MALAYSIA HOTEL (AUSTRALIA) PTY LTD v SABEMO PTY LTD [1993] NSWCA 306

MALAYSIA HOTEL (AUSTRALIA) PTY LTD v SABEMO PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

KIRBY P, MAHONEY and SHELLER JJA 27 November and 4 December 1992, 12 March 1993

[1993] NSWCA 306

GUARANTEE — banker's guarantee — provision of guarantee in relation to lump sum building contract — dispute arises between proprietor and builder — builder makes demand upon banker's guarantee and is paid in part — proceedings commenced in Equity Division to restrain further claim of payment on guarantee and to restrain use of guarantee moneys already paid — guarantee to remain effective until date of issue by the architect of final certificate — provision in contract for bank guarantee in lieu of retention fund otherwise provided for — provision in form of guarantee by which builder "unconditionally agreed that... payments will be made... forthwith without further reference... and notwithstanding any notice given by the Customer to the Bank not to pay same" — whether obligation to pay upon demand on guarantee is subject to an implied negative stipulation that guarantee is to remain in place and uncalled upon until the architect's final certificate is given — held: (reversing Hodgson J):

CONTRACT — meaning of — building contract in common form — whether "or" should be read as "and" — whether consistent with language and purpose of contract and commercial commonsense — "held: (reversing Hodgson J): It is not.

BUILDING CONTRACT — bank guarantee — right of proprietor to convert rights under contract into security offered by guarantee — purpose of guarantee — whether subject to negative stipulation, implied into the contract, that claim will only be made after architect's final certificate — held: (reversing Hodgson J): No such implied negative stipulation should be imported. It conflicted with the plain language of the contract and the guarantee and the commercial purposes of each.