//
[2026] QSC 38
General information, not legal advice.
Supreme Court of Queensland
2026-03-19
Wilson J
Original judgment source is linked above.
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - SECURITY AND RETENTION FUNDS - where the applicant was a builder contracted to design and construct a residential apartment by the respondent developer and owner - where it is alleged that the applicant failed to ensure the project reached practical completion by the date for practical completion - where the respondent gave the applicant notice that it was having recourse to security amounts for a claim of consequential loss - where the applicant sought an interlocutory injunction to restrain the builder from having recourse to the security amounts - where the applicant contended that the notice was not effective under s 67J of the Queensland Building and Construction Commission Act 1991 (Qld) - whether s 67J applies to claims of unliquidated damages - whether the applicant has established there is a serious question to be tried warranting a grant of an injunction
AECI Australia Pty Ltd v Convey [2020] QSC 207
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Beyfield Pty Ltd v Northbuild Construction Sunshine Coast Pty Ltd [2014] QSC 12
Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458
Daysea Pty Ltd v Watpac Aust Pty Ltd [2001] QCA 49
Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd [2023] QSC 276
Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812
FMT Aircraft Gate Support Systems v Sydney Ports Corporation [2010] NSWSC 1108
Hicks v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 757
Kawasaki Heavy Industries Ltd v Laing O'Rouke Australia Construction Pty Ltd [2017] NSWCA 291; (2017) 96 NSWLR 329
PJ Nash Pty Ltd v Food and Beverage Australia Limited [2021] SASCA 86
Saipem Australia Pty Ltd v GLNG Operations Pty Ltd (No 2) [2015] QSC 173; [2016] 1 Qd R 254
Saipem Australia Pty Ltd v GLNG Operations Pty Ltd [2017] QSC 294
Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98
Sun Engineering (Qld) Pty Ltd v Ravenswood Gold Pty Ltd [2024] QSC 68
Synergy Construct Australia Pty Ltd v GSA North Terrace Pty Limited (ATF GSA North Terrace Unit Trust) [2025] SASCA 72
Tymbook Pty Ltd v State of Victoria; Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65
Undershaft (No 1) Ltd v Commissioner of Taxation [2009] FCA 41; (2009) 175 FCR 150
Shannon Clark Tuhtan for the First and Second Respondents
[1] The applicant (Rawcorp Pty Ltd) seeks an interlocutory injunction to restrain the first respondent (MDP No 15 Pty Ltd) from dealing with the proceeds of security under a building contract between the parties ('the Contract').
(a) the second respondent was purportedly appointed as Superintendent to the Contract by the first respondent;[1] and
(b) the third respondent is the body corporate under the Body Corporate and Community Management Act 1997 (Qld) ('the BCCMA'),[2] and it came into existence upon the creation of lots in the building.
[3] The second and third respondents did not take an active part in the proceedings.[3] Accordingly, any reference to "the respondent" in these reasons means the first respondent.
[4] The applicant was a builder carrying out building work and, pursuant to the Contract, was constructing a residential apartment complex at Coolangatta.
[5] The respondent was the developer, and original owner,[4] and contracted the applicant to perform the building work.
[6] On 14 October 2025, the respondent gave the applicant notice that it was having recourse to the held security pursuant to clause 5.2 of the Contract ('the Notice'). The respondent proceeded, on 22 October 2025 at 4:37 pm, to have recourse to the security.
[8] Interlocutory relief is sought by the applicant to:
(a) restrain the respondent from having recourse to, or dispersing the proceeds of recourse from, the retentions held under the Contract pending a determination by the Court of the parties' rights to the retentions; and
(b) require the payment into court of the retentions, or the proceeds thereof, by the respondent.
[9] Whilst there will be an ongoing dispute between the applicant and the respondent regarding claims for entitlements arising from the carrying out of the building work, the applicant contends that:
(a) its entitlement to retentions held by the respondent against payments otherwise due to the applicant has been perfected; and
(b) an order should be made requiring the respondent to transfer the retentions to the applicant, which the respondent was required to hold on trust for the applicant.[7]
[10] The Court has power to issue an interlocutory injunction where it is satisfied that:
(a) the applicant has shown that there is a serious question to be tried; and
(b) the balance of convenience favours the granting of relief.[8]
[11] The applicant states that the question of interlocutory relief in this case turns upon the following questions:
(a) whether the applicant has established that there is a serious question to be tried, or a prima facie case; and
(b) whether the applicant will likely suffer irreparable harm not curable by an award of damages if the relief sought is not granted.
[12] The applicant relies upon four grounds in support of the relief sought.
[13] The respondent is not entitled to either liquidated damages or consequential damages of the type notified by reason that:
(a) the Contract provided that the exclusive remedy for late completion was liquidated damages;
(b) the mechanisms under the Contract for the adjustment of time for delay outside of the control of the applicant required a Superintendent; and
(c) the Superintendent ceased to be able to perform the role by reason of loss of its licence and was not reappointed once it had obtained a new licence.
[14] The entitlements articulated in the Notice did not come into existence by reason that:
(a) no entitlement to liquidated damages for late completion could accrue absent a Superintendent;[9]
(b) the entitlement to have recourse for liquidated damages expired pursuant to s 67J of the Queensland Building and Construction Commission Act 1991 (Qld) ("the QCBBA") on or about 20 November 2024, and no notice was given before that date; and
(c) there is no entitlement, whether under the Contract or by reason of ss 67J, 67E, or 108D of the QBCCA, to have recourse for an unliquidated amount, and the consequential loss claim is unliquidated in nature.
[15] The respondent has already received an accounting for the liquidated damages:
(a) under the Contract in the form of an abatement of the amount paid in response to progress claim 37; and
(b) under an adjudication pursuant to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) ('the BIF Act'); its notice, insofar as it relates to the liquidated damages asserted, is not on a basis that it can sustain.
[16] The respondent's entitlement to have recourse lapsed upon a failure to give a notice on valid grounds on or before 16 October 2025 due to:
(a) clause 5 of the General Conditions, which stipulated that the respondent cannot have recourse to the Retentions without giving 7 clear days' notice of its intention to have recourse; and
(b) the operation of ss 67NA, 67E, or 108D of the QBCCA.
[17] The threshold of showing a prima facie case is not a particularly demanding one.
[18] In Australian Broadcasting Corporation v O'Neill,[10] Gummow and Hayne JJ explained that a prima facie case involves the need for an applicant to show no more than "a sufficient likelihood of success to justify...the preservation of the status quo".[11] It is not necessary to show that the applicant will, more probably than not, succeed at trial.
[19] Consideration of the balance of convenience involves weighing the competing prejudice to the parties and, ultimately, adopting the course which "...appears to carry the lower risk of injustice if it should turn out to have been 'wrong'...".[12]
[20] Bond J (as his Honour then was) observed in AECI Australia Pty Ltd v Convey:[13]
"The two inquiries are related and not independent of each other, so that the weight of considerations in regard to one may well affect the other."
[21] The respondent submits that the application should be dismissed as the applicant has failed to grapple with the real issue on the application, which is that clause 5.2 creates an unfettered right to security with the right to recourse being conditioned only upon the giving of 7 days' notice, which occurred. The respondent states that clause 5.2 only requires the respondent to assert that it has, or may have, a claim against the applicant.
[22] The respondent states that the requirements of clause 5.2 were fulfilled as:
(a) the Notice given to the applicant asserted that it has, or may have, a claim against the applicant; and
(b) 7 days' notice was given to the applicant.
[23] Further, as the Notice was in relation to an unliquidated claim, the respondent states that the requirements set out in s 67J of the QBCCA do not apply. The applicant submits that is the end of the matter.
[24] In relation to the grounds raised by the applicant, the respondent submits that they are all matters for trial.
[25] In all of the circumstances, I agree with the respondent.
[26] The applicant and respondent entered into the Contract on 20 August 2020.
[27] The applicant was engaged by the respondent to design and construct a residential apartment building, with an agreed contract price of $25,200,000.
[28] Clause 5 of the General Conditions to the Contract requires the applicant to provide security. That was in the form of retention monies equal to 10% of the total contract sum.
[29] Works progressed slowly. A dispute arose about the applicant's lack of progress. Consequently, the applicant and respondent entered into a deed which, amongst other things, varied the terms of the Contract.
[30] Works then continued with practical completion on or about 23 October 2024.
[31] However, on 14 October 2025, the respondent gave the applicant notice that it was having recourse to security. The letter is set out in detail below.
"1. We adopt all defined terms given in the Contract.
The contractor shall ensure that WUC reaches practical completion by the date for practical completion.
(a) to extend the date for practical completion to 16 May 2024; and
(b) to increase the rate for liquidated damages from $5,000.00 per day to $10,000.00 per day.
If WUC does not reach practical completion by the date for practical completion, the Superintendent shall certify, as due and payable to the Principal, liquidated damages in Item 29 for every day after the date for practical completion to and including the earliest of the date of practical completion or termination of the Contract or the Principal taking WUC out of the hands of the Contractor.
The Contractor's maximum aggregate liability for liquidated damages shall not exceed the amount which is equivalent to 10% of the contract sum.
The Contractor acknowledges that rate for liquidated damages in Item 29 does not cover nor include consequential loss (including but not limited to loss of rent or loss of profit) which the Contractor indemnifies the Principal under Clause 2A, or to recover such losses under the Contract.
(a) 14 June 2021, Arriba Investments Pty Ltd and the Principal entered into a loan agreement for financing part of the cost of the Project for the Principal;
(b) 30 June 2023, Boulder Capital Pty Ltd and the Principal entered into a loan agreement for financing part of the cost of the Project for the Principal; and
(c) 22 September 2023, Australia and New Zealand Banking Group Limited (ANZ) and the Principal entered into a loan agreement for financing part of the cost of the Project for the Principal; and
(d) 1 July 2024, Boulder Capital Pty Ltd and the Principal entered into a loan agreement for financing part of the cost of the Project for the Principal that refinanced the ANZ loan facility.
(a) the WUC reached practical completion on 23 October 2024; and
(b) the Contractor failed to ensure the Works under the Contract reached practical completion by the date for practical completion, namely 16 May 2024
(a) the Principal has incurred $2,257,683 in damages, costs and expenses as follows:
(i) $2,130,178.47 in additional interest and fees payable under the Loan Agreements as particularised in Annexure B.
(ii) $88,400.00 estimated for wasted overheads for the management and supervision of works, being the costs incurred by Marquee Projects Pty Ltd, Mitchell Brandtman and Blackdot Pty Ltd as particularised in Annexure C.
(iii) $7,356.41 for rates to the City of Gold Coast estimated as 184 days apportioned by reference to the Rate Notice dated 6 March 2023 which calculated rates from 1 July 2024 to 31 December 2024 in the amount of $15,039.78.
(iv) $27,647.26 for land tax to the Queensland Revenue Office estimated as 365 days apportioned by reference to the Land Tax Assessment Notice dated 20 August 2024 which calculated land tax of $112,125.00 for the 2024/2025 financial year.
(v) $4,100.85 for water and sewage to City of Gold Coast with utilities charges in the amount as particularised in Annexure D; and
(b) claims that Consequential Loss from the Contractor.
(a) is in breach of Contract; and
(b) liable to pay to the Principal the Consequential Loss.
(a) where an amount due to the Principal under the Contract or otherwise remains unpaid after the time for payment; and
(b) in respect of any claim to payment (liquidated or otherwise), the Principal may have or claims to have against the Contractor under the Contract or otherwise.
on the giving of 7 days with written notice to the Contractor.
[32] The respondent states that the Notice relates to unliquidated damages. However, the applicant states that the Notice is for liquidated damages by reference to the following passages of the Notice:
"6. On 27 March 2025, the Superintendent certified that the Contractor was liable to pay to the Plaintiff the sum of $900,000.00 for liquidated damages.
(a) the WUC reached practical completion on 23 October 2024; and
(b) the Contractor failed to ensure the Works under the Contract reached practical completion by the date for practical completion, namely 16 May 2024.
(a) the Principal has incurred $2,257,683 in damages, costs and expenses as follows:
[33] The applicant submits the allegation as contained in the Notice is that the respondent has incurred the amounts identified and therefore is a liquidated amount.
[34] In my view, the Notice is in relation to a claim for unliquidated damages.
[35] In PJ Nash Pty Ltd v Food and Beverage Australia Limited,[14] the distinction between liquidated and unliquidated damages was conveniently summarised:
"[54] At common law, a debt is distinct from a liability in damages or some other unliquidated obligation. It is distinct from a claim in damages particularly in that a claim in debt does not require proof of loss or damage. Actions in debt are, in essence, actions on the case where the damages for breach of the promise to pay the debt are equal to the amount owed. As the High Court stated in Young v Queensland Trustees Ltd:
"The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebtitatus assumpsit."
[55] A debt is a liquidated sum in money presently due, owing and payable by one person, called the debtor, to another person called the creditor. A claim in debt arises at the moment the debt falls due. A liquidated sum is one where the amount to which an applicant is entitled has been predetermined (by or pursuant to agreement or legislation) by reference to a fixed amount, scale or formula before the matter reaches court. In Spain v Union Steamship Co of New Zealand Ltd Knox CJ and Starke J adopted a textbook definition that:
"...whenever the amount to which the plaintiff is entitled ... can be ascertained by calculation or fixed by any scale of charges, or other positive data, it is ... liquidated."
[56] What constitutes a liquidated sum as opposed to an unliquidated sum can be difficult in some circumstances to ascertain. The distinction is that between agreed compensation calculated and quantified in a way specified in, or ascertainable from, the contract itself and damages which are to be assessed according to the ordinary principles for determining damages for breach of contract. Thus, where a contract or agreement between parties provides for a mechanism to calculate or ascertain a specific amount that is due and payable, that amount is a liquidated sum".
[36] The Notice is seeking the consequential loss, which is defined in the Contract as:
"any special, indirect, consequential or economic loss or damage of any nature including, but not limited to special, exemplary or punitive damages, loss of production, loss of revenue, loss of profit or anticipated profit, loss of contract, loss of business reputation, business interruptions of any nature, loss of opportunities, loss of anticipated savings or wasted overheads."
[37] The Contract has not provided for a mechanism to calculate or ascertain a specific amount that is due and payable in relation to the consequential loss and the damages sought by the Notice. The Notice is about an unliquidated claim.
[38] The ultimate issue raised by the applicant's grounds is whether, at least in relation to the serious question to be tried issue, the respondent is, or is not, entitled to call on the security.
[39] This, in turn, depends upon the obligation, or liability, of the applicant intended to be secured by the terms of the Contract and whether the respondent's liability to call on the security is necessarily qualified or subject to any condition.
[40] The inquiry begins with construing the terms of the Contract which deal with recourse to the security.
[41] As set out in Clough,[15] as a general proposition, a court will not intervene to restrain a party from calling on security:
"[75] The principles under which a court will construe the terms of a bank's undertaking in a performance guarantee, and the contract between a contractor and an owner, have been stated in a series of authorities over the last 30 years. The seminal decision is that of the High Court in Wood Hall Ltd v Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443.
[76] Reference was made in Wood Hall Ltd v Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443 to the commercial purpose of the guarantees, which in that case was that they be equivalent to cash: see Barwick CJ (at 445); Gibbs J (at 453); Stephen J (at 457-458). As Stephen J observed, to introduce a qualification on the entitlement of the owner to call upon the performance guarantees (at 457):
... would be to deprive them of the quality which gives them commercial currency.
Barwick CJ and Gibbs J expressed similar views to Stephen J. Gibbs J stated the argument made on behalf of the contractor, which was that the performance guarantee must be construed in light of the contract between the authority and the contractor (at CLR 450; ALR 391). His Honour rejected the submission that the right to invoke the guarantee was conditional upon the contractor having committed a breach of its primary obligations under the contract. He placed emphasis upon the express statement in the guarantee that the undertaking of the bank was unconditional (at CLR 451; ALR 391-2)."
[42] There are, however, three well recognized exceptions to that general proposition, as outlined in Clough:
"[77] Nevertheless, the authorities have recognised three principal exceptions to the rule that a court will not enjoin the issuer of a performance guarantee, or bond, from performing its unconditional obligation to make payment. The exceptions were succinctly stated, with references to relevant authorities, by Austin J in Reed Construction Services Pty Ltd v Kheng Seng (Aust) Pty Ltd (1999) 15 BCL 158 at 164 -165:
First - the court will enjoin the party in whose favour the performance guarantee has been given from acting fraudulently: see, for example, Wood Hall per Gibbs J (at CLR 451; ALR 391-2). As the primary judge observed at [36] Clough does not assert that ONGC has made a fraudulent claim. Accordingly, the first exception has no application in the present case.
Second - the party in whose favour the performance bank guarantee has been given may be enjoined from acting unconscionably in contravention of s 51AA of the TPA ... On this point, different views have been expressed about the reach of s 51AA. The High Court has not determined which of these views is correct ... In any event, none of the categories of unconscionable conduct recognised in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd (2002) 117 FCR 301; 189 ALR 76; [2002] FCA 62 at [48] apply in this case. Accordingly, the second exception has no application.
Third - the most important exception for present purposes, is that, 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 bond has been given has made a contract promising 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.
It may be preferable not to describe this as an exception but rather as an over-riding rule because it emphasises that the "primary focus" will always be the proper construction of the contract ... Stephen J recognised this in Wood Hall at CLR 459; ALR 398-9 by observing that the provisions of the contract may qualify the right to call on the undertaking contained in a performance guarantee."
[43] Where the relevant clause, properly construed, creates an unfettered right to call on the security, "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".[16]
[44] If the relevant clause is an unfettered right to call upon security, then, absent fraud or unconscionability, a party seeking to restrain a call on a guarantee will be unable to make out a prima facie case (or show that there is a serious question to be tried), and relief should be refused.
[45] Accordingly, an application of this nature does not require any evaluation of the underlying merits of the claim. It is sufficient that a claim has been made or asserted.
[46] A prima facie case is not, of course, enough. The balance of convenience must also favour the grant of relief.
[47] It has been long recognised that a clause, such as clause 5.2, may serve two purposes:
(a) to provide security; and
(b) to allocate risk as to who will be out of pocket pending the resolution of a dispute.
[48] In Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd,[17] Callaway JA explained:
**"**There are broadly two reasons why the beneficiary may have stipulated for a guarantee. One is to provide security. If it has a valid claim and there are difficulties about recovering from the party in default, it has recourse against the bank. The second reason, which is additional to the first, is to allocate the risk as to who shall be out of pocket pending resolution of a dispute. The beneficiary is then able to call upon the guarantee even if it turns out, in the end, that the other party was not in default ... It is a question of construction of the underlying contract whether the guarantee is provided solely by way of security or also as a risk allocation device. Remembering that we are speaking of guarantees in the sense of standby letters of credit, performance bonds, guarantees in lieu of retention moneys and the like, the latter purpose is often present and commercial practice plays a large part in construing the contract."
[49] Where the relevant security is provided for both purposes, the balance of convenience will ordinarily favour the refusal of an injunction.
[50] The reason for that was explained by Osborn and Ferguson JJA in Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd:[18]
"If a provision in a building contract requiring a performance bond is intended to operate as a risk allocation device pending the final determination of the dispute between the parties then that intention must be fundamental to a consideration of the justice of an application made to restrain recourse to such a bond pending final determination of the dispute."
[51] The question of whether security fulfills both purposes is a question of construction.[19]
[52] Where the relevant provisions create an unqualified or unfettered right to call upon the security, it will be regarded as having both purposes.
[53] Part 5 of the Contract sets out the provisions in relation to Security.
[54] Relevantly, clause 5.2(b) of the Contract provides:
"(b) in respect of any claim to payment (liquidated or otherwise), the Principal may have or claims to have against the Contractor under the Contract or otherwise, on the giving of 7 days written notice to the Contractor."
[55] The applicant states that clause 5.2(b) requires the identification of an actual amount and, at the hearing, counsel for the applicant explained his submission in this way:
"But if I can note that the recourse is in respect to any claim for payment. And the words "claim to payment", in my submission, have to be read together. So the notice must specify it's claiming an amount, not merely claiming the retentions. And the reason for that is if the claim - if the retentions were a million dollars and the claim was for 500,000, then clearly recourse couldn't be had to the whole of the million dollars, it would be capped by the amount of the notice. And in my submission, that's the logical construction that flows. But the other aspect of the clause is that it's implicit in the nature of the notice that it must identify a cause, i.e., is it a claim for a debt, is it a claim for an amount owed, is it a claim for damages, is it a claim for tortious damages. For the notice to be effective, the notice must identify the purpose for which the recourse is sought."
[56] Clause 5.2 entitles the respondent to have recourse to security in respect of any claim it "may have" or claims "to have against" the applicant. This clause is broadly framed.
[57] In the parentheses, clause 5.2(b) provides examples of any claim to payment. It states it applies to claims to payment (liquidated or otherwise). The use of the term "otherwise" allows for broad application.
[58] Accordingly, clause 5.2(b) is not confined to liquidated amounts or to liquidated damages and applies to other damages, as in this case, unliquidated damages.
[59] It should be noted that the Contract gives an expansive meaning to the term "claim":
"Claim: means any claim (including for any EOT, variation or delay costs under the Contract), right or action or demand (or similar legal entitlement), in any jurisdiction, including but not limited to at law, in tort (including negligence), under statute, in equity including quantum meruit or restitution based on unjust enrichment for rectification, frustration or for any other legal or equitable remedy."
[60] The breadth of the term "claim" is clear from the definition and the variety of circumstances it embraces which includes any "demand".
[61] The ordinary use of "demand" includes the making of an assertion. The provision of broad examples in the definition of "claim" is inconsistent with limiting it to any proven entitlement to an amount.
[62] Notably, clause 5.2(b) uses the broad term of "claim" and not "entitlement" and does not require the question of an objective existence of the claim.
[63] The use of the term "claim" in clause 5.2(b) rather than "entitlement" is significant.
[64] In FMT Aircraft Gate Support Systems v Sydney Ports Corporation,[20] Pembroke J stated:
"Nevertheless, whatever the extent of the broadening of the circumstances that was intended, the formulation used in clause 5.2 still requires consideration of the precise meaning and extent of the word "claim". The word is used in many different contexts in the law. Its ordinary meaning however is of an assertion or demand."
[65] Such a conclusion in FMT Aircraft Gate Support Systems is consistent with the wide definition given to the term "claim" by the Contract.
[66] Clause 5.2(b) deals with situations where the respondent is merely claiming to have a claim, demand, or assertion (including all of the circumstances that the definition of "claim" embrace).
[67] A mere claim, or the assertion of a claim, is sufficient to engage clause 5.2(b). Clause 5.2(b) permits recourse to the security provided that a demand has been made with the only requirement being a "claim", not a proved entitlement.
[68] The test of what is a "claim" for the purpose of a contractual provision such as clause 5.2(b) is relatively undemanding. Indeed, it has been held the claim need not be "genuine or fair" or even reasonable.[21]
[69] I note that the breadth of clause 5.2(b) continues, "under the _Contrac_t or otherwise."
[70] The expansive way of how clause 5.2(b) is framed means that it has broad application and includes claims where a demand (or assertion) has been made.
[71] Accordingly, clause 5.2(b) is not limited to claims that might arise under the Contract, rather, it includes claims, however so arising.
[72] There is one precondition to the exercise of the right under clause 5.2(b) and that is the giving of 7 days' notice. In this case there is no dispute that 7 days' notice has been given.
[73] Properly construed, clause 5.2(b) creates an unfettered right to security. That conclusion emerges from the clear words in clause 5.2(b). It entitles the Principal to have recourse to security in respect of any "claim" that the "...Principal may have or claims to have against the contractor...". It does not speak in respect of the language of entitlement. A mere claim, or the assertion of a claim, is sufficient.
[74] I note that Davis J in Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd[22] came to the same conclusion when considering a materially similar clause which stated:
(b) in respect of any claim to payment (liquidator or otherwise), the Principal may have against the Contractor under the Contract which remains unpaid after 5 business days after demanding payment."[23]
[75] As in this case, Davis J concluded that the only relevant pre-condition on a call being made on the security on that case was the giving of notice. A mere assertion of entitlement was sufficient. His Honour explained that:
"[57] Clause 5.2 of the building contract, as earlier observed, permits recourse to the bonds where there is "any amount due" or any "claim to payment". Therefore, provided demand has been made, the only requirement is a "claim" not a proved entitlement." [24]
[76] The applicant refers to Tomkins Commercial & Industrial Builders Pty Ltd v Majella Towers One Pty Ltd,[25] Austrak Pty Ltd v John Holland Pty Ltd,[26] and Synergy Construct Australia Pty Ltd v GSA North Terrace Pty Limited (ATF GSA North Terrace Unit Trust)[27] and submits that the principles that emerge from these authorities are that:
(a) if the applicant demonstrates a reasonable prospect that:
(i) the purported or actual recourse to the retentions was in breach of a negative stipulation; and
(ii) the time at which the transfer of the retentions has passed;
(b) then it cannot be said that such recourse was a risk assumed by the applicant under the Contract, and absent other factors weighing against the position, the reasonable prospect identified was sufficient to satisfy the balance of convenience in the grant of relief.
[77] Here the applicant states that, by reference to its grounds, the respondent's claim is misconceived and would be amenable to summary judgment if commenced as a claim.
[78] The respondent rejects such a characterisation of its claim.
[79] First, the respondent rejects the consequences of the Superintendent being unlicensed being fatal to its ability to bring a claim against the applicant and submits that:
(a) the Superintendent, Marquee Projects Pty Ltd, was licensed at all relevant times;
(b) the Superintendent held the requisite licence both at the time the Contract was entered into and at the time it was engaged by the Principal to act as the Superintendent;
(c) the only period the Superintendent did not hold a licence was for a few weeks between 31 August 2022 and 1 November 2022, and there is no suggestion that anything material happened during that time;
(d) any suggestion that s 42 of the QBCCA, which operates to preclude the formation of a contract with an unlicensed person, somehow operates to invalidate the superintendent's appointment is wrong;
(e) at the time the Contract was formed, Marquee was licensed;
(f) no authority is cited by the applicant to support the proposition that the superintendent temporarily losing its licence somehow had some effect on a contract entered into sometime before; and
(g) the efficacy of the respondent's call on the security had nothing to do with the Superintendent, which was a right for the respondent to exercise, and not dependent, for example, on the Superintendent having certified anything.
[80] Second, the respondent submits that the focus which the applicant places on its entitlement to liquidated damages is a distraction. The held security was not converted in respect of any claim for liquidated damages. It was converted only in respect of the Consequential Loss.
[81] Third, the respondent submits that any suggestion that it is not entitled to claim Consequential Loss of the type it claims must, as a matter of construction, be rejected.
[82] It cannot be said that the respondent's sole remedy in the event of delay was liquidated damages. That is because clause 34.7 of the Contract states that:
"... the rate for liquidated damages in Item 29 does not cover nor include consequential loss (including but not limited to loss of rent or loss of profit) which the Contractor indemnifies the Principal under clause 2A, or to recover such losses under the Contract."
[83] The term "consequential loss" (as it is used in clause 34.7 of the Contract) is defined in the Contract in broad terms.[28]
[84] Having regard to the breadth of that definition, the respondent rejects any submission that the Consequential Loss claimed is somehow beyond what can be claimed as damages for breach of the Contract; it falls precisely within the definition.
[85] Each party raises arguable issues and their competing arguments are matters to be litigated at a trial.
[86] It is not for me to ultimately determine these issues on this application.
[87] These reasons were set to be published on the afternoon of 19 December 2025. On the morning of delivery day, the parties advised that due to a recent decision of McCafferty J in Grassy Meadows Projects Pty Ltd ACN 639 329 801 v Rawcorp Pty Ltd; MDP No 15 Pty Ltd v Rawcorp Pty Ltd,[29] the parties needed to provide further submissions (which they did and also set the matter down for a further review).
[89] Grassy Meadows Projects concerned an application by the respondent for an order freezing the applicant's assets.[30] The claim which formed the basis of that application included the respondent's claim for Consequential Loss which was raised in these proceedings.[31] The applicant's position in Grassy Meadows Projects (as it was in these proceedings) was that the respondent did not have a prima facie claim on its claim for Consequential Loss.[32] McCafferty J in his reasons found that the respondent had "a good arguable case, in the sense that they have a case which is more than barely capable of serious argument, and yet, not necessarily one which the court believes has a better than 50 per cent chance of success."[33]
[90] Such a view by another judge in another application between the parties is of no consequence to this application.
[91] The relevant issue on this application is whether there is a valid claim within the meaning of clause 5.2(b).
[92] The test for what is a "claim" for the purpose of a provision such as clause 5.2(b) is ultimately undemanding.
[93] As Pembroke J explained in FMT Aircraft Gate Support Systems, what is required is an arguable claim:
"[13] It is stating the obvious to say that a valid claim within the meaning of clause 5.2 must be non-fraudulent. In that sense, it must be a genuine claim. It adds nothing to say that it must be bona fide. On the other hand, despite occasional suggestions to the contrary, I am satisfied that a mere honest or bona fide "belief" in a claim is insufficient: cf Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136 at [102]. The test could not be subjective honesty or bona fides. More is required. A claim that is irrational and misconceived could not justify recourse to the security simply because the claimant had an honest, but wrongheaded, belief in the correctness of its claim. Equally, it is inappropriate to insist that the claim be "genuine and fair" as the plaintiff submitted. And it is certainly not necessary that the claim be reasonable. Both would impose requirements on the principal that could well be onerous and productive of disputes.
[14] What is required in my view is an arguable claim - one that is not specious, fanciful or untenable: Hughes Bros v Telede Pty Ltd (supra) at 216 (Cole J). This is at least consistent with decisions that have held that an "entitlement" for the purpose of such a clause will have been established even though there is a genuine dispute or serious issue to be tried as to the existence of the right which underpins the entitlement: Fletcher Construction v Varnsdorf (supra) at 821-3 (per Charles JA).
[15] For my part, I think that the test of what is a "claim" for the purpose of a contractual provision such as clause 5.2 is relatively undemanding. An appropriate analogy is the criterion used for determining whether there should, or should not be, summary dismissal of a claim or proceeding: General Steel Industries v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125. Such an approach would, in my view, reflect the commercial purpose and the allocation of risk which I have explained."
[94] Considering the applicant's and the respondent's submissions as to the validity of the claim, in my view, it cannot be said that the respondent's claim as set out in the Notice is specious, fanciful, or untenable.
[95] The Contract is for "building work" regulated by the QBCCA, and the form of the Contract is regulated by Part 4A of the Act.
[96] Section 67J of the QBCCA relevantly provides:
(1) The contracting party for a building contract may use a security or retention amount, in whole or in part, to obtain an amount owed under the contract, only if the contracting party has given notice in writing to the contracted party advising of the proposed use and of the amount owed.
(2) The notice must be given within 28 days after the contracting party becomes aware, or ought reasonably to have become aware, of the contracting party's right to obtain the amount owed.
..."
[97] Sections 67E and 108D of the QBCCA have the effect of rendering inoperative any provision of a building contract which would restrict the operation of s 67J.
[98] The applicant contends that there is a serious question to be tried, namely, whether or not the purported notice to have recourse relied upon by the respondent was effective.
[99] The Notice identified two sources of entitlement to have recourse:
[100] Clause 5.2 of the Contract provides for when the respondent could have recourse to the retentions provided.
[101] The entitlement to liquidated damages is set out in clause 34.7 of the Contract, which provides:
"If WUC does not reach practical completion by the date for practical completion, the Superintendent shall certify, as due and payable to the Principal, liquidated damages in Item 29 for every day after the date for practical completion to and including the earliest of the date of practical completion or termination of the Contract or the Principal taking WUC out of the hands of the Contractor.
...
The Contractor acknowledges that the rate for liquidated damages in Item 29 does not cover nor include consequential loss (including but not limited to loss of rent or loss of profit) which the Contractor indemnifies the Principal under clause 2A, or to recover such losses under the Contract."
[102] Clause 2A was limited in its operation to compliance with proforma sales contracts and provided:
"2A Sales contracts
(a) The Contractor acknowledges that the Principal has entered or will enter into sales contracts for the units.
(b) The Contractor shall design and construct the Works in a manner to ensure that,
(i) when designing and carrying out WUC; and
(ii) when completed,
the Works will comply in all respects with the proforma sales contract.
(c) If either party discovers a discrepancy between the Contract documents and the Principal's project requirements or the proforma sales contract, that party shall promptly give written notice to the other party and the Superintendent, whereupon the discrepancy will be resolved in accordance with subclause 8.1.
(d) The Contractor hereby indemnifies the Principal against and will compensate the Principal for any cost, expense, loss, damage, consequential loss or any other liability."
[103] The applicant states that the respondent has not identified any "consequential loss" relating to the "proforma sales contract" in the Notice to have recourse. All it has asserted is an entitlement to various time-related holding costs associated solely with late completion.
[104] The applicant further submits if any entitlement to liquidated damages or the consequential loss identified in the Notice exists, those entitlements would have accrued upon practical completion.[36]
[105] The second respondent purported to certify practical completion as 23 October 2024. The applicants submit the respondent ought reasonably to be taken to have been aware of its asserted entitlements on, or shortly after, that date.
[106] But, in any event, the respondent's notice avers that the Superintendent's certification of liquidated damages occurred on 27 March 2025.
[107] The applicant contends that on any construction of the facts, more than 28 days have lapsed between the time the respondent could be taken to be aware of the right to pursue liquidated damages and the consequential damages it has claimed, particularly since those costs on their own statement accrued prior to practical completion.
(a) s 67J refers to an amount owed under the Contract, which is a debt, it would be inapt for the respondent to suggest it only just became aware of the amounts it has now claimed as those costs, if incurred, were plainly incurred more than 28 days before the Notice was given; and
(b) a claim was made for liquidated damages as a basis for the recourse that is plainly a claim regulated by s 67J, the entitlement to which arose more than 28 days before the Notice was given.
[109] Insofar as the claim was made for "consequential loss", the applicant submits that two questions arise:
(a) does a notice under clause 5.2 fall within the scope of s 67J of the QBCCA simply by its identification of an amount claimed?
(b) are the claims for "consequential loss" properly characterised as for liquidated amounts?
[110] I note that the interpretation of s 67J has been the subject of consideration in recent years.
[111] In Beyfield Pty Ltd v Northbuild Construction Sunshine Coast Pty Ltd,[37] Martin J relevantly held:
"[40] Section 67J also confines the operation of retention clauses to "debts due". To argue, as Northbuild does, that this section does not apply to matters other than "debts due" is inconsistent with the scheme of this Part of the Act. The Act sets out to regulate the building industry and to limit the scope of set-offs to contracting parties. Any ambiguity in the construction of s 67J should be resolved by reference to those matters. It is remedial legislation in many respects and that can be seen from the sections which work to impose conditions expressly. While s 67J does not, in terms, impose a condition it restricts the use which a contracting party may make of a security.
[41] The term relied upon by Northbuild - cl 5(e)(ii) - is inconsistent with s 67J to the extent that it purports to allow access to a security for the purposes of satisfying claims which are not for "amounts owed". The clause is, then, unenforceable to that extent and Northbuild cannot use the securities for its unliquidated claims."
[112] Then, in Saipem Australia Pty Ltd v GLNG Operations Pty Ltd (No 2),[38] McMurdo J (as his Honour then was) held:
"[31] ... The present question is whether, as Saipem argues, s 67J(1), and not just cl 5.5(a) of the contract, limits recourse to the bank guarantees to where there is a debt due. In Beyfield Pty Ltd v Northbuild Construction Sunshine Coast Pty Ltd, it was said that "section 67J also confines the operation of retention clauses to 'debts due'". This statement must be read in context. The question there being considered was whether s 67J(1) was confined to circumstances of "debts due" so that it would not apply to the use of a security or retention amount, pursuant to a term of the building contract, to recover unliquidated damages. It was held that s 67J did extend to the circumstance of a claim for unliquidated damages, so that recourse could not be had to a security for the purpose of satisfying such a claim unless a notice was given under s 67J(1). The term "amount owed" was thereby given a broad interpretation to include unliquidated damages ...
...
[33] Rather, s 67J(1) affects the right of a contracting party to use a security or retention amount only by requiring the notice which it describes. The section is engaged where that entitlement to use a security or retention amount otherwise exists and once engaged, its effect is to qualify the entitlement by requiring the notice ...
...
[38] The question here is whether it was a purpose of the Act that a notice given in breach of s 67J(2) should be invalid, for which regard must be had to "the language of the relevant provision and the scope and object of the whole statute". The question is yet to be conclusively determined. It is unnecessary for a concluded view to be reached here. However, the better view seems to be that a noncompliance with s 67J(2) would have the consequence of invalidating the notice ..."
[Citations omitted]
[113] This was followed by Saipem Australia Pty Ltd v GLNG Operations Pty Ltd[39] ("Saipem No 3") where then Chief Justice Holmes considered s 67J(2). The Chief Justice referred to Beyfield and Saipem (No 2) in her reasons and concluded:
"[27] Were there no previous decisions concerning the issue, I would reject the proposition that there is a serious question about s 67J's application to unliquidated damages, but in light of what may be seen as contrary (but differing as between them) views in Beyfield and Saipem (No. 2), I accept that there remains a live argument on the point. What seems to me its lack of strength is a factor to be taken into account in deciding where the balance of convenience lies.
...
[29] I concur with McMurdo J on this point: the stronger argument is that a breach of the requirements of s 67J renders a notice purportedly given under it invalid. GLNG conceded that it was at least a serious question to be tried, while contending that the contrary - that a failure to give the notice within 28 days did not render it ineffective - was also seriously arguable."
[114] Finally, Applegarth J in Sun Engineering (Qld) Pty Ltd v Ravenswood Gold Pty Ltd,[40] considered these previous cases and found Saipem (No 3) persuasive.
[115] The applicant states that, whatever else might be said about the authorities on s 67J of the QBCCA, the common theme is that, insofar as a claim is for a liquidated amount, the better view is that the right to make such a claim lapses more than 28 days after the claimant became or ought to have become aware of the entitlement to claim.
[116] It is submitted that the applicant has a prima facie case to the effect that recourse for the purpose of satisfying a claim for the liquidated amounts claimed is out of time.
[117] The question remaining is whether the "consequential loss" claim is a ground which is not caught by the operation of s 67J merely by reason that it might be said to be unliquidated in nature.
[118] The applicant submits that the reasoning of Martin J in Beyfield and of McMurdo J in Saipem (No 2) is at odds with the reasoning of Applegarth J in Sun Engineering, and that this difference raises serious questions to be tried, namely:
(a) whether the proper construction of the QBCCA is to exclude any entitlement to have recourse to retentions for unliquidated amounts; and alternatively,
(b) whether the "amount owed under the contract" in s 67J(1) speaks to the claimed amount referable to clause 5.2(b) of the Contract, which becomes a debt on a contingent basis, namely what was described in Daysea Pty Ltd v Watpac Aust Pty Ltd[41] as making the recipient of the Notice "bound to pay the amount of the certificate notwithstanding that the amount is provisional only and subsequently may be found to be incorrect".
[119] The applicant submits that these are serious questions to be tried sufficient to support the interlocutory relief sought by it.
[120] In my view, the issue about s 67J not applying to unliquidated damages is relatively settled.
[121] The Chief Justice's reluctance to conclude, definitively, that there was no serious question to be tried about s 67J was based on the existence of those earlier decisions. The position has now changed.
[122] The reasoning in Saipem was followed by Applegarth J Sun Engineering, who regarded Saipem as settling the question. His Honour explained that:
"[153] The clear words of s 67J(1) indicate that its notice requirement is engaged only when a party seeks to have recourse to security to obtain "an amount owed under the contract". The notice requirement in s 67J apparently does not apply where the contract entitles a party to use a security to recover other amounts, such as a claim for unliquidated damages or an amount to which a party is entitled under the general law. This conclusion is supported by the decision of Holmes CJ in Saipem (No 3). Saipem (No 3) held that a clause which permits recourse to security for unliquidated amounts (i.e. not an "amount owed") would not be inconsistent with s 67J. The section was not the source of a party's entitlement to recourse to security, but rather placed "a hurdle in the way of the exercise of contractual rights, in the form of the notice requirement".
[154] Sun seeks to call into question the correctness of the reasoning in Saipem (No 3). It says that the decision did not refer to an earlier decision of the Court of Appeal in Multiplex Ltd v Qantas Airways Ltd. The decision in Multiplex concerned a different form of s 67J. However, Keane JA (with whom McMurdo P and Mullins J agreed), noted that s 67J was concerned to regulate the reduction of "an amount payable under the contract" by "an amount owed under the contract". I do not consider that Multiplex provides a reason to not follow the decision of Holmes CJ in Saipem (No 3).
[155] Sun also relies on an earlier decision in Beyfield Pty Ltd v _Northbuild Construction Sunshine Coast Pty Lt_d. Holmes CJ considered the reasoning in Beyfield and the reasoning in the earlier Saipem decision. Saipem (No 3) is a carefully-reasoned decision. It recognises a possible anomaly in s 67J not applying to unliquidated claims or attempts to use a security for amounts other than "an amount owed under the contract". However, that conclusion flows from the language of the section. Saipem (No 3) is persuasive and I follow it."
[123] I, too, find Saipem (No 3) persuasive and follow it.
[124] The applicant's counsel initially stated that, of the four cases that considered s 67J, it was evenly divided. However, during submissions he acknowledged that three of those cases held that s 67J does not apply to unliquidated damages. The outlier was Martin J in Beyfield.
[125] Saipem (No 2), Saipem (No 3) and Sun Engineering all had the luxury of considering Beyfield and all concluded that s 67J did not apply to unliquidated damages.
[126] I am not bound by previous decisions of the Supreme Court (trial division). However, in my view, the aforementioned cases contain a thorough analysis of the principles involved in this case and are persuasive.
[127] The balance of convenience will most often favour refusal of an injunction where, as here, the security provisions in the Contract serve a risk allocation function. As explained in Clough:
"[79] In Fletcher Construction, Charles JA at 821 and Callaway JA at 826 recognised that there are generally two commercial reasons why a beneficiary of a performance guarantee may have stipulated for such an entitlement. One is to provide security for a valid claim against the contractor. The second, which is additional to the first, is to allocate the risk between the parties as to who shall be out of pocket pending the resolution of a dispute between them. Callaway JA went on to observe that it is a question of construction of the underlying contract whether the guarantee is provided solely by way of security or also as a risk allocation device. He went on to say (at 827):
Remembering that we are speaking of guarantees in the sense of standby letters of credit, performance bonds, guarantees in lieu of retention moneys and the like, the latter purpose is often present and commercial practice plays a large part in construing the contract. No implication may be made that is inconsistent with an agreed allocation of risk as to who shall be out of pocket pending resolution of a dispute and clauses in the contract that do not expressly inhibit the beneficiary from calling upon the security should not be too readily construed to have that effect. As I have already indicated, they may simply refer to the kind of default which, if it is alleged in good faith, enables the beneficiary to have recourse to the security or its proceeds.
[80] It seems to us that his Honour's reference to a default "alleged in good faith" was intended to embrace the first exception we have set out above. That is to say, the breach relied upon to support a call on the performance guarantee must not be asserted fraudulently because the Court will enjoin a party from so acting. Thus, subject to the exceptions of fraud and unconscionability, the beneficiary of a performance guarantee granted in its favour as a risk allocation device, will be entitled to call upon the guarantee even if it turns out, ultimately, that the other party was not in default: Fletcher Construction at 827." [42]
[128] In this case, the applicant has failed to grapple with the real issues.
[129] The answer to this application is found in clause 5.2.
[130] Upon giving 7 days' notice, clause 5.2 creates an unfettered right to call upon security. The respondent's claim to do so is not specious, fanciful, or untenable.
[131] The security under the Contract was provided for a dual purpose:
(a) to provide security to the respondent; and
(b) to allocate risk - in the sense of determining who should hold the funds - until the dispute is determined.
[132] That follows from the unfettered nature of the right.
[133] Whereas here, as the Contract creates an unfettered right to have recourse to security, the Court will not interfere by issuing an injunction except in cases of fraud and unconscionability;[43] no such exception issues arise in this application.
[136] I will give the parties an opportunity to consider these reasons before they are required to file and serve short written submissions on the question of costs. I encourage the parties to agree on an order for costs.
[137] If this cannot occur, the parties should, within 28 days, file and serve written submissions as to costs.
[138] If it is appropriate, I will then deal with the question of costs on the papers, unless either party requests a hearing. To facilitate that process, I will adjourn the question of costs to a date to be fixed.
[1] The appointment is contested by the applicant on the basis that it involved an unlawful undertaking by the second respondent to carry out building work without a licence of the appropriate class: see s 42 of the Queensland Building and Construction Commission Act 1991 (Qld) ('QBCCA').
[3] The applicant states that the second and third respondents are necessary parties by reason that:
(a) orders involving the second respondent's conduct are sought; and
(b) pursuant to s 36 of the BCCMA, the third respondent has an interest in the outcome of the proceeding through its statutory right of subrogation to the rights of the first respondent under the Contract and, consequently, ought to be bound by the decision of the Court.
[5] Order of Williams J dated 23 October 2025.
[6] At the conclusion of this hearing, that undertaking was extended to the delivery of judgment.
[7] Clause 5.5 of the General Conditions of the Contract ("the General Conditions").
[8] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at 68 [19] (Gleeson CJ and Crennan J), 81-2 [65] (Gummow and Hayne JJ).
[9] It is uncontroversial that the applicant had made claims for extensions of time after 31 August 2022, being the date the second respondent ceased to be licensed.
[11] At [65], citing Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, 622-3.
[12] Tymbook Pty Ltd v State of Victoria; Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65, at 73 [35].
[13] [2020] QSC 207, at [16].
[15] Clough Engineering Ltd v Oil and Natural Gas Corporation Ltd (2008) 249 ALR 458 ("Clough").
[17] [1998] 3 VR 812, at 826-7 ("Fletcher Construction").
[18] [2015] VSCA 98, at [21].
[19] Fletcher Construction, at 821 and 826-7.
[20] [2010] NSWSC 1108, at [12] ("FMT Aircraft Gate Support Systems").
[21] FMT Aircraft Gate Support Systems, at [13].
[23] [2023] QSC 276, at [11].
[24] [2023] QSC 276, at [57].
[29] (Supreme Court of Queensland, McCafferty J, 15 December 2025) ('Grassy Meadows Projects').
[36] See for example clause 34.7 of the General Conditions.
[39] [2017] QSC 294, at [13]-[27].
[41] [2001] QCA 49, at [21].
[43] See Clough, at [80], citing Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812
Rawcorp Pty Ltd
MDP No 15 Pty Ltd [2026] QSC 38
(2006) 227 CLR 57
(1968) 118 CLR 618
(2008) 249 ALR 458
(2017) 96 NSWLR 329
(2006) 15 VR 65
(2009) 175 FCR 150
(1979) 141 CLR 443
(2002) 117 FCR 301
(1964) 112 CLR 125