239 Queen Street Developments Ltd v Watts & Hughes Construction Ltd - [2012] NZHC 1791

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2159 [2012] NZHC 1791

BETWEEN 239 QUEEN STREET DEVELOPMENTS LIMITED
Applicant

ANDWATTS & HUGHES CONSTRUCTION LIMITED
Respondent

Hearing: 19 July 2012

Appearances: D Hoskin for Plaintiff
G Kohler for Respondent

Judgment: 19 July 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:
Steindle Williams (D Hoskin/M Williams) P O Box 47858 Auckland, for applicant
Email: david.hoskin@swlegal.co.nz / megan.williams@swlegal.co.nz

Lawler & Co Ltd (Brendan J Lawler) P O Box 105212 Auckland 1140, for respondent
Email: Brendan.lawler@lawler.co.nz

Copy for:
Graham J Kohler, P O Box 4338 Auckland 1140, for respondent
Email: kohler@shortlandchambers.co.nz

239 QUEEN STREET DEVELOPMENTS LIMITED V WATTS & HUGHES CONSTRUCTION LIMITED HC AK CIV-2012-404-2159 [19 July 2012]

[1] In April 2012 Watts & Hughes Construction Ltd served a statutory demand on 239 Queen Street Developments Ltd for $196,910.93. The debt was said to be due under the Construction Contracts Act 2002 for work done and under payment schedules issued under demolition and alteration works construction contracts of August 2011 and September 2011 respectively.

[2] 239 Queen Street Developments Ltd applied to set aside the statutory demand under s 290 of the Companies Act 1993. It claimed that there was a substantial dispute whether or not the debt claimed in the demand was due and owing and it alleged that it had a counterclaim, set-off or cross-demand which equalled or exceeded the sum demanded.

[3] Watts & Hughes Construction Ltd opposed. Its notice of opposition says that the amount outstanding is an amount certified by engineers under payment schedules provided under s 21 of the Construction Contracts Act. It relies on the “pay now/argue later” provisions of the Construction Contracts Act.

[4] On 9 May 2012, Associate Judge Sargisson made an order under s 290(3) of the Companies Act extending the period for compliance with the demand pending further orders. The application was set down for hearing today.

[5] Last week the applicant advised that it would withdraw the application. In response, the Watts & Hughes Construction Ltd filed a memorandum asking for the fixture to be maintained so that it could apply for orders for immediate liquidation under s 291(1)(b) of the Companies Act and for solicitor/client costs.

[6] Watts & Hughes Construction Ltd seemed to assume that there would be no opposition to an order for immediate liquidation. However, 239 Queen Street Developments Ltd opposes an immediate liquidation order. Accordingly I am required to consider how to exercise the powers under s 291 of the Companies Act.

[7] Section 291 of the Companies Act 1993 provides:

291Additional powers of Court on application to set aside statutory demand

(1) If, on the hearing of an application under section 290, the Court is satisfied that there is a debt due by the company to the creditor that is not the subject of a substantial dispute, or is not subject to a counterclaim, set-off, or cross-demand, the Court may—

(a) Order the company to pay the debt within a specified period and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NZHC 1791
Decision Date: 19 July 2012

CaseChat Overview and Summary

239 Queen Street Developments Ltd brought an application to set aside a statutory demand under s 290 of the Companies Act 1993, made by Watts & Hughes Construction Ltd under the Construction Contracts Act 2002. Watts & Hughes Construction Ltd opposed the application and applied for an order for immediate liquidation under s 291 of the Companies Act 1993. The legal issues considered by the court were whether to set aside the statutory demand, whether to make an immediate order for liquidation, and the appropriate costs orders. The court considered the effect of the "pay now/argue later" principles of the Construction Contracts Act 2002 on the statutory demand and on the application to set aside the demand. The court held that the statutory demand was valid and could not be set aside. The court considered the appropriate order to make under s 291 of the Companies Act 1993. The court held that it was not appropriate to make an immediate order for liquidation, but that it was appropriate to make an order for payment within a specified period. The court ordered that 239 Queen Street Developments Ltd pay Watts & Hughes Construction Ltd the sum of $196,910.93 by 9 August 2012. In default of payment, Watts & Hughes Construction Ltd may apply for a liquidation order. The court also ordered that Watts & Hughes Construction Ltd and 239 Queen Street Developments Ltd confer to agree on costs, and if they were unable to agree, they should file memoranda in court.

Orders