Taringa Property Group Pty Ltd v Kenik Pty Ltd
[2024] QSC 327
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- Taringa Property Group Pty Ltd v Kenik Pty Ltd[2024] QSC 327
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Taringa Property Group Pty Ltd v Kenik Pty Ltd[2024] QSC 327
Taringa Property Group Pty Ltd v Kenik Pty Ltd[2024] QSC 327
SUPREME COURT OF QUEENSLAND
CITATION: | Taringa Property Group Pty Ltd v Kenik Pty Ltd [2024] QSC 327 |
PARTIES: | TARGINA PROPERTY GROUP PTY LTD AS TRUSTEE FOR THE TARINGA PROPERTY GROUP UNIT TRUST (ACN 638 168 626) (Applicant) v KENIK PTY LTD (ABN 43 138 806 872) (First Respondent) RHIANN STOREY (ADJUDICATOR J15056123) (Second Respondent) THE ADJUDICATION REGISTRAR, QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (Third Respondent) |
FILE NO/S: | BS2242/24 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court of Queensland at Brisbane |
DELIVERED ON: | 23 December 2024 (ex tempore) |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19 December 2024 |
JUDGE: | Hindman J |
ORDER: |
until the determination of Supreme Court proceeding 3773/24 or further order of the Court.
|
CATCHWORDS: | CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – OTHER MATTERS – where contract was for designing and constructing a retail complex – where adjudication decision had been made in favour of the respondent – where Court has declared the adjudication decision valid – where the applicant seeks a stay preventing the first respondent’s enforcement of the adjudicated decision and associated judgment debt – whether a stay should be granted given the policy objectives of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) – whether the balance of convenience favours the granting of a stay Building Industry Fairness (Security of Payment) Act 2017 (Qld) Uniform Civil Procedure Rules 1999 (Qld), r 800 A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 Bothar Boring and Tunnelling (Australia) Pty Ltd v Ausipile Pty Ltd [2021] QCA 226 BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 218 Grosvenor Constructions (New South Wales) Pty Ltd (in administration) v Musico (2005) 21 BCL 266 Martinek Holdings Pty Ltd v Reed Constructions (Queensland) Pty Ltd [2009] QSC 328 Queensland Bulk Water Supply Authority v McDonald Keen Group Pty Ltd (in liquidation) (2009) 26 BCL 360 RJ Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390 Taylor Projects Group Pty Ltd v Brick Department Pty Ltd [2005] NSWSC 571 TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118 |
COUNSEL: | L Campbell for the applicant C J Tassell for the first respondent |
SOLICITORS: | Muscat Tanzer Lawyers for the applicant HWL Ebsworth for the first respondent Submitting appearances on behalf of the second and third respondents |
- [1]TPG (the applicant) and Kenik (the first respondent) were parties to a contract dated the 3rd of August 2020 by which Kenik, as contractor, was to design and construct for TPG, as principal, a retail complex that included a Coles supermarket and a Liquorland at Taringa. The contract price was about $13.6 million excluding GST.
- [2]It is common ground that construction of the works took significantly longer than had been anticipated under the contract and, consequently, the cost of construction claimed by Kenik was, in turn, significantly greater than the contract price for the original scope of works. It is also common ground that the contract ended on the 29th of August 2023. At that time the last progress payment that had been made by Kenik under the contract was in April 2023.
- [3]On the 8th of September 2023 Kenik made payment claim 31 for the total amount of $9,689,767.44 including GST, in relation to the reference date of the 29th of August 2023. On the 13th of September 2023, TPG, by its solicitors, responded by providing a payment schedule, with reasons for withholding payment, for the scheduled amount of nil.
- [4]On the 26th of October 2023 Kenik made an adjudication application. On the 13th of December 2023 TPG provided its adjudication response. The adjudication decision was made on the 14th of February 2024. The adjudicated amount was $4,218,787.02 including GST. On the 21st of February 2024 Kenik obtained judgment in respect of the adjudicated amount in Supreme Court proceeding BS2046 of 2024.
- [5]On the 23rd of February 2024 TPG filed this proceeding, seeking to have the adjudication decision dated the 14th of February 2024, made by the second respondent pursuant to the Building Industry Fairness (Security of Payment) Act 2017 Qld (BIF Act) in the identified sum in favour of Kenik, declared void in whole or in part as a consequence of alleged jurisdictional error. Related relief was also sought.
- [6]On the 26th of March 2024 TPG and another person commenced Supreme Court proceeding BS3773 of 2024 against Kenik and another person in which final relief relating to the contract is sought. TPG, in that proceeding, contends that the proper final position between the parties is that Kenik is not entitled to retain the adjudicated amount. The final substantive proceeding has been defended by Kenik. That proceeding is on the building and construction case management list subject to directions and management by the Court.
- [7]TPG paid into court, pursuant to orders dated the 29th of February 2024, the sum of $4,825,708.11 in respect of the adjudicated amount plus an amount for interest and adjudication costs.
- [8]TPG submitted in this proceeding that the decision is void for jurisdictional error on four alleged grounds. In a decision dated the 6th of December 2024 I rejected those arguments and found the decision valid. Accordingly, I dismissed paragraphs 2 and 3 of TPG’s originating application. There has not yet been an appeal from that decision, or any indication that an appeal is to be filed, although the time limit for so appealing has not yet expired.
- [9]The matter comes back before me because the originating application sought – but I adjourned to be determined after the validity or otherwise of the decision was determined – the applicant’s application for a stay preventing enforcement of the judgment debt obtained by Kenik in reliance upon the adjudication decision. I note that in my decision of the 6th of December 2024, I indicated that the Court will, regardless of the stay application, retain in court the amount of $803,267.16 which relates to two subcontractors’ charges and a payment withholding request. The balance of the funds in court is a touch over $4 million.
- [10]Argument was heard about the stay application on the 19th of December 2024 at which time I indicated that I would deliver an ex tempore judgment today. The result of the stay application is that I am going to grant a stay on certain conditions. The conditions include the applicant making further payment into court by the end of January 2025 of an additional sum reflecting interest that will accrue on the whole of the adjudicated amount until the 30th of June 2026, and the applicant providing the usual undertaking as to damages.
- [11]Another condition, or perhaps more accurately described as a carve out from the stay, although it was not a matter raised by the parties and upon which I will give them an opportunity to make submissions, is that the adjudication costs should be released from the amount in court to Kenik. Kenik paid the adjudication costs in order to secure the adjudication decision. I have determined that the adjudication decision is valid. TPG should be required to pay those costs to Kenik and any interest on those costs, if interest does in fact accrue on those costs, regardless of any eventual outcome of the substantive proceeding.
- [12]I note that Kenik, on the 19th of December 2024, orally raised the possibility of orders that would permit Kenik to access part of the funds in court for the purpose of funding its costs of the substantive proceeding, relying on the case of Queensland Bulk Water Supply Authority v McDonald Keen Group Pty Ltd (in liquidation) (2009) 26 BCL 360 where that possibility was mentioned but not implemented in the particular case (see at paragraphs 109 to 115).
- [13]I can see some merit to orders or conditions of the stay to that effect, but any such orders ought be properly considered after full argument on the issue, including as to the particular regime for access to funds that is practical and workable. Accordingly, I propose to grant liberty to apply for that issue to be agitated in the future should Kenik wish to do so. Liberty to apply will also allow for the parties to make any applications necessary to potentially finalise payment of moneys out of court in respect of the subcontractors’ charges matters, if there be agreement about that between all affected parties including the relevant subcontractors, and it will permit the possibility of the moneys in court being transferred into the substantive proceeding to await the outcome of that proceeding.
- [14]The remaining issue for this proceeding is in respect of the costs of this proceeding to date. Without expressing a final view, it seems likely that Kenik should have its costs of this proceeding to date, bar the costs relating to the stay application, on the simple basis that costs ought follow the event. I would think that the costs of the stay application ought be reserved, possibly to be dealt with by the judge in the substantive proceeding, because ultimately how the costs of the stay application ought be dealt with is likely to be highly influenced by future events, including the outcome of the substantive proceeding and the final future of Kenik, but I will hear from the parties about costs at the conclusion of these reasons, along with any submissions about the proper form of the orders to be made.
- [15]Turning then to the principles on which this application resolves. The parties are not far apart in terms of the relevant principles to be applied in an application of this nature. First, there is no issue about the power of the Court to order a stay, either pursuant to rule 800 of the Uniform Civil Procedure Rules 1999 (Qld) or the inherent jurisdiction of the Court. The power to order a stay is a discretionary power to be exercised judicially. The power is a wide power and is to take into account all relevant considerations. The applicant for the stay bears the onus of proof. It is a heavy burden.
- [16]Considerable caution should attend to the grant of the stay as to grant to stay detracts from the primary purpose of the BIF Act. That is a sentiment that has been expressed in decisions of the New South Wales Court of Appeal, in particular, in TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118 at paragraph 90 and A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 at paragraph 31.
- [17]The prima facie position, given the policy objectives evident in the BIF Act, is that in the ordinary case stays are not granted. The BIF Act is designed to improve cashflow for contractors, and any risk of non-recovery of payments made under the BIF Act as a consequence of the financial failure of the contractor after the receipt of the BIF payment is generally to lie with the principal or superior contractor required to make the payment.
- [18]The Queensland Court of Appeal decision in RJ Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390, and the principles expressed therein by Justice Keane, as he then was, are well known. Refer particularly to paragraphs 39 to 42 of that decision. In that case his Honour referred to two types of cases where the prima facie position might be able to be displaced. First, where the contractor has deliberately taken steps to make the task of recovering any BIF payment more difficult for the principal by way of restructuring its financial affairs, or, second, where the contractor engages in tactics to delay the resolution of the substantive proceeding. Neither of those examples apply in this case, but the examples are not exhaustive of the circumstances in which a stay of an adjudication decision might be granted by the Court.
- [19]Another case where the prima facie position will usually be displaced is in circumstances where the contractor is, in fact, in liquidation or perhaps even in some form of external administration due to liquidity issues at the time the BIF payment would otherwise be made. Queensland Bulk Water Supply Authority v McDonald Keen Group Pty Ltd (in liquidation), which I have already referred to, is an example of such a case.
- [20]Whilst in Queensland there is no express prohibition on a company in liquidation using the processes of the BIF Act as compared to, say, the express prohibitions that were brought into the New South Wales equivalent legislation in 2019, cases have held that it is a circumstance in which a stay can be granted. The underlying rationale is that whilst the scheme of the BIF Act is pay now, argue later, implicit in that is that the payer does have the right by curial proceedings to, in fact, recover the BIF payment, which is intended to be an interim process. If the financial position of the contractor is that the making of the BIF payment, intended to be interim, will, in fact, in essence, because of the external administration of the contractor, make it effectively a final payment, that would not be consistent with the purpose of the BIF Act and may justify a stay.
- [21]The cases speak of the risk of irreparable damage to the payer of the BIF payment. Grosvenor Constructions (New South Wales) Pty Ltd (in administration) v Musico (2005) 21 BCL 266 referred to cases where there is a certainty that a party’s right to challenge the outcome recorded in an adjudication certificate would otherwise be rendered nugatory and that the party would suffer irreparable prejudice, and that was a type of case where a stay might be granted. Another form of expression is that there needs to be a real risk that the respondent will suffer prejudice or damage if a stay is not granted.
- [22]Counsel for Kenik submitted that the relevant threshold before a stay would be entertained is that the risk be a certain risk of non-recovery by the payer. No authority putting the threshold so high was referred to. I reject that the proper legal position is that the risk must reach the level of certainty before a stay might be granted. What is, in fact, involved in the exercise of the discretion for a stay of an adjudication decision is not some fixed standard of risk but a balancing exercise whereby the risk of non-recovery by the payer is to be balanced with the consequences to the recipient of the BIF payment if that payment is not received in a timely manner as contemplated by the BIF Act. There is a balance of convenience to be considered.
- [23]In this case the undisputed evidence, which I accept, is that the granting of a stay is likely to result in the complete financial failure of Kenik. In such a case it will be obvious that the risk of irreparable damage to TPG if the stay is not granted will need to be very high indeed if a stay is to be granted, but I do not think that the threshold is so high that it means Kenik must actually be in external administration or must be positively proved to be hopelessly or otherwise insolvent.
- [24]The parties agreed most of the factors to be taken into account in the balancing exercise and that are, then, relevant to the general discretion to grant a stay. I will detail those factors and how they apply in this case.
- [25]First, some weight should be given to the fact that an independent adjudicator has considered the merits of the particular claims and defences in the adjudication and has substantially ruled in Kenik’s favour, although not accepting the whole of Kenik’s claims.
- [26]Second, insofar as the substantive proceeding is concerned, there is some overlap in that proceeding with the issues raised in the adjudication, although the precise extent of the overlap was not the subject of detailed explanation. But, apart from the first matter mentioned, this is not a case in which any conclusion can be reached either way as to where the merits of the substantive proceeding lie. In other cases the apparent merits of the substantive case might strongly point in one direction or another in regards a stay. This is not such a case.
- [27]Third, the prima facie position that the proper construction of the BIF Act compels should be given significant weight. In most cases no stay should be granted. In this case no payment has been made by TPG to Kenik since April of 2023. Kenik has been held out of the payment the subject of the adjudication already for some 15 months based on when the relevant payment schedule was delivered which the adjudicator found should not have been scheduled at nil. The amount of the payment here involved is a quite significant amount compared to the original value of the contract sum, about 30 percent, so it is readily inferred that non-payment of such a significant amount would have a real impact on Kenik.
- [28]Fourth, although not referred to in any cases that I was taken to, a submission was made by Kenik that a relevant factor would include that the perilous financial position that Kenik finds itself in has been significantly contributed to by the non-payment action, and perhaps the actions generally, of TPG. An analogy is drawn with how that factor is relevant in security for costs applications. TPG’s counsel did not dispute that such a matter may be relevant for the Court to consider, although he submitted in this case that the Court would not consider it a relevant factor on the basis that the financial documents of Kenik make it plain that Kenik’s financial troubles went far beyond any action of TPG. I think it is plain on the evidence that Kenik’s financial woes are at least significantly the result of the non-payment of the adjudicated amount, and I do consider that a relevant factor to take into account here favouring the non-granting of a stay.
- [29]The fifth factor to consider is the likely length of the stay. Conclusion of the substantive proceeding is only likely to occur after a trial and a judgment which could be expected around mid-2026. This is not a case like Bothar Boring and Tunnelling (Australia) Pty Ltd v Ausipile Pty Ltd [2021] QCA 226 where a stay was granted in circumstances including that an arbitral award was about to be shortly delivered. Note the need to speculate about the financial position of Kenik at that future point in time, that is, mid-2026, which makes the applicant’s task of demonstrating real risk more difficult from an evidentiary perspective. Note the approach of Einstein J in Taylor Projects Group Pty Ltd v Brick Department Pty Ltd [2005] NSWSC 571 at paragraph 23.
- [30]Sixth is the effect of the stay on other creditors including subcontractors. That is a factor that the parties are not in agreement about in terms of whether it is a particularly relevant consideration. The applicant points to a case, BRB Modular Pty Ltd v AWX Constructions Pty Ltd [2015] QSC 218 at paragraphs 19 to 22 per Applegarth J that it says supports its proposition that only the cashflow effects on Kenik ought to be in consideration, because the BIF Act is not concerned with the position of suppliers and subcontractors. Kenik, on the other hand, points to the scheme of the BIF Act that is in part to get cash flowing through the construction chain which will inevitably affect subcontractors. I think it is a relevant factor that payments to contractors will ordinarily result in cash flowing down the chain to subcontractors. Here there is evidence that that is an intention of Kenik if it receives the BIF payment. It is a factor that favours no stay being granted, and I do not read the BRB decision as suggesting otherwise.
- [31]Seventh, Kenik noted some matters which might in some cases be relevant factors, but here I conclude are either not relevant factors or, if relevant, should be given very limited weight.
- [32]The first was that TPG had commenced its final proceeding before my decision as to the validity of the adjudication decision was made. There was some suggestion of that being for the purpose of supporting the stay application, perhaps in some improper way. I see no relevance to the commencement of the final proceeding. In the circumstance of a party seeking a stay of this nature, the Court would, in fact, be concerned about granting a stay if the applying party was not taking all appropriate steps to have the final dispute determined as quickly as possible, so I would give that matter no weight.
- [33]The second was that the final proceeding includes other parties and claims. That might have some relevance if that was delaying the progress of the resolution of the final proceeding between these parties, but there is no evidence to that effect, and I am not prepared to infer (without more) that more parties and issues will necessarily lead to any significant delay in the resolution of the final proceeding, and if there is that possibility, then there is a solution that should be explored, the splitting of the final proceeding. Accordingly, I would give that matter no significant weight.
- [34]Whilst having proper regard to the factors I have already mentioned, and am still to mention, ultimately the balance of convenience in most cases, and in this case, will be determined by considering the likely outcomes if a stay is granted compared to the likely outcomes if a stay is not granted. As mentioned, if a stay is granted in this case, the undisputed evidence is that Kenik is most likely to financially fail. That is a dire consequence having adverse impacts beyond Kenik itself. If a stay is not granted, then approximately $4 million will be paid out of court to Kenik. Kenik would be at liberty to apply those funds as it sees fit.
- [35]The detail of Kenik’s current financial position is contained in a statement of working capital financial position. That statement, and an earlier statement from June 2024, were the subject of cross-examination and submissions by both parties. As I remarked during exchanges with counsel, the documents, whilst undoubtedly prepared with care, do need to be treated as somewhat “rubbery”. There is no particular criticism of Kenik made by me in that respect. It is simply that the statements have been prepared on the basis of certain assumptions which may or may not be correct, and the statements provide only a snapshot of certain limited information and cannot be safely relied upon by me to reach any final view about the actual insolvency or otherwise of Kenik now or in the future. But there is enough information and inferences to be made from the material that is available to form a general view about the financial position of Kenik now and into the future, by which I am referring to the next 18 months or so until the substantive proceeding is finalised.
- [36]The December statement, on its face, shows current assets over liabilities of about $268,000. In all of the circumstances that exist, that is not a strong financial position. Insofar as trade receivables are recorded at a touch under $2 million, there is no dispute that most of that amount is the subject of strong dispute by identified creditors and is unlikely to be recovered without litigation, which itself will involve further cost to Kenik. The cash at bank amount is very small, about $9,000: it is unlikely to cover even the legal costs associated with this application. There are no real properties or chattels. And it is known that Kenik surrendered its Queensland building licence in August 2024: that licence was initially suspended in August 2023 due to Kenik not meeting financial requirements.
- [37]It is also known that Kenik is otherwise not trading. It has given undertakings in different proceedings to that effect in June 2024 to prevent further debts from being incurred. There is, therefore, no obvious source of further income/assets. In fact, the director of Kenik, Mr Kennedy, has been personally funding Kenik so as to manage its cashflow problems whilst it awaits the outcome of this proceeding.
- [38]On the other side of the ledger there are liabilities of nearly $7 million. Insofar as trade creditors are concerned, many of the amounts outstanding appear long overdue. That can be inferred because there is evidence that amounts relate to projects completed years ago. It might be that some trade creditors will take less than the amount owed to them, and some of the trade creditors’ claims are not accepted by Kenik. The other liabilities are tax and superannuation type liabilities. Ordinarily such amounts are required to be paid fairly regularly, often quarterly, but there might be delayed payment arrangements in place: that is not known on the evidence. There are other contingent liabilities that the statement does not appear to incorporate or acknowledge in any way, including the substantive proceeding and another proceeding in which some $2.1 million is claimed against Kenik.
- [39]The only apparent possibility of the current liabilities being reduced comes from the payment out of court and TPG otherwise paying a further amount on account of outstanding interest on the adjudicated amount. It would be likely that some of those moneys, if paid to it, would have to be retained by Kenik and not used to satisfy the listed liabilities because of further litigation costs associated with attempted recovery of the trade receivables, other litigation and perhaps steps to get back its building licence and commence trading again.
- [40]Exactly how much would be used to reduce the current liabilities is not known, although it might be expected that the most pressing outstanding amounts might be paid, for example, creditors who have moved to wind up Kenik, that being one of the proceedings to which Kenik is presently a party and in which, apparently, no argument has yet been advanced by Kenik that it should not be wound up because it is, in fact, solvent.
- [41]On a very simple analysis, it is difficult to see a path through by Kenik that does not result in it in external administration, even if it receives the $4 million out of court and another $400,000 approximately in accrued interest from TPG in the short term. Receipt of those amounts seems highly unlikely to be sufficient to compromise or finalise outstanding trade creditor debts, to pay any tax and superannuation liabilities, to have sufficient funds to progress the various litigations, to improve its financial position in order to get its building licence back, and to actually commence trade to create an income source.
- [42]There is no real detail provided by Kenik on the proposed path through to a financial position at the conclusion of the substantive proceeding, say in mid-2026, such that if the Court ultimately ruled that Kenik was not entitled to the adjudicated amount, that Kenik would then be in a position to repay it to TPG. There is a wish and a hope for Kenik to restore its financial position, but it is difficult to see it as much more than that on the evidence presented. This is not, therefore, a case like Martinek Holdings Pty Ltd v Reed Constructions (Queensland) Pty Ltd [2009] QSC 328 where there was merely perceived financial instability. Here there is strong evidence of serious financial instability.
- [43]I conclude, therefore, on the evidence available to me, that there is a very high risk that if the stay is not granted that the consequence is, if it is ultimately determined that Kenik was not entitled to the adjudicated amount on a final basis, that Kenik will not be able to repay that amount with the effect that the payment of the adjudicated amount under the BIF Act intended to be an interim payment would, in fact, be, in essence, a final payment unrecoverable by TPG. That is not to make a final determination about the solvency or otherwise of Kenik either currently or at the likely conclusion of the substantive proceeding. It is making an assessment of risk.
- [44]A further relevant factor to consider in the stay application, which I have not mentioned so far, is the adequacy of the undertaking as to damages offered by TPG if a stay is granted. The lack of an undertaking of worth is a powerful factor telling against the grant of a stay. In the event that a stay is granted, but ultimately Kenik, or a liquidator of Kenik, in the substantive proceeding vindicates its rights to have received payment of the adjudicated amount, then any damages that Kenik has suffered as a consequence of the imposition of the stay will be claimable against the undertaking as to damages proffered by TPG. The value of that undertaking is, therefore, a relevant factor to be taken into account.
- [45]Like the financial report of Kenik, I perceive the financial information proffered by TPG to be somewhat “rubbery”. There are, again, issues about assumptions underlying the figures which, on their face in the balance sheet provided (which has not been provided by an independent person) suggest that the total equity available to TPG is approximately $15 million. For example, the real property owned has been valued at cost at $38.5 million, whereas an available valuation values the property at only $33 million. The moneys in court have been treated as an asset. Disputed claims against Kenik have been treated as an asset. Claims made by Kenik that are disputed are not mentioned as a possible liability. And the additional interest on the adjudicated amount accrued to date has not been accounted for. But even if some broad-brush adjustments are made to allow for such matters, TPG does appear to have a net asset position in the millions, perhaps something like $3 million, and, importantly, it does own a valuable real asset, the shopping centre.
- [46]Insofar as TPG’s profit and loss statement shows a loss of some $144,000 over four months of operation, little weight should be put on that. TPG has reduced its debt significantly by converting debt to equity, and it would be expected that the interest paid amounts will, therefore, reduce over time. There is no reason to suspect that the unit trust will continue in a loss-making position into the future given the income receipts likely from the shopping centre.
- [47]Whilst the amount of damages that might be ultimately claimed against the undertaking as to damages may be very significant, particularly if the stay results in the financial ruin of Kenik when it might be able to prove that it otherwise would have traded out of its financial difficulties, I am not prepared to conclude that TPG’s undertaking as to damages is not valuable.
- [48]The task for the Court then, on the stay application, is to weigh all of those competing factors. In the result I am satisfied, even in light of the heavy burden that TPG shoulders in this application, that the stay ought be granted on the conditions I have mentioned. The risk of payment out of court being, in essence, a final payment due to the perilous financial position of Kenik is too high.
- [49]I note that counsel for Kenik made submissions that if a stay were granted in this case it would be the first case in Queensland in a matter where the builder was, in fact, not in liquidation, and none of the examples mentioned by Justice Keane in RJ Neller are in play, where a stay has been granted. As I understood it, the submission was that it would therefore create a precedent whereby in many cases contractors might be forced to prove up solvency to avoid an order for a stay, and that would undermine the purpose of the legislation and create practical difficulties.
- [50]Each case will, of course, be determined on its own merits. The policy of the BIF Act of pay now and argue later is strong, and it is only ever going to be a small number of cases in which a stay might properly be granted. Principals who apply for stays without a proper basis can be appropriately discouraged from making stay applications in the nature of a fishing exercise into solvency by the appropriate use of indemnity costs orders. That consideration therefore does not compel a different result here, in my opinion.
- [51]I will hear further from the parties on the form of order and costs.