Taringa Property Group Pty Ltd v Kenik Pty Ltd

The applicant, Taringa Property Group Pty Ltd, sought a stay of the enforcement of an adjudication decision pending the resolution of ongoing proceedings. Her Honour, Hindman J, considered the policy objectives of the Building Industry Fairness (Security of Payment) Act 2017 and the circumstances of the case. Her Honour assessed the respondent’s financial position as being precarious, such that there was a significant risk that the payment of the judgment debt arising from the adjudication decision might not be recoverable by the applicant if it was ultimately successful in its substantive proceeding. The stay was granted.

Hindman J

23 December 2024 (ex tempore)

Factual background

The applicant contracted with the respondent to design and construct a retail complex. [1]. A payment claim was the subject of an adjudication, which ultimately concluded that the respondent was owed slightly more than $4,000,000. [3]–[4]. Judgment in respect of that amount was obtained in a Supreme Court proceeding. [4].

The applicant sought a stay preventing enforcement of the judgment debt that the respondent had obtained in reliance on the adjudication decision. [9].

The principles relevant to a stay in these circumstances

The parties agreed that the power to order a stay is discretionary, taking into account all relevant considerations; the onus lies with the applicant and it is heavy. [15]. Her Honour noted that stays will not ordinarily be granted in respect of payments due under the Building Industry Fairness (Security of Payment) Act 2017 (“BIF Act”); this is because the BIF Act is designed to improve cashflow for contractors and assigns the risk of non-recovery of payments to the principal or superior contractors required to make payment. [16]–[17].

Referring to the decision of Keane J (as he then was) in RJ Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390, her Honour identified two types of cases where a stay might nonetheless be granted where the BIF Act is involved, including where a contractor restructures its affairs to make recovery more difficult, or where the contractor attempts to delay substantive proceedings. [18]. Another type of case is where a contractor is in fact in liquidation. [19].

Her Honour rejected the argument made by the respondent that the threshold for such a stay being granted was that the risk of non-recovery by the payer was “certain”. [22]. Rather, the risk of non-recovery by the applicant was to be balanced with the consequences of the BIF Act payment not being received by the respondent; the balance of convenience is to be considered. [22].

The circumstances of the case

Her Honour listed several factors to be considered, including: the independent adjudicator’s conclusions, the merits or otherwise of the substantive proceeding, the prima facie position of the BIF Act which compels payment, the effect of the applicant’s own actions on the respondent’s financial position, the length of the stay, and the effect of the stay on other creditors of the respondent. [25]–[31].

Her Honour acknowledged that if the stay was granted, the respondent was likely to financially fail. [34]. However, after a detailed consideration of the respondent’s financial position, her Honour concluded that even if the stay was refused and payment made, it still seemed likely that the respondent would be unable to restore its financial position. [35]–[42]. It followed that if the respondent was ultimately unsuccessful in the substantive proceedings, there was a very high risk that the respondent would not be able to repay the applicant. [43]. Following a similar analysis of the applicant, her Honour concluded that the applicant’s undertaking as to damages was valuable, and that they could meet an order which might be made in the substantive proceedings in the respondent’s favour. [44]–[47].

Her Honour concluded that the stay should be granted, the risk that the payment might be unrecoverable being too high in light of the respondent’s perilous financial position. [48].

Disposition

The stay was granted.

B Wilson of Counsel