BuildLaw Issue 38 December 2019 | Page 17

was reasonable. The Court held that it was arguable that by not certifying the claim in accordance with the terms of the Contract, the Engineer had not met the terms of the Bond allowing Project 29 to issue a demand on Vero under the Bond.
However, for the Court to extend the period of the interim injunction, Arrow had to demonstrate that the contractual provisions were not given effect to and the Engineer’s certificate was not valid under the Contract. While by failing to assess the cost of completion, the Engineer had not complied with the terms of the Contract and Bond, this did not mean the Engineer’s certificate was invalid under the contractual machinery. The purpose of the Engineer’s certificate was to relieve Project 29 from the adverse impacts of disputes. It would be inappropriate for the Court to transfer the risk of dispute back to Project 29.
The Court held that ultimately, it is not for them to make orders that are inconsistent with what the parties had contractually agreed would occur if Arrow failed to fulfil its obligations under the Contract. The Contract expressly outlined that if Arrow failed to meet its contractual obligations, Project 29 had a right to “step-in” and resume possession of the site and call up the Bond. The Bond itself also stated that Vero was liable to release the Bond, irrespective of any dispute or disagreement between Arrow and Project 29.
The Court held there was no basis to continue the interim injunction and discharged the interim injunction in place.
Practical Considerations
Arrow is a timely reminder of the importance of parties including clear provisions regarding bonds (both in construction contracts and in bonds themselves). Wherever possible, the Courts will give effect to the intention of the contracting parties and the allocation of risk expressly negotiated by the parties, but this can be a lengthy process if the contract and bond are not clear.