In York Property Holdings Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2026] QCA 198, the Queensland Court of Appeal overturned a Queensland Supreme Court decision which granted an injunction restraining a principal from making any demands on the contractor’s security.

A dispute arose between York (the Principal) and Tomkins (the Contractor) during the course of construction, resulting in Tomkins terminating the contract and leaving the site before works had been completed. Tomkins sought an injunction preventing York from relying upon recourse to the security after the Superintendent certified that an amount was payable by Tomkins to York prior to the completion of works.

Clause 5.2 of the contract permitted York to have recourse to security in specific circumstances, including:

…in respect of any claim to payment (liquidated or otherwise), the Principal may have or claim to have against the Contractor under the Contract.

At first instance, the primary judge granted an injunction on the basis that York’s claim was misconceived and untenable and therefore not properly characterised as a claim for payment under the contract. Our update on the Queensland Supreme Court’s decision is here.

On appeal, the Court of Appeal stated that it was not necessary to resolve whether York’s underlying claim was valid or not; rather, the appeal turned on the proper construction of clause 5.2 of the contract. In this regard, the Court of Appeal observed that the words “claim to have” made a “qualitative difference” as it introduced subjectivity into the contractual test and removed any requirement for an objective assessment of the validity of the underlying claim, subject to two important qualifications:

• the principal must claim to have a claim for payment under the contract; and
• that assertion must be advanced in good faith.

It therefore followed that it was not necessary for York to demonstrate that its underlying claim was valid, correct or even satisfied an objective threshold equivalent to an ‘arguable claim’, before it could have recourse to security. The Court of Appeal considered that this interpretation reflected the parties’ agreed risk allocation, being that while an underlying dispute remained unresolved, the contractor would bear the risk of being out of pocket.

As Tomkins did not allege that York failed to advance its claim other than in good faith, the Court of Appeal allowed the appeal and revoked the injunction restricting York’s recourse to security.

This decision is a reminder that small differences in security provision drafting can have significant consequences. A clause permitting recourse where a principal “claims to have” a claim or entitlement is materially broader than one requiring the principal to actually “have” a claim or entitlement.

The Queensland Court of Appeal’s decision can be viewed here.