Competition and Consumer Act 2010Plaintiff v Defendant [2025] VSC 655 | Case summary | Zoe

VICVSC

Plaintiff v Defendant

[2025] VSC 655

Supreme Court of Victoria|2025-10-17|Before: Sloss J

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General information, not legal advice.

At a glance

Source facts

Court

Supreme Court of Victoria

Decision date

2025-10-17

Before

Sloss J

Source

Original judgment source is linked above.

Judgment (572 paragraphs)

[1]

[2025] VSC 655

[2]

BUILDING CONTRACTS - Recourse to unconditional bank guarantees - Security for the purpose of ensuring the due and proper performance of the contract - Interlocutory application by contractor seeking injunctive relief pursuant to ss 232 and 234 of the ACL to restrain principal from taking steps (or further steps) to have recourse to security - Where contractor alleges that principal engaged in misleading and deceptive conduct in contravention of s 18 and (statutory) unconscionable conduct in contravention of s 21 of the ACL - Construction of security clause, recourse clause and restraint clause in building contract - Where terms of the contract provides that principal may convert all or part of the security into cash at any time subject to providing 3 days' prior written notice of its intention to have recourse to the security (recourse clause) - Where contractor restrained by terms of the contract from taking steps to injunct or otherwise restrain the principal from having recourse to the security (restraint clause) - Whether plaintiff has properly articulated a serious question to be tried in this application - Whether plaintiff has articulated the discrimen alleged to render the conduct of defendant unconscionable conduct in the relevant contravening sense - Whether balance of convenience favours granting of injunctive relief - Plaintiff's claim for injunctive relief not granted; ss 21, 22 Australian Consumer Law, Schedule 2 to the (Cth).

[29]

Cardigan's tender process for the Project

In response to changed market conditions driven by the Covid-19 pandemic, Cardigan re-designed the project to a residential development with minimal ground floor commercial space, consisting of 79 apartments (later amended to 80 apartments) over 9 levels, and planning permission for this development was agreed in mid-2021, with a final permit issued in December 2021.

In August 2021, I commenced discussions with Mr Moschoyiannis of LU Simon about LU Simon's capability to undertake the works, and on 17 August 2021 I emailed Mr Moschoyiannis a bundle of material described as a "tender package" although no formal tender was undertaken with contractors beyond LU Simon. A copy of this email (excluding attachments) is at page [132] of exhibit bundle GF-1.

On about 13 September 2021, Mr Moschoyiannis sent me LU Simon's tender response, copying his solicitor Mr Toumazou. A copy of LU Simon's tender response dated 13 September 2021 is at page [134] of exhibit bundle GF-1.

Armed with confidence about the cost and duration for the works to enable Cardigan to complete negotiations with its financiers, by 24 December 2021, Cardigan had entered the final tranche of financing facilities with its senior lender PAG totaling $[redacted] (plus other fees which were to be capitalised), of which the construction sub-limit was to be initially set at $[redacted] which exceeded the expected construction costs for the project plus novated consultants, authority costs and contingencies (having had regard to the written pricing provided by LU Simon in its tender submissions above).

On 20 May 2022, Cardigan entered into the Contract with LU Simon. A copy of the Contract is in the SR Affidavit bundle at page 139.

Since 26 June 2020 to the present, being the duration of my involvement as director of Cardigan, Cardigan has not been subject to any action by ASIC relating to its solvency, in external administration, in liquidation, under receivership or subject to any statutory demand.

Until April 2025, LU Simon had not formally raised with me any issues regarding Cardigan's financial position.

Cardigan's Funding and Financing for the Project

The debt structure for Cardigan was secured for the Project in 2021, well before LU Simon became involved.

Cardigan has both a senior lender and a junior lender for the Project as follows:

[30]

(a) The senior lender is PAG. PAG is a global investment fund based in Hong Kong. PAG has over USD $55 billion under management and is one of the leading non-bank lenders/ investors in the Asia Pacific region. Its Australian real estate debt book is circa A$2 billion. PAG's lender vehicle for the project is Brighten Lead Opportunity Limited. A copy of the PAG's website documents is at page [182] of exhibit bundle

GF-1.

(b) The junior lender is 121 Cardigan Pte Ltd, which is a syndicate of investors via a fund controlled by Havenport Investments Pte Ltd, a company incorporated in Singapore, also a current shareholder of Cardigan.

Under the financing arrangements, the funds could be used as follows:

(a) to refinance existing indebtedness secured against the Property;

(b) to fund construction, civil, infrastructure and development costs in respect of the Project; and

(c) for the capitalisation of interest and other fees payable in respect of the financing facilities.

Critically, the financing available to Cardigan for the Project was always greater than the Contract Sum payable to LU Simon. In particular, the PAG financing facilities in place since 24 December 2021 provided funding for construction of at least $[redacted] million, well in excess of the Contract Sum under the Contract, which was circa $[redacted] million excluding GST on execution. I explain this further below.

On or around 1 June 2021, Cardigan executed a Loan Note Subscription Agreement (LNSA) with its senior lender, PAG, for an initial two facilities A & B totaling $[redacted] (plus other fees which were to be capitalised). PAG entered the LNSA via its lending vehicles Brighten Lead Opportunity Limited ARBN 649 651 034 (as Security Trustee and Agent) and Brighten Lead Opportunity VIII Limited (company number 2057784).

On 24 December 2021, Cardigan and the PAG parties amended the LNSA with PAG including three facilities A, B and C totaling $[redacted] (plus other fees which were to be capitalised). Importantly, the amended LNSA now expressly allowed for the facility funds to be used for construction and development costs in respect of the Project up to the Construction Sub-Limit (initially $[redacted]).

The LNSA was amended over the course of the project to increase the facility limits and Construction Sub-Limits to accommodate the changes made during the project, including agreed variations or additional costs validly claimed by LU Simon, as set out below:

[72]

This requirement of LU Simon was fundamental, because otherwise LU Simon might not receive payment if the Principal for any reason wanted to withhold payment. In saying this was a fundamental requirement, this meant that LU Simon would not sign the Builder's Side Deed, or the Contract, unless this was changed as requested, because LU Simon would not take the commercial risk of not being paid. Cardigan and the Financier [PAG] agreed to change clause 4.10 of the Builder's Side Deed to accommodate LU Simon's requirement.
On 6 June 2022, I signed the Builder's Side Deed in my capacity as a Director of LU Simon. A copy is at [10-33] of the Bundle.
On 20 June 2022, I received an email from Mr Fraser in which he asked me to procure an insurance certificate which listed Cardigan and Brighten Lead Opportunity Ltd as interested parties. He stated, among other things, that this was a condition precedent to Cardigan's funding that he was keen to resolve so that money could be paid by the Financier prior to 30 June 2022. A copy of the email from Mr Fraser is at [34-35] of the Bundle.
On the basis that the Builder's Side Deed had been signed by the Financier and on the basis of the email I had received from Mr Fraser on 20 June 2022, I believed that Cardigan would make progress payments in full and on time as certified by the Project Manager.
Further, Mr Fraser never informed me that Cardigan would not have sufficient funds to pay LU Simon monies due and payable under the Contract progressively as required by the Contract. If I had known that Cardigan would not be able to make payment of certified progress payments in full and on time, I would never have signed LU Simon up to the Contract.
Based on these discussions with Mr Fraser, I believed that Cardigan had the financial capacity to pay LU Simon any monies due under the Contract, as required under the Contract. It was on this basis that LU Simon signed the Contract. After the parties signed the Builder's Side Deed and LU Simon received the Notice to Proceed on 21 June 2022, LU Simon mobilised to site and started its work under the Contract.

[81]

With the time difference, and the time it took for the funds transfer to occur, there was occasionally a short delay between LU Simon sending the invoice to the Project Manager and PAG transferring funds to LU Simon. This was purely an administrative and processing delay and not in any way due to a lack of funds or financing.
The first five payment claims from LU Simon were paid to LU Simon within 11 days of the due date. In mid-December 2022, I held a telephone discussion with Mr Moschoyiannis about the state of construction works on the Project which had started slowly and I was keen to ensure construction progress improved. Mr Moschoyiannis said to me words to the effect that he was confident progress would improve. In that same conversation I said to Mr Moschoyiannis words to the effect that the payment processing time would be shortened to ensure prompt payment to the best extent possible. Mr Moschoyiannis then said to me words to the effect that he was aware of processing requirements for funding of projects.
The next payment claims between February 2023 to October 2024 were all paid to LU Simon in full in accordance with the scheduled payments certified as described above within a few days of the due date for payment, with some of these payments being made a few days prior to the due date for payment, depending on progress of the payment certifications described above.
Other than my discussions with Mr Moschoyiannis in December 2022 referred to in paragraph 63 above, until March 2025, LU Simon did not raise any concerns with the ability to satisfy future claims, the payment process or the date it received full payment, nor did it make any demand for interest for late or delayed payments, nor did it seek to invoke any other provision of the contract in respect of payments to be made under the Contract.
The table referred to at paragraph 57 illustrates the relevant events in the payment process for each payment claim.
The first time LU Simon raised concerns with Cardigan about the payment process was in March 2025. By this time, Mr Moschoyiannis was no longer a director or employee of LU Simon.

[92]

(a) the first mortgagee was financially safe;

(b) the second mortgagee was financially safe; and

(c) the Singaporean equity partners will be taking a haircut (which I understood to mean taking a loss) but to what extent was unknown at that stage.

Mr Fraser also told me that the financier was not funding the Purchaser Change Variations of approximately $1.2million. I restated to Mr Fraser the message that I had asked Mr Moschoyiannis to convey months earlier that LU Simon would not provide funding for the Project and that we required all progress certificates to be paid in full.

On 4 March 2025, I attended a meeting at Gallagher Jeffs' office with Mr Fraser, Mr Scott Reid, Mr Andrew Minty of Gallagher Jeffs and Mr Chris Burton of Gallagher Jeffs to discuss my concerns with the Project, including outstanding payment claims and unresolved claims for extensions of time. At that meeting, I told Mr Fraser that LU Simon would be providing further information in relation to its EOT Claims for review and consideration by Gallagher Jeffs. Mr Fraser stated that he would rely on Gallagher Jeffs with respect to the review of LU Simon's EOT Claims and variations and that he would not be trying to influence them for the review of the resubmitted EOT claims. Mr Fraser stated that on the basis of Gallagher Jeffs' assessment of the Date for Practical Completion and the current estimated Date of Practical Completion, he believed that the liquidated damages were in the order of approximately $6.2 million and he expected to use the liquidated damages payment to reduce the Singaporean Equity Investors' losses. At that meeting, I told Mr Fraser words to the effect that LU Simon required all unpaid progress certificates to be paid in full.

After my meetings with Mr Fraser on 6 February 2025 and 4 March 2025, it became apparent that Cardigan was either unable or unwilling to make payment in full of all of the outstanding progress certificates. I instructed LU Simon's solicitor, Mr Dimi Toumazou, to issue formal letters of demand to Cardigan pursuant to the Building and Construction Industry Security of Payment Act 2002 (Vic). I gave this instruction as I was concerned that the Project was due to be completed and that LU Simon would have large sums unpaid. A copy of the letters of demand issued by Mr Toumazou on 25 March 2025 and 27 March 2025 are contained at [6-12] of the Bundle.

After making these demands for payment of the outstanding progress certificates Cardigan gave notice of its intention to cash the bank guarantees.

[134]

Impermissible ouster of the jurisdiction of the court

It is common ground that if Article 35.3(b) is construed to have the meaning which it appears to have on its face then it is an impermissible ouster of the court's jurisdiction to grant the only appropriate remedy. Those concessions are properly made.

The general principle is that contracts which seek to oust the jurisdiction of the courts are invalid. On the other hand, limitations placed on the rights and remedies available to the parties have not been treated as an ouster of the court's jurisdiction. In Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643 Rich, Dixon, Evatt and McTiernan JJ said that negative restrictions upon the right to invoke the jurisdiction of the courts have always been invalid. Their Honours said at 652:

No contractual provision which attempts to disable a party from resorting to the Courts of law was ever recognized as valid. It is not possible for a contract to create rights and at the same time to deny to the other party in whom they vest the right to invoke the jurisdiction of the Courts to enforce them.

Their Honours said at 652 653:

What no contract can do is take from a party to whom a right actually accrues, whether ex contractu or otherwise, his power of invoking the jurisdiction of the Courts to enforce it.

In Bateman Project Engineering Pty Ltd v Resolute Ltd [2000] WASC 284 Owen J held that a clause in a contract which provided that the principal was entitled to convert a bank guarantee and the contractor shall not hinder, obstruct, restrain or injunct the principle from doing so was an ouster of the jurisdiction of the court and void as being against public policy. The provision affected one aspect of the contractual rights arising under the contract, namely the right of the plaintiffs to have the guarantee called on only in strict accord with the relevant terms of the contract. While the right to have the overall dispute between the parties adjudicated in the court survived, so far as concerns the guarantee it was defeated. The contractual provision took away from a party to whom a right accrues − his power of invoking the jurisdiction of the courts to enforce it.

In this case Article 35.3(b) takes away from CPB its right to enforce all and any rights it may have in respect of JKC having recourse to the Bank Guarantees. The provision takes away not only CPB's right to obtain an injunction to restrain JKC from having recourse to the Bank Guarantees unlawfully but also CPB's right to obtain damages, or any other remedy, in respect of JKC's breach of contract in having recourse to the Bank Guarantees in breach of the relevant terms of the Subcontract. The provision takes away CPB's right to compel performance of JKC's contractual obligations in respect of having recourse to the Bank Guarantees. Article 35.3(b) is a provision which ousts the jurisdiction of the court and is void.

[138]

Contractual prohibitions or limits on seeking an injunction restraining a party's recourse to a performance bond may shed light on the purpose of the right to recourse. In our opinion GC 35.3(b) confirms that the object of the provision in GC 35 for the Bank Guarantee(s) is to provide a risk allocation device as to who is to be out of pocket pending the resolution of any dispute between them. Of course, a question of construction invites attention to the whole of the contract. When that is done in this case, GC 35.3(b) remains a powerful obstacle to the subcontractor's construction. In any event, as we will explain, the construction of GC 35.3(a) suggested by GC 35.3(b) is supported by a consideration of all the other terms of the Subcontract.
If, as the primary judge held, GC 35.3(b) were unenforceable as an ouster of the jurisdiction of the court, in our opinion for the reasons that follow it would nevertheless be appropriate to take into account the terms of par (b) in construing par (a) of GC 35.3.
A contract is to be construed as a whole. Ascertainment of the meaning of one provision may be assisted by consideration of other provisions. In our opinion, a finding that GC 35.3(b) ousts the court's jurisdiction does not require that GC 35.3(b) be ignored in the process of construction of GC 35.3(a). If, on its proper construction, a provision ousts the jurisdiction of the court, it is on that account contrary to public policy. Some judgments state that the provision is consequently unenforceable, while others say that the provision is void. In our view it would be wrong to insert the adjectival label 'void' and then deduce a legal consequence from it, namely that the contract must be treated for all purposes as if GC 35.3(b) did not exist. The policy of the law against the ouster of the court's jurisdiction means that a provision which purports to do so will not be enforced. Protection of that policy does not require or justify the ignoring of GC 35.3(b) in the process of construction of GC 35.3(a). To have regard to par (b) in the process of construction of par (a) does not in any way offend or engage the policy against the ouster of the court's jurisdiction.

[169]

(1) ...

(2) Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the acquirer) has contravened section 21 in connection with the acquisition or possible acquisition of goods or services from a person (the supplier), the court may have regard to:

(a) the relative strengths of the bargaining positions of the acquirer and the supplier; and

(b) whether, as a result of conduct engaged in by the acquirer, the supplier was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the acquirer; and

(c) whether the supplier was able to understand any documents relating to the acquisition or possible acquisition of the goods or services; and

(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the supplier or a person acting on behalf of the supplier by the acquirer or a person acting on behalf of the acquirer in relation to the acquisition or possible acquisition of the goods or services; and

(e) the amount for which, and the circumstances in which, the supplier could have supplied identical or equivalent goods or services to a person other than the acquirer; and

(f) the extent to which the acquirer's conduct towards the supplier was consistent with the acquirer's conduct in similar transactions between the acquirer and other like suppliers; and

(g) the requirements of any applicable industry code; and

(h) the requirements of any other industry code, if the supplier acted on the reasonable belief that the acquirer would comply with that code; and

(i) the extent to which the acquirer unreasonably failed to disclose to the supplier:

(i) any intended conduct of the acquirer that might affect the interests of the supplier; and

(ii) any risks to the supplier arising from the acquirer's intended conduct (being risks that the acquirer should have foreseen would not be apparent to the supplier); and

(j) if there is a contract between the acquirer and the supplier for the acquisition of the goods or services:

(i) the extent to which the acquirer was willing to negotiate the terms and conditions of the contract with the supplier; and

(ii) the terms and conditions of the contract; and

(iii) the conduct of the acquirer and the supplier in complying with the terms and conditions of the contract; and

(iv) any conduct that the acquirer or the supplier engaged in, in connection with their commercial relationship, after they entered into the contract; and

(k) without limiting paragraph (j), whether the acquirer has a contractual right to vary unilaterally a term or condition of a contract between the acquirer and the supplier for the acquisition of the goods or services; and

(l) the extent to which the acquirer and the supplier acted in good faith.

[249]

It follows that if a party in whose favour a bank guarantee has been given has bound itself to a contractual fetter or qualification under which that party promises not to call upon the guarantee in the circumstances defined, breach of that contractual promise, or a threatened breach, may be enjoined by applying the usual principles relating to the enforcement by injunction of negative stipulations in contracts.[180]

Whilst it may be accepted that the usual principles governing interlocutory injunctions fell to be applied in the present case, it must also be accepted that they fell to be applied in respect of an unusual form of contract, if it be the case that the commercial purpose of the performance bond was to allocate risk pending final determination of the dispute. Such a contractual provision fundamentally alters the context in which the Court must exercise its discretion by changing the complexion of the status quo and raising the prospect of substantial injustice if the purpose of the provision is defeated. That is, the status quo in such circumstances becomes what the parties have agreed as to which of them should bear the financial risk pending final determination, not the continuation of where that risk would naturally fall in the absence of a performance bond to call upon.

...

If the commercial purpose of a contractual provision is defeated that must bear squarely on the ultimate risk of injustice inherent in the grant of an injunction. In Bradto Pty Ltd v State of Victoria,[181] the Court of Appeal constituted by Maxwell P and Charles JA applied the following statement of fundamental principle by Hoffman J in Films Rover International Ltd v Cannon Films Sales Ltd:

... The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the 'wrong' decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong' in the sense I have described ...[182]

[263]

(a) If WUC does not reach Practical Completion by the Date for Practical Completion, the Contractor shall be indebted to the Principal, for liquidated damages at the rate stated in Annexure Part A for every day after the Date for Practical Completion to and including the earliest of the Date of Practical Completion or termination of the Contract or the Principal taking the whole of the remaining WUC out of the hands of the Contractor.

(b) The Contractor's maximum aggregate liability for liquidated damages under this subclause 34.7 will not exceed the Liquidated Damages Cap.

(c) If an EOT is directed after the Contractor has paid or the Principal has set off liquidated damages, the Principal shall forthwith repay to the Contractor such of those liquidated damages as represent the days the subject of the EOT.

(d) The Contractor acknowledges that all sums payable by the Contractor to the Principal under this subclause 34.7 represent the Principal's genuine pre-estimate of the damages likely to be suffered by it if the Works do not reach Practical Completion by the Date for Practical Completion and such sums shall not be construed as a penalty.

(e) If liquidated damages are found to be void, voidable or unenforceable in any way or on any basis so that the Principal is not entitled to claim or recover liquidated damages for the Contractor's failure to reach Practical Completion by the Date for Practical Completion, the Principal is entitled to claim and recover general law damages if the Contractor fails to reach Practical Completion by the Date for Practical Completion.

(f) If Annexure Part A is completed so as to indicate that liquidated damages do not apply to the Contract (for example by the use of the words "Nil" or "Not applicable" or similar), then the Principal's right to claim general damages at law from the Contractor in connection with delay by the Contractor (including in achieving Practical Completion) is preserved however the Contractor's liability for damages will accrue at a rate not exceeding the rate for liquidated damages stated in Annexure Part A and will not exceed the Liquidated Damages Cap.

[284]

[77] Nevertheless, the authorities have recognised three principal exceptions to the rule that a court will not enjoin the issuer of a performance guarantee, or bond, from performing its unconditional obligation to make payment. The exceptions were succinctly stated, with references to relevant authorities, by Austin J in _Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Lt_d (1999) 15 BCL 158 at 164-5 (Reed):

First - the court will enjoin the party in whose favour the performance guarantee has been given from acting fraudulently: see, for example, Wood Hall per Gibbs J (at CLR 451; ALR 391-2). As the primary judge observed at [36] Clough does not assert that ONGC [the first respondent] has made a fraudulent claim. Accordingly, the first exception has no application in the present case.

Second - the party in whose favour the performance bank guarantee has been given may be enjoined from acting unconscionably in contravention of s 51AA of the TPA: Olex Focas Pty Ltd v Skodaexport Co Ltd [1998] 3 VR 380 (Olex Focas). On this point, different views have been expressed about the reach of s 51AA. The High Court has not determined which of these views is correct: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; 197 ALR 153; [2003] HCA 18 at [44]-[45] (CG Berbatis Holdings). In any event, none of the categories of unconscionable conduct recognised in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301; 189 ALR 76; [2002] FCA 62 at [48] (Samton Holdings) apply in this case. Accordingly, the second exception has no application.

Third - the most important exception for present purposes, is that, while the court will not restrain the issuer of a performance guarantee from acting on an unqualified promise to pay (Reed Construction Services at 164 per Austin J):

... if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.

It may be preferable not to describe this as an exception but rather as an over-riding rule because it emphasises that the "primary focus" will always be the proper construction of the contract: Bateman Project Engineering Pty Ltd v Resolute Ltd (2000) 23 WAR 493; [2000] WASC 284 per Owen J at [30]. Stephen J recognised this in Wood Hall at CLR 459; ALR 398-9 by observing that the provisions of the contract may qualify the right to call on the undertaking contained in a performance guarantee.

[78] Numerous authorities have accepted the third proposition. Many were referred to in Reed at 165. Others include Fletcher Construction at 826-7; Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420; [1998] VSCA 40 at [28] (Bachmann); Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2000] FCA 672 at [10]; Rejan Constructions Pty Ltd v Manningham Medical Centre Pty Ltd [2002] VSC 579 at [37].

[291]

From 2012 the college was authorised to provide the relevant courses under a Commonwealth funding scheme where students' tuition fees were paid by the Commonwealth after the "census date" for each unit of study (relevantly two weeks after the unit commenced). Students who stayed enrolled after the census date then incurred a debt to the Commonwealth which was repayable through the taxation system. At the relevant times the college engaged agents, called "career advisers" to recruit students for online courses and sign them up to the funding program. The agents were paid commissions once the students passed census dates and incurred debts for tuition.

The college was aware that the funding scheme was open to abuse, particularly through the external agents' unscrupulous sales tactics. Against the "moral hazard" of receiving payments for which students obtained no benefit, the college put in place certain system controls aimed at ensuring that only engaged students were enrolled in the first place and were still engaged as census dates approached.

In September 2015 falling revenue, budget expectations set by Site and discontent with existing commission rates among the college's agents led to it abolishing the system controls. Enrolments and revenue increased substantially, although almost all of those enrolled did not complete a single unit of study. They nevertheless accumulated substantial debts to the Commonwealth for no concomitant benefit.

The respondent Commission brought proceedings in the Federal Court of Australia alleging that the college engaged in a system of conduct or a pattern of behaviour that was unconscionable contrary to the Australian Consumer Law, s 21. Proceedings were also brought against Wills and Site pursuant to ss 2 and 224(1)(e), alleging that they were knowingly concerned in, or parties to the college's contravention. The primary judge found the allegations proven and those findings were upheld by a majority of the Full Court of the Federal Court on appeal.

[311]

In the affidavit of Jason Zeb sworn 10 July 2017 in support of the application, it was deposed that a call by JKC on the bank guarantees could "potentially have an adverse effect on the financial position of CPB" because "[i]f a financial institution assesses CPB or other members of the CIMIC group [of which CPB is a member] as having a high or higher degree of financial risk, this can affect the price of CIMIC obtaining capital generally". Similarly, it was stated that "CPB may also suffer adverse consequences to its lending arrangements as the price of CPB's existing financing will increase". Since that evidence was not challenged, I accept it. But it is to be observed that it is expressed in markedly tentative terms and, although Mr Zeb also stated in the affidavit that it could prove difficult to quantify the amount of loss which CPB might thereby suffer, it was not suggested that the amount of any such loss could not be assessed and recovered in the international arbitration if found to be due.

Mr Zeb further deposed that, if JKC makes a call on the bank guarantees, CPB's "reputation in the industry will be adversely affected" the result of the liability to the bank thus incurred needing to be brought to account in CPB's and CIMIC's books of account, and thus would be perceived negatively by CPB's customers and financiers. Once again, that evidence was not challenged and, therefore, I accept it. But I observe that, although a call on the bank guarantees would need to be reflected in CPB's books of account, so too would need to be recorded the contingent asset constituted of CPB's claim for repayment of the moneys which it says were not payable. The true and fair view of the company's financial position thus stated would represent a true reflex of the facts, namely, that there is a dispute as to CPB's liability for liquidated damages which remains to be determined by international arbitration.

Mr Zeb stated as well that a call on the bank guarantees would be an indication to "the market" that CPB cannot uphold its obligations in delivering projects. Perhaps; but I take leave to doubt it. Granted, as CPB contends, the prospect of reputational harm has been accepted as a relevant consideration by several experienced construction law judges.[235] But each case depends on its facts. Here, it is clear from Le Miere J's and the Court of Appeal's reasons for judgment that there has not yet been a determination of CPB's alleged substantive liability for liquidated damages - that remains to be determined in the international arbitration - and it is clear from the Court of Appeal's reasons for judgment that their Honours' conclusion as to the proper construction of the sub contract is that JKC should "be in the money, to the extent of the Bank Guarantees, pending resolution of any dispute".[236] If that be correct, and until and unless there is a successful appeal it must be accepted that it is correct, the fact that JKC is permitted to draw down under relevantly unconditional bank guarantees pending determination of the issue of substantive liability can hardly be seen as reflecting on CPB's performance or, therefore, reputation as a contractor.