Mainstream (Aust) Pty Ltd v Gilpip Bayside Projects Pty Ltd
[2013] VSC 610
•13 NOVEMBER 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
TECHNOLOGY ENGINEERING AND CONSTRUCTION LIST
No. 04899 of 2013
| MAINSTREAM (AUST) PTY LTD (ACN 088 304 483) | Plaintiff |
| v | |
| GILPIP BAYSIDE PROJECTS PTY LTD (ACN 088 010 374) | Defendant |
---
JUDGE: | VICKERY J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 31 OCTOBER 2013 |
DATE OF JUDGMENT: | 13 NOVEMBER 2013 |
CASE MAY BE CITED AS: | MAINSTREAM (AUST) PTY LTD v GILPIP BAYSIDE PROJECTS PTY LTD |
MEDIUM NEUTRAL CITATION: | [2013] VSC 610 |
---
PRACTICE AND PROCEDURE – Interlocutory Application – Injunction – Action to restrain enforcement of guarantee clause – Contract – Security for Payment clauses – Financial liability while Parties in dispute – Clauses 37.4 and 42.1 of the Australian Standard General Conditions of Contract AS4000 – 1997
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr B Archer (Solicitor) | Brendan J Archer |
| For the Defendant | Mr G Hellyer | Nevett Ford Lawyers |
HIS HONOUR:
This is an application by the Plaintiff, Mainstream (Aust) Pty Ltd (“Mainstream”), for an interlocutory injunction to restrain the Defendant, Gilpip Bayside Projects Pty Ltd (“Gilpip”), from having recourse to a bank guarantee provided under a building contract in the sum of $73,000.
By an agreement dated 12 July 2010 (the “Contract”), the Defendant, Gilpip, engaged the Plaintiff, Mainstream, to refurbish an existing building and construct additional residential accommodation for Gilpip at a site located at 17 to 31 Tanti Avenue, Mornington and undertake associated works (together known as the “Macartan’s project”) for the agreed sum of $9,649,176.
The Contract incorporated the Australian Standard General Conditions of Contract AS4000 -1997 (the “General Conditions”).
Pursuant to the Contract the date for completion of the works was 15 September 2011. The present position is that, save for some relatively minor maintenance and/or defect items, the works have been completed.
A superintendent (the “Superintendent”) was appointed under the Contract.
In addition to the sum of $9,700,000 which Gilpip has paid to Mainstream for the contract works, Mainstream has received payment of approximately $2.8 million for carrying out reinstatement works following significant damage to the works which was caused by a fire on or about 23 October 2011.
The Contract has given rise to a complex web of litigation. Mainstream has initiated three separate sets of proceedings in this Court each involving relatively small sums of money.
This proceeding is an application by Mainstream to restrain the Defendant Gilpip from having recourse to a bank guarantee in the sum of $73,000, which is the amount Gilpip claims the Plaintiff is required to pay to it pursuant to the final certificate, dated 16 August 2013 issued under the Contract by the Superintendent.
Background
By notice dated 9 July 2012, pursuant to clause 42.1 of the General Conditions of Contract, Mainstream gave notice of dispute in relation to the Superintendent’s rejection of it’s claim for extensions of time for completion and in respect to the Superintendent’s calculation of liquidated damages. At a conference on 20 July 2012 Mainstream and Gilpip entered into a settlement agreement in relation to the disputes the subject of the notice dated 9 July 2012.
On the 26 July 2012, pursuant to clause 39.7 of the General Conditions of Contract, Mainstream issued a show cause notice (the “Show Cause Notice”), which it served on Gilpip.
Subsequently by Writ dated 6 August 2012 in another but related proceeding No. S CI 2012/04510 (the “First Proceeding”), Mainstream sought to set aside the settlement agreement. Further, by summons dated 6 August 2012 Mainstream Construction, inter alia, sought an injunction to restrain Gilpip from having recourse to the bank guarantee as provided for in the settlement agreement.
On 31 August 2012 this Court dismissed Mainstream Construction’s application and ordered that it pay Gilpip’s costs.
On 12 September 2012 Gilpip served on Mainstream its response to the Show Cause Notice.
By letter dated 31 October 2012, Mainstream informed Gilpip that it did not consider that Gilpip had shown reasonable cause in its response, and notified Gilpip that it exercised its right under clause 39.9 General Conditions of Contract to suspend the balance of the works to be performed by Mainstream under the Contract until Gilpip resolved the breaches notified in the Show Cause Notice.
As it appeared to Mainstream that Gilpip had taken no steps to remedy the alleged breaches notified in the Show Cause Notice, the suspension of its work remained in place.
On 10 April 2013 Costs Registrar Deviny granted an adjournment in favour of Mainstream of the taxation of costs and ordered that Mainstream in the interim pay Gilpip’s costs in the sum of $22,000 and that Mainstream pay Gilpip’s costs of the adjournment fixed in the sum of $450.
On 17 April 2013 Gilpip served on Mainstream a statutory demand for payment of the sum of $22,450 pursuant to section 459G of the Corporations Act 2001.
By application dated 8 May 2013 in a further but related proceeding S CI 2013/2343 (the “Second Proceeding”), Mainstream applied to set aside the statutory demand. The further hearing of this application has been adjourned to 20 December 2013.
On 16 May 2013 Costs Registrar Deviny ordered that Gilpip’s costs be taxed and allowed in the sum of $40,551.14 (which included the earlier interim sum awarded of $22,000).
By summons dated 3 July 2013 in the First Proceeding S CI 2012/04510 Gilpip, pursuant to Rule 63.03(3), sought an order that the proceeding be stayed until such time as Mainstream paid the costs ordered to be paid on 31 August 2012. Pursuant to the order of the Honourable Associate Justice Derham made on 13 August 2013, Mainstream consented to orders which amounted to a stay of the proceeding.
In late June or early July 2013 the Superintendent invited Mainstream to submit its final payment claim (the “Final Payment Claim”) to the Superintendent for assessment on the basis that the last defects liability period applicable under the Contract expired on 2 July 2013.
On 16 July 2013, pursuant to clause 37.4 of the General Conditions of Contract, Mainstream submitted its Final Payment Claim to the Superintendent. This claim was also designated as a claim under the Building and Construction Industry Security of Payments Act 2002 (the “Act”).
On 29 July 2013, Gilpip issued to Mainstream a document entitled “Payment Schedule” which it claimed was a Payment Schedule issued pursuant to s. 15 of the Act.
On 16 August 2013, the Superintendent appointed under the Contract issued to Gilpip and Mainstream a document, which it described as the “Final Certificate”. The amount allegedly payable to Gilpip by Mainstream under the purported Final Payment Certificate was the amount of $70,166.62.
On 16 August 2013 Mainstream's solicitor (“Archer”) sent a letter to Gilpip's solicitor (“Nevett Ford”) disputing the validity of the document purporting to be the Final Payment Certificate, and advising of Mainstream's intention to issue a Notice of Dispute pursuant to clauses 37.4 and 42.1 of the General Conditions of Contract. Subsequently, further correspondence was exchanged between Archer and Nevett Ford regarding Mainstream’s challenge to the validity of the document described as the Final Payment Certificate.
On 22 August 2013 Mainstream purported to serve notice of dispute in relation to the Final Payment Certificate under clause 42.1 of the General Conditions of Contract.
Security under the Contract
Relevant provisions of the General Conditions of the Contract relating to security were as follows:
(a)“Security” was defined in clause 1 to include:
(e)An approved unconditional undertaking (the form in Annexure Part C is approved) or an approved performance undertaking given by an approved financial institution or insurance company; or
(f)Other form approved by the party having the benefit of the security.
(b)By clause 5.2 security was to be subject to recourse by a party who remains unpaid after the time for payment where at least five days have elapsed since that party notified the other party of intention to have recourse. The full relevant text of clause 5 relating to security was as follows:
Security
5.1 Provision
Security shall be provided in accordance with Item 13 or 14. All delivered security, other than cash or retention moneys, shall be transferred in escrow.
5.2 Recourse
Security shall be subject to recourse by a party who remains unpaid after the time for payment where at least 5 days have elapsed since that party notified the other party of intention to have recourse.
5.3 Change of security
At any time a party providing retention moneys or cash security may substitute another form of security. To the extent that another form of security is provided, the other party shall not deduct, and shall promptly release and return, retention moneys and cash security.
5.4 Reduction and release
Upon the issue of the certificate of practical completion a party’s entitlement to security (other than in Item 13(e)) shall be reduced by the percentage or amount in Item 13(f) or 14(d) as applicable, and the reduction shall be released and returned within 14 days to the other part.
There was no issue between the parties that the First Bank Guarantee and the Second Bank Guarantee both constituted “Security” within the meaning of clause 5 of the General Conditions.
The Bank Guarantees
Pursuant to clause 5.1 of the General Conditions of Contract, security was provided by Mainstream in the form of bank guarantees.
A first bank guarantee was provided by Mainstream in the sum of $238,729 (the “First Bank Guarantee”).
On 23 August 2013, in reliance on the document described as the “Final Payment Certificate”, purportedly under clause 5.4 of the General Conditions of Contract, Gilpip served a notice of intention to drawdown against the First Bank Guarantee provided by Mainstream under the Contract.
Following correspondence from Archer to Nevett Ford advising of Mainstream’s intention to seek injunctive relief from the Court to restrain any drawdown of the First Bank Guarantee provided by Mainstream Construction, the parties entered into an agreement pursuant to which Gilpip agreed not to proceed with the proposed drawdown on that bank guarantee. It was further agreed that a further bank guarantee in the sum of $73,000 (the “Second Bank Guarantee”) would be substituted for the First Bank Guarantee, which was in the sum of $238,729. The Second Bank Guarantee was in an amount, which was intended to cover (with a little extra) the sum allegedly payable to Gilpip by Mainstream under the purported Final Payment Certificate.
The agreement on the part of Mainstream to provide the Second Bank Guarantee was recorded in a letter dated 30 August 2013, signed on behalf of the parties.
On 13 September 2013, and purportedly in accordance with clause 5.4 of the General Conditions of Contract, Gilpip gave notice of intention to have recourse to the Second Bank Guarantee.
On 15 September 2013 (by letter dated apparently in error, 11 September 2013) Archer wrote to Nevett Ford setting out the reasons why it was considered that Gilpip was not presently entitled to drawdown against the Mainstream security and advising of Mainstream's intention to again apply for injunctive relief from Court if Gilpip did not agree to refrain from acting on its drawdown notice. By letter dated 16 September 2013 Nevett Ford rejected Archer’s assertions as to the correct legal position.
Issues in Dispute
By way of summary, the Defendant Gilpip contends that:
(a)the Plaintiff, Mainstream Constructions, has failed and neglected to pay to it the sum of $70,166.62 pursuant to the Final Payment Certificate issued by the Superintendent dated 16 August 2013;
(b)consequently it is claimed that it remains unpaid for the purposes of clause 5.2 of the General Conditions of Contract thereby entitling it to have recourse to the Second Bank Guarantee;
(c)it is further contended that the fact that it (Gilpip) has issued a notice of dispute does not relieve the Plaintiff from its obligations to pay the sum due because, pursuant to clause 42.1, the Plaintiff is obliged, notwithstanding the existence of a dispute, to continue to perform the contract. This is the bargain, which was struck by the parties. Reference was made in this regard to Skilled Group Ltd v CSR Viridian Pty Ltd & Anor,[1] Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd;[2]
(d) for these reasons, Gilpip submits that it is entitled to have recourse to the Second Bank Guarantee.
[1]Skilled Group Ltd v CSR Viridian Pty Ltd & Anor [2012] VSC 290 [196]-[209].
[2]Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd [1998] VSC 205 [99]-[100] (Gillard J).
Mainstream disputes this claimed entitlement.
Mainstream submitted that the consent stay Order ordered by associate Justice Derham, is not relevant to and does not prevent the Plaintiff seeking the relief sought in this proceeding.
I agree with this submission. The stay order made on 13 August 2013 was not made in this proceeding but in the First Proceeding S CI 2012/04510. The stay order has no direct bearing on this proceeding.
It was then submitted by Mainstream that under clause 37.4 of the General Conditions of Contract, if there is a notice of dispute issued which disputes any financial liability on the part of the debtor party under the final certificate, then the Final Certificate is ineffective until the issues in dispute between the parties have been resolved.
It was further submitted that the Final Payment Certificate issued by the Superintendent, which was the foundation for the drawdown on the Second Bank Guarantee, was not valid under the terms of the Contract.
Mainstream further claims that discretionary factors and the balance of convenience favours Mainstream in its application for an injunction to restrain Gilpip from drawing down the Second Bank Guarantee.
Whether Final Certificate Ineffective by reason of Notice of Dispute
Mainstream submitted that under clause 37.4 of the General Conditions of the Contract, if there is a notice of dispute issued which disputes any financial liability on the part of the debtor party under the final certificate, then the Final Certificate is ineffective until the issues in dispute between the parties have been resolved.
Mainstream contended that this precise issue was recently considered by the Queensland Court of Appeal in Martinek Holdings Pty Ltd v Reed Construction (Qld) Pty Ltd (“Martinek Holdings”).[3] It submitted that in that case the Court of Appeal[4] upheld the decision of the primary judge that the issue of a notice of dispute under clause 42 enlivened the exception to the finality of the certificate and accordingly, the enforceability of payment under the certificate contained in clause 37.4(d). It was submitted that this is a correct statement of the law in so far as it concerns clause 37.4(d) of the General Conditions of the present Contract.
[3]Martinek Holdings Pty Ltd v Reed Construction (Qld) Pty Ltd [2009] QCA 329.
[4]Martinek Holdings Pty Ltd v Reed Construction (Qld) Pty Ltd [2009] QCA 329 [14]–[17].
Clause 37.4 of the General Conditions of the Contract in this case provided:
37.4 Final payment claim and certificate
Within 28 days after the expiry of the last defects liability period, the Contractor shall give the Superintendent a written final payment claim endorsed ‘Final Payment Claim’ being a progress claim together with all other claims whatsoever in connection with the subject matter of the Contract.
Within 42 days after the expiry of the last defects liability period, the Superintendent shall issue to both the Contractor and the Principal a final certificate evidencing the moneys finally due and payable between the Contractor and the Principal on any account whatsoever in connection with the subject matter of the Contract.
Those moneys certified as due and payable shall be paid by the Principal or the Contractor, as the case may be, within 7 days after the debtor receives the final certificate.
The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party’s obligations in connection with the subject matter of the Contract except for:
(a)fraud or dishonesty relating to WUC or any part thereof or to any matter dealt with in the final certificate;
(b)any defect or omission in the Works or any part thereof which was not apparent at the end of the last defects liability period, or which would not have been disclosed upon reasonable inspection at the time of the issue of the final certificate;
(c)any accidental or erroneous inclusion or exclusion of any work or figures in any computation or an arithmetical error in any computation; and
(d)unresolved issues the subject of any notice of dispute pursuant to clause 42, served before the 7th day after the issue of the final certificate.
Part of clause 42 of the General Conditions of the Contract, being the dispute resolution clause, is relevant. The following is referred to:
42.1Notice of dispute
If a difference or dispute (together called a ‘dispute’) between the parties arises in connection with the subject matter of the Contract, including a dispute concerning:
(a)a Superintendent’s direction; or
(b)a claim:
(i)in tort;
(ii)under statute;
(iii)for restitution based on unjust enrichment or other quantum meruit; or
(iv)for rectification or frustration, or like claim available under the law governing the Contract.
Then either party shall, by hand or by certified mail, give the other and the Superintendent a written notice of dispute adequately identifying and providing details of the dispute.
Notwithstanding the existence of a dispute, the parties shall, subject to clauses 39 and 40 and subclause 42.4, continue to perform the Contract.
[Underlined here for emphasis]
42.2 Conference
Within 14 days after receiving a notice of dispute, the parties shall confer at least once to resolve the dispute or to agree on methods of doing so. At every such conference each party shall be represented by a person having authority to agree to such resolution or methods. All aspects of every such conference except the fact of occurrence shall be privileged.
If the dispute has not been resolved within 28 days of service of the notice of dispute, that dispute shall be and is hereby referred to arbitration.
42.3 Arbitration
If within a further 14 days the parties have not agreed upon an arbitrator, the arbitrator shall be nominated by the person in Item 32(a). The arbitration shall be conducted in accordance with the rules in Item 32(b).
42.4 Summary relief
Nothing herein shall prejudice the right of a party to institute proceedings to enforce payment due under the Contract or to seek injunctive or urgent declaratory relief.
Martinek Holdings
In Martinek Holdings, the Queensland Court of Appeal considered a case involving an adjudication decision made under the Building and Construction Industry Payments Act 2004 (Qld) ("the Payments Act") on 17 September 2009 in favour of the respondent ("Reed"). This was subsequently converted into an adjudication certificate and judgment of the Supreme Court pursuant to s 30 and s 31 of the Payments Act. The appellant ("Martinek") sought to have that judgment set aside or permanently stayed.
Under the adjudication decision, Martinek was obliged to pay Reed $919,634.91 in respect of one of Reed's progress payment claims made under the Payments Act. However, on 24 September 2009, the superintendent under the contract for the work issued the superintendent's final certificate in respect of Reed's progress claim. The superintendent's final certificate was issued pursuant to clause 37.4 of the contract, which was in the same terms as clause 37.4 under the General Conditions of the present Contract (Standard General Conditions of Contract AS4000 -1997).
However, by virtue of the superintendent's final certificate, only an amount of $72,027.27 was due to Martinek by Reed after taking into account the superintendent's assessment of Reed's claim at $664,902.03 and deducting $730,381.37 for moneys due to Martinek for rectification of defects in the work.
On 30 September 2009, pursuant to clause 42.1 of the contract, Reed served a notice of dispute in relation to the superintendent's final certificate. Clause 42.1 was in the same terms as the General Conditions of the present Contract (Standard General Conditions of Contract AS4000 -1997).
Martinek commenced proceedings in the Trial Division of the Supreme Court contending that the final certificate issued by the superintendent under the contract effectively trumped the adjudication decision by establishing the final position of the parties under the contract. On this basis, Martinek argued that Reed was precluded from pursuing the inconsistent rights, which would otherwise be available to Reed under the Payments Act.
On the other hand, Reed argued that the superintendent's final certificate gave Martinek a contractual right to payment of $72,027.27 but it did not produce a final settling of accounts, which was apt to subsume or supersede the adjudication decision. In this regard, Reed relied particularly (though not exclusively) on the terms of clause 37.4(d) of the contract. Reed submitted that its notice of dispute of 30 September 2009 engaged the terms of clause 37.4(d) to deny to the superintendent's certificate the effect for which Martinek's argument contends.
It was common ground between the parties at first instance and in the Court of Appeal that the resolution of this issue turned on the interpretation of clause 37.4.
The Queensland Court of Appeal held that it may be accepted that the final settling of accounts between contractor and principal established under the terms of the contract may in some cases supersede the interim adjudications effected under the Payments Act. However, in this case, the terms of clause 37.4(d) of the contract reflected an intention that the "accord and satisfaction" and the "discharge of obligations" between the parties would not be effected by the superintendent's certificate while the issues the subject of Reed's notice of dispute remained "unresolved". Accordingly, on the proper construction of clause 37.4, it was held that only the moneys certified as due and payable by a certificate unqualified in its effect by the fourth paragraph of clause 37.4 that give rise to a right to payment in accordance with the third paragraph of clause 37.4. In the case before the Court of Appeal, because the effect of the superintendent's certificate was qualified in this way, in the opinion of the Court of Appeal, it could give rise to no right in Martinek under the contract which could trump the effect of the adjudication decision.
In my opinion, it is arguable that this construction of clause 37.4 of the General Conditions of Contract (Standard General Conditions of Contract AS4000 -1997) is also applicable to the present case where, although there is no conflict with any adjudication decision made under the Payments Act, the decision in Martinek Holdings may also be arguably applicable to the circumstances of the present case where a Notice of Dispute was issued under clause 42.1 the General Conditions of the present Contract, with the effect that only the moneys certified by the superintendent as due and payable by a certificate which is unqualified in its effect by the operation of the fourth paragraph of clause 37.4, that gives rise to a right to payment in accordance with the third paragraph of clause 37.4, while the issues the subject of notice of dispute dated 22 August 2013, purportedly served by Mainstream under clause 42.1 of the General Conditions, remained "unresolved".
As the amount allegedly payable to Gilpip by Mainstream under the purported Final Payment Certificate (which in turn was founded upon the certification given by the superintendent under clause 37.4) was the foundation of Gilpip’s alleged right to draw down monies under the Second Bank Guarantee, given that it is arguable that no such indebtedness arose, it follows that Gilpip’s right to draw down on the Second Bank Guarantee is also brought into question.
I am satisfied that there is a serious question to be tried in the sense that Mainstream has shown a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial.
Discretionary Factors
I accept from the evidence that Mainstream was a relatively small builder.
Further, it has currently expended approximately $1 million in excess of what it has been paid for the Tanti Avenue project under the Contract.
There is unchallenged evidence before the Court that it is only by the negotiation of interim arrangements with its banker and a third party that it has been able to continue with its business.
There is also unchallenged evidence before the Court that if Gilpip is permitted to make a drawdown against the Second Bank Guarantee, then Mainstream’s entire business would be at risk. The evidence of its director, Mr Peter Baker, is that if the drawdown was permitted to take place, the company’s banker is not expected to continue to support Mainstream's current commitment by way of a security in the sum of $380,000 on another project at Drouin, which is now virtually complete, and that Mainstream would be unable to complete this project and to continue to operate as a builder.
Gilpip advanced no evidence, other than its claimed right to have recourse to the Second Bank Guarantee in the sum of $73,000.
I am satisfied on the evidence that if there is no injunction but Mainstream’s claim is ultimately vindicated, it will be likely to have suffered irreparable harm for which damages will not be an adequate remedy.
Further, after taking into account the discretionary factors advanced by Gilpip, it is concluded that on the evidence before the Court the balance of convenience favours Mainstream and the injunction being granted in it’s favour.
Conclusion and Order
Gilpip made reference to the decision of Hollingworth J in Otter Group Pty Ltd v Wylaars & Anor (“Otter Group”).[5] It submitted that the following passages from the judgment in Otter Group are apposite:
[5]Otter Group Pty Ltd v Wylaars & Anor [2013] VSC 98 [14].
15Courts have traditionally treated an interlocutory application to restrain the calling upon or use of money secured by a bank guarantee or other performance bond as being in a special category.
16The authorities have been recently summarised in Cerasola TLS AG v Thiess Pty Ltd & John Holland [2011] QSC 115 as follows:
On the basis of those authorities, it is sufficient for present purposes to note that the general rule is that a court will not enjoin the issuer of a performance guarantee from performing its unconditional obligation to make payment. A number of exceptions to that general rule have been identified. They are identified in Clough Engineering at [77] as:
(1)An injunction will issue to prevent a party in whose favour the performance guarantee has been given from acting fraudulently.
(2)An injunction will issue to prevent a party in whose favour the performance guarantee has been given from acting unconscionably in contravention of the Trade Practice Act 1974 (Cth).
(3)While the Court will not restrain the issuer of a performance guarantee from acting on an unqualified promise to pay if the party in whose favour the guarantee has been given has made a contractual promise not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.
17This general rule is the product of the following appellate authorities: Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443, Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812, Bachmann Pty Ltd v BHP Power New Zealand Ltd [1999] 1 VR 420 and Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd & Ors. The rationale for the general rule is that by providing for security to be given, the parties implicitly agree that the party giving the security deposit shall be out of pocket pending resolution of the underlying dispute.
18In Clough, the Full Federal Court said that “clear words will be required to support a construction which inhibits a beneficiary from calling on a performance guarantee where a breach is alleged in good faith, that is, non-fraudulently”.
In my opinion, the facts of the present case arguably point to Gilpip having made a contractual promise not to call upon the Second Bank Guarantee. Accordingly, applying the third category of the principles referred to by Hollingworth J in Otter Group identified in Clough Engineering,[6] breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts.
[6] Otter Group Pty Ltd v Wylaars & Anor [2013] VSC 98 per Hollingworth J [16], citing Cerasola TLS AG v Thiess Pty Ltd & John Holland [2011] QSC 115 and Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd & Ors. (2008) 249 ALR 458.
The applicable legal principles as to injunctive relief were set out in the decision Perfection Fresh Australia Pty Ltd & Ors v Melbourne Market Authority as follows:[7]
43The granting of injunctive relief is discretionary and the Court must be satisfied that:
(a)there is a serious question to be tried in the sense that the plaintiff must show a sufficient likelihood of success to justify in the circumstances the pending trial;
(b)if there is no injunction but the plaintiff’s claim is ultimately vindicated, the plaintiff will have suffered irreparable harm for which damages will not be an adequate remedy; and
(c)the balance of convenience must favour the grant of the injunction.
[7]Perfection Fresh Australia Pty Ltd & Ors v Melbourne Market Authority [2013] VSC 287 [43].
I have made findings in accordance with each of these principles.
Although issues other than the clause 37.4 point were raised by Mainstream in support of its application for the interlocutory injunction, it is unnecessary to deal with them in these reasons given my approach to the decision of the Queensland Court of Appeal in Martinek Holdings and its arguable application to the facts of the present case.
It will be ordered that upon the usual undertaking as to damages being given by the Plaintiff, Mainstream (Aust) Pty Ltd, the Defendant Gilpip Bayside Projects Pty Ltd, its servants and agents, be restrained until the trial of this proceeding or further order from taking any step to draw down or enforce the Second Bank Guarantee of $73,000 or any part of that sum, which security was agreed to be provided pursuant to the agreement between the parties recorded in a signed letter dated 30 August 2013.
I will hear the parties on what further orders as to costs and trial directions ought to be made.
---
1
4
0