered the appellant's case, the respondent's draft answer, the evidence to which the parties referred, including the affidavit filed this morning in accordance with the court's directions yesterday, and the parties' arguments, we are of the opinion:

1. that the appeal has, in the relevant sense, reasonable prospects of success;
2. there is a real risk that if an injunction were not granted, the bonds would be called;
3. there is a real risk that the appellant will suffer at least reputational damage if the bonds were called;
4. there is detailed evidence of the appellant's claims and grounds for its claims for extensions of time, sufficient to indicate for present purposes that the appellant has at least reasonably arguable grounds upon which it may contend that it has an entitlement to extensions of time; and
5. that in the circumstances, there is, at the least, a substantial risk that the appeal will be rendered nugatory if an injunction is not granted.

9 Weighing all these factors together, they favour the grant of an injunction. On the other hand, the respondent contends that it would be prejudiced if it were prevented from calling on the bonds. No particular evidence of prejudice is adduced, save that the respondent says that the bonds may, by their terms and in the relevant circumstances, expire by the end of June this year. That concern is, in our view, accommodated by the urgent hearing of the appeal and orders for liberty to apply. The other contentions raised by the respondent as to whether the appellant has a prima facie case and the balance of convenience, in large measure reflect its contention that the judge's construction of cl 35.3(a) was not in error. As we have said, however, in our view the appeal has, for relevant purposes, reasonable prospects of success. Also, there is evidence that the appellant has executed, but not yet filed, an undertaking as to damages in the usual form. We were informed that the undertaking was executed in Sydney and has been sent to Perth via express courier.

10 In all the circumstances, we are of the view that there should be an injunction granted pending the determination of the appeal, subject to the appellant filing the undertaking as to damages. We would hear the parties as to the precise form of the orders.

[1] CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [2017] WASC 112.

[2] Mercanti v Mercanti [2015] WASCA 206 [16] - [17].