The $55 million dispute related to a bank guarantee issued to secure the performance of a contractor working on the Gladstone LNG Upstream Project.
The $55 million dispute related to a bank guarantee issued to secure the performance of a contractor working on the Gladstone LNG Upstream Project. File

Energy giant's 'demand' for $55million blows up

A HUGE French bank has won a court battle against mining giant Santos after a signature and letterhead dispute complicated a $55million claim.

Santos delivered the $55million "demand” in a letter to BNP Paribas in December 2015.

The claim related to a performance security in the form of a bank guarantee.

The security was issued to secure the performance of contractor Fluor Australia in providing engineering and design services to the Santos coal seam gas extraction project.

The Observer previously reported Fluor developed Surat Basin coal seam gas fields and hubs to feed the Curtis Island LNG exporting site.

The performance security had a clause describing how BNP was liable to pay security to Santos.

BNP Paribas rejected the demand, saying it was defective because its maker did not purport to be authorised to make it - and it was not made on Santos letterhead.

A court was told a handwritten signature from a Santos general manager, Rob Simpson, appeared on the letter.

Justice David Jackson ruled against Santos last year.

He told the energy giant to pay court costs for BNP, because the company's demand for $55million was not done as agreed in the terms of the unconditional bond.

Santos appealed after Justice Jackson dismissed its application for summary judgment on the claim.

And on Tuesday, Queensland Court of Appeal also dismissed Santos's case.

"The position description said nothing about Mr Simpson's authority,” Chief Justice Catherine Holmes said in the new judgment.

"The letter of demand contained no statement of his authority to sign on Santos Limited's behalf,” the Chief Justice added.

"For BNP Paribas in the absence of such a statement to resort to inference would have been to disregard the requirement for strict compliance.”

The new Court of Appeal judgment upheld Justice Jackson's decision, dismissing the Santos appeal with costs. -NewsRegional



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