Citation: [2015] EWHC 949 (TCC); LTL 14/6/2015; [2015] 1 CLC 449; [2016] 2 All ER (Comm) 129 : [2016] BLR 187 : 164 Con LR 39 : [2016] CILL 3801
This decision arises from a dispute on a project for the design, build and operation of a recycling facility for West Sussex County Council. A related decision in MW High Tech Projects UK Ltd v Haase Environmental Consulting GmbH [2015] EWHC 152 TCC was noted in the Summer 2015 issue of KC Legal Update. Biffa had entered into a contract (the EPC contract) for the design, construction, installation and testing of the plant, the completion date of which was to be determined by reference to the testing regime, with liquidated damages payable for non-completion. MW High Tech, as EPC contractor, was required to procure a parent company guarantee (from MW GmbH), the Second Claimant), a performance bond and retention bond. The completion date was not achieved, for reasons which were disputed, and Biffa gave notice under the terms of the parent company guarantee of its intention to call on the retention bond, predicated on its assertion that MW High Tech was required to pay liquidated damages and had not done so. The claimants succeeded in an ex parte application to restrain the bond call and any steps towards calling it: a temporary injunction was granted. MW GmbH, the parent company was added as Second Claimant, to ensure that the undertaking in damages given could be supported. On Biffa’s application, the interim injunction was subsequently set aside. A typical on-demand bond can only be restrained where there is fraud or where the call is precluded by the terms of the underlying contract. The court would not accept that a term should be implied that the call on the parent company guarantee must be ‘valid’. No such implication was justified. The parent company should be regarded as being given the opportunity to pay the underlying demand without recourse being necessary to the retention bond.
Counsel: Vincent Moran QC appeared on behalf of the Claimants.
