The High Court refused an interlocutory injunction sought by Construgomes & Carlos Gomes SA to restrain payment under a €134,713.45 performance bond. Ms Justice Nuala Butler held that the company had not established the seriously arguable case of fraud required to stop payment on an on-demand bond. She did not decide whether the joint venture’s underlying claims were valid, and did not consider the balance of convenience.
The dispute arose from the subcontractor’s work on the New Ross Bypass. It had contracted with a joint venture formed by Dragados Ireland Limited and BAM Civil Engineering to build part of the bridge over the River Barrow. The subcontract was worth just under €2.7 million. The bond, issued by Banco BPI SA, had originally been worth 10% of the subcontract value; €134,713.45 remained after phased releases.
In 2019, the subcontractor referred a payment dispute to adjudication, seeking €1,157,919.30. The joint venture counterclaimed €1,482,744.88, including liquidated damages and repair costs. The adjudicator awarded the subcontractor €388,274 and allowed €1,275 of the counterclaim. The joint venture paid the award.
On the day of the adjudicator’s decision, the joint venture notified the subcontractor that it considered the subcontract to have been breached and sought payment of the bond amount. The subcontractor alleged that the demand repeated defects claims rejected in the adjudication and was a fraudulent attempt to sidestep the decision. The joint venture said its bond claim concerned different defects and a separate claim for liquidated damages covering a different period.
Justice Butler said an on-demand bond is independent of the underlying subcontract, and the court may restrain payment only in exceptional circumstances involving fraud. The test was whether it was seriously arguable that fraud was the only realistic inference from the evidence. She also said the Construction Contracts Act 2013 did not require a respondent to bring every potential crossclaim in an adjudication or lose the right to pursue it elsewhere.
The judge found that the joint venture had provided evidence distinguishing its current claims from those made in the adjudication. Some repair costs might overlap, and elements of the claims might ultimately fail, but the evidence did not make fraud the only realistic inference. The interlocutory relief was therefore refused. The court did not determine the substantive dispute or whether the joint venture was entitled to recover under the bond.