Allens Arthur Robinson
The Supreme Court of Queensland has refused to grant an injunction restraining a party from calling on a bank guarantee despite there being serious questions to be tried. The Court affirmed the general rule that, in the absence of fraud and unconscionability, courts will not grant an injunction. Bank guarantees have two purposes: one is to provide security, and the other is to allocate risk as to which party should be out of pocket while a dispute is resolved. The Court took the view that the terms of the contract when taken together with the unconditional nature of the bank guarantee showed an intention that the contractor should be out of pocket pending resolution of the dispute; that intention was independent of the seriousness of the questions to be tried.