Payment-protection laws for builders block recourse to bonds covering stored goods
The Supreme Court of New South Wales has barred Brisbane Airport Corporation from calling on $10 million in guarantees provided by its contractor pending trial.
In Alstef Australia Pty Ltd v Brisbane Airport Corporation [2026] NSWSC 764, the court granted interim injunctions restraining the airport operator from drawing on three payment security bonds worth $10 million but refused Alstef the same protection for two performance bonds worth about $3.4 million.
Brisbane Airport Corporation (BAC) engaged Alstef Australia Pty Ltd (Alstef) in May 2023 to design and construct a baggage handling system for the airport's domestic terminal. Alstef procured unconditional bank guarantees from ANZ in BAC's favour. After a defect emerged in a steel platform in September 2025, the parties exchanged termination notices, and each accused the other of repudiating the contract. They agreed that the contract had ended but disputed who had validly terminated it.
The court considered it “strongly arguable” that the two performance bonds, each worth 2.5 percent of the contract price, operated as "risk allocation devices" – security that worked on a "pay now, argue later" basis and let BAC obtain payment despite the dispute. On that reading, BAC could call on the bonds for its claims without first proving them, provided it did not act fraudulently, in bad faith or unconscionably.
The court found that Alstef had not shown it would suffer financial harm if BAC called on the performance bonds, and it rejected evidence that a call would threaten the wider Alstef group's compliance with its lending covenants. It found that restraining BAC would instead prejudice the airport operator by changing, rather than preserving, the status quo. The court dismissed Alstef's injunction application over the performance bonds.
The court took the opposite view on the three payment security bonds, worth $10 million, which Alstef had provided to secure BAC's payments for goods and materials not yet installed. It found that Alstef had a strong case that the contract clause requiring those bonds was void under s. 200 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld), the provision that stops parties from contracting out of the statute.
The court said that the clause, in substance, denied Alstef its statutory right to progress payments by making each payment conditional on Alstef securing its own repayment. It added that, with title to the goods having passed to BAC, retaining the bonds would “strongly arguably” breach the ban on "unconscionable" conduct in s. 21 of the Australian Consumer Law.
The court granted interim injunctions restraining BAC from drawing on the payment security bonds until the proceedings end. It made the injunction over the largest bond, worth $6 million, conditional on Alstef providing a substitute guarantee within 42 days. The court ordered that the costs of the application be the parties' costs in the cause and listed the matter for directions on July 10, 2026.
