Courts willing to grant injunctive relief to compel performance of contractual obligations

Injunctions as a tool to enforce contractual rights and responsibilities 8 min read

In this Insight, we consider two recent Supreme Court decisions where injunctions were granted to compel the performance of contractual obligations.

The first is Alinta Cogeneration (Wagerup) Pty Ltd v Shanghai Electric Power Design Institute Co Ltd [2025] WASC 455, in which the Supreme Court of Western Australia granted an interlocutory injunction for the delivery up of certain goods on a battery storage facility project.

The second is Boroondara City Council v ADCO Group Pty Ltd & ADCO Construction Pty Ltd [2025] VSC 774, in which the Supreme Court of Victoria granted a mandatory injunction for the provision of a parent company guarantee on a project for the construction of a recreational centre.

These decisions demonstrate an increased willingness to grant injunctive relief to give effect to the commercial bargain struck by the parties. The decisions are a useful reminder that courts will, where appropriate, grant interlocutory or mandatory injunctive relief where one party has failed to perform its contractual obligations and the injured party can demonstrate that the circumstances justify the making of the injunction.

Western Australian Supreme Court's grant of interlocutory injunction to compel delivery up of goods

Key facts and background

Alinta Cogeneration (Wagerup) Pty Ltd (Alinta) contracted Shanghai Electric Power Design Institute Co Ltd and Sunterra Energy Pty Ltd (together, the Contractors) to undertake the engineering, procurement, construction and commissioning of a battery storage facility (Works) at a power station in Western Australia.

The Contractors were required to procure, deliver and install certain components, including transformer accessories, transformers, cables, inverters and batteries. Completion was delayed and Alinta purported to terminate.

Another contractor was engaged by Alinta, but components to be installed (which were procured by the Contractors) remained under the control of the Contractors. Alinta sought an urgent injunction seeking delivery of those components. The Contractors subsequently agreed to deliver some, but not all, of the components.

The contract included provisions under which title in goods transferred to Alinta upon payment of a relevant payment milestone amount, and that upon termination, among other things, the Contractors were required to return the property of Alinta which was in their control.

Court's decision

The court granted the interlocutory injunction sought by Alinta, requiring the Contractors to deliver up the remaining components, being inverters and batteries.

In determining whether to grant injunctive relief, the court undertook the established two-stage enquiry:¹

1. Whether Alinta had made out a prima facie case, meaning Alinta must demonstrate there is a serious question to be tried, such that it may be said there is a sufficient likelihood of success in its case to justify the grant of injunctive relief.
   
   The court was satisfied that Alinta had more than adequately made out a prima facie case, on the basis that the title of possession to the components passed to Alinta upon full payment of the relevant payment milestone amounts, as they were, at that point, 'ready for dispatch' as contemplated under the provision. It was not disputed that those milestone payments had been made in full.
   
   The court also held that, read as a whole, the obligation to 'return' Alinta's property extended to any property owned by Alinta that was in the Contractors' possession prior to termination.
   
   
2. Whether the balance of convenience favours the grant of an injunction, meaning the inconvenience or injury that Alinta would suffer if the injunction were rejected, outweighs the inconvenience or injury suffered by the Contractors if the injunction were granted.
   
   The court found that the balance of convenience weighed strongly in favour of the grant of the injunction sought.
   
   The court considered that the injury or inconvenience likely to be suffered by Alinta if the injunction were not granted would be significant, given:
   • it was common ground that all the components were essential for the Works to continue.
   • it was not disputed that the inverters and batteries could not feasibly be replaced or obtained 'at market' in a reasonable timeframe.
   • Alinta required access to those components before the Works could continue in any meaningful way.
   • evidence established that each day of further delay in the Works would result in substantial costs being incurred by Alinta and Genus.

Victorian Supreme Court's grant of mandatory injunctive relief to effectively compel performance of a contractual term

Key facts and background

Boroondara City Council (Boroondara) and ADCO Group Pty Ltd (ADCO Group) entered into a construction contract under which ADCO Group was to construct the Kew Recreation Centre.

ADCO Group was required to provide Boroondara with a deed of guarantee and indemnity executed by its parent company (PCG), ADCO Constructions Pty Ltd (ADCO Constructions), but did not do so after execution of the D&C Contract. Boroondara did not ask for it, until over three years after execution. ADCO Group refused.

At this stage, the project was in difficulty and delayed as a consequence of a roof collapse during construction, and a number of defect, extension of time and delay claims having been made (which were not the subject of this proceeding).

ADCO Group asserted that Boroondara had, by conduct, waived its right to the PCG. Notwithstanding this, ADCO Group enquired with ADCO Constructions as to whether it would be willing to provide the PCG. ADCO Constructions declined.

Boroondara commenced a proceeding against both ADCO entities that alleged (amongst other things) that, by failing to provide the PCGs, ADCO Group (the subsidiary entity and party to the construction contract) was in breach of the contract.

Accordingly, Boroondara sought a mandatory injunction compelling ADCO Group to do all things within its power to provide to Boroondara an executed PCG.

This Insight does not address all issues considered by the Victorian Supreme Court. It focuses on the court's decision in relation to the injunctive relief sought by Boroondara as against ADCO Group.

Importantly, before determining whether the injunctive relief sought by Boroondara should be granted, the court found that ADCO Group was in breach of contract by failing to provide a PCG executed by ADCO Constructions.² The court also found that Boroondara had not waived its entitlement to that PCG.³

Why the court granted the mandatory injunctive relief sought by Boroondara

The court granted the relief sought; a mandatory injunction that ADCO Group do all things within its power to provide Boroondara with a PCG executed by ADCO Constructions.⁴

In coming to this decision, the court found that Boroondara had satisfied the requisite elements for establishing its entitlement to a mandatory injunction in the context of this case, which were that:⁵

• it possessed a recognised legal or equitable right, being the requirement under the contract that ADCO Group provide an executed PCG, which the court held Boroondara had not waived.
• damages were an inadequate remedy, on the basis that the very nature and function of the PCG was to guarantee the performance of ADCO Group's obligations under the contract and indemnify Boroondara against losses arising from, amongst other things, ADCO Group's failure to perform its obligations or its liquidation or insolvency. The court observed that the PCG would entitle Boroondara to pursue ADCO Constructions precisely in circumstances where ADCO Group could not perform or pay damages.
• there are no equitable reasons why the relief ought to be refused, as it was just in the circumstances for the court to exercise its discretion to order a mandatory injunction against ADCO Group. The court again emphasised that damages were inadequate in the circumstances and rejected ADCO Group's submission that it had already done all things within its power to procure the PCG (which ADCO Constructions declined to provide), as well as its contention that compliance with a mandatory injunction would be impossible.

Insights

These decisions serve as a useful reminder for contracting parties that courts are increasingly prepared and willing to, in appropriate circumstances, intervene by granting injunctive relief where one party has failed to perform its contractual obligations.

The decision in Boroondara City Council also, in particular:

• adopts reasoning which is likely to extend not just to parent company guarantees, but also to security in other forms which a party is required to provide pursuant to contractual obligations. For example, bank guarantees, which are commonly provided as security in construction contracts. This is likely the case given:
  • the similarities in purpose between parent company guarantees and other security instruments, being to protect a party against their counter-party's non-performance and insolvency; and
  • the court's focus on the inadequacy of damages in light of that purpose.
• highlights the importance of PCGs as a risk allocation mechanism. It confirms that, in circumstances where a party has failed to provide a PCG, an award of damages against the offending party may be regarded as an inadequate substitute for the protections a PCG is designed to afford.