Allianz Australia Insurance Ltd v Probuild Constructions (Aust) Pty Ltd [2023] NSWCA 56

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Allianz Australia Insurance Ltd v Probuild Constructions (Aust) Pty Ltd [2023] NSWCA 56 Hearing dates: 10 March 2023 Decision date: 30 March 2023 Before: Leeming JA at [1]; Mitchelmore JA at [70]; Adamson JA at [71] Decision: (1) Allow the appeal. (2) Set aside the orders of the Court below and, in lieu thereof, make the following orders (a) Declare that, subject to order (2)(b) below, the first respondent holds the sum of $7.7 million on trust for the appellant. (b) Declare that the trust in order (2)(a) above is subject to a charge in favour of the second to fifth respondents in the amount of $1,157,557.64 (excluding GST). (3) Unless a written application for a different order is made within 14 days, the respondents to pay the appellant's costs of the appeal and of the proceedings in the Court below. Catchwords: CONTRACT — settlement deed — whether settlement sum constituted surplus bond moneys held on trust — whether settlement sum in excess of amount required to meet contractual obligations supported by performance bonds CONTRACT — performance bonds — deed of indemnity relating to issue of performance bonds — whether trust provisions in deed of indemnity created security interest for purposes of Personal Property Securities Act 2009 (Cth) Legislation Cited: Acts Interpretation Act 1901 (Cth), s 15AA Building and Construction Industry Security of Payment Act 2002 (Vic) Corporations Act 2001 (Cth), s 444E Evidence Act 1995 (NSW), s 191 Personal Property Securities Act 2009 (Cth), ss 12, 151, 153, 267, 267A Cases Cited: 2 Elizabeth Bay Road Pty Ltd v The Owners - Strata Plan No 73943 (2014) 88 NSWLR 488; [2014] NSWCA 409 Allianz Australia Insurance Ltd v Probuild Constructions (Aust) Pty Ltd [2022] NSWSC 1601 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588; [2000] HCA 25 Birdon Pty Ltd v Houben Marine Pty Ltd (2011) 197 FCR 25; [2011] FCAFC 126 Brolton Group Pty Ltd v Hanson Construction Materials Pty Ltd [2020] NSWCA 63 Cargill International SA v Bangladesh Sugar and Food Industries Corp [1996] 4 All ER 563 Cargill International SA v Bangladesh Sugar and Food Industries Corp [1997] EWCA Civ 2757; [1998] 2 All ER 406 CSR Ltd v Eddy (2005) 226 CLR 1; [2005] HCA 64 Diversa Pty Ltd v Taiping Trustees Ltd [2022] FCA 316; 401 ALR 161 DJ Builders & Son Pty Ltd (in liq) v Queensland Building and Construction Commission [No 3] [2021] FCA 1041 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd (2005) 62 NSWLR 385; [2005] NSWCA 49 Fitness First Australia Pty Ltd v Fenshaw Pty Ltd (2016) 92 NSWLR 128; [2016] NSWCA 207 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 Gold Valley Iron Pty Ltd (in liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134 Grey v Inland Revenue Commissioners [1958] Ch 375 Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545; [2006] HCA 3 Iskra v MMIR Pty Ltd [2019] NSWCA 126 ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697 at [266]-[270] Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6 Maxcon Constructions Pty Ltd v Vadasz (2018) 264 CLR 46; [2018] HCA 5 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Mulley v Hayes (2021) 286 FCR 360; [2021] FCA 1111 Oliver v Nine Network Australia Pty Ltd [2019] FCA 583 Owners of Strata Plan 58161 and Hanssen Pty Ltd [No 2] [2023] WASAT 7 Parrwood Pty Ltd v Trinity Constructions (Aust) Pty Ltd [2020] NSWCA 172 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 Re Universal Distributing Co Ltd (in Liq) (1933) 48 CLR 171; [1933] HCA 2 Southern Han Breakfast Point Pty Ltd (in liq) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52 State of Queensland v Epoca Constructions Pty Ltd [2006] QSC 324 Stiassny v North Shore City Council [2008] 1 NZLR 825; [2008] NZ CCLR 7 Stiassny v North Shore City Council [2009] 1 NZLR 342; [2008] NZCA 522 Thurin v Krongold Constructions (Aust) Pty Ltd [2022] VSCA 226 Tradigrain SA v State Trading Corporation of India [2005] EWHC 2206 (Comm); [2006] 1 Lloyd's Rep 216 Texts Cited: Explanatory Memorandum (as replaced), Personal Property Securities Bill 2009 (Cth) P Davenport, Construction Claims (4th ed, Federation Press, 2020) N Denys and R Clay (eds), Hudson's Building and Engineering Contracts (14th ed, Sweet & Maxwell, 2020) E McKendrick, Goode on Commercial law (5th ed, Penguin Books, 2016) Category: Principal judgment Parties: Allianz Australia Insurance Ltd (Appellant) Probuild Constructions (Aust) Pty Ltd (subject to a deed of company arrangement) (First Respondent) Salvatore Algeri (as joint and several deed administrator Probuild Constructions (Aust) Pty Ltd (subject to a deed of company arrangement)) (Second Respondent) Jason Mark Tracy (as joint and several deed administrator Probuild Constructions (Aust) Pty Ltd (subject to a deed of company arrangement)) (Third Respondent) Matthew James Donnelly (as joint and several deed administrator Probuild Constructions (Aust) Pty Ltd (subject to a deed of company arrangement)) (Fourth Respondent) David Michael Orr (as joint and several deed administrator Probuild Constructions (Aust) Pty Ltd (subject to a deed of company arrangement)) (Fifth Respondent) Representation: Counsel: J Giles SC / A Campbell (Appellant) H N G Austin KC / D Krochmalik (Respondents)