Access Limited v Urban Homes Construction Limited

[2025] NZHC 3469

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-001785

[2025] NZHC 3469

UNDER

the Companies Act 1993

BETWEEN

ACCESS LIMITED

Plaintiff

AND

URBAN HOMES CONSTRUCTION LIMITED

Defendant

Hearing:	4 November 2025
Appearances:	J Nolen for the Plaintiff S Han for the Defendant
Judgment:	14 November 2025

JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 14 November 2025 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Nolen Walters, Auckland Righteous Law, Auckland

ACCESS LTD v URBAN HOMES CONSTRUCTION LTD [2025] NZHC 3469 [14 November 2025]

Introduction

[1]                  Access Limited, trading as Terra Constructions (Terra), seeks an order to place Urban Homes Construction Limited (Urban) in liquidation.

[2]                  Terra supplied civil engineering works to Urban under a construction contract. That contract was governed by the Construction Contracts Act 2002 (CCA).

[3]                  Terra’s statement of claim seeks liquidation relying on an unanswered statutory demand for $101,531.87 served on Urban. The failure to respond to a statutory demand raises a rebuttable presumption of insolvency.1

Issues for determination

[4]Based on Urban’s defence, there are four issues for determination:

(a)Was the statutory demand brought to the attention of Urban?

(b)Was Terra the party Urban contracted with?

(c)Is Urban solvent?

(d)Is there a dispute about the debt?

Background

[5]                  On 20 December 2023, Urban entered into a head contract for building and civil engineering works at 55 Harkness Road, Karaka (the Project).

[6]                  Terra and Urban were introduced by Damian Wang of DHC Consulting. He was the engineer to the Project.

[7]Terra submitted a tender on 4 October 2024 via email.

1      Companies Act 1993, s 287.

[8]                  After a brief email negotiation, Terra was contacted by Urban on 8 October 2024 to advise that its tender was accepted.

[9]                  The parties entered into an agreement on 15 October 2024 to sub-contract the civil engineering works for the Project with a contract sum of $1,045,760.32 (subcontract). The subcontract erroneously described Terra as "Terra Construction Limited", rather than “Access Limited, trading as Terra Constructions”.

[10]              A bond of 10 per cent of the contract sum, namely $104,576.03, was agreed to be paid by Urban to Terra to secure Urban's performance under the subcontract.

[11]              It was initially agreed that Urban would pay the bond upfront as Progress Claim (PC) 1. The bond would then be deducted in four equal instalments from the subsequent four PCs (PC 2 to 5). That meant that the bond would be exhausted after the next four progress claims. After that, Terra would be on risk of non-payment.

[12]              On 16 October 2024, PC 1 was issued. It was the claim for the bond. PC 1 was paid in two instalments of $60,000 on 21 October 2024 and the balance of

$44,576.03 on 23 October 2024.

[13]              On 25 October 2024, PC 2 was issued for $225,182 with a due date for payment of 30 October 2024.

[14]It was not paid in full until 7 November 2025.

[15]              As will be expanded on later, the parties exchanged emails about that delayed payment, with Terra expressing concern.

[16]              As a result of the late payment, Terra says that it was not prepared to continue deducting the bond from subsequent PCs. Terra contends that the parties agreed a further variation to the subcontract that the bond would be retained in full by Terra until the final claim.

[17]              On 25 November 2024, PC 3 was issued for $479,925.77. Again, and says Terra, consistent with the further variation, the partial bond reduction from PC 2 was reversed, restoring the bond to its full amount.

[18]Urban’s engineer approved PC 3 in full, with no deductions.

[19]On 12 December 2024, PC 4 was issued for $259,837.33.

[20]              Again, no deduction was made from the bond. A Payment Schedule for the full amount was issued on 8 January 2025.

[21]On 30 January 2025, PC 5 was issued for $101,531.87.17.

[22]              By this time, PC 4 remained unpaid despite repeated assurances from Urban to Terra that payment would be forthcoming.

[23]              On 8 February 2025, Terra wrote to Urban recording that no Payment Schedule had been issued, so the full amount of PC 5 was also now due.

[24]              Urban replied later that day with an explanation about why the payment had been delayed. No issue was raised with PC 5 and Urban concluded the email by saying:

I apologize for the inconvenience caused by the payment delay, but I assure you that the client has no intention of avoiding payment. Thank you for your patience and understanding.

[25]              Despite Urban’s assurances, it did not pay PC 4 until 25 February 2025, which was two weeks after Terra had issued a Statutory Demand for the amount due under PC 4.

[26]              This was the first statutory demand Terra issued. The demand was issued in the name of Terra Construction Limited, repeating the misdescription in the subcontract agreement.

[27]              On 24 March 2025, a second statutory demand was served on Urban for the outstanding amount in PC 5. Once again the statutory demand was issued in the incorrect name of Terra Construction Limited. That second statutory demand expired unremedied.

[28]              On 20 April 2025, Urban raised a dispute for the first time about PC 5, contrary to the position it had taken and the assurances it had given in February.

[29]              In May 2025, Terra began preparing liquidation proceedings in reliance on the unremedied statutory demand. At that point, the misdescription of Terra's name became apparent and a fresh statutory demand was served on Urban in the name of "Access Limited trading as Terra Constructions" on 28 May 2025. It is this statutory demand that Terra relies on in this application.

[30]              Terra received no communication from Urban in the period between 20 April and 19 August 2025, at which point Urban's lawyers responded to  the proceeding.  A statement of defence was filed.

[31]The current position is:

(a)PC 5 remains outstanding in the sum of $101,531.87;

(b)Terra holds the bond in the amount of $104,576.03;

(c)Terra says that it has outstanding claims for work and lost profit.

Approach to liquidation proceedings

[32]              Under s 241(4)(a) of the Companies Act 1993 (Act), a creditor may apply to the Court for liquidators to be appointed if a company is unable to pay its debts.

[33]              Inability to pay debts is established in several ways, one of which is failure to comply with a statutory demand issued under s 287(a) of the Act. A failure to respond to a statutory demand raises a rebuttable presumption of insolvency.

[34]              To challenge a statutory demand on the grounds that the debt is not due, the defendant must establish a genuine and substantial dispute as to whether the debt that is the subject of the statutory demand is due.2

[35]              The defendant must demonstrate a genuine and substantial dispute, one that is “real and not fanciful or insubstantial”, and the grounds of the dispute must be “clear and persuasive”.3 Material short of proof is required to support the claim that the debt is disputed.

[36]              If the Court is satisfied that the defendant has not rebutted the presumption of insolvency and there is no genuine and substantial dispute, then it may liquidate the company. The Court retains an inherent jurisdiction not to do so, where the technical requirements of an order for liquidation are made out. That discretion should be exercised sparingly and in a judicial way.

Was the statutory demand brought to the attention of Urban?

[37]                Section 387(1)(c) of the Act provides that a document may be served on a company by leaving it at the company’s registered office or address for service.

[38]              Service may be affected in a number of ways, including by affixing the document to the front door or the front gate of the property.4 Service is affected if there is a reasonable prospect of it actually bringing the document to the defendant’s attention so as to ensure no miscarriage of justice will result.5

[39]              Urban contends that it was never made aware of the statutory demand because its landlord removed the statutory demand from where it was affixed to the registered office. It makes the submission that Urban is a one-person company, and that its sole director, Mr Ai, was overseas during the period when the statutory demand was running.

2      Yan v Mainzeal Property & Construction Ltd (in rec and in liq) [2014] NZCA 190 at [63].

3      Waikato Motors Ltd v West End Property Developments Ltd [2019] NZHC 865 at [5].

4      Denize Trustee Co Ltd v Waimauri Ltd [2020] NZHC 1718 at [30].

5 At [21].

[40]The statutory demand was properly served at the company’s registered office.

[41]              It is for Mr Ai to make arrangements to ensure relevant legal documents are provided to him or brought to his attention if he is to leave the registered office vacant for a period.

[42]I find that the statutory demand was properly served.

Was Terra the party Urban contracted with?

[43]              Through inadvertence, the construction contract named Terra Construction Limited as the subcontractor. The correct name was “Access Limited, trading as Terra Constructions”.

[44]              Urban was a single project vehicle established for the purpose of the Project. It was therefore dealing with a limited number of contractors. It cannot have been confused about who it was dealing with.

[45]              Terra’s email correspondence to Urban and its progress claims refer to Terra Constructions. Terra’s emails have the logo “Terra Constructions” prominently displayed. The word “Limited” is not used in the email name. Urban dealt with Terra’s director, who had a very distinctive name, Pubudi Kaushayla Madushani Yakupitiyage.

[46]              Payment of Terra Constructions’ progress claims was made by way of its MYOB software which, when accessed online, made it clear that the payee was Access Limited. The invoices used Access Limited’s NZBN number, a unique identifier that identifies the company as Access Limited.

[47]              Urban responded to the first statutory demand issued by “Terra Constructions” by paying Access Limited.

[48]              Urban now attempts to raise an argument that it was unclear who the contracting party was. That is not accepted. It is apparent from the correspondence

that Urban knew exactly who it was dealing with, albeit that it was dealing with a company using its trading name, Terra Constructions.

[49]              The statutory demand relies on PC 5. The statutory demand was initially issued in the name of Terra Constructions. Once the error was recognised, Terra reissued the statutory demand using its legal name.

[50]              Standing back and reviewing the documentation and correspondence between the parties, there is no confusion as to the correct contracting party. Urban knew it was dealing with Access Limited. I reject Urban’s argument on the identity of parties.

Is Urban solvent?

[51]                The failure to respond to a statutory demand raises a rebuttable presumption of insolvency.

[52]              In support of its argument that it is not insolvent, Urban provided a set of draft annual accounts for the financial year ended 31 March 2025. They were prepared on 10 August 2025 after Terra commenced liquidation proceedings.

[53]              I give little regard to those accounts in support of an argument that the presumption of insolvency is rebutted.

[54]              That is because the draft accounts record net assets of $203,143. However, Urban’s primary  asset  is  an  overdrawn  shareholder  current  account  owed  by  Mr Ai to the sum of $202,474.

[55]              If Urban is unable to recover that sum for any reason, then it is technically balance sheet insolvent, or nearly so.

[56]              There is no evidence before the Court of Mr Ai’s willingness or ability to meet his overdrawn shareholder current account amount.

[57]                Further, and inexplicably, Urban does not include any liability amount owing to Terra. The accounts record that there are no known contingent liabilities. Urban’s

position is that it does not accept there is a debt outstanding to Terra, and so it did not need to record that amount in its accounts.

[58]              Section 4 of the Companies Act 1993 refers to the need for a company to satisfy the solvency test by demonstrating that the value of its assets is greater than the value of its liabilities, including contingent liabilities.

[59]In determining the value of a contingent liability, account may be taken of:6

(a)the likelihood of the contingency occurring; and

(b)any claim the company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability.

[60]              There is no justification for Urban not including the debt owing to Terra. Not only was that liability in existence, but it was the subject of an unchallenged progress claim, being PC 5. Urban should have included that sum in the draft accounts, in order to make them correctly reflect its position. It was entitled to also record the bond amount as an asset, however.

[61]              It follows from this that I discount the draft accounts in as much as they are relied on to rebut the presumption of insolvency.

Is there a dispute about the debt?

[62]              There are three sub-issues to determine when considering whether Urban has raised a dispute about the debt.

[63]They are:

(a)Is there a dispute about the amount sought in PC 5?

6      Companies Act, s 4(4).

(b)What did the parties agree about how the bond was to be treated?

(c)Is there a due debt outstanding?

Is there a dispute about the amount sought in PC 5?

[64]The statutory demand relies on the unanswered claim in PC 5.

[65]              The CCA is clear that a party is not entitled to challenge a progress claim if it fails to respond to it in accordance with the agreement between the parties or, in the absence of agreement, the default timeframe set out in the CCA. It is not in dispute that Urban did not issue a Payment Schedule in response to any of the progress claims issued by Terra.

[66]              PC 5 was issued for the period ending 30 January 2025. On 8 February 2025, Terra emailed Urban that no Payment Schedule had been received and attached an invoice with a due date of 10 February 2025. None was received.  The amount of  PC 5 became a due debt pursuant to s 79 of the CCA.

[67]              In response to PC 5, Urban wrote to Terra apologising for the delay in payment of PC 4, which was by then well overdue.

[68]On 15 January 2025 Urban wrote to Terra, saying:

Apologies for the delay in payment. I can see that your team has done excellent work. I will follow up with the client today to confirm the payment timeline … Thank you for your understanding.

[69]              Urban advised that its client was seeking financing, which had been approved, but that there was further delay expected before payment was due.

[70]              One would have expected that if there was a dispute about the quality or amount of PC 4 or PC 5, Urban would have issued Payment Schedules. That never happened. There was no suggestion of a dispute as to workmanship or the amount of the claims.

[71]              This correspondence continued throughout, up to and beyond the date when PC 5 was issued. As examples:

(a)On 17 January 2025 Urban wrote, saying:

The client has assured me that they will make the payment to you as soon as they receive the funds. I sincerely apologize again for the delay in payment.

(b)On 23 January 2025 Mr Ai stated:

As soon as the funds are available, the client will make payment to you immediately. Once again I apologize for the delay.

(c)On 30 January 2025 Mr Ai stated:

I believe that all costs within the budget will eventually be paid in full, but the payment will be delayed. I sincerely apologize for the inconvenience this has caused you, and I understand that you also have bills to pay. I will do my best to push the client to resolve the payment issue ASAP.

(d)On 8 February 2025, Urban recorded the further work that had been carried out by Terra, and thanked Terra for it. In the face of having received PC 5, and where PC 4 was well overdue, Urban stated:

I apologize for the inconvenience caused by the payment delay, but I assure you that the client has no intention of avoiding payment.

[72]              These communications record Urban’s misunderstanding of the effect of the payment regime established by the CCA. Urban’s problems with its principal are a matter for it. They are not a reason to withhold or delay due payment to a subcontractor.

[73]              At no time over the period at least from when the PC 4 became due did Urban raise any issue about the workmanship or the amount of the claims.

[74]              Its claims now about a dispute are largely unsupported by any independent evidence. They are a makeweight and an attempt to avoid the payments otherwise due.

[75]              The highest that Urban’s position can be put is set out in an exchange of emails on 20 April 2025.

[76]              That exchange of correspondence commenced with Terra advising it that the statutory demand it had issued in relation to PC 4 was soon to expire, and that Terra intended to commence insolvency proceedings on expiry. The consequences of liquidation were set out to Urban in that email.

[77]              A response to that was made that day. Urban attempted to argue that it wished to “review” the claimed amount in PC 5. That is notwithstanding the fact that the time to do that had long expired. Urban had no entitlement to revisit PC 5. It was a due debt. Terra was entitled to recover it as such.7

[78]              The email goes on to record various work that was yet to be completed and that uncompleted works were already valued higher than the remaining payment due under the contract.

[79]              It also complained about Terra stopping work without formal notification. There is no sufficient evidence either way whether Terra suspended work, or whether Urban requested Terra to suspend work. The point is, Terra was not being paid.

[80]              Urban had previously asked for work to be paused because of a scheduling difficulty with other contractors. Despite now saying that there were disputes about alleged wrongful suspension of work, and around quantification of the amounts claimed, Urban wrote saying:

We still hope that you can complete all the agreed contractual work, and once the works are completed, we will pay in full. Unless you no longer wish to continue with this project, in which case, as I mentioned in my email to [the engineer to the contract] on February 18, we need to settle the completed work and close the project properly.

We will not default on any payments … However, we do require reasonable payment terms and a transparent budget.

7      Construction Contracts Act, ss 22 and 23.

[81]                This email underscores Urban’s misunderstanding of the contractual arrangements between the parties. It was not open to Urban to force renegotiation of payment terms, nor was it open to it to renegotiate the amounts due under the progress claims to which Urban had not responded.

[82]              I find therefore that PC 5 is a valid progress claim which establishes a due debt from Urban to Terra which it has not paid.8 There is no dispute about the amount of the debt.

What did the parties agree about how the bond was to be treated?

[83]              The key dispute in this case is how the parties agreed to deal with the bond that Urban agreed to pay to Terra to secure its performance of the subcontract agreement.

[84]              The arrangements concerning the bond were negotiated and agreed separately between the parties and were a variation to the terms of the subcontract.

[85]On 4 October 2024, Terra provided its tender.

[86]              That day, Mr Wang acknowledged receipt and advised that Urban was prepared to accept the tender subject to a reduction in rates of 10 per cent.

[87]              Terra responded to that request by agreeing to adjust the rates as sought and advising that it required some sort of bond prior to establishment. It said:

Happy to adjust the rates as above; however, we require some form of principal bond. i.e. a cash bond or an advance payment prior to establishment which would carry progressively.

[88]              On 5 October 2024 Mr Wang acknowledged receipt of the amended rates and confirmed acceptance. He sought confirmation of Terra’s proposal for the bond.

[89]Terra’s response was given the next day, 6 October 2024. Terra stated:

We proposed 10% of the contract value paid in advance prior to establishment, to be deducted in 4 instalments in progress claims.

8      Construction Contracts Act, s 21.

[90]On 8 October 2024, Urban wrote:

I am pleased to inform you that we have accepted your offer subject to the post tender correspondence.

[91]The subcontract agreement was signed on 15 October 2024.

[92]              PC 1 was issued by Terra on 16 October 2024. It was paid by Urban. PC 1 was the bond to be held to secure Urban’s performance. It was 10 per cent of the contract price, $104,576.03.

[93]              PC 2 issued on 25 October 2024. It included a credit in favour of Urban for 25 per cent of the bond paid in the total claim.

[94]PC 2 was paid late.

[95]                In an email of 6 November 2024, Terra recorded its concern about continued late payments and stated:

we propose to keep the full bond amount in place until the final claim, when this can be deducted at once.

[96]              There is no evidence of Urban having agreed to this variation to the way in which the bond was to be treated. Previously, the parties had agreed that the bond would be used to part-pay the next four progress claims. The agreement had been to allocate 25 per cent of the bond to each of the next four progress claims.

[97]              Urban denies that it agreed to this further variation, or that it understood Terra was taking these steps. There is no response from Urban agreeing to this. It is clear that was what Terra did, as the details set out in the progress claims made it clear that the bond had been “repaid” back to the full amount, which Terra held.

[98]              Terra issued PC 3 on 25 November 2024. Notwithstanding no apparent agreement by Urban to the variation, Terra reversing the initial 25 per cent bond amount and adding it back into the claim. This restored the bond back to the full amount of $104,576.03 held by Terra. PC 3 was certified by the engineer and was paid by Urban.

[99]              PC 4 was issued on 12 December 2024. No deduction on account of the bond was made; Terra still held the full amount of PC 1. PC 4 was certified by the engineer and paid by Urban.

[100]          Currently, Terra holds the full amount of the bond of $104,576.03. That sum exceeds the amount in the statutory demand.

[101]The issue is how that amount is to be treated.

[102]          Terra’s position is that it may hold that amount on account of a final invoice that it has yet to issue. It says that the agreement was to hold the payment claim to meet the final claim. It says that it can require Urban to pay PC 5 without applying the bond to that sum.

[103]          Urban’s position is that there is actually no amount outstanding, as Terra holds more than the amount of the statutory demand by way of the bond and should apply that to it. If it does that, there is no amount outstanding.

[104]          Terra issued a draft PC 6. That is said to incorporate a claim for unpaid work completed of $69,059.80 (including GST) and $37,565.91 (including GST) for lost margin on the early termination of the subcontract. Those sums are not the subject of a progress claim; they were issued in draft to Urban to advise it of the further amounts that would be due to it.

[105]          That draft progress claim does not establish a due debt owing to Terra. It will need to issue a progress claim to Urban to recover those amounts. Urban may or may not agree with the amount and may issue a Payment Schedule. The CCA process will then need to be followed.

Is there a due debt outstanding?

[106]          The issue is whether there is a debt outstanding, in circumstances where more than the amount sought in the statutory demand is held by Terra as a bond.

[107]          I consider that it is strongly arguable that the agreement regarding the bond was that it was intended to be available to meet claims issued by Terra to Urban and that Terra should be required to meet PC 5 from the bond.

[108]          That is because initially the agreement was to do that. The review of the correspondence forming the variation makes it clear, or at least strongly arguable, that the parties intended to use the bond to meet payments as they arose. It was agreed that the bond would be expended across the first four progress payments until it was exhausted. Had that occurred as initially agreed, there would currently be no amount outstanding.

[109]          That has not happened. Instead, seemingly without express agreement, Terra sought to vary that agreement and require the bond to be held until the “final payment”. It simply imposed that term on Urban, without its agreement. There is no evidence of Urban’s agreement to that.

[110]          Terra’s submissions say that it is entitled to retain the full amount of the bond as security for amounts yet to be claimed from Urban, pending resolution of any disputes Urban might raise about those amounts.

[111]          I do not agree. I consider the agreement was that the bond would be exhausted by the time of the later progress claims. It was Terra that sought to unilaterally change the agreement to one under which the bond was to act effectively as a security amount.

[112]          I consider that Terra must apply the bond to the amount of the statutory demand. The application of the bond to the progress claims was what was intended between the parties at the outset of the subcontract and was clearly recorded in the exchanges forming the variation. Terra should do that.

[113]          The effect of Terra applying the bond to PC 5 is that there is no amount outstanding as a due debt.

[114]          Terra’s further claims are unliquidated. They are yet to issue. Terra must comply with the subcontract and issue a progress claim to advance those claims. Terra has yet to issue its further progress claim for the amounts it claims are due. Urban’s response to that further progress claim is unknown.

[115]          In conclusion, the use of the bond as agreed between the parties satisfies the amount sought in the statutory demand. There is no due debt.

Decision

[116]I find:

(a)Urban was properly served with the statutory demand when it was served at its registered office.

(b)There is no defence to PC 5 on the ground of the misnaming of Access Limited by reference to its trading name, Terra Constructions.

(c)Urban has not satisfied the Court that its accounts demonstrate that it is solvent.

(d)Urban did not respond to PC 5 which is now a due debt.

(e)Terra holds more that the amount sought in PC 5 by way of the bond and should apply that to meet the amount outstanding in PC 5. That would satisfy the outstanding amount in full.

(f)Terra’s further claims are unquantified and must be issued under the subcontract as a progress claim.

[117]It follows that there is no due debt outstanding on which to liquidate Urban.

[118]          I decline the application to order that Urban Homes Construction Limited be placed in liquidation.

Costs

[119]Urban is entitled to costs. I consider that scale 2B is appropriate.

[120]          The parties are to liaise on costs. If agreement is not reached, then Urban may file a memorandum as to costs not exceeding five pages (including attachments). Terra may file its memorandum as to costs within five working days of receipt of Urban’s memorandum. That is not to exceed five pages (including attachments).

[121]I will determine costs on the papers.

Associate Judge Cogswell