Origin wins round one in BassGas brawl

THE Federal Court has dismissed Clough Limit’s application for restoration of the $19.3 million bond called by Origin Energy on behalf of the BassGas joint venture.
Origin wins round one in BassGas brawl Origin wins round one in BassGas brawl Origin wins round one in BassGas brawl Origin wins round one in BassGas brawl Origin wins round one in BassGas brawl

It has also refused to grant an injunction to restrain the calling of a second bank guarantee of a further $19.3 million and has directed Clough to pay Origin’s legal costs on the matter.

The BassGas joint venture called upon the first bank guarantee on 30 November 2004, saying that Clough failed to perform significant work required to achieve completion of certain works in accordance with the EPIC Contract.

The court noted that arbitration had been commenced in relation to the dispute and that the arbitrator would have the power to award damages to Clough if he found that Origin had acted improperly in relation to the bonds. Given this and the fact that the bank bonds appeared to be unconditional, the judge said he was not disposed to make orders at this stage.

On legal advice, Clough then withdrew its application.

“The Court’s dismissal of Clough’s application unequivocally supports the right of the joint venture to call upon the guarantee,” BassGas operator Origin said in a statement.

“Following the dismissal of Clough’s application today, the BassGas joint venture is at liberty to call upon the second bank guarantee in accordance with the terms of the EPIC contract.”

Clough Limited CEO and managing director David Singleton said Origin’s actions in calling the bond had set an unfortunate precedent.

“Origin has changed industry practice about when it is appropriate to call contractor-provided bonds and this is likely to have a profound effect on the industry,” Singleton said.

“We are disappointed that the court was not willing to intervene at this point but we understand the court’s reasoning and will pursue our claims with vigour in the arbitration process.”

Clough has also instigated other legal proceedings on matters relating to the contract, which are scheduled to go before an arbitrator later in the year. The BassGas joint venture has significant counterclaims against Clough which will be prosecuted in the same proceedings.

Both parties said they remained confident that the matters in dispute would be resolved in their favour.

Origin Energy Resources Ltd is the BassGas project operator (32.5%), in joint venture with AWE Petroleum Pty Ltd (30.0%), CalEnergy (Australia)Ltd (20%), Wandoo Petroleum Pty Ltd (12.5%) and Origin Energy Northwest Ltd (5%).

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