APPLICANT: Marson Constructions Australia Pty Ltd

BEFORE: Deputy President Associate Professor Cremean

1. The injunction in paragraph (a) of Order 1 made on 27 January 2000 is discharged with effect from 12:00 pm on 29 February 2000.

1. The Tribunal has power ("may") under section 123 of the Victorian Civil and Administrative Tribunal Act 1998, by order, to grant an injunction, including an interim injunction, in any proceeding if it is just and convenient to do so.

2. Acting under this power, I, by orders made on 27 January 2000, granted injunctions that:

(a) the Respondent by its servant or servants or agent or agents or howsoever otherwise is and is hereby restrained from making demand for payment pursuant to the bank guarantee issued by the National Australia Bank Limited through its branch at 424 St Kilda Road Melbourne which is dated 27 September 1999 and which is in the sum of $168,950.00;

(b) the National Australia Bank Limited is and is hereby restrained from making any payment at any of its branches or otherwise of the amount or any part thereof specified in the bank guarantee referred to in paragraph (a);

(c) the Respondent by its servant or servants or agent or agents or howsoever otherwise is hereby restrained from making demand for payment pursuant to a retention fund held jointly in the names of the Applicant and the Respondent in the National Australia Bank Limited;

(d) the National Australia Bank Limited is and is hereby restrained from making any payment at any of its branches or otherwise of the amount or any part thereof held in the retention fund referred to in paragraph (c);

(e) the Respondent by its servant or servants or agent or agents or howsoever otherwise is and is hereby restrained from preventing the Applicant going upon the site at 743 - 751 Swanston Street Carlton to exercise its rights or carrying out its duties pursuant to clause 12.07 of the contract entered into between the Applicant and the Respondent dated 6 July 1999.

3. By reason of arrangements made between the parties, I, by orders made on 9 February 2000, discharged the injunctions in paragraphs (c), (d) and (e). The injunction in paragraph (e) had already been varied by orders, substituting a new paragraph, made on 31 January 2000. Then, at the hearing on 15 February 2000, I discharged the injunction in paragraph (b) at the Applicant's request.

4. Only the injunction in paragraph (a) thus now survives. I am asked by the Applicant to continue this injunction. The Respondent, however, contends that it should be discharged.

5. Each side has filed affidavits in support of its position and referred me to various authorities. In reaching my decision I have had regard to the materials set out in those affidavits; to the authorities I was referred to; and to the submissions which were made. The submissions of counsel, including their respective Outlines of Argument, I have found most helpful.

6. The injunction in paragraph (a) calls into question the operation of Clause 10.25 of the building agreement between the parties. That clause reads as follows:

Any security provided by the Builder in terms of this Agreement shall be available to the Proprietor whenever the Proprietor shall be entitled to the payment of the moneys by the Builder under or in consequence of this Agreement or whenever the Proprietor shall be entitled to reimbursement of any moneys paid to others under this Agreement, in all such cases as if the security were a sum of money due to or to become due to the Builder by the Proprietor, provided that if the employment of the Builder under this Agreement is determined by the Builder pursuant to Clause 12.01 and the Proprietor holds any security provided by the Builder the Proprietor shall not be entitled to have recourse to that security unless and until an enabling award is made or an enabling judgement is given (whether pursuant to Section 13 or otherwise) or the Builder agrees in writing that the Proprietor is so entitled.

7. Whether an injunction should be granted, or continued, is, ultimately, a matter of discretion. This is made clear by section 123 itself. In the face of actual or threatened conduct, however, the authorities indicate that two governing considerations (which, themselves, raise subsidiary issues) to the granting of interlocutory relief are these: (a) whether there is a serious question (or, are serious questions) to be tried; and (b) whether the balance of convenience favours the granting of such relief. Amongst the many cases which could be referred to in support of these propositions, I refer to Nicholas John Holdings Pty Ltd v. Australia and New Zealand Banking Group Ltd [1992] VicRp 98; [1992] 2 VR 715 at 722 per Hedigan J.

8. Before turning to those considerations, I should say that I am satisfied of the existence of the actual or threatened conduct in this case. The Respondent, I think, equivocated a little on this point. There was nothing positive in the materials about this, it was said, and out of nothing, it was also said, nothing (of a positive nature) could be inferred. Or, this is, at least, how I understood the submission. But I think that actual or threatened conduct can be seen in the statement in paragraph 67 of the affidavit of Harry Argirios Nanos sworn 8 February 2000 where he says the Respondent "will suffer prejudice if it does not have access to the security provided by the builder under the contract." The clear intimation, I think, is that, unless restrained, the Respondent will take steps to gain that access. The threat of conduct taking place in the absence of restraint, I am satisfied, does exist.

9. Turning to the first of the considerations I have mentioned, I am satisfied also that in this case there is a serious question to be tried. This ground is often referred to as a "triable issue" but I think that description of the ground can, sometimes, be misleading because it understates the true nature of the test which is involved. The ground is satisfied not by a triable issue simpliciter but by a serious question to be tried. In a sense, any issue at all is "triable" no matter how weak or strong it is. Furthermore, it seems to me that the serious question which is asserted must be one arising, not globally between the parties, but in relation to that issue or those issues giving rise to the claim for interlocutory relief. Otherwise it could be said a serious question has arisen in relation to some matter which is entirely unrelated to the claim for interlocutory relief.

10. The serious question to be tried is, in my view, whether under Clause 10.25 the security provided by the Applicant (which is in the sum of $168,950.00) is "available" to the Respondent in the terminology of the provision. In other words, such security (as a fact) having been provided, the question is whether the Respondent is entitled to the payment of moneys from the Applicant "under or in consequence" of the contract or is entitled to reimbursement of moneys paid to others "under" the contract.

11. Much time was spent at the hearing on 15 February 2000 in the Applicant seeking to persuade me that no such entitlement had arisen in the Respondent. Reference was made to other provisions in the contract including Clauses 5.06, 10.02 and 12.05. To an extent, however, the emphasis was misplaced. In order to be satisfied that a serious question exists, I do not need to be satisfied that the Applicant's case is one that is made out as a matter of reality. The hearing on 15 February 2000 was not the place to have a trial before the trial. Equally, it is not in point for the Respondent to say that, considering one interpretation of the wording in Clause 10.25 (focusing on the disjunctive in "under or in consequence") no serious question has arisen . It is enough, in my view, that, as between both sides, as in this case, disputation exists and that that disputation is real and not spurious or fanciful.

12. My views therefore are that there is conduct which is threatened unless restrained and that a serious question to be tried exists between the parties. However, in order to justify the continuation of the injunction, I must also be satisfied that the balance of convenience lies in that direction. Having given all matters my earnest consideration I am unable to be so satisfied. The Applicant has not persuaded me, on the balance of probabilities, or otherwise, that the balance lies in its favour in this regard. It seems true, and would follow from my finding of threatened conduct, that, if the injunction is not continued, the Respondent will access the security sum. If that happens, and the whole of it is withdrawn, there will be none left. If there is none left, there will be, by definition, none left for the Applicant. But I accept, on the materials submitted to me on behalf of the Respondent, that one purpose of withdrawing the funds would be to have funding available to do, amongst other things, urgent works to make the building site safe. I refer again to the affidavit of Harry Argirios Nanos sworn 8 February 2000. I am told, for example, that the Respondent is currently the subject of a requirement from the Work Cover Authority to make the site safe and stable. That requirement, which is made under section 39(1)(k) of the Occupational Health and Safety Act 1985, is also deposed to in that affidavit and is exhibited as "HN6" ("Work Cover Field Report"). The requirement (which I have read for myself) is that the Respondent is directed, at the building site, "to complete all footings that could effect the safety or stability of the building or adjoining buildings".

13. I should make it clear that the Applicant does not show an injunction should continue, as regards the security provided under Clause 10.25, by pointing to the financial position of the Respondent. If the Applicant has no entitlement to have the injunction continued, it makes no difference whatever may be the financial status of the Respondent. This is not an occasion on which I should take up the Applicant's invitation to speculate about the Respondent. It is not proper I should be asked to draw adverse inferences about the Respondent's financial position from the barest of suggestions. I make no finding, in any event, that adverse inferences exist to be drawn. Moreover, I do not overlook the fact (as it would seem to be) that the Applicant must have had a view about the Respondent when it entered into the building contract as recently as July 1999. At that time, the Applicant must surely have had a view about the Respondent's financial position which, if it did, was clearly not in any event such as to deter it from concluding the bargain.

14. I should also wish to make it clear that entering into a consideration of the balance of convenience, or standing alone as a requirement on its own, is the question whether damages are, in any event, an adequate remedy. If the injunction is not continued and the security is accessed, and yet it is found, later, that the Respondent had no entitlement to the security, then it seems to me (without at all deciding the point) that the Applicant could well have a right to claim damages for the loss suffered in consequence. Or, there may be a contractual provision which applies in that eventuality. But, even if there is not, the loss, it would seem to me, otherwise would equal the amount of the sum of the security. Damages, I would think, would be in that amount, correspondingly. But I am unable to see how recovery of damages, in such circumstances, could not be an adequate remedy. If the true test, in reality, is whether a party "should be confined to [a] remedy in damages" (see State Transport Authority v. Apex Quarries Ltd [1998] VR 187 at 193) I see no reason why the Applicant should not be so confined. A financial loss, if any, only would have been suffered which, if so, would be readily compensible in damages. And, I would think, only a financial loss would have been suffered. There is nothing otherwise which is special about the case which would warrant a finding in the circumstances that the Applicant should not be confined to its remedy in damages.

15. I am of the view, therefore, that one way or another, and for these reasons, the injunction in paragraph (a) should be discharged as set out below. The Applicant fails in my view on the balance of convenience requirement and, if it be a separate test, on the question whether damages are an adequate remedy.

16. This result, I should add, is consonant in my view, with a long line of authorities. I mention one in particular - Fletcher Constructions Australia Ltd v. Vainsdorf [1998] VR 812. But I refer also to Bachmann Pty Ltd v. BHP Power New Zealand Ltd [1998] VSCA 40; [1999] 1 VR 420. The fact is, as I see it, the Applicant is seeking to restrain the Respondent from doing the very thing which Clause 10.25 provides for - namely, access to a security sum. It may turn out, in reality, that the Respondent has no entitlement to that sum. But that is a question which must await a full hearing - this is not the place, as I say, to have a trial before a trial. And, in my view, if it is found that the Respondent ultimately has no entitlement then the Applicant has its remedy, which I consider would be adequate, in damages. Or, some contractual mechanism may apply. But, in the meantime, Clause 10.25, which was the subject of agreement between the parties, should be allowed to operate. I think they must be taken to have intended Clause 10.25 to operate even in the face of a challenged entitlement of the Respondent. It is difficult to discern why else the provision was included. Surely, it must be given an operation. As Brooking JA said in Bachmann (at pp 436-7):

"It would, as Charles JA said in Fletcher, be strange if the clauses concerned in that case and this - cl.3.13(b) and cl.22.4 - conferred the practical right of recourse only where moneys were 'due' from the supplier to the purchaser in some such sense as actually or indisputably due."

And as Callaway JA said in Fletcher Constructions (at p 831):

"Guarantees are an efficient substitute for cash. It would be unfortunate if the law made them unattractive".

17. It is possible to find authorities, in other jurisdictions, where injunctions have been granted in cases like this. See, for example, Pearson Bridge (NSW) Pty Ltd v. State Rail Authority of NSW (1982) 1 ACLR 81. See also Reed Construction Services Pty Ltd v. Kheng Seng (Australia) Pty Ltd (1998) 15 BCL 158. More often than not, however, those cases tend to turn on their own facts. The balance of convenience and, if it be a separate question, the adequacy of damages, are the issues which determine this particular case. And I determine this case in the exercise of my discretion.

18. But, with respect, I decline to follow authorities from other jurisdictions which are at variance with the clear statements of principle in cases which are binding on me. I refer also to Olex Focas Pty Ltd v. Skodaexport Pty Ltd (1996) 134 FLR 331. I note, that in Fletcher Constructions, Charles JA (at p 820) quotes from Hudson on Building and Engineering Contracts 11th Edition (1995), which says of the decision in Pearson Bridge that it "does not seem entirely convincing." It is true, however, that Pearson Bridge is quoted by Byrne J in ADI Ltd v. State Electricity Commission of Victoria (Supreme Court of Victoria, 6 June 1997, unreported) but it is not given any extended consideration by him. However, the analysis undertaken by Brooking JA in Bachmann (at pp 431-3) would indicate that misgivings exist about the authority of Pearson Bridge. See also Cargill International SA v. Bangladesh Sugar and Food Industries Corp. [1997] EWCA Civ 2757; [1998] 2 All ER 406 at 413 per Potter LJ. Certainly there is nothing in the contract between the parties which appears to be of an unusual nature taking the case out of the general rule that, in the absence of fraud, the Respondent has a right to call upon the security under Clause 10.25. See Anaconda Operations Pty Ltd v. Fluor Daniel Pty Ltd [1999] VSCA 214. And a case of fraud, if seriously raised, was hardly made out in any of the materials before me.

19. It follows from my reasons that I discharge the injunction in paragraph (a) with effect from 12:00 pm on Tuesday 29 February 2000.

20. The Respondent has succeeded in its opposition to the injunction. I should think there could well be an argument made under section 109 of the Act for its costs to be paid. I reserve such question, however. In the event that the parties are unable to agree on costs, they may request the Principal Registrar to re-list this matter before me on some subsequent date set aside for the purpose.