A SUPREME Court decision has opened the door for AGL to claim breach of contract if gas company Westside fails to provide the gas it owes before January 31 next year.
A contract between AGL and Westside expired on January 31 this year, with Westside owing an unspecified amount of gas to AGL.
Chinese company Landbridge now owns Westside, and the company operates the Meridian coal seam gas field west of Gladstone.
According to its gas supply contract, Westside has a year to supply this "deferred gas" to AGL.
Deferred gas accumulated when the gas AGL requested during a set period exceeded the total quantity delivered.
A judgment handed down in Brisbane Supreme Court on Wednesday detailed a contract clause requiring Westside to deliver the deferred gas within 12 months of the contract term.
Justice Philip McMurdo said the dispute ended up in court because there was "an anticipation that the sellers might not supply this deferred gas according to the agreement".
"The buyer (AGL) says that the consequence of any such breach will be a liability for damages for breach of contract, to be assessed under the common law," he said.
"The sellers (Westside) say that their liability for any such breach would be capped by a liquidated damages provision of the agreement."
Justice McMurdo said he had to determine whether the cap applied if Westside did breach its contract by not fulfilling its deferred gas supply obligation.
He dismissed Westside's argument, saying its obligation to provide the deferred gas was set out in the contract and the language it relied on for the cap could not be read in isolation with other relevant passages.
"Under (the contract) the sellers must supply a certain quantity of deferred gas and they must do so at a certain rate," he said.
Justice McMurdo ruled in AGL's favour. He ordered Westside pay costs.
- APN NEWSDESK
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