Lanskey Constructions has lost its court bid to stop WesTrac from retrieving $170,000 in bank guarantees over delays to the expansion of its Welshpool facility.
Malaga-based company Lanskey Constructions has lost its court bid to stop WesTrac from retrieving $170,000 in bank guarantees over delays to the expansion of its Welshpool facility.
Late last month, Lanskey Constructions took to the Supreme Court demanding an urgent injunction to prevent WesTrac or its employees from collecting three guarantees with NAB totalling $168,993.
The dispute centred around a contract Lanskey held to perform early works on WesTrac’s Welshpool facility expansion, which required Lanskey to provide security in the form of six unconditional irrevocable bank guarantees.
Under the agreement, WesTrac could retrieve the security if Lanskey breached its obligations, failed to meet the necessary deadlines and to meet any bona fide claims arising from the contract.
The contract also stipulated that WesTrac would be entitled to liquidated damages for every day after the specified date for practical completion.
According to evidence tendered during the court hearing on February 28, four phases of the development were completed late, with delays of between 22 and 76 days.
At the time, Lanskey tendered for WesTrac's other expansion project at South Guildford, entering a contract in February 2021.
Lanskey state manager Steve Garces claims he told WesTrac's product support executive general manager Adam Cook the company was having second thoughts and might withdraw its tender because WesTrac had refused to award extensions of time on the Welshpool project.
But Mr Garces told the court he believed Mr Cook guaranteed WesTrac would waive its right to liquidated damages on the basis that Lanskey continued with the contract.
Last month, WesTrac demanded Lanskey pay $408,600 in damages and reserved its right to draw on the three remaining bank guarantees if the demand was not met within 28 days.
In justifying the action, WesTrac claimed the oral agreement was a temporary moratorium on disputes until the works were complete and no longer applied.
Lanskey launched the legal action, with Mr Garces claiming the move would be viewed negatively by credit providers and may hinder the company’s ability to tender for future construction contracts.
In a judgment handed down this week, Justice Jenni Hill said the precise terms of the alleged agreement were “unclear” and did not consider Lanskey's case strong enough to warrant an injunction.
Further, Justice Hill said it was not unarguable that WesTrac had a right to liquidated damages.
"While I accept that the plaintiff may suffer a risk of reputational damage or increased costs in the event the bank guarantees are called upon, I am not satisfied that, by reason of any or all of these matters, the balance of convenience favours an injunction being granted," she said.
While acknowledging the risk to Lanskey, Justice Hill said the risk was one the company assumed when it agreed to provide the bank guarantees under the contract.
As such, she dismissed the application.
