Contract – security – interlocutory injunction – serious question to be tried – Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) – building contract – building work –balance of convenience – damage to reputation
A contract does not need to be exclusively for construction work to be excluded from operation of Part 4A of the QBCC Act.
On the balance of convenience, a contractor's risk of damage to its reputation should be weighed against other factors.
Wiggins Island Coal Export Terminal Pty Ltd (respondent) entered into two contracts with Monadelphous Engineering Pty Ltd and Muhibbah Construction Pty Ltd (applicants) for the construction of a jetty and wharf and a shiploader.
The respondent issued a payment certificate under each contract levying liquidated damages and backcharges. Each contract allowed the respondent to draw on the securities provided by the applicants, if the respondent had a bona fide claim.
The applicants brought an application for an interlocutory injunction restraining the respondent from drawing on the securities. The applicants contended that there were serious questions to be tried regarding the respondent's contractual entitlement to draw on the securities because:
- the date for practical completion was the subject of conflicting expert evidence; and
- the calculation of the backcharges was flawed.
The applicants also contended that there was a serious question regarding the applicability of Part 4A of the QBCC Act to the contracts.
The applicants submitted that the balance of convenience was in its favour due to the risk of damage to its reputation if the applicants were allowed to call on the securities.
Wilson J refused the application on the basis that there was no serious question to be tried and that the balance of convenience favoured the respondent.
In regards to the respondent's contractual entitlement to draw on the securities, Wilson J found that:
- the respondent had a contractual entitlement to claim liquidated damages once the applicants missed the date for practical completion, despite conflicting expert evidence about the date for practical completion; and
- the bona fides of the backcharges was irrelevant because the liquidated damages equalled the amount of security provided.
His Honour considered that the work under the contracts was not 'building work' as defined by the QBCC Act as it was excluded by the Queensland Building and Construction Commission Regulation 2003 (Qld) (QBCC Regulation) with the consequence that Part 4A of the QBCC Act did not apply.
Wilson J found that the risk of damage to the applicants' reputation was outweighed by other factors, including:
- the respondent's entitlement to have recourse to the securities;
- the applicants' contractual acceptance of the risk of damage to its reputation; and
- that any reputational harm suffered by the applicants would not be incapable of measurement in damages.
The applicants have appealed.