Sarah Ferrett | Matt Hammond | Gemma Galloway
A court will exercise its discretion to grant a stay pursuant to rule 800 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) where one party holds a legitimate concern that it will not receive payment of a prospective arbitral award due to the other party restructuring its financial affairs.
This decision concerns an application for an order pursuant to rule 800 of the UCPR that the enforcement of the court’s orders in Ausipile Pty Ltd v Bothar Boring and Tunnelling (Australia) Pty Ltd  QCA 223 be stayed until delivery of an arbitral award in an arbitration between the parties. We reviewed the original decision here and the decision of the Court of Appeal here.
The decision of the Court of Appeal concerned an application for summary judgment under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). The court made an order under s78(2)(a) of the BIF Act that judgment be entered for Ausipile against Bothar for $761,296.75.
Following this decision, Bothar applied for an order that the enforcement of the court’s orders be stayed until the delivery of an arbitral award in an arbitration between the parties. Bothar submitted that it held genuine concerns regarding Ausipile’s ability to pay, in circumstances where the ongoing arbitration concerned a sum well in excess of that in issue in the court proceeding. That concern arose in circumstances where:
- a new entity (termed ‘Ausipile No.2’) had been incorporated some four days after Ausipile received a substantive defects notice from Bothar;
- Ausipile No.2 had the same sole director as Ausipile, and held a building licence from the QBCC in the same class;
- Ausipile had changed its name to be its ACN; and
- Ausipile No.2 was at liberty to operate under the same descriptive name ‘Ausipile‘.
The court exercised its discretion to grant a stay until delivery of the arbitral award, provided Bothar gave an undertaking as to damages and supplied a bank guarantee securing payment of the judgment debt. The court considered Ausipile’s submissions that granting a stay of the judgment sum was at odds with the ‘pay now, argue later‘ policy of the BIF Act.
In considering the exercise of the discretion to award a stay in the context of the BIF Act, the court cited with approval the judgment of Keane JA (as he then was) in R J Neller Building Pty Ltd v Ainsworth  1 Qd R 390. Here, his Honour discussed the circumstances in which a stay might be justified, including where a builder restructured its financial affairs after the making of a building contract, and where doing so increased the risk to the owner of the possible inability of the builder to meet its liabilities when they were ultimately declared by the courts.
Having regard to the restructuring of Ausipile’s affairs described above, the court concluded that these circumstances gave rise to a legitimate concern by Bothar that it might not be paid if it succeeded in obtaining a substantial award in the arbitration. Accordingly, the stay was granted, with costs.