Bothar Boring and Tunnelling (Australia) Pty Ltd v Ausipile Pty Ltd [2021] QCA 226

[2021] QCA 226 COURT OF APPEAL FRASER JA Appeal No 3642 of 2021 SC No 8953 of 2019 BOTHAR BORING AND TUNNELLING (AUSTRALIA) PTY LTD Respondent/Applicant ACN 622 309 264 v AUSIPILE PTY LTD Appellant/Respondent ACN 101 402 322 BRISBANE THURSDAY, 21 OCTOBER 2021 JUDGMENT FRASER JA: On 15 October 2021 the Court allowed the appellant’s appeal from a decision made in the trial division and it made an order under s 78(2)(a) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“the Act”), that judgment be entered for the appellant Ausipile Pty Ltd against the respondent, Bothar Boring and Tunnelling (Australia) Pty Ltd, in the amount of $761,296.75. (See Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd [2021] QCA 223.) The unsuccessful respondent to that appeal has applied for an order pursuant to r 800 of the Uniform Civil Procedure Rules 1999 (Qld) that the enforcement of the Court’s orders made in -- 1 of 5 -- 2 that appeal be stayed until delivery of the arbitral award in an arbitration between it and the appellant. The background is that the parties to the appeal were parties to a construction contract. They fell into dispute. On 5 July 2019 the respondent served a defects notice upon the appellant complaining that work improperly done by the appellant required the respondent to do a great deal of work at great expense. Four days later, on 9 July 2019, a company called Ausipile Foundation & Engineering Services Pty Ltd (“Ausipile No 2”) was incorporated. Ausipile No 2 has the same director as the appellant. It has a paid-up share capital of $6,001, whereas the appellant has a paid-up share capital of $1 and is subject to the registration of personal property securities by a bank for all present and after-acquired properties. Ausipile No 2 owns no real property. It holds a building licence issued by the Queensland Building and Construction Commission in the same class as the licence held by the appellant. From a date in September 2019 until 2 June 2021, Ausipile No 2 had Mr Cawse as its current nominee for the purpose of its building licence. Mr Cawse is the sole director of the appellant and of Ausipile No 2. On 18 June 2021, so relatively very recently, the appellant changed its name; its name now is simply its ACN. Ausipile No 2 will now be able to operate under the descriptive part of its name, “Ausipile”, which had previously been used by the appellant. Notwithstanding the persuasive submissions of Ms Hindman for the appellant, it seems to me quite clear that the circumstances involving these corporate rearrangements provide ample justification for what the respondent submits are its genuine concerns about the prospect that the appellant will actually pay any substantial amount of any large arbitral award in favour of the respondent, if there is any such award. Before the litigation commenced, there was a major arbitration under way, in which the respondent claims a sum of money which is substantially larger than the amount of the judgment debt resulting from the Court’s decision allowing the appeal. I have been told that the evidence has concluded in that arbitration, that there will now be an exchange of submissions before the arbitrator, and ultimately the arbitration will result in an award one way or another. -- 2 of 5 -- 3 There is no question that the court has jurisdiction to grant a stay of the enforcement of the judgment under r 800. It is true that a part of that rule refers to the court’s power to grant such a stay because of facts arising or discovered after the order was made. Nevertheless, the circumstances in which that rule may apply are relevantly not circumscribed. Contrary to a submission made by Ms Hindman, this is not an application for a Mareva order, nor is it analogous to the grant of a Mareva order. It is an application for a stay which is to be granted or refused in accordance with the exercise of the court’s discretion under r 800. The substantial point made by Ms Hindman is that to grant such a stay would be, in effect, to erode the “pay-now-and-argue-later” policy of the Act. That is an important consideration in a case of this kind, but it is not a full statement of the relevant policy of the Act. To put it briefly, what the Act is concerned with in chapter 3 is to establish a scheme for the interim payment of progress claims in defined circumstances, including where (as here) a respondent to a progress claim does not lodge a schedule in response to a claim under the Act. That the payment of the progress claim required by the Act is interim in nature is particularly reflected in s 100(3). That provision requires a court or tribunal charged with adjudicating or awarding the amount finally determined to be due under the building contract by one party or the other, to allow for any amount paid to a party to the contract under chapter 3 in any order or award. It also confers upon that court or tribunal a discretion to make orders it considers appropriate for the restitution of any amount so paid, having regard to its decision in the proceedings. There are now quite a number of judgments which discuss the way in which the discretion to grant a stay is to be exercised under the Act. It seems to me in this case to be sufficient to refer to the analysis by Keane JA (as his Honour then was) in R J Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390, particularly from paragraph 37. Justice Keane acknowledged the relevance of the policy of the Act, which is emphasised by Ms Hindman, in the observation that the mere existence of the very kind of risk on which the provisions of the Building and Construction Industry Payments Act 2004 (Qld) in favour of the builder are predicated would not ordinarily be sufficient, of itself, to justify a stay of an execution warrant based on the registration of a certificate of adjudication. -- 3 of 5 -- 4 However, his Honour went on to discuss particular circumstances in which a stay might be justified, one of which was a case in which the builder may have restructured its financial affairs after the making of the building contract so as to increase the risk to the owner of the possible inability of the builder to meet its liabilities to the owner when they are ultimately declared by the courts. Upon the evidence, there is a good argument that this is such a case. I am not in a position to make any final determination. Nevertheless, it appears to me significant for the exercise of the discretion to grant a stay that the circumstances give rise to a legitimate concern by the respondent that it may not be paid if it succeeds in obtaining a substantial award in the arbitration. So much of the policy of the Act as favours the appellant is sufficiently catered for by imposing a condition of any stay that the respondent provide security for the payment of the judgment debt, which it unconditionally owes the appellant. In addition, of course, as a condition of the stay the respondent should be obliged to give the usual undertaking as to damages. Mr Hickey, who appears for the respondent, has indicated that he has instructions to give such an undertaking. In these circumstances I am prepared to grant the stay which is sought, upon the respondent giving the usual undertaking as to damages and either paying into court or supplying a bank guarantee in a form satisfactory to the registrar securing payment of the amount of the judgment debt payable by the respondent to the appellant, together with interest up to and including 1 December 2021. The amount that should therefore be paid into court or secured is, according to calculations which I understand to be not contentious, $953,364.63. … Counsel have agreed upon a form of order which reflects my reasons. I should add that, if the appellant forms an apprehension that the award will not be delivered before 1 December 2021, the appellant is at liberty to apply for an increase in the amount of the payment into court or bank guarantee, any such application to be made by a brief written submission by the appellant lodged in the registry and served upon the respondent. -- 4 of 5 -- 5 The orders of the court are that, upon the respondent by its counsel giving the usual undertaking as to damages: 1. The enforcement of the Court of Appeal’s orders made in proceeding CA 3642 of 21 on 15 October 2021 be stayed until delivery of the arbitral award in the matter of an arbitration between Bothar Boring and Tunnelling (Australia) Pty Ltd and Ausipile Pty Ltd or earlier order. 2. The respondent pay into court or deposit a bank guarantee in a form satisfactory to the registrar for the sum of $953,364.63 by 6 pm on 25 October 2021. 3. In the event the respondent fails to comply with order 2 by the date therein, the stay in order 1 is lifted. 4. The security amount of $30,000 paid into court by the appellant by order of Justice Bond made on 20 July 2021 be paid to the appellant together with accretions thereto. … The respondent sought an indulgence and it did not offer to pay the amount of the judgment together with interest into Court or, alternatively, to provide security for the payment of the judgment together with interest, as a condition of it being granted a stay. I have something of an impression that there might have been a little bit more flexibility on both sides in negotiations, having regard to what was at stake. Nevertheless, it does seem to me in these circumstances that it is appropriate that the respondent pay the appellant’s costs of the respondent’s application. I so order. -- 5 of 5 --