Synergy Construct Australia Pty Ltd v GSA North Terrace Pty Limited Atf GSA North Terrace Unit Trust

Synergy Construct Australia Pty Ltd (Synergy) sought an interlocutory injunction against GSA North Terrace Pty Limited Atf GSA North Terrace Unit Trust (GSA) to restrain GSA from calling upon a bank guarantee. The dispute arose from a building contract where Synergy alleged that GSA had wrongly purported to terminate the contract and had failed to make a progress payment due under the contract. Synergy contended that GSA's termination was invalid and that it was entitled to the progress payment, which would have offset the amount GSA sought to claim under the bank guarantee.

The primary legal issues before the Full Court of the Supreme Court of South Australia were whether Synergy had established a serious question to be tried regarding the validity of GSA's purported termination of the building contract and its entitlement to the progress payment, and, if so, whether the balance of convenience favoured granting the interlocutory injunction. Specifically, the court had to consider whether the architect's certificate, which GSA relied upon to justify termination and withholding payment, was final and conclusive in the circumstances, and whether Synergy had a genuine dispute about the amount due.

The Full Court found that Synergy had raised a serious question to be tried. It reasoned that the architect's certificate was not necessarily final and conclusive in relation to the progress payment claimed by Synergy, particularly given Synergy's assertion that it was entitled to that payment. The court also considered the balance of convenience, noting that if the injunction were not granted and GSA called upon the bank guarantee, Synergy might suffer irreparable harm. Conversely, if the injunction were granted and Synergy ultimately failed in its claim, GSA would still have recourse to the bank guarantee, albeit with a delay.

The Full Court ordered that the interlocutory injunction be granted, restraining GSA from calling upon the bank guarantee until further order, on the condition that Synergy pay into court the sum of $1,000,000.