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Cannon Point Development Ltd v Wellington Developments Ltd

Cannon Point Development Ltd v Wellington Developments Ltd

Case [2024] NZHC 3377 13 November 2024

Interim Injunctions

Retention Under Construction Contracts

Duty of Utmost Good Faith

Jurisdiction

Serious Question to be Tried

Commercial Law

Construction Law

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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-000384

[2024] NZHC 3377

UNDER the Construction Contracts Act 2002 and the High Court Rules 2016

IN THE MATTER OF

an application to rescind the interlocutory order of Gordon J dated 4 July 2024

BETWEEN

CANNON POINT DEVELOPMENT LIMITED

Applicant

AND

WELLINGTON DEVELOPMENTS LIMITED

Respondent

Hearing: 31 October 2024

Counsel:

J T Wollerman and F N Hallett for Applicant

F B Q Collins and F A Hollingworth for Respondent

Judgment:

13 November 2024

JUDGMENT OF GRAU J

[Application to rescind order of the Court]

The application

[1] On 4 July 2024 Gordon J granted a without notice application by Wellington Developments Ltd (WDL) for retentions totalling $94,131.88 (including GST) to be placed by Cannon Point Development Ltd (CPDL) into the trust account of Ford Sumner Lawyer’s Westpac Bank trust account.1 The retentions were held by CPDL

1 Wellington Developments Ltd v Cannon Point Development Ltd [2024] NZHC 1798 [Decision of Gordon J].
WELLINGTON DEVELOPMENTS LIMITED v CANNON POINT DEVELOPMENT LIMITED [2024] NZHC 3377 [13 November 2024]

pursuant to a construction contract between the parties for civil works that is now the subject of a high level of dispute.

[2] CPDL has applied to rescind Gordon J’s order because it says WDL’s application was inaccurate and omitted relevant facts, breaching the duty of utmost good faith CPDL owed to the Court to make full disclosure. In particular, CPDL says WDL’s allegation that an adjudicator determined CPDL had underpaid WDL by
$510,854.95 was incorrect, as was an allegation CPDL was unable to pay monies it owed to WDL. Nor did WDL make any reference to CPDL’s significant claims against WDL in relation to defects arising from WDL’s work, as it was obliged to do. These inaccuracies and/or omissions are said to have gone to the heart of the application and the basis for granting the order.

[3] CPDL agrees the retentions must be safeguarded, but it says that is best achieved by repayment of the retentions to CPDL who will hold the funds (as it had done before the order was granted) in accordance with its statutory obligations. Otherwise, there is a risk of WDL obtaining the retentions after further adjudication and dissipating them. CPDL says it is WDL, not CPDL, that has solvency issues.

[4] WDL’s position is that it provided the Court with the necessary information to determine its application and CPDL’s application to rescind the order is moot. The money can be in no safer place, and it cannot be released unless agreement is reached, or by further order of a court, an adjudicator, or an arbitrator. The retention monies are being safeguarded until determination of the current second adjudication which is likely to happen before the Christmas holiday period. The retentions are held on trust for WDL; they are WDL’s money. If there are significant defects, as CPL alleges, then CPDL has the ability to adduce evidence and seek such…

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.

Continue reading Cannon Point Development Ltd v Wellington Developments Ltd

Details

AGLC: Cannon Point Development Ltd v Wellington Developments Ltd [2024] NZHC 3377
Case: [2024] NZHC 3377
Decision Date: 13 November 2024

CaseChat Overview and Summary

The High Court has declined an application to rescind an interim order requiring Cannon Point Development Limited (CPDL) to place retentions totalling $94,131.88 (including GST) into a trust account of Ford Sumner Lawyer’s Westpac Bank trust account. Wellington Developments Limited (WDL) made the application for the injunction in reliance on an adjudicator’s decision that CPDL had underpaid it by $510,854.95 (including GST). CPDL applied to rescind the order on the basis that WDL’s application was inaccurate and omitted relevant facts, breaching the duty of utmost good faith WDL owed to the Court to make full disclosure. CPDL says WDL’s claim that CPDL owed it money was incorrect and that WDL did not make any reference to CPDL’s claims in relation to defects arising from WDL’s work. CPDL submitted that if the retentions were released, it would be prejudiced as WDL would continue to sidestep issues of defects and concerns regarding WDL’s solvency. WDL argued that there is no safer place for the retentions than in a solicitors’ trust account and that there was no evidence to support CPDL’s solvency concerns. Grau J found that, while WDL’s application could have been more forthcoming, it was not capable of misleading the Court. The Court found that there was a serious question to be tried and that the balance of convenience and overall justice favoured the injunction being granted. Grau J declined the application to rescind the order.

Orders