H & M Constructions (NSW) Pty Ltd v Golden Rain Development Pty Ltd

The Plaintiff, H & M Constructions (NSW) Pty Ltd, is a construction contractor. The Defendant, Golden Rain Development Pty Ltd, is a developer. H & M and Golden Rain are parties to a construction contract.

H & M commenced these proceedings in the Supreme Court of Victoria on 5 March 2021 seeking ex parte relief to restrain Golden Rain from calling on a bank guarantee under the contract.

The security had already been converted into cash but a continuing restraint on recourse to that cash was ordered by consent and remains in place.

H & M filed a Statement of Claim in the Supreme Court of Victoria which pleads breach of the contract, unconscionable conduct under the Australian Consumer Law and seeks the return of security and damages.

On 9 April 2021 the proceedings were transferred to this Court.

By Notice of Motion dated 27 April 2021 Golden Rain seeks security for costs.

There has been no relevant delay in the bringing of the application, as was foreshadowed as early as 30 March 2021 when the proceedings were still in the Supreme Court of Victoria.

H & M does not dispute that the Court’s jurisdiction to order security is enlivened.

However, H & M contends that its proceedings are “defensive” and that H & M is, in effect, a defendant in these proceedings, which have been triggered by Golden Rain taking “self-help” procedures by seeking to have recourse to the bank guarantees provided by H & M under the construction contract.

However, H & M seeks substantive relief in the proceedings. It pleads breaches of the construction contract and unconscionable conduct under the Australian Consumer Law.

I do not see that H & M, in substance, should be seen as a defendant in the proceedings.

H & M Constructions that:

In those circumstances, on 7 June 2021 my Associate wrote to the parties:

Golden Rain has responded to that email by an affidavit sworn by its solicitor, Mr Jonathan Light, in which it is stated:

I do not see this as being an unequivocal response to the enquiry that I, through my Associate, made of Golden Rain.

I will return to this below.

Golden Rain seeks security in the sum of $643,199. It has adduced evidence from a costs assessor, Mr Nicholas, who has estimated that this figure represents the amount of costs which will be recoverable by Golden Rain on an assessment were it to be successful in the proceedings.

The parties have agreed to attend a mediation by 30 August 2021.

In those circumstances, my opinion is that the appropriate amount to order for security is the amount that Mr Nicholas assessed as being Golden Rain’s recoverable costs up to and including mediation, being a figure in the order of $350,000.

As Golden Rain has not ruled out the possibility of bringing a cross-claim, the order for security should be qualified so that if Golden Rain does bring a cross-claim, the order for security be set aside without prejudice to Golden Rain’s entitlement to bring a further application for security.

In those circumstances, I make the following orders: