FACTS
Under a $55.34 million design-and-construct contract, Pacific Diamond 88 Pty Ltd attempted to set off $2.6 million in certified liquidated damages against $694,343 certified as payable to the contractor, Tomkins Commercial & Industrial Builders Pty Ltd. The principal issued a notice to draw on one of two bank guarantees held as security, citing the resulting $1.9 million net debt position. Tomkins challenged the set-off and sought declarations preventing recourse to security, arguing that the contract had been amended to delete clause 37.2(b) of the AS4902-2000, which would otherwise have authorised such a set-off.
ISSUE
Was the principal entitled to set off certified liquidated damages against progress payments and draw on security, despite having deleted clause 37.2(b) from the standard AS4902-2000 contract?
FINDING…
…
Find Us Where Business Thrives!
Level 11, 456 Lonsdale Street, Melbourne, VIC 3000, Australia
Level 13, 111 Elizabeth Street, Sydney, NSW 2000, Australia
Level 10, 95 North Quay, Brisbane City, QLD 4000, Australia
