EGL Management Services v Northern SEQ Distributor-Retailer Authority [2011] NSWSC 1234

Supreme Court New South Wales

Medium Neutral Citation: EGL Management Services v Northern SEQ Distributor-Retailer Authority [2011] NSWSC 1234 Hearing dates: 28/09/2011 Decision date: 02 November 2011 Before: McDougall J Decision: Summons dismissed with costs. Catchwords: CONTRACT - security for performance of obligations under contract - whether conversion of security into cash then deposited into bank account amounted to appropriation - whether security intended to serve function of risk allocation - meaning of words 'to account' in contract. Cases Cited: Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd [2008] FCAFC 136 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 Lucas Stuart Pty LTd v Hemmes Hermitage Pty LTd [2010] NSWCA 283 Texts Cited: Australian Oxford Dictionary, 2nd Edition, 2004 Category: Principal judgment Parties: EGL Management Services Pty Ltd (ABN 27 062 716 572) Northern SEQ Distributor - Retailer Authority trading as Unitywater (ABN 89 791 717 472) Representation: Counsel: M Christie SC / LDR Shipway (Plaintiff) MG Rudge SC / EB Cowpe (First Defendant) Solicitors: Zraika Partners (Plaintiff) Corrs Chambers Westgarth (Defendant) File Number(s): 2011/249736

Judgment 1On 17 December 1999, the plaintiff (EGL) contracted with Redcliffe City Council (the Council) to design and construct upgrades to, and to maintain and operate, a waste water treatment plant. The defendant (Unitywater) is the statutory successor of the Council. EGL and Unitywater are in dispute as to the construction and effect of provisions in the contract relating to "Security" (performance guarantees) provided by EGL. 2The issue for decision is whether, on the proper construction of the contract and in the events that have happened, Unitywater's obligation to "account" to EGL for security given by EGL requires Unitywater to return that Security (or the cash into which it has been converted), or whether Unitywater is entitled to retain it.