- Notable Unreported Decision
SUPREME COURT OF QUEENSLAND
Low v MCC Pty Ltd & Ors; MCC Pty Ltd v Low  QSC 6
In proceeding BS11709 of 2017:
MCC PTY LTD
ACN 002 243 263
Registered Adjudicator No. J1182971
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
In proceeding BS12115 of 2017:
MCC PTY LTD
ACN 002 243 263
SC No 11709 of 2017
SC No 12115 of 2017
Application and Originating Application
29 January 2018
8 December 2017
On the application in proceeding BS11709 of 2017:
Upon the applicant giving the usual undertaking as to damages and undertaking to lodge with the registrar of the court within 3 business days an unconditional bank guarantee of payment of the sum of $340,000 to the respondent in a form satisfactory to the registrar, the orders of the court are as follows:
On the originating application in proceeding BS12115 of 2017 the order of the court is that:
EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – RELEVANT CONSIDERATIONS – BALANCE OF CONVENIENCE GENERALLY – where the applicant is seeking an injunction to restrain enforcement of adjudicator’s decisions under BCIPA filed as judgments in the District Court of Queensland – where the applicant has offered to undertake to provide a bank guarantee in to court sufficient to cover the amount of the adjudicator’s decisions – whether a “prima facie” case has been shown by the applicant – whether the balance of convenience favours the grant of an injunction
L Campbell for the applicant
P Hay for the respondent
Case Legal Pty Ltd for the applicant
Tucker Cowen for the respondent
- These cross applications stem from a dispute as to the validity of two payment claims and adjudication decisions made under the Building and Construction Industry Payments Act 2004 (Qld) (“BCIPA”). There were two relevant construction contracts, each to build a similar house on two adjoining lots of land. The contracts are in similar forms, except for the amounts payable under them, because the parties agreed to apportion the overall price for the works to construct both houses unequally between the two contracts. There is one relevant adjudication decision in relation to each construction contract.
- The plaintiff in proceeding BS11709 of 2017 applies for an interlocutory injunction to restrain enforcement of the adjudication decisions, the adjudication certificates issued upon them and filed as judgments in the District Court of Queensland, and enforcement warrants issued in respect of the judgments pending the determination of the proceeding. The first defendant in that proceeding as respondent resists the application for an injunction and cross applies by originating application BS12115 for final relief to enforce an equitable charge granted under each of the contracts, including the appointment of receivers, presumably by way of equitable execution, or as persons appointed to sell the charged land.
- The relevant claims in BS11709 of 2017 are for declarations that each of the adjudication decisions is void and for a final injunction to restrain the first defendant from enforcing the adjudication decision. The interlocutory injunctions and other orders sought are wider. First, the applicant applies for orders that until further order the respondent be restrained from enforcing or otherwise relying on each of:
- the adjudication decisions;
- the adjudication certificates issued upon the adjudication decisions filed as judgments of the District Court of Queensland; and
- Second, the applicant applies for a final order in the nature of a mandatory injunction that the respondent withdraw within 10 days:
- a caveat lodged over the two relevant lots of land claiming an equitable charge; and
- the enforcement warrants.
- The respondent, as applicant in BS12115 of 2017, cross-applies for a declaration that it has an equitable mortgage or equitable charge over the two relevant lots. The mortgage or charge is claimed to secure all amounts that may become due to the respondent under the construction contract for carrying out construction work on each of the houses.
- As well, the respondent applies for consequential orders appointing named individuals as receivers or trustees for sale (before any decision on the applicants’ claim) and for payment from the proceeds of sale of the amount of the District Court judgment.
- Both applications were argued on the basis that the question whether an interlocutory injunction should be granted might be considered first.
Ground of alleged invalidity
- Since Northbuild Construction Pty Ltd v Central Interior Linings Pty Ltd, it has been uncontroversial in this court that an adjudication decision may be declared invalid and void for jurisdictional error.
- The alleged ground of invalidity in the present case is that a jurisdictional fact for making each of the adjudication decisions did not exist, with the consequence that each decision is void. The relevant fact is whether there was a reference date to engage the entitlement to a progress payment.
- Summarising, a person’s entitlement to a “progress payment” arises “[f]rom each reference date”, under s 12 of BCIPA. It is “a person mentioned in section 12” who is or who claims to be entitled to a progress payment who may serve a “payment claim”, under s 17 of BCIPA. And it is a payment claim, validly made, that engages the rights and obligations provided for under Pt 3 Div 1 of BCIPA that, in turn, lead to the right of a claimant to apply for adjudication “of a payment claim”, under s 21 of BCIPA.
- The applicant submits, and I accept, that the existence of a “reference date” for each of the progress payment claims made is thus a jurisdictional fact, meaning that if the fact is proved not to exist, upon the trial of the claim made in BS11709 of 2017, the corresponding adjudication decision will be held and declared to be void.
- Schedule 2 of BCIPA defines the expressions “progress payment” and “reference date”, in part, as follows:
“reference date, under a construction contract, means –
- a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for construction work carried out… under the contract; or
“progress payment means a payment to which a person is entitled under section 12, and includes…
- a payment that is based on an event or date, known in the building and construction industry as a ‘milestone payment’.”
- It is common ground that each of the contracts provided for a progress payment to be made for construction work carried out under the contract, in the form of a milestone payment upon the relevant house reaching the “Frame Stage”.
- Simplifying, each of the contracts provided for part payment of the total contract price upon a number of different events or stages. For example, the contract for House H1 on Lot 10 on SP131769 provided:
% of Contract Price
Value (GST Inclusive)
- Apart from the value amounts, the contract for House H2 on Lot 11 on SP171369 does not materially differ.
- Each of the contracts defined “Frame Stage” as meaning:
“… that stage of the Works when apart from minor defects or minor omissions, the building’s frame is finished.”
- For each contract, the dispute between the parties is whether the Frame Stage for the relevant house was finished or whether any defects or omissions were minor. There are three relevant points raised in the statement of claim and advanced by the applicant in support of the application for an interlocutory injunction as the basis for the conclusion that the Frame Stage event was not reached.
- First, the applicant submits that there is a prima facie case or a serious question to be tried that the reference date for the Frame Stage was not reached because of the failure to complete the light steel framing for the external and structural walls to the upper levels of the relevant house.
- Second, the applicant submits that there is a prima facie case or a serious question to be tried that the reference date for the Frame Stage was not reached because of the failure to install the floor joists for the upper levels of the relevant house.
- Third, the applicant submits that there is a prima facie case or a serious question to be tried that the reference date for the Frame Stage was not reached because of the failure to install the frames for the internal partitions of the relevant house.
First basis: failure to install light steel framing on external and structural walls
- The respondent submits that there are two reasons to reject the contention that the building’s frame was not finished because of the failure to complete the light steel framing for the external and structural walls to the upper levels of the house. First, it submits that on the proper construction of each of the contracts the building’s frame is confined to the structural frame and does not include the light steel framing components that are wall studs to be placed at 600 millimetre centres to support the fixing of exterior cladding and interior linings. Second, in any event, it submits that the value of the incomplete work for those components (apparently over both houses) is approximately $1,500 and that it constitutes minor omissions, apart from which the building’s frame under each contract is finished.
- What is the building’s frame for each of the contracts? The applicant submits that it includes the light steel framing for wall studs. He relies on paragraph 3.2 of work section WS12 of the architectural specification, that provides for a maximum stud centre spacing of 600 millimetres at the nominal minimal stud widths shown on the drawings.
- The applicant relies on the photographic evidence taken at about the time of service of the payment claim was made, namely 4 August 2017, showing that installation of the light steel framing for wall studs for level 2 and level 3 of each of the houses was incomplete. That is supported by an estimate that there were approximately 150 to 200 lineal metres of the light steel framing material for wall studs that was not installed.
- The applicant submits that extent of incomplete work is more than “minor omissions”, with the consequence that the contractual event of reaching the Frame Stage was not achieved.
- It is not in dispute that fabrication of the structural framing steel work was not part of the work of the respondent under the contracts, because it was removed from the scope of works by the applicant. However, the applicant does not submit that the structural steel framing for the walls of the house was not complete, so that point does not matter. The respondent submits, nevertheless, that the Frame Stage was complete when the structural steel part of the frame was complete.
- Although at first blush, that might appear to be a neat distinction that depends on the construction of the contracts, the case is not limited to that point, because the parties are also in dispute about what part or parts of the floor framing and whether the light steel framing for partition walls are included in the Frame Stage.
- For example, they appear to be in dispute about whether the floors for level 2 and level 3 are to be laid before the internal partitions that are not load bearing are to be framed on top of the floors. Mr Scroope for the respondent says they are and that neither the floors nor the internal partitions form part of the Frame Stage. The applicant appears to say that the light steel framing for the internal partitions forms part of the Frame Stage.
- Another aspect is that there is a dispute about whether the floor joists for level 2 and level 3 are not part of the Frame Stage, either because they are “structural flooring” or more generally as a matter of construction. Underlying that, Mr Scroope on behalf of the respondent says that some of the floor frame that is structural does not form part of the respondent’s work under the contracts.
- However, the first question about finishing the building’s frame relates to the light steel framing of the level 2 and level 3 walls already framed in part by the structural steel framing, not the non-load bearing partitions yet to be installed.
- Although parts of the specification speak to the requirements for both light steel framing as provided for in work section WS12 of the architectural specification and partitions that are to be framed and lined as provided for in work section WS28 of the architectural specification, they do not directly speak to the question whether the “Frame Stage” comprising “the building’s frame” should be limited to the structural steel or other structural frame elements.
- One obvious point is that the express language of the contract does not confine the “building’s frame” to the structural elements. Against that, as set out above, the next milestone stage of the works under the contracts, after the “Frame Stage”, is the “Enclosed Stage”. That stage is defined to require, inter alia, that “the structural flooring is laid”. Mr Scroope appears to say in his first affidavit that the joists are structural flooring, but the parties did not otherwise address the meaning of “structural flooring”. It is an expression, in house construction, capable of including a number of products suitable to bear the design loads to be placed on a floor, including timber, plywoods, particleboards and fibre cement sheets of particular grades. If that is right, and a partition wall is to be framed on top of a floor that has been laid, the frame for that partition logically could not be required to be installed or fixed before the floor is laid.
- Whether or not that is so, a related point made by Mr Scroope in his first affidavit is that the work of the installation of the structural flooring for level 2 and level 3 is not part of the respondent’s work under the contract. That appears to be supported supported by the plans in Ex AL-34 to the applicant’s first affidavit, that show some floor joists as work to be performed by others.
- The respondent relied on the evidence of two engineers, Mr Dugan and Mr Northey, and an architect, Mr Mack, as supporting the conclusion that the building’s frame for the purposes of the Frame Stage should be confined to the structural steel frame that was complete. However, their affidavits were expressed in the form of largely conclusory opinions, without setting out the assumptions or matters taken into account in reaching their conclusions, to the extent that they were tendered as expert opinion. In any event, in my view, the meaning of “Frame Stage” in the contracts is most likely not a matter of expert opinion, although there may well be construction industry specialist knowledge that will inform the correct conclusion.
- In my view, there is a sufficient question to be decided as to the proper construction of the contracts for the applicant to show a prima facie case or serious question to be tried that the non-load bearing light steel wall framing for the structural walls that was not completed at the date of the payment claim had the consequence that the building’s frame was not finished, unless the work of that kind that was not completed constituted minor omissions.
- As to that, the applicant relies on the physical extent of the incomplete work measured in lineal metres (150 – 200 metres) as depicted in the photographs exhibited to the applicant’s first affidavit, in Ex AL-30 and AL -32 and AL-33 and represented in the marked-up copies of the plans in Ex AL-31 and Ex AL-34.
- The respondent does not, in general, contest the extent of the incomplete work, having regard to Mr Scroope’s second affidavit and Ex GCS-9, GCS-10 and GCS-11. However, Mr Scroope makes two points. First that the non-load bearing light steel framing for the walls of level 2 and level 3 that has not been completed is inaccessible until the flooring for those levels is installed to allow a platform for access. Second, the value of the incomplete work of that kind is two days work for one man after the structural floors are installed, and constitutes only minor omissions.
- On the last point, Mr Scroope is supported by the two engineers, Mr Dugan and Mr Northey, and the architect, Mr Mack. Nevertheless, in my view, for the purposes of an application of this kind, there is still a sufficient question whether the extent of the incomplete works was such that they were not only minor omissions, even though the weight of the evidence at the present time is against that conclusion. For example, it is not clear what assumptions have been made by any of those who express a relevant opinion as to the value of the remaining work as to the means of access of the installers to the places where the remaining light steel framing for wall studs is required.
Second basis: failure to install floor joists
- The applicant’s alternative contention that the Frame Stage was incomplete because of failure to install the floor joists is raised by allegations in the statement of claim that the light steel framing for the walls was required to be fixed to the floor joists as part of the construction and that the joists to be installed by contractors engaged by the plaintiff other than the defendant had not been installed at the date of the payment claim.
- This contention was not raised in the applicant’s outline of argument but was advanced in oral submissions. It too depends on the proper construction of the contractual provision as to the “Frame Stage”.
- The evidence of the parties did not directly address whether the floor framing for a building would ordinarily be treated as part of a frame stage. The inclusion of structural flooring in the Enclosed Stage may suggest that the joists or some of them are not included in the Frame Stage but it does not necessarily exclude the floor frame from the Frame Stage, if “structural flooring” refers to the load bearing flooring material itself.
- As already noted, the steel joists shown on the plans appear to have been excluded from the respondent’s work under the contracts. That may tend to indicate that the installation of those joists was not to form part of the Frame Stage. On the other hand, the structural steel frame that was installed was also excluded from the respondent’s scope of work, yet it clearly had to be completed before the respondent was able to do the work of the light steel framing within the structural steel framing.
- In my view, the position as to whether the floor joists were required to be installed before the building’s frame is finished is unclear. It may form a basis for the applicant to make out a prima facie case or a serious question to be tried as to the event of the Frame Stage not being reached.
Third basis: failure to install frames for internal partitions
- The applicant’s other alternative contention that the Frame Stage was incomplete because of failure to install the internal partitions is raised by allegations in the statement of claim that the light wall framing was required to be in the construction of internal wall partitions and that the respondent had not constructed any light framing in the dining/kitchen room, study, and store rooms on level 2 of each house and bedroom 1, ensuite 1, walk in wardrobe, water closet, shower loft and stairs areas to the front on level 3 of each house.
- This contention was not raised in the applicant’s outline of argument but was advanced in oral submissions. It too depends on a question of the proper construction of the contract.
- Again, the evidence of the parties did not directly address whether the light steel framing for the internal partitions would ordinarily be treated as part of a frame stage. It is apparent, as already noted, that the respondent considers that the framing of the internal non-load bearing partitions must await the installation of the flooring. At first blush, there seems good sense in that.
- On the other hand, the applicant submits that the contract, properly construed, requires that the light steel framing be fixed to the floor joists or frame at the base of the studs. The applicant did not identify the provision of the specification that required that to be done. There is a requirement that the bottom tracks of partition wall frames are fixed to the floor substrate, but that is not the same thing.
- Having regard to the other bases for the application, I do not find it necessary to pursue this basis for the contention that the building’s frame was not finished any further.
Respondent’s alternative basis for a reference date having been reached
- The respondent submits that there is an alternative basis for concluding that there is no prima facie case or serious question to be tried that there was no reference date on 4 August 2017 that authorised the making of the payment claims made by the respondent on that date.
- The respondent submits that even if the Frame Stage event had not been reached on 4 August 2017, and therefore did not provide the basis for the reference date for the payment clams to be made, by reason of other provisions of the contracts and other facts, that date was deemed to be the date of “Practical Completion” and that the event of Practical Completion was a reference date under each of the contracts, as shown in the table of milestone events set out above.
- Before identifying the relevant contractual provisions and facts relied upon by the respondent to support this argument, some advance points should be noted. This basis for calculating a reference date and the evidence in support of it were not placed before the adjudicator. His decision was based on the reference date of the Frame Stage being reached upon the building’s frame having been finished. As well, the amounts determined by the adjudicator as payable in the adjudication decisions were calculated by reference to the amounts payable upon the contractual events of the Frame Stage, not by amounts calculated by valuing the work independently under each contract on the footing that the Frame Stage had not been reached.
- The basis of the respondent’s submission lies in cl 17.10 of each of the contracts, that provided:
“Consequences of Owner taking Possession of the Works when not entitled to do so
It the Owner takes Possession of the Works when not entitled to do so under this Contract, the Works are deemed to have reached Practical Completion without any defects or omissions on the Day that the Owner takes Possession and the Owner is liable for any loss or damage that the Contractor may incur or suffer as a result.”
- The respondent submits that the applicant excluded the respondent from the site for the two contracts on 4 August 2017. In part, the applicant relies on the fact that on the morning of Monday, 7 August 2017, the respondent’s employees attended at the site to discover that the temporary fencing had been changed, they were locked out and security contractors retained by the applicant refused to give them access. As well, the respondent relies on a passage in the applicant’s first affidavit where he says that on 4 August 2017 he had terminated the contracts and had to replace the temporary fencing and started arranging alternative subcontractors.
- The word “Possession” in cl 17.10 is a defined expression, meaning when the Works or any part of the Works are taken over occupied or used by the Owner or the Owner’s employees, other contractors or agents.
- The passage from the applicant’s first affidavit relied upon for this purpose was not directed to the present question or prepared knowing that this question would be raised by the respondent and, in context, is not clear enough, in my view, to justify the factual conclusion necessary for the respondent’s factual submission on this point that the respondent was excluded from the site on 4 August 2017.
- That is enough to decide that the respondent’s argument on this question does not justify the conclusion on the hearing of this application that there is no prima facie case or serious question to be tried that there was no reference date on 4 August 2017.
- It is unnecessary, therefore, to decide whether, if there was a deemed Practical Completion under each of the contracts on 4 August 2017, the respondent was entitled to payment of the amount of the Frame Stage under each of the contracts upon the adjudication application or whether the adjudication decision was thereby validly made.
Balance of convenience
- On 13 October 2017, the second defendant in proceeding BS11709 of 2017, made:
- adjudication decision 298320 in respect of the respondent’s adjudication application for the payment made under the contract for House H1; and
- adjudication decision 298427 in respect of the respondent’s adjudication application for the payment made under the contract for House H1.
- On 8 November 2017, the applicant started proceeding BS11709 of 2017 claiming the relief previously stated, in substance to obtain declaratory relief that each of the adjudication decisions is void.
- On 27 October 2017, the respondent obtained an adjudication certificate, under s 30 of BCIPA, in respect of each of the adjudication decisions. The amounts of the adjudication certificates were as follows:
- adjudication decision 298320 - $210,331.32;
- adjudication decision 298427 - $90,529.72.
- On 31 October 2017, the respondent filed the adjudication certificates in the District Court of Queensland.
- On 13 November 2017, the respondent obtained enforcement warrants from the District Court to enforce each filed certificate as a judgment.
- The applicant’s submissions proceeded on the footing that there are judgments of the District Court that have been entered for those amounts. BCIPA provides for the filing of an adjudication certificate, under s 31, “as a judgment for a debt”. The filed certificate may be enforced as a judgment for a debt.
- The applicant submits that the balance of convenience favours the grant of the interlocutory injunction sought, because:
- he offers the usual undertaking as to damages;
- he offers an undertaking to the court to lodge with the registrar of the court a bank guarantee in the amount of $340,000;
- the proceeding by way of judicial review should be able to be heard promptly;
- there will be no prejudice to the respondent beyond being kept out of the money until the proceeding is determined;
- there is a risk that the respondent will be unable to repay the money, if it paid before the proceeding is determined;
- the applicant will suffer irreparable loss and damage if the land is sold under the enforcement warrants or under the process engaged by the respondent for enforcement of its alleged equitable charge; and
- the policy of BCIPA does not support the payment on account of an invalid adjudication decision that is susceptible to be declared to be void.
- The respondent submits that the balance of convenience favours the refusal of the injunction because:
- the applicant’s case is weak;
- the respondent has on the applicant’s case done the substance of the work for which the adjudication decisions and certificates issued and will suffer hardship if an injunction is granted;
- the applicant chose not to engage in the payment claim and adjudication application process;
- an injunction would defeat the policy of BCIPA that payment is to be made promptly of an amount established by an adjudication decision;
- the respondent is likely to be able to repay the money if the applicant is ultimately successful;
- there is no real risk of substantial damage to the applicant from a forced sale of the land because the applicant has the means to pay the amounts of the adjudication certificates and enforcement warrants, but chooses not to do so.
- Overall, I have formed the view that the balance of convenience favours granting the injunction sought.
- As to the usual undertaking as to damages, there is no evidence that the respondent is likely to suffer loss or damage in this particular case beyond the cost of being kept out of the money payable under the adjudication certificates and enforcement warrants. The evidence does not suggest that the applicant’s undertaking as to damages is not sufficiently valuable.
- The respondent does rely on evidence from Mr Scroope in his first affidavit that by being kept out of the money, the respondent is disadvantaged in having to pay its subcontractors, maintain its balance sheet ratio for the purpose of registration as a builder, manage its overdraft facility with its financier and obtain profit. However, there is no suggestion that the respondent is under any threat because of those matters, and no evidence of the amount that the respondent is carrying as unmet expenses in relation to this project. Mr Scroope’s second affidavit is specifically directed to demonstrating the respondent’s continuing financial strength, including substantial current assets and fianancial accommodation to support cashflow.
- The respondent’s reliance on the policy of BCIPA raises a question of principle. There is no doubt that the overall policy of BCIPA is to ensure an entitlement to progress payments under all construction contracts and the prompt receipt of the amount of that entitlement by the process of establishing any amounts that are due under the terms of the Act upon the making of a payment claim or the making of an adjudication decision. However, there is also no doubt that some purported progress claims and adjudication decisions may be invalid and of no effect in law. With one exception, there is no express policy of BCIPA that there must be a payment in respect of an invalid or possibly invalid adjudication decision.
- The exception is in s 31(4) of BCIPA, that provides as follows:
“(4) If the respondent commences proceedings to have the judgment set aside, the respondent—
- is not, in those proceedings, entitled—
- to bring any counterclaim against the claimant; or
- to raise any defence in relation to matters arising under the construction contract; or
- to challenge the adjudicator’s decision; and
- is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final decision in those proceedings.”
- In effect, s 31(4) requires that when an adjudication certificate has been filed as a judgment for a debt, and a respondent to a payment claim commences proceedings to have the judgment set aside, the respondent is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final decision in those proceedings.
- Strictly speaking, the applicant’s claim in proceeding BS11709 of 2017 does not seek an order to set aside the filed adjudication certificate as a judgment. That is explained by the fact that the claim antedates the adjudication certificates. Nevertheless, three points may be made.
- First, although the relief sought by the applicant by way of declaration and permanent injunction is not an order to set aside the judgment, it would have the same effect in substance as such an order. The purpose of s 31(4) is to require that a person who mounts a curial challenge to an adjudication decision and adjudication certificate that has been filed as a judgment to begin by securing payment of the amount to which the claimant is ostensibly entitled, by payment into court, so that if the proceeding is unsuccessful the claimant has an assurance of payment. By way of analogy, it might be appropriate to require an applicant who seeks relief by way of declaration and injunction, in substance having the same effect as an order to set aside the judgment, to secure the payment ostensibly due to the successful claimant as an assurance of payment if the proceeding is unsuccessful, as part of the price of an interlocutory injunction to preserve the status quo until a decision upon the final hearing of the application.
- Second, the payment required to be made under s 31(4) is a payment into court, not a payment to the claimant, and serves a different purpose from payment to the claimant. The purposes are different because a payment into court removes the risk that the successful claimant cannot repay the amount in the event of a respondent’s success in the proceeding to set aside the judgment. By way of analogy, in the present proceeding, the applicant’s offer of a bank guarantee to be lodged with the registrar pending the final decision upon the application for declaratory and injunctive relief would fulfil the same purpose as a payment into court.
- Third, although s 31(4) requires a payment into court, as opposed to the applicant’s offer of a bank guarantee, the ubiquitous modern commercial practice of provision of security in different contexts by way of bank guarantee, in lieu of a cash deposit, is also recognised in modern court practice, where the acceptance of a bank guarantee in lieu of a payment into court, where that is permissible, is a common place. In my view, the applicant’s offer should not be treated as less acceptable because it is an offer of a bank guarantee rather than a payment into court.
- Against all that, the respondent submits that the policy of BCIPA does support dismissal of the present application on discretionary grounds, relying on Wiggins Island Coal Export Terminal Pty Ltd v Sun Engineering (Qld) Pty Ltd (“WICET”). I accept that case suggests that an interlocutory injunction of the present kind should be refused because of the policy of BCIPA, as reflected or explicated in R J Neller Building Pty Ltd v Ainsworth, and that WICET was followed in Sunshine Coast Regional Council v Earthpro Pty Ltd.
- On the other hand, WICET was not followed in BRB Modular Pty Ltd v AWX Constructions, where the logic of some of the reasoning I have set out above was accepted, as it was in Filadelfia Projects Pty Ltd v EntirITy Business Services Pty Ltd and Nazero Group Pty Ltd v Top Quality Construction Pty Ltd.
- There is some force, in my view, in the contention that the respondent has done at least a substantial amount of the work for which it seeks payment. But the court is not in a position to form any strong view about the point. First, the respondent’s evidence as to the cost of completing the building’s frame does depend on whether it is correct in the views that the floor joists and the internal partitions do not have to be completed, although there does not seem any doubt that at least some of the floor joists are not within the respondent’s scope of works. Second, it is not clear what assumptions as to access to level 2 and level 3 have been made by the respondent’s witnesses as the basis for the time and cost estimates for the remaining light steel framing on those levels.
- Further, it is difficult to characterise the applicant’s case as weak, in my view. The respondent relied on the evidence of its three expert deponents as informing the lack of strength of the applicant’s case that the building’s frame extends to anything other than the structural steel. But, as previously discussed, the question may be more complex. The applicant also relies on a written acknowledgement by Mr Scroope in the days before the payment claim was made that appears to have assumed that the light steel framing was included in the frame in some respects. If it was included, the basis for excluding the light steel framing for the wall studs on levels 2 and 3 altogether is complex and was not articulated by any of those witnesses.
- As to whether the proceeding should be able to be heard promptly, in my view, there is no reason to think it will either be particularly prompt on the one hand or slow on the other. But even if the parties do progress promptly, it will be a number of months, and likely more than six months, before any trial.
- As to the risk of non-repayment by the respondent if an injunction were granted, on the evidence presented there is no reason to think that the risk is significant. The construction industry is a relatively high-risk industry, but the respondent has an established track record of business over many years and a strong enough balance sheet that the risk should not be considered a high one.
- As to the risk of serious loss to the applicant if an injunction is not granted and the land is sold, I agree with the respondent that the risk is dependent on the applicant choosing to permit a sale to proceed rather than paying the amounts payable under the enforcement warrants.
Withdrawal of caveat
- On 20 September 2017, the respondent lodged a caveat over lot 10 and lot 11. The caveat claimed an interest as equitable chargee or equitable mortgagee pursuant to clause 27.2 of the contracts whereby the applicant charged his interest in the lots to secure to the respondent “all amounts that may become due to the [respondent] arising out of, or otherwise in connection, the contracts.”
- Although the interlocutory application seeks an order that the caveat “be withdrawn” within 10 days, the use of the passive voice does not disguise an intention that an injunction is sought that the respondent withdraw the caveat by lodging a request to withdraw it. Such an order would be a final order. Whether it would be appropriate to order a party to withdraw a caveat as opposed to the court making an order that the caveat be removed (by the registrar) may be passed by.
- The applicant’s outline of argument did not address this part of the application. In oral submissions, however, it was not clear that the applicant abandoned this part of the application and it was dealt with in the respondent’s submissions.
- The principles to be applied must be those that would apply on an application by a caveatee for an order for removal of a caveat. They are not in doubt. A caveat is to remain pending the hearing of a caveator’s claim to establish the interest claimed if the caveator shows that there is a serious question to be tried and the balance of convenience is in favour of maintaining the status quo.
- In my view, no basis has been revealed for an order that the caveat be removed at this stage. The applicant does not challenge the validity of the charging clauses in the contracts or that they would secure any sum payable either under the contracts, or under BCIPA if the applicant is unsuccessful in its challenge to the validity of the adjudication decisions and the adjudication certificates filed as judgments in the District Court. The respondent has claims of both kinds as supported by the evidence, that raise a serious question to be tried.
- No submission was made by the applicant as to why the balance of convenience favoured an order that the caveats be removed before the respondent’s claims are resolved, assuming that the applicant obtains an interlocutory injunction to restrain the respondent from proceeding on the adjudication certificates filed as judgments in the District Court.
- In any event, I do not consider that the applicant’s offer to provide a bank guarantee of $340,000 tips the balance of convenience in favour of an order for removal. The respondent has other amounts that it claims as due under the contracts apart from the amounts it claims are owing under the adjudication certificates.
- It is unnecessary to go further, in my view, to conclude that at this stage no injunction should be granted that the respondent withdraw the caveat.
Cross-application for appointment of receivers or statutory trustees for sale
- To some extent, the answers to the questions argued on the respondent’s cross- application for declaratory relief as to whether it holds an equitable mortgage or an equitable charge and for an order for appointment of receivers or statutory trustees for sale of the land flow from the decision on the application for an interlocutory injunction.
- There are important differences between the two proceedings, that were not always recognised in the parties’ submissions.
- The respondent’s cross-application is not an application for interlocutory relief. It is an originating application for final relief. It applies for a declaration that the respondent has an equitable mortgage or equitable charge over lot 10 and lot 11 in accordance with the interests claimed in the caveat.
- At the hearing of the application, no order was applied for that would establish the amount of the money secured by the charge. Instead, the declaration is sought that the charge secures “all amounts that may become due to the applicant arising out of or otherwise in connection with” the contracts. That form of order would follow the language of the charging clause, in cl 27.2 of the contracts.
- Next, the orders sought upon the respondent’s application were for the appointment of receivers or trustees for sale of lot 10 and lot 11 and consequential directions as to payments to be made from the proceeds of sale. The respondent’s outline of argument and oral submissions proceeded on the footing that even if the applicant obtains an order restraining the respondent until trial or further order from proceeding upon the adjudication certificates filed as judgments, other (unspecified) amounts were owing to the respondent under the contracts and secured by the charge that would justify making the order for appointment of the receivers or statutory trustees and sale applied for.
- However, the orders sought by the respondent as to the payments to be made from the proceeds of sale are that after deducting the expenses of sale and the receivers’ costs, the receivers would deduct the amounts owing under the adjudication certificates filed as judgments and interest and costs, before payment of any surplus to the applicant.
- In other words, the orders sought for appointment and sale to enforce the equitable mortgage or charge claimed are in substance confined to the amounts claimed under the adjudication certificates filed as judgments as the secured amount. Thus, it can be seen that the orders sought are predicated on a sale of lot 10 and lot 11 whether or not those amounts are ultimately found to be due when proceeding BS11709 of 2017 is finally decided and not to pay other established secured amounts.
- The respondent did not identify any legal principle or authority that would justify making such orders before the applicant’s claim in proceeding BS11709 of 2017 is finally decided. In my view, they should not be made.
- In the circumstances, it is unnecessary to further consider the operation of the remedies of equitable execution by appointment of a receiver or the court’s power to order sale to enforce an equitable charge.
- I am fortified in the conclusion I have reached by the fact that a condition of the grant of the interlocutory injunction sought by the applicant is that the respondent will have the benefit of the bank guarantee of $340,000 as well as the continuing security of the claim of a charge over lot 10 and lot 11. The respondent should not be prejudiced by any delay in making the orders sought.
- Accordingly, the respondent’s cross-application for final relief should be refused at this stage, but the respondent should be able to pursue an application for such relief when the applicant’s claim in proceeding BS11709 of 2017 is decided, or some other further order is made that relevantly changes the present circumstances.
- In my view, the respondent’s application should be adjourned to a date to be fixed. I will hear the parties as to whether any further directions or orders should be made on that application.
 The payment claims were made by the respondent on 4 August 2017. The adjudication decisions were made by the second defendant in proceeding BS11709 of 2017 on 13 October 2017 and are identified as Adjudication Decision 298320 and Adjudication Decision 298427.
 See Property Law Act 1974 (Qld), s 100.
 Building and Construction Industry Payments Act 2004 (Qld), s 31(1).
 Uniform Civil Procedure Rules 1999 (Qld), r 828.
 Alternative orders are sought to stay the judgments and enforcement warrants, but no separate questions need be considered on those points.
 The orders sought by the respondent would appear to proceed upon the assumption that one charge under both of the contracts secured the debts owing under both contract and that the amounts obtained on sale might be pooled and distributed accordingly, but no argument was addressed to this point.
  1 Qd R 525, , ,  and .
 See also Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd  2 Qd R 75, .
 Building and Construction Industry Payments Act 2004 (Qld), s 9 and Sch 2, definition of “progress payment”.
 Building and Construction Industry Payments Act 2004 (Qld), s 12.
 Building and Construction Industry Payments Act 20004 (Qld), s 9 and Sch 2, definition of “payment claim”.
 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 340 ALR 193, 203 .
 Whether the respondent played any role in its installation is not clear on the evidence.
 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, 81-84, -.
 That is alleged to have been done by the applicant by a solicitor’s letter sent on that date.
  QSC 170, .
  1 Qd R 390, -.
  QSC 271, -.
  QSC 222.
  NSWSC 473, .
 [2015[ NSWSC 232, .
 Caveat dealing number 718283247.
 Land Title Act 1994 (Qld), s 125. Withdrawal by a caveator under s 125 may be contrasted with removal of a lapsed caveat by the registrar under s 126(7) or removal of a caveat on registration of an interest giving effect to the interest claimed in the caveat under s 128 or an order of the court under s 127(1) that a caveat be removed.
 Although the respondent offered an undertaking as to damages by its written submissions the applicant did not submit that the respondent was required to do so. I note that a statutory right to compensation for loss or damage as a result of a caveat being lodged or continued without reasonable cause is conferred under s 130 of the Land Title Act 1994 (Qld).
 Re Burman’s Caveat  1 Qd R 123, 127-128; Cousin’s Securities Pty Ltd v CEC Group Ltd  2 Qd R 520, .
 The application is framed as though the separate charging clause under each contract created a single overall charge over both lots, but no submissions were directed to whether that is correct or incorrect.
- Published Case Name:
Low v MCC Pty Ltd & Ors; MCC Pty Ltd v Low
- Shortened Case Name:
Low v MCC Pty Ltd
 QSC 6
29 Jan 2018
- White Star Case:
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QSC 6||29 Jan 2018||-|