Kell & Rigby Holdings Pty Limited v Lindsay Bennelong Developments Pty Ltd [2010] NSWSC 777

New South Wales Supreme Court

CITATION : Kell & Rigby Holdings Pty Limited v Lindsay Bennelong Developments Pty Ltd [2010] NSWSC 777

HEARING DATE(S) : 7 July 2010

JUDGMENT DATE : 16 July 2010

JUDGMENT OF : Hammerschlag J

DECISION : Plaintiff entitled to a declaration that in the circumstances that have occurred to this point, the defendant is not entitled to call on the Guarantees. It is also entitled to an injunction, in appropriate terms, in aid of the declaration.

CATCHWORDS : CONTRACT – building contracts – construction – the defendant Principal and the plaintiff Contractor entered into a construction contract ("the Contract") – later they entered into an Advance Payment Deed which amended the Contract and which inserted provisions for the making of Advance Payments to the Contractor and for the provision by the Contractor of Advance Payment Bonds to secure repayment – the Principal advanced or made Advance Payments and the Contractor provided two Advance Payment Bonds each in the form of an unconditional Bank Guarantee ("the Guarantees") – the Advance Payments became repayable on provision of a Certificate of Practical Completion – the Principal was in addition the Superintendent under the Contract – it purported to vary the Contract by deletion of work and then issue a Certificate of Practical Completion and then sought to call on the Guarantees – the Contractor asserted that the variation was beyond power and the Certificate of Practical Completion was invalid – alternatively it asserted that the Certificate of Practical Completion was issued in breach of an obligation of the defendant to act fairly – the Contractor asserted that a call by the Principal on the Guarantees would be in breach of an implied negative stipulation in the Contract that it would not do so if the Advance Payment was not repayable – HELD – held that the Notice of Variation to Works was unauthorised and the Certificate of Practical Completion was ineffective – held further that the Superintendent did not act fairly in giving the Notice of Variation to Works and issuing the Certificate of Practical Completion – held further that the Principal breached its express contractual obligations – held further that a call on the Guarantees would be in breach of an implied negative stipulation as contended for