Hansen Yuncken Pty Ltd v Ian James Ericson trading as Flea's Concreting & Anor

HopgoodGanim Lawyers as town agents for Crawford Legal for the applicant

[1] The first respondent, Mr Ericson, applies for the provision of further security as a condition of the injunction put in place by an order of 23 July 2009. By that order he is restrained from taking any steps to obtain an adjudication certificate or from otherwise enforcing the adjudication decision the subject of this case until further order.

[2] The adjudication decision was dated 2 July 2009. The adjudicator held that Mr Ericson was entitled to the whole of the amount claimed by him, being $4,803,866.60. He decided that the due date for payment was 13 June 2009. As to interest, he decided that Mr Ericson was entitled to interest at the rate according to s 67P of the Queensland Building Services Authority Act 1991 (Qld) because this was construction to which that Act applied. In that respect the adjudicator accepted that the case was within s 15(3) of the Building and Construction Industry Payments Act 2004 (Qld) ("the Payments Act"). He noted there was no contrary submission for the party which is the applicant in these proceedings.

[3] After a contested hearing, the Court granted the injunction on 23 July 2009 upon undertakings by the applicant to provide to the Registrar of the Court within seven days two bank guarantees to secure the adjudicated amount, such guarantees to be held until further order of the Court. They are still in place. Mr Ericson now seeks orders to the effect that he be secured for the interest which has accrued and will accrue upon the adjudicated amount.

[4] There is no question that if the applicant is unsuccessful in this case, so that the adjudication stands, Mr Ericson will be entitled to seek forthwith a certificate from the adjudicator for the adjudicated amount together with interest pursuant to s 30(4) of the Payments Act. Nor is there any issue, at least for this application, as to the appropriate rates (consistently with the adjudicator's decision) or as to the accuracy of Mr Ericson's calculations of the interest. He says that as at 31 October 2010 the amount accrued was $1,042,588.26 and that interest is now accruing at $2,400 (approximately) per day. He therefore seeks further security for that amount to the end of October plus $75,000 per month. The trial of this case has a reserve listing for the week commencing 21 March 2011. Accordingly, he seeks further security until at least that date, which is effectively another 4.66 months at $75,000 or approximately $350,000. All up then he would seek further security in an amount of about $1,392,000.

[5] The application is opposed upon two bases. The first is that the financial position of the applicant is so demonstrably strong that there is effectively no utility in requiring the provision of further security. The second is that the proceedings have been substantially delayed by steps taken by or on behalf of Mr Ericson.

[6] As to that first argument, it is unnecessary to detail the evidence here which is relied upon by the applicant. It is sufficient to say that its net assets according to that evidence are in excess of $100 million and that it is actively and profitably trading. Its most recent audited accounts are for the year ended 30 June 2010. But Mr Ericson argues, in effect, that if there be any risk that the applicant would be unable to pay the accumulated interest, it should not be borne by him. And there is no argument for the applicant that there would be any undue expense or impracticality in requiring the provision of further security.

[7] As to that second argument, I accept that the proceedings have been substantially delayed by Mr Ericson's side. There was a strike-out application which was unsuccessful. His side has also been in default in making disclosure within the times which were ordered. However, if he ultimately succeeds in defending the adjudicator's decision, he will be entitled to this interest so that in that way the fact of his delaying the proceedings is of relatively little importance. It is not as if the award of interest would be discretionary.

[8] The Payments Act has an evident purpose of securing for a builder the expeditious payment of progress claims where they have been upheld by an adjudicator. In particular, s 31(4) provides that if an adjudication certificate has been obtained and filed as a judgment, and the defendant commences proceedings to have that judgment set aside, the defendant is required to pay into court as security the unpaid portion of the adjudicated amount pending the final decision in those proceedings. Accordingly, to restrain a successful claimant from enforcing his rights from an adjudicator's decision, and from obtaining an adjudicator's certificate, is no light matter. Hence, the applicant's undertaking to provide bank guarantees, as was given to the Court on 23 July 2009, was obviously critical to the outcome of the application for the interlocutory injunction. The time which has expired since that order could not have been anticipated at that stage. After this passage of time, it is apt that the security provided by the applicant be increased. The real question then is whether there is any point in so ordering. As there is not said to be any significant detriment to or difficulty for the applicant in providing that additional security, in my view the balance of convenience favours the order sought, so that any risk to Mr Ericson can be avoided.

[9] Accordingly, it will be ordered that unless the applicant provides to the Registrar of the Supreme Court within 21 days a bank guarantee or bank guarantees securing interest upon the adjudicated amount, up to the sum of $1,392,000, the restraining order upon the first respondent made on 23 July 2009 will be set aside.