Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283

New South Wales Court of Appeal

CITATION: Lucas Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283

HEARING DATE(S): 26 October 2010

JUDGMENT DATE: 1 November 2010

JUDGMENT OF: Campbell JA at 1; Macfarlan JA at 12; Young JA at 53

(1) Leave to appeal granted; (2) Appeal allowed; DECISION: (3) Orders made by Macready AsJ on 21 September 2010 set aside; (4) Upon the applicant by its counsel giving to the Court the usual undertaking as to damages, and until further order of this Court or of the court at first instance, restrain the respondent from converting into cash, pursuant to Clause 16.3 of the Contract between the parties, any unconditional undertaking provided by the applicant to the respondent where such conversion is sought to be made by the respondent in reliance upon any failure, or purported failure, of the applicant to comply with the terms of the Notice dated 19 July 2010 issued by the respondent to the applicant; (5) Order the respondent to pay the applicant's costs of the applicant's Notice of Motion filed on 17 September 2010 and of the proceedings on appeal; and (6) The respondent to have a certificate under the Suitor's Fund Act 1951, if qualified.

CATCHWORDS: CONTRACTS – building and construction contracts – performance bonds – whether entitlement of principal to call on performance bonds conditioned upon the objective fact of material non-compliance by the contactor with its contractual obligations – Clough Engineering v Oil & Gas Corporation (2008) 249 ALR 458 considered – grant of interlocutory injunction – whether contractually unjustified call on bonds likely to damage reputation and financial standing of contractor - EQUITY - injunction to restrain breach of negative stipulation in contract - exercise of equity's auxiliary jurisdiction - need to demonstrate inadequacy of relevant legal remedies including an award of damages - test for grant of interlocutory injunction