Two recent Supreme Court decisions considered when a court may grant an injunction to stop a party from calling on contractual security before the underlying dispute is resolved.

The general principles governing the grant of an interim injunction are well established. The party seeking an injunction must show that there is a serious question to be tried or prima facie case – meaning that there is a probability that, at the trial, that party would be entitled to relief. That party must also show that the balance of convenience favours granting the relief. The court will weigh the harm the applicant is likely to suffer if the injunction is refused against the harm the respondent is likely to suffer if it is granted. These two limbs are interrelated: the strength or otherwise of the applicant’s prima facie case will be relevant to assessing the balance of convenience.

Although the courts applied these principles in the cases discussed below, the courts reached different outcomes which turned on the terms of the relevant contracts, the purpose of the security and the commercial consequences of allowing, or preventing, a call on the security.

When the Court Intervened: York

In York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2026] QSC 156, the Supreme Court of Queensland granted a temporary injunction restraining York from calling on Tomkins’ security.

The dispute arose after Tomkins purported to terminate the contract and left the site. York disputing the termination, treated the contract as continuing and sought to remove the remaining works out of Tomkins’ hands and engaged a third party to complete the works. Before those works were complete, the superintendent certified that an amount was payable by Tomkins to York. Tomkins disputed any liability to pay and sought to restrain York from having recourse to the security in respect of that certification.

In deciding whether to grant an injunction, the Court was satisfied that Tomkins would establish that the contract did not permit York to do so and that the amount claimed was not yet payable. As a result, York was unlikely to be entitled to call on the security. The Court also rejected York’s argument that the contract allowed it to call on the security while the dispute remained unresolved. Instead, it found the contract allowed either party to seek court intervention and did not require Tomkins to bear the financial risk while the dispute was unresolved.

The Court also accepted that a call on the security could affect Tomkins’ financing arrangements and reputation. By contrast, York would still have the benefit of the security while the dispute remained unresolved. The balance of convenience therefore favoured granting the injunction.

Different Bonds, Different Outcomes: Alstef

In Alstef Australia Pty Ltd v Brisbane Airport Corporation [2026] NSWSC 764, the Supreme Court of New South Wales reached different conclusions in relation to two different types of security provided under the same contract. The Court refused to restrain BAC from calling on two bonds concerned with Alstef’s broader performance of the contract but granted a temporary injunction restraining BAC from calling on three bonds linked to payment for unfixed goods and materials.

For the performance bonds, the Court considered it strongly arguable that, under the terms of the contract, those bonds were intended to allocate risk by allowing BAC to call on the security immediately and resolve any dispute later. The Court was also not persuaded that a call on the bonds would cause Alstef significant financial harm, and gave limited weight to Alstef’s concerns about reputational damage. The Court concluded that stopping BAC from calling on the bonds would deprive BAC of a contractual benefit and alter the parties’ agreed allocation of risk. Accordingly, the Court refused the injunction.

The Court reached a different conclusion in relation to the bonds linked to payment for unfixed goods and materials. For those bonds, the Court accepted that Alstef had a strong prima facie case that the contract term requiring those bonds was ineffective under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the Act). Under the contract, Alstef could only be paid for unfixed goods and materials if it provided security for the same amount at the same time. In substance, the term required Alstef to provide equivalent security as a condition of receiving payment, contrary to the Act’s prohibition on contracting out.

BAC argued that the Act permitted the parties to agree that the amount payable for unfixed goods and materials would be nil unless the contractual preconditions for payment had been satisfied. The Court rejected that argument, finding that there was a strong case it would deprive Alstef of its statutory entitlement to progress payments for those goods and materials. The Court noted that, in practical terms, a conditional progress payment does not provide Alstef with any real cash flow benefit and undermines the purpose of the Act, which is to facilitate prompt interim payments pending final resolution of the parties’ rights.

The Court therefore considered it strongly arguable that the contractual provision amounted to an attempt to contract out of or otherwise limit the operation of the Act. In those circumstances and given that BAC did not assert any present entitlement to call on the security bonds, the balance of convenience favoured the grant of the injunction.

Key takeaways

These decisions show that, although the general principles governing interim injunctions are well established, how those principles are applied will depend heavily on the particular contract and security in question. The strength of the applicant’s case will often turn on whether the party seeking to call on the security has a present contractual basis to do so, including whether the security was intended to operate as a risk allocation device pending final determination of the parties’ rights.

That assessment will also shape the balance of convenience. A court may be reluctant to restrain a call where doing so would deprive the beneficiary of the risk allocation the security was intended to provide. But where there is a strong case that there is no present entitlement to recourse, the balance may favour preserving the security until the dispute is resolved.

The cases also suggest that contractual security cannot be used in a way that undermines security of payment legislation. If a contract makes payment conditional on providing equivalent security, that requirement may be ineffective where it deprives the contractor of the cash flow protection the legislation is designed to provide. The outcome will therefore turn on the contract, the purpose of the security, the strength of the claim and any applicable security of payment regime.

The York decision can be found here and the Alstef decision can be found here.