Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [No 2] [2007] FCA 927

Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [No 2] [2007] FCA 927

There was a serious issue to be tried as to whether ONGC had acted unconscionably within the meaning of s 51AA of the Trade Practices Act 1976 (Cth) in calling on or threatening to call on the performance guarantees without a contractual right to do so, and as to whether ONGC was in breach of an implied negative stipulation in the construction contract. The balance of convenience strongly favoured maintenance of the injunctive orders as discharge could cause irreparable harm to Clough, whereas concerns raised by the banks were speculative or unsubstantiated on the evidence.

Jurisdiction
Australia
Judgment Date
19 June 2007
Procedural Posture
Application to Discharge Interim Interlocutory Injunction / Decision on Motion to Set Aside Interim Injunction
Outcome
Motion dismissed. Injunctive relief maintained.
Legal Topics
['performance Guarantees' 'interim Relief' 'unconscionable Conduct' 'section 51 AA Trade Practices Act' 'autonomy of Letters of Credit' 'balance of Convenience']
['injunctions' 'commercial Law' 'banking and Finance Law' 'equity' 'trade Practices'] ['performance Guarantees' 'interim Relief' 'unconscionable Conduct' 'section 51 AA Trade Practices Act' 'autonomy of Letters of Credit' 'balance of Convenience']

Case Brief

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Procedural Posture

Application to Discharge Interim Interlocutory Injunction / Decision on Motion to Set Aside Interim Injunction

Legal Issues

  1. 1 ['Whether interlocutory injunctive relief restraining banks from paying under performance guarantees should be maintained in circumstances where principal has already been enjoined from taking further steps to demand or obtain payment from banks under those guarantees' 'Whether there is a serious question to be tried concerning unconscionable conduct by the principal or breach of implied contractual terms' 'Whether the balance of convenience favours continuation of the injunctions against the banks']

Ratio Decidendi

There was a serious issue to be tried as to whether ONGC had acted unconscionably within the meaning of s 51AA of the Trade Practices Act 1976 (Cth) in calling on or threatening to call on the performance guarantees without a contractual right to do so, and as to whether ONGC was in breach of an implied negative stipulation in the construction contract. The balance of convenience strongly favoured maintenance of the injunctive orders as discharge could cause irreparable harm to Clough, whereas concerns raised by the banks were speculative or unsubstantiated on the evidence.

Court Disposition

Motion dismissed. Injunctive relief maintained.

Orders

  • ['The motion is dismissed.' "The second to fourth respondents (banks) are to pay the applicant's costs of the motion to be taxed."]