Ottoway Engineering Pty Ltd v Westpac Banking Corporation (No 3) [2017] FCA 1500

FEDERAL COURT OF AUSTRALIA

Ottoway Engineering Pty Ltd v Westpac Banking Corporation (No 3) [2017] FCA 1500 File number: SAD 90 of 2016

Judge: BESANKO J

Date of judgment: 13 December 2017

Catchwords: PRACTICE AND PROCEDURE – consideration of an application by the applicant seeking orders to prevent the respondent from enforcing a guarantee – where the applicant was the subcontractor on a construction project – where the applicant's bank provided a guarantee to the main contractor's bank – whether the guarantee secures the applicant's obligations to the main contractor under a separate agreement – whether the guarantee secures the main contractor's obligations to its bank. BANKING AND FINANCIAL INSTITUTIONS – consideration of the proper construction of the guarantee – where the guarantee is in the nature of a performance bond or demand guarantee and not a contract of suretyship – where the true nature of the document is to be ascertained from its terms and conditions – where the guarantee was provided by the applicant's bank to the main contractor's bank – where there is no underlying agreement between the applicant and the respondent – where the guarantee places a primary obligation on the applicant's bank to pay to the respondent the amount specified in a written demand in accordance with the guarantee – where the obligation under the guarantee is independent of the underlying agreements between the applicant and the main contractor. CONSUMER LAW – whether the respondent engaged in misleading or deceptive or unconscionable conduct under the Australian Consumer Law in procuring or enforcing the guarantee – where the applicant sought to rely on what it claimed was a species of unconscionable conduct that arises where the assertion or reliance on a legal right is, in the circumstances, unconscionable – where there is very limited scope for holding unconscionable conduct in a case involving a performance bond or demand guarantee – where the respondent had no obligation to make further inquiries into the conduct of the main contractor before calling on the guarantee – where the respondent was not bound to pursue repayment of the amount secured by the guarantee through a term deposit also held by the respondent – where the respondent was entitled to take immediate action on the guarantee.