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  • christie2278

Do you know your risk profile for security?

A recent Western Australian case, Lanskey Constructions Pty Ltd v Westrac Pty Ltd [2022] WASC 90, has provided a decision for ‘bona fide’ claims in relation to calling on bank guarantees used for security. The case involved a dispute regarding the use of bank guarantees for liquidated damages claims.

The parties entered discussions regarding liquidated damages, and after a 13-month period of negotiations, Westrac made a claim for payment of the liquidated damages and reserved its rights to recourse on the security. Lansksy disputed this position and denied that liquidated damages were payable, and then sought urgent injunctive relief to prevent Westrac from calling on the security.

The injunctive relief order was refused by the Court, and a ruling was provided on the requirements for a ‘bona fide’ claim when calling on the security. This ruling sets a threshold that the claim must be made in good faith, honestly, and with a proper or real foundation for the belief that it is or will be entitled to recover.

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