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MTECC NEWS 22.02 ||| In what circumstances will a freezing order be granted under the Building and Construction Industry Security of Payment Act 2002 (Vic)?

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In ex parte Argyle Building Services Pty Ltd v Dalamex Pty Ltd trading as RK Basement & Structure Solutions & Anor (Unreported, Supreme Court of Victoria, Delany J 10 January 2022) RK obtained an Adjudication Determination for $431,266.80 immediately due for payment.

RK obtained judgement in the County Court for $440,746.29 pursuant to s 28R of the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act). Argyle sought judicial review on the basis the subcontract was not silent (as found by the adjudicator) as to a reference date.

RK obtained a Garnishee Order and ANZ transferred funds of $440,942.29 from Argyle to RK.

Argyle sought an urgent Freezing Order against RK for $440,942.29.

RK transferred $340,000.00 of the funds to STR Holdings Australia Pty Ltd (STR) a company controlled by its director who at that time was aware of the Freezing Order application.

Delany J found first Argyle had a good arguable case that the subcontract was not silent as to a reference date.

Second the purpose of a freezing order is to prevent frustration or abuse of the process of the Court NOT to provide security for a prospective judgement. Argyle’s evidence simply showed impecuniosity of RK, insufficient for a freezing order. But the evidence of the transfer from RK to STR showed a risk of assets being dissipated thereby frustrating the Court’s process.

Third it was appropriate to join STR to the application and to grant a freezing order against RK for $440,942.29 and against STR for $340,000.00 with a carve out for reasonable legal costs of RK and STR.

Michael Heaton QC

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