Superintendents Wearing Two Hats Risk Abuse Of Power

Facts

Lindsay Bennelong Developments Pty Ltd (the principal) entered into a contract with Kell and Rigby Holdings Pty Ltd (the contractor) for the construction of a mixed residential and commercial development (the contract). The principal also acted as superintendent under the contract.

The works were to be completed in three stages. At the time of the dispute, stage 1 had been completed and stages 2 and 3 were under construction. Two years into construction, the parties entered into an advance payment deed (the deed), by which the principal agreed to advance to the contractor part of the balance of the original contract sum to the value of $2 million (the advance payments). The deed provided for two advance payment bonds, each in the form of an unconditional bank guarantee in the amount of $1 million (the guarantees).The contract provided that, with respect to the advance payments, if they had not been repaid on or before the date of the issue of the