Case: Re Media, Entertainment and Arts Alliance, Ex parte the Hoyts Corporation Pty Limited [1993] HCA 40 ; (1993) 178 CLR 379
Outcome: cited
made demands upon the Banks, HSBC Bank Australia Limited (HSBC) in Perth and upon the Commonwealth Bank of Australia (CBA) and BNP Paribas in Sydney under the performance guarantees, on 4 June 2007, which was a Perth public holiday. These proceedings were commenced the following day. The Construction Contract was terminated by ONGC by a facsimile letter to Clough of 4 June 2007. PREVIOUS ORDERS MADE BY THE COURT (a) On 5 June 2007 an ex parte interlocutory injunction was granted against the Banks restraining each of them from making payment to ONGC under the performance guarantees. This injunction was extended on 12 June 2007 and on 19 June 2007, following an inter parties hearing, when an application by the Banks to discharge the injunction was dismissed. (b) On 7 June 2007 an ex parte interim injunction was granted against ONGC restraining it from taking further steps to demand or obtain payment, or renewing such claims or demands, from the Banks under the performance guarantees. The injunction was extended on 12 and 19 June 2007. (c) On 7 June 2007 e x parte orders for leave to serve ONGC ex juris were made. Clough has sought to restrain the calling on, or payment under, the performance guarantees for a number of reasons. The first, it submits, is that the Construction Contact, properly construed, prohibits a demand being made in the prevailing circumstances. The second, alternative, basis is that even if the Construction Contract, by its terms, does not preclude making a demand under the guarantees, nevertheless ONGC has caused or contributed to the circumstances leading to the asserted breach of the Construction Contract by Clough, upon which ONGC relies to make a demand. The third is that alternatively, ONGC's demand constituted unconscionable conduct within the meaning of the unwritten laws of Australia, in contravention of s 51AA of the Trade Practices Act 1974 (Cth) ("TPA"). Finally, it is said, that the demand served by ONGC does not conform with the criteria required of a valid demand on the proper construction of the guarantees. The terms of the performance guarantees to be entered into under the Construction Contract are contained in Appendix III (not II) of Annexure A to the Contract. Clause 3.3.3 requires to be construed in the context of the document as a whole. This includes the context of Appendix III of Annexure A: see, for example, Re Media, Entertainment and Arts Alliance, Ex parte the Hoyts Corporation Pty Limited [1993] HCA 40 ; (1993) 178 CLR 379 at 386-387. The performance guarantees prescribed by the Construction Contract accordingly promise payment even where disputes, which could include disputes as to whether or not Clough had failed to honour any of its commitments under the Construction Contract, are pending before a Court or arbitrator. This, in my opinion, is a powerful indicator that a mere claimed breach of contract, which is not fraudulently asserted is sufficient to trigger entitlement to call on the performance guarantee. Clough does not assert that ONGC has made a fraudulent claim. This construction is reinforced by the fact that, under the prescribed terms of the guarantees, the Banks are required to pay "without any demur, reservation, contest or protest and/or without any reference to the Contractor". Under the terms of the performance guarantees, each of the Banks was entitled to treat the written demand by ONGC as conclusive and binding as to the amount due and payable, notwithstanding any dispute pending before any Court, Tribunal, Arbitrator or any other authority. Liability under the performance guarantees was absolute and unequivocal.