· 2026-10-08T23:45:52+0000 · 15 posts

Pay Now, Argue Later, But Not Always: Short Freezing Order Granted Over a Garnisheed Construction Payment

A contractor garnisheed nearly $279,000 from a developer under a security of payment judgment while a stay application was pending in the ACT. The NSW Supreme Court froze the money for just days until a contested hearing, finding an arguable, though not strong, abuse case.

In iMech Solutions Pty Ltd v Liangis Investments Pty Ltd [2026] NSWSC 1244, the Supreme Court of New South Wales (Emmett J, sitting as duty judge) dealt with an urgent application by a hotel developer. The developer wanted to freeze money that a building contractor had just collected from the developer's bank under a garnishee order. The money came from a security of payment adjudication. The result was that a short-term freezing order was made, restraining the contractor from disposing of or dealing with assets up to $278,987.91, with directions for a contested hearing within days ([32]). The important point is that the "pay now, argue later" policy of security of payment laws carries great weight, but it does not completely shut the door on interim protection. Here the developer showed an arguable (though not strong) case that the garnishee order was an abuse of process, there was some evidence of a risk of insolvency, and the order was kept short ([21], [25], [28], [31]). All paragraph references below are to the judgment.

Why it matters: Security of payment laws are designed to get cash to contractors quickly, with disputes resolved later. This ex tempore decision shows the narrow circumstances in which a court may still preserve that money briefly: a pending stay application, unanswered correspondence, non-disclosure to the court, and solvency concerns all played a part. It also shows the limits on using one court to protect proceedings in another.

At a glance

Court: Supreme Court of New South Wales, Common Law Division, duty judge, ex tempore (revised)
Area of law: Civil procedure (freezing orders); building and construction security of payment; enforcement of judgments
Decision type: Urgent interlocutory application, treated as akin to ex parte
Outcome: Freezing order for a short period, up to $278,987.91, plus directions for a contested hearing
Standard applied: Prima facie (arguable) case; danger that a prospective judgment will be frustrated; balance of convenience; undertaking as to damages ([21], [29], [31])
Costs: The judgment does not deal with costs. The application had asked for costs to be reserved

🧩 Facts and Issues

Background

The developer owns land in the Australian Capital Territory, which it is developing into a multi-storey hotel. The contractor was engaged to carry out works ([2]). In July 2026 the contractor served a progress claim of about $562,000 under the Building and Construction Industry (Security of Payment) Act 2009 (ACT). An adjudicator determined that about $266,600 was payable, and an adjudication certificate issued for $278,745.81 ([3]–[5]).

The developer then sued the contractor in the Federal Court for restitution of that amount, damages for breach of contract and Australian Consumer Law relief ([6]). The certificate was entered as a judgment of the ACT Supreme Court ([7]).

How the case got here

On 4 September 2026, the developer's solicitor wrote to the contractor's then solicitor. The letter raised a possible conflict of interest, said the developer had sought interim freezing relief in the Federal Court, and asked the contractor to "exercise restraint in any enforcement steps" ([8]–[9]). The contractor did not reply ([10]).

The contractor then registered the ACT judgment in the NSW Supreme Court, and it was entered on 15 September. The developer says it was not told ([11]). On 17 September the developer applied to the ACT Supreme Court for a stay of the adjudication judgment, listed for 16 October ([12]). On the same day, the NSW Court made a garnishee order, and the contractor's solicitor wrote to the developer's bank to enforce it ([14]–[15]). After 5 pm on 2 October, the bank paid the funds to the contractor ([16]).

On 6 October, the developer came to the duty judge seeking a freezing order ([17]).

What each side argued

The developer: It asked for a freezing order (a) in aid of the Federal Court proceedings, and (b) in aid of relief it intends to seek in the NSW Supreme Court on the basis that the garnishee order was an abuse of process or obtained against good faith ([17]). It relied on four matters: the pending ACT stay application; its unanswered request for restraint; that, practically, no garnishee order would have been obtained in the ACT before the stay was decided; and that the contractor had not disclosed the stay application to the NSW Court ([20]).
The contractor: Its counsel could not take instructions because the client was travelling ([22]). He pointed out that the contractor never gave any undertaking not to enforce ([20(2)]), said some of the funds had already gone to pay the contractor's creditors ([30]), and, in correspondence, the contractor's solicitor denied that it was insolvent ([27]).

The issues

Can the NSW Supreme Court make a freezing order to protect proceedings in the Federal Court?
Has the developer shown a prima facie case that the NSW garnishee order was an abuse of process or obtained against good faith?
Do the discretionary factors, especially the security of payment policy, favour a freezing order?

⚖️ Applicable Law – Legislation, Rules and Principles

Uniform Civil Procedure Rules 2005 (NSW), r 25.11(1): the Court may make a freezing order "for the purpose of preventing the frustration or inhibition of the court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied" ([18]). In plain English, a freezing order stops a party from moving or spending assets before a court can decide the case against them.
UCPR r 25.15: preserves the Court's inherent, implied and statutory power to make freezing orders (fn 1).
Building and Construction Industry (Security of Payment) Act 2009 (ACT): creates fast-track progress-payment adjudication. Its policy, "pay now, argue later", must inform any injunction or stay ([24]).
Australian Consumer Law, ss 236–237: the basis of part of the developer's Federal Court claim ([6]).

📌 Authorities Relied On

Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA 394: the security of payment policy informs whether injunctive relief or a stay should be granted ([24]).
Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [254]: same proposition ([24]).
Amflo Constructions Pty Ltd v Anthony Jefferies [2003] NSWSC 856 at [27]: cashflow is the "lifeblood of the construction industry" ([30]).
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [40]: cited in support (fn 2).

🧠 Analysis

Issue

Whether interim freezing relief was justified to preserve funds the contractor had obtained by garnishee under a security of payment judgment.

Rule

A freezing order requires an arguable case for relief from the Court, a real danger that a judgment will go unsatisfied, and a balance of convenience in its favour. Any relief must take full account of the security of payment policy that money should be paid now and disputes resolved later ([18], [21], [24]–[25]).

Application

This Court will not readily act as the Federal Court's backstop

Emmett J had "real reservations" about granting a freezing order merely to protect the subject matter of the Federal Court case. Rule 25.11(1) speaks of protecting a judgment "of the court", meaning the NSW Supreme Court itself ([18]). The order was instead grounded in the relief to be sought in this Court about the garnishee order ([19]).

An arguable case, but "not a strong case"

None of the developer's four points alone would "in all likelihood" establish abuse of process or lack of good faith. Taken together, his Honour accepted a prima facie case that was arguable, though not "strongly arguable" ([21]). That is a finding that the case is arguable, not that the contractor did anything wrong.

Treated as ex parte, so candour was critical

Because the contractor's counsel had no instructions, the Court treated the application as "akin to an ex parte application" ([23]). The developer had made the frank disclosures expected of a party seeking orders without the other side being heard. Those included acknowledging that the security of payment policy weighs against it ([24]).

Full weight to "pay now, argue later"

His Honour placed "full weight" on the policy of the Security of Payment Act. He kept the relief short ([25]). He made "no criticism" of the contractor using the funds to pay its own creditors: if it was entitled to the money, it was entitled to use it that way ([30]).

Solvency risk and the undertaking tipped the balance

On "limited evidence", which the contractor disputes and has not yet tested, there was a risk of insolvency. That warranted weight ([26]–[28]). The developer gave the usual undertaking as to damages, with some evidence that it could meet it ([29]). The parties agreed that any order should last only days ([22]).

Conclusion

Satisfied that there was a risk of the prospective judgment being frustrated, and that the balance of convenience favoured a short order, the Court made the freezing order and gave directions ([31]–[32]).

🏛️ Outcome, Orders and Costs

The contractor was restrained from disposing of or dealing with its assets up to $278,987.91 for a short period, with directions for the further conduct of the proceedings, so that both sides could prepare for a contested hearing ([31]–[32]). The ACT stay application remained listed for 16 October 2026 ([12]). The judgment does not deal with costs. Nothing in it decides whether the garnishee order was in fact an abuse of process, whether the adjudication should be stayed, or whether the contractor is insolvent.

🧭 Practical Lessons

For self-represented litigants: A freezing order is an emergency remedy. You must show an arguable case, a real risk that a judgment will not be paid, and that the balance of convenience favours you. You will usually have to promise to pay the other side's losses if the order turns out to be wrong ([21], [29], [31]).
For self-represented litigants: When you go to court without the other side being heard, you must tell the court about matters that hurt your case as well as those that help it. The developer here disclosed the policy against it ([24]).
For practitioners: Seek interim relief in the court whose judgment you need to protect. A State Supreme Court may be reluctant to freeze assets merely to protect Federal Court proceedings under r 25.11 ([18]).
For practitioners: When enforcing a security of payment judgment, disclose any pending stay application to the enforcing court. Do not ignore correspondence asking for restraint. Both featured in the arguable abuse of process case ([20]).
For practitioners: For developers and principals, expect "pay now, argue later" to dominate. Interim relief, if available at all, will be short and tightly confined ([25], [31]).

🧠 Take-Home Lesson

Security of payment money is meant to flow, and courts give that policy full weight.
A short freezing order may still be available where enforcement steps arguably sidestep a pending stay application and solvency is in doubt.
An arguable case is not a finding of wrongdoing. The real fight happens at the contested hearing.

"Pay now, argue later is the rule. But if you enforce while a stay application is pending and say nothing to the court, expect to be asked why."

This digest is general information about a published judgment, not legal advice. For advice about your own situation, speak to a lawyer, Legal Aid or a community legal centre.