Cato Bolam Consultants Limited v Mansion Rear Limited
[2025] NZHC 2846
•30 September 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-459
[2025] NZHC 2846
UNDER the Companies Act 1993 IN THE MATTER
of an application for liquidation of Mansion Rear Limited
BETWEEN
CATO BOLAM CONSULTANTS LIMITED
Plaintiff
AND
MANSION REAR LIMITED
Defendant
Hearing: 3 July 2025
(further submissions filed 5 and 15 August 2025)
Appearances:
N P Tetzlaff for Plaintiff N S Tabb for Defendant
Judgment:
30 September 2025
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 30 September 2025 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
CATO BOLAM CONSULTANTS LIMITED v MANSION REAR LIMITED [2025] NZHC 2846 [30 September 2025]
[1] Cato Bolam Consultants Ltd (Cato Bolam) is a property and development consultancy. It provided professional services to Mansion Rear Ltd (Mansion) and rendered invoices from time to time. When these were not paid in full Cato Bolam served a statutory demand upon Mansion. Mansion did not apply to set aside the statutory demand. Relying upon what it says was the failure of Mansion to satisfy the statutory demand, Cato Bolam has now filed an application to put Mansion into liquidation.
[2] Mansion applies for an order under r 31.11 of the High Court Rules 2016 to restrain advertising and for a stay of this proceeding on the grounds that:
(a)the debt on which the proceeding is founded is genuinely disputed;
(b)the statutory demand was invalid; and
(c)the statutory demand was satisfied as Cato Bolam took an equitable mortgage over Mansion’s land for payment of any amount owed.
[3]The issues that arise are:
(a)Is there a genuine and substantial dispute that Mansion is indebted to Cato Bolam?
(b)Was the statutory demand invalid?
(c)Was the statutory demand reasonably satisfied by the taking of an equitable mortgage over Mansion’s land?
Background
[4] In August 2023 Junge Xu (Ms Xu), the director of Mansion, contacted Chris Solleder of Cato Bolam about the possibility of engaging Cato Bolam to make a COVID-19 fast-track resource consent application for lodgement before Christmas 2023.
[5] On 30 August 2023 Mr Solleder advised Ms Xu by email that an initial design Mansion had previously prepared for the application was not suitable and a new design would need to be developed within three or four weeks. He provided an indication of costs for the initial design phase and also to lodgement of the resource consent application as follows:
I haven’t had a chance to look at costs in detail yet but looking at some of our similar scale projects and with similar complexity, I believe our fees for engineering, architecture, scheme plans, planning, design management would be in the order of $300-$350k. + GST to lodgement. We would at least need commitment to undertake initial 3-4 weeks of work with architect, engineer, planner, plus inputs as needed from the other experts. Suggest allowance of
$50k-$70k + GST which is first part of that total sum.
[6] There followed further email correspondence between Mr Solleder, Ms Xu and Gary Gray, who was assisting Mansion in respect to the project. On 6 September 2023 Mr Solleder sent Ms Xu an email with an estimate for the design phase of $60,000 plus GST and disbursements.
[7] On 8 September 2023 Cato Bolam sent Mansion a letter confirming its engagement for the design phase, with an attached Instruction Confirmation Form to be signed and returned on behalf of Mansion which contained Cato Bolam’s Specific Fee and Engagement Conditions.
[8]The letter of engagement relevantly stated:
Estimate and scope of work
Our estimated fee is outlined on the enclosed Instruction Confirmation Form. We have based the estimate and our scope on our experience of similar projects and the information supplied. Please bear in mind that no two sites are the same. If the work does not proceed as expected, the scope changes or if unexpected complications arise the fee may need to be adjusted to take into account the extra time spent, or additional complexity.
Outline of tasks and budgets for first 3-4 weeks of work to develop design
…
Total budget = $60,000 + GST and disbursements
This work will be charged on hourly rate, but the budgets above are the expected level of inputs …
We note, we will be in a better position to confirm costs to lodgement and timeframe once completing initial investigation and design development.
…
Invoicing and Payments
As stated on the Instruction Confirmation Form our normal practice is that invoices for fees and disbursements will be forwarded at monthly intervals to the value of the work completed. Invoices are payable within ten (10) days of invoicing.
Payment of our fees associated with the preparation of the Consent Application/s, Engineering Plan Approval and Land Transfer Plans, as per our company terms and conditions, must be received prior to the submission of documentation to the Local Authority or Land Information New Zealand. Please refer to Clause 2: Invoicing and payments for further detail regarding invoicing and payments.
…
[9] The Specific Fee and Engagement Conditions contained terms in relation to invoicing and payments, estimates, and the taking of security by Cato Bolam for payment of its fees as follows:
2. INVOICING AND PAYMENTS
Fees associated with the preparation of the resource consent application, engineering plans and land transfer plans must be received prior to the submission of documentation to the Local Authority or Land Information New Zealand.
Cato Bolam Consultants Limited shall be entitled to charge on a monthly basis to the full value of the work completed. Accounts not paid with 20 days of the date of issue of the account shall be subject to interest at 2.0% per month. Accounts unpaid within 90 days of the date of issue will be regarded as delinquent and the costs of any legal or other debt collecting fee incurred in collecting any delinquent amount will be added to the account.
…
9. ESTIMATES
The estimated fee and the estimated completion date where given have been assessed in the light of information currently known to Cato Bolam Consultants Limited. The estimated fee is not a quotation, and the estimated completion date is not an undertaking by Cato Bolam Consultants Limited to complete by that date. If revised estimates become necessary they will be provided if possible.
…
13. SECURITY FOR PAYMENT
For the better securing of payment of all monies due, and owing by the client and/or the Guarantor to the Company, the client and/or the Guarantor hereby agrees to mortgage to the Company all or any of the client’s and/or the Guarantor’s real property of whatever nature on the terms and conditions of the Auckland District Law Society form of All Obligations Mortgage and to execute such mortgage over any item of real property as contemplated by this clause when requested to do so, PROVIDED HOWEVER, and without limiting the generality of the foregoing, if the real property involved in the job address detailed overleaf (the job address) is wholly owned by the client and/or the Guarantor then in such case and in full satisfaction of the security required by this clause, the client and/or the Guarantor agree to give and will only be required to execute a mortgage over the job address.
[10] Ms Xu signed and returned the Instruction Confirmation Form, both as a director and guarantor of Mansion. Cato Bolam commenced work.
[11] On 30 September 2023 Cato Bolam invoiced Mansion for the design phase in an amount of $54,574, which was under its estimate. This was paid on 2 November 2023.
[12] On 11 October 2023 Mr Solleder emailed Ms Xu with an estimate for Cato Bolam’s further services up to lodgement of the resource consent application. The email relevantly read as follows:
Hi Gary and June
Please see attached updated estimate to lodgement. This is about what I expect given the knowledge we have to date. I initially gave a ball park of 300-350k before we got started based on some similar scale projects. This is a bit more than that, but have added contamination services onto the estimate and the architectural component is a lot more complicated as we have a lot of typologies to deal with the differences across the site both in contour and zoning context (and to also try to get the most out of it).
Also note that this replaces our earlier estimate. (not added on top)
Let me know if you have any questions
[13] Accompanying Mr Solleder’s email was Cato Bolam’s further letter of engagement and Instruction Confirmation Form, with an estimate for the work of
$391,100 excluding GST ($449,765 including GST). The engagement letter noted that the estimate might be subject to change if the work did not proceed as expected, there were scope changes or unexpected complications. Not included in the estimate
were services of other land development consultants in specific areas for which quotes would be required, or Council and Environmental Protection Authority (EPA) fees estimated at $30,000. The Instruction Confirmation Form contained the same Specific Fee and Engagement Conditions as at [9] above.
[14] On 13 October 2023 Mansion obtained a legal opinion from Russell McVeagh, copied to Cato Bolam. Russell McVeagh had been asked to assess the risk of pursuing the resource consent application. It identified there was a low chance of the resource consent being granted, or if granted surviving challenge on appeal to the High Court. The summary of its advice included:
16.We estimate there is a 20-30% chance the Fast-track Application is approved by the Panel, and survives any appeal to the High Court. We consider Council would be likely to appeal any grant of consent by the Panel to preserve the position set by Matvin1 that urban development in the [Future Urban Zone] requires a plan change.
17.Despite our assessment that there is a low chance of success in achieving consent through the Fast-track process, it may be worth continuing with the Fast-track Application regardless (given the potential upside if the Fast-track Application were successful). In addition, the assessment and thinking required for the Fast-track Application is similar enough that it could be repurposed for a private plan change application.
18.We also consider that although Council may oppose the Fast-track Application this ultimately should not harm any private plan change application. Council’s opposition will be based on the lack of a plan change, and the area is scheduled to be developed in the short term. A plan change application is therefore consistent with the expected process and timeline. Even if the decision is ultimately to decline the Fast-track Application the Panel and / or High Court decision may also contain positive findings about the Proposed Development which could form a helpful base for the private plan change application.
[15] Mr Solleder says that on 24 October 2023 he emailed Mansion about the need to discuss the consent strategy, addressed late payment of Cato Bolam’s first invoice, and advised Mansion that unless Cato Bolam was explicitly told to stop it would continue work. Cato Bolam did continue work and on 31 October 2023 issued a further invoice for $109, 567.64.
1 Auckland Council v Matvin Group Ltd [2023] NZHC 2481.
[16] On 15 November 2023 there was a meeting between Mr Solleder and Ms Xu to discuss payment of the outstanding invoices. Ms Xu advised that Mansion was not in a position to make full payment before lodgement of the resource consent application. On 16 November 2023 Mr Solleder emailed Ms Xu with his concern about this as follows:
We certainly did not agree to take this sort of project on and then negotiate a delayed payment plan after the fact which places significant risk on our end. An accelerated work flow is provided on the basis of prompt and full payment given we are also compromising other work streams to complete this work.
That is going to put us in a difficult situation when it comes time to lodge and this needs to be resolved and we will await your reply.
[17]On 30 November 2023 Cato Bolam issued an invoice for $256,851.35.
[18] On 5 December 2023 Mr Solleder sent a letter to Ms Xu with a further invoice for $94,105.08. He explained that this invoice was for work forecasted for the month of December up to lodgement of the resource consent application. He confirmed an expected lodgement date for the resource consent application of 15 December 2023, and reiterated that Cato Bolam’s invoices needed to be paid in full prior to lodgement.
[19] On 12 December 2023 there was meeting between Ms Xu and Mr Solleder where Ms Xu said the amount charged by Cato Bolam was over budget, an assertion she made again in an email to Mr Solleder on 15 December 2023.
[20] On 18 December 2023 Mr Solleder emailed Ms Xu explaining the reasons why the project had gone over budget.
[21] On 20 December 2023 Mr Solleder and Ms Xu met again. Ms Xu stated that she was only prepared to pay $180,000 in advance of lodgement of the resource consent application.
[22] Mr Solleder sent an email following the meeting recording the outcome as follows:
Hi June
I have had a talk to a couple of our directors and our position is we require you to provide security if you are unable to pay the balance.
From our conversation it appears:
1.You will pay $180,000 now, so we can lodge
2.Pay balance in Feb / March from proceeds of sales from Pooks Road.
We are effectively required to offer you finance for the balance of money outstanding and we also expect that this bill will grow as we move into section 92 work which is likely to start in February.
We need to speak to our solicitor, but we are trying to do so at present, however with the Christmas period this will be hard to resolve quickly.
Our suggestion is you [give] us as a first mortgage on one of your titles with a term of 4 months. That will provide security for the outstanding funds.
If we are proceeding with such a deal, we are doing so on the basis that the costs are not disputed and will be paid in full.
…
[23]Ms Xu responded that Mansion would pay $180,000 immediately and a further
$150,000 by 20 March 2024. She said any additional amount should be left for further discussion but she would be happy to pay if the application was approved “as bonus or rewards in future”.
[24] Mr Solleder then replied that Cato Bolam would accept $180,000 before lodgement on the conditions that the remaining fees were confirmed as undisputed, a payment plan was in place, and Ms Xu provided her personal guarantee:
Hi June
We have some problems with this.
Your maths [doesn’t] quite add up. We not prepared to discuss a renegotiation of our fees if we are agreeing to a staged payment. At present you appear to be renegotiating the in scope fees.
So far you have paid 47,455.65+GST against an October budget (since outdated) of $391,100 + GST although we note that some items are hourly rate with a budget, such as the project consultation.
So if we are linking discussion to budget, the minimum you would expect to owe is $343,644.35 + GST = $395,191
You are suggesting a total and staged payment of $330,000 which we assume includes GST, which is $65k short of the original budget, so we already have a problem there and $130k short of what has been invoiced. We have provided reasoning for the increased costs as the situation changed through the course of the project quite substantially that has led to justified additional cost and you haven’t actually engaged in discussion about this before making an offer on total costs you will pay.
What is most concerning is you also appear to be withholding payment of
$180k as leverage to get us to agree to a lower fee than was agreed to. We were up front with our terms from our initial engagement and we have not deviated from this, so it is concerning that 2 days before lodgement after over 1 month of failing to respond to my concerns over payment progress, you are now choosing to renegotiate our fees.
…
We do not agree to a reduction in fees on the basis of a staged payment that has only been raised now.
We will agree to a staged payment with $180k up front and the balance (undisputed and to be confirmed as such) paid with your timeframes stated. We will require security provided (you have suggested a personal guarantee) and this should be provided via your solicitor.
[25]Ms Xu responded as follows:
Hi Chris,
…
I did realise over budget only recently till all 4 invoices came out totally
It is [quite] lots more than budget. Now we don’t have time to look through details. I respect and trust you even we have this disagreement. Therefore I suggest leave over budget amount to resolve.
Regarding the personal guarantee, it is simply that I can sign the form you provided which is common practice. There is not necessary for lawyer involved.
[26]And then later:
Hi Chris,
Following last email I sent, I would like to explain that I [did not] mean holding 180k for bad [intention], [i]n reality, I got the other commitment to meet, because 8 Stevenson submissions is the most priority therefore I promise do 180k now in order to submit in time.
… unfortunately we have short term cashflow difficulties, which many us developers facing today. But please support and make sure submitting in time.
Your understanding and support would be greatly appreciated, surely it leads long way in future.
[27] On 21 December 2023 Cato Bolam’s Instruction Confirmation Form was re-sent to Ms Xu. It was signed and returned the same day, with Ms Xu as guarantor of Mansion’s obligations. Mansion also paid $180,000 and Cato Bolam lodged the resource consent application.
[28] Following this, the EPA made requests for more information concerning the application and Cato Bolam carried out further work. On 31 January 2024 it issued a further invoice for $12,310.75.
[29] On 30 April 2024 Cato Bolam emailed Ms Xu advising of interest accrued on the unpaid accounts. On 9 May 2024 Cato Bolam followed up with an email to Mr Gray asking for prompt settlement of its accounts.
[30]On 30 June 2024 Cato Bolam issued a further invoice for $9,593.30.
[31] On 15 July 2024 there was an email from Ms Xu to Mr Solleder saying that she was working through Cato Bolam’s invoices and asking for timesheets and details of the work Cato Bolam had performed. Mr Solleder responded to Ms Xu with the timesheets for the outstanding invoices. He noted that the amount invoiced was less than the value of time recorded:
Hi June
See attached time sheet records for the outstanding invoices. You will see on the attached summary, circled in green this project has cost us $568,201.12 and we have charged $466.958.35. [W]rite off of $101,242.77 in total, so we have lost a lot on this project.
[32]On 31 July 2024 Cato Bolam issued a further invoice for $1,715.23.
[33] There was another meeting between Ms Xu and Mr Solleder on what must have been 22 August 2024, which was referred to in an email Mr Solleder sent Ms Xu on 26 August 2024 as follows:
Hi June,
I hope you are well. I wanted to follow up since our meeting last Thursday, as I have not received any further communication from you. To continue our work together, it is crucial that we establish the following:
1.A clear payment plan for the outstanding fees.
2.Initial payment towards the agreed-upon payment plan.
3.Clarification on any disputed fees. So far, you have only mentioned that the costs are high, and we are unsure of your specific concerns.
4. Upfront payment for the work required to complete the RFI.
Based on our recent discussions, there appears to be changes in your position that are causing us concern about the likelihood of receiving payment for work already completed. While you have encouraged us to move forward positively, Cato Bolam has already taken steps by providing an initial response without any guarantee of payment. We have carried this cost for the past three- quarters of a year. For us to continue in a positive direction, we require positive steps from your side as well.
I look forward to your prompt response to these matters as we are running out of time to give the project the response it deserves. I am also aware the solicitors are not yet in a position where they will offer their assistance.
[34] On 30 August 2024 Cato Bolam emailed Ms Xu, attaching unpaid invoices and a statement of account and requesting payment without further delay.
[35] On 2 September 2024 Ms Xu advised that the amount Mansion had paid Cato Bolam was sufficient:
For recent project of Fast Track 8 Stevenson which bring us back to work again. I recalled clearly when I spoke with you on phone at that time I was in [C]hina, I did tell you the budget of work was under or around 300k which based from the other consultants quotation, you told me that you thought it was ok and you mentioned later in your email with similar ball park figures. You did send fee estimates and clearly stated that you charged by hourly rates (as in past) , I did sign just before submitting applications (otherwise it wouldn’t happen). I did make payment [i]n total about 240k, I think it well covers your cost , but there is lot’s details need to be looked into further , some are over charged and some are exactly same number as estimated , especially there was pre issued invoice and also it was suspended serval weeks for confirmation because of lawyer ’s low chance success opinion. Also I will ask Gary to work on this invoices details and time sheet, he will contact you directly on questions. Any how, you aware the lawyer’s opinion and I believe you will try your best [p]rofessional ethics to control cost for client best interest.
Anyway, this invoice dispute wouldn’t disappear and we need more time to discuss and resolve. Therefore I think the best way is to continue working with EPA which is sensible and only positive step, as camperise [sic] I would like to put 20-25k as good faith in order to complete EPA process. But [n]o [matter] what results, we have more time to solve problems. Of course I hope good results from process, (otherwise it will be huge [loss] and sad thing.) if succeed I would promise to continue to work with your company for future work which future cost will be secured by project lender. …
[36]On 3 September 2024 Mr Solleder responded:
Hi June,
Thank you for your response and for your continued interest in working with us. I want to clarify that we are not demanding full payment to continue working. Our primary concern is reaching an agreement on a payment plan that will help reduce the outstanding debt and allow us to move forward with the project.
I spoke to Gary [Gray] on Friday and I thought we may have been heading closer towards an agreement, however, I am seeing that between our understanding of the amount owed and your perspective of which I have a number of concerns, that this gap is getting larger. It is crucial that we reach a mutual agreement on the debt before proceeding any further. Until we can agree on the amount, we cannot continue with the project with any confidence. There has been 9 months to work through this and the delay has not been with Cato Bolam.
I am prepared to sit down and resolve this matter and I am open to further discussions to find a solution that works for both parties.
[37] On 10 September 2024 Mr Solleder had another meeting with Ms Xu. Ms Xu again stated that she believed Mansion had paid enough. There was further email correspondence between Ms Xu and Mr Solleder after that meeting, and Cato Bolam agreed to make a final response to the EPA on the basis that Mansion prepaid for that work. On 19 September 2024 Cato Bolam issued another invoice for $28,750.00, which was paid by Mansion on 20 September 2024.
[38]On 31 October 2024 Cato Bolam issued a further invoice for $5,518.56.
[39] On 11 November 2024 Mansion’s application for resource consent was declined. The Panel considered Mansion’s proposal was contrary to the objectives and policies of the District Plan and that the adverse landscape, visual, amenity and character effects of the proposal would be more than minor.
[40] Cato Bolam served its statutory demand on Mansion on 19 December 2024. The demand was for $211,441, which is not the full amount that Cato Bolam considers is owed. Cato Bolam described this amount in the statutory demand as:
… being part payment of invoices payable by you for goods and services supplied to you during the period 30 September 2023 to 5 December 2023 as set out in the statement attached.
The sum of $211,441.00 is calculated as the estimated [sic] of costs given on 11 October 2023 of $479,765.00, minus part payment received from you in the amount of $268,324.00.
This notice does not affect CATO BOLAM CONSULTANTS LIMITED ‘s right to receive full payment of all invoices issued set out in the statement attached, notwithstanding that this notice does not demand for the full balance due as set out in the statement attached.
[41] The statement attached to the statutory demand lists all invoices rendered to Mansion along with the payments received. The invoices total $572,985.91. Payments received total $268,324, which have been applied to specific invoices. The balance owing is $304,661.90.
[42] Mr Solleder explains that while Cato Bolam does not accept there is a substantial dispute as to what is owed by Mansion, on the advice of its lawyers it did not include in the statutory demand the cost of additional work. What I understand this to mean is that Cato Bolam considered there could not be any dispute that it was owed at least the amount of its 11 October 2023 estimate. For that reason the statutory demand required payment of the amount of the estimate less payments made by Mansion, reserving Cato Bolam’s rights in respect to further amounts it considers are owing.
[43] On 20 December 2024 Cato Bolam registered caveats over two properties owned by Mansion. The caveats were lodged in reliance upon cl 13 of its Specific Fee and Engagement Conditions. The estate or interest claimed in the land under the caveats was an “Agreement to Mortgage dated 23/12/2023 between the Registered Owner Mansion Rear Limited and the Caveator CATO BOLAM CONSULTANTS LIMITED”.
[44] On 24 January 2025 Mansion’s lawyers wrote to Cato Bolam’s lawyers demanding the withdrawal of the statutory demand because the amount claimed was disputed and had been satisfied because “[t]he caveat refers to an agreement to mortgage which is clearly a charge over property. Accordingly, the statutory demand has been satisfied.”
[45] On 5 February 2025 Cato Bolam’s lawyers responded that the statutory demand would not be withdrawn and had not been satisfied because “the agreement to mortgage is not sufficient to reasonably satisfy our client in relation to the Demanded Sum”.
[46] Cato Bolam then issued this proceeding and the application to restrain advertising and for a stay followed.
[47] Mansion took steps to lapse Cato Bolam’s caveats. In response, on 23 May 2025, Cato Bolam’s lawyer wrote to Mansion’s lawyer about the possibility of withdrawing one of the caveats in these terms:
…
Without any admission, our client is willing to consider the extent of equity in the secured properties in terms of whether a single secured property could be sufficient. You mentioned that there was sworn evidence as to the value/equity in both properties, however going back over the affidavits I can’t find anything more than paragraph 24 of the affidavit dated 11 April 2025. On its own, that information is not sufficient to satisfy our client that its rights would be protected if the notice to lapse went unopposed.
…
For our client to properly consider its position it needs disclosure of the following information:
1The property value of 1067997 (the 1137 square metre block), as substantiated by any available documentation;
2The amount of lending secured by the Mortgage to ASAP Finance Ltd over 1067997 by instrument 13053722.1;
3The property value of 1097804 (the 159 square metre block), as substantiated by any available documentation;
4The amount of lending secured by the Mortgage to ASAP Finance Ltd over 1097804 by instrument 13053722.2; and
5The amount and type of lending secured by the Caveat by Pacific Business & Investment Ltd over 1097804 by instrument 13116441.1.
While our client reserves all rights, if satisfactory information can be provided (and verified by affidavit if required) our client will consider whether retaining only the caveat over the development block is sufficient …
[48]On 26 May 2025 Mansion’s lawyer wrote to Cato Bolam’s lawyer in response:
… Attached is:
1.Letter from asap finance confirming loan extension, principal sum in December 2024 of $548,680.94 and with a loan extension fee and capitalised interest the amount due on the extended date of January 2026 is $635,611.79;
2.Approved resource consent plan showing the 6 sections which the larger land has been subdivided into (stage 3 on the plan);
3.A copy of the Pacific Business and Investment Ltd caveat relying on a sale and purchase agreement- lodged on settlement date of 16 September 2024 (instead of settling);
4.A single page of a sale and purchase agreement with Pacific Business and Investment Ltd.
These documents support my client’s estimated value of the larger land at
$1.8 million (or more) and the smaller land with a completed home at
$800,000 giving a total property value of $2.6 million with around $600k of lending.
My client’s position is that if your client permitted the caveat over the smaller land to lapse and retained its a [sic] caveat over the larger land your client is still protected to the extent of around $1.2 million. As you are aware the disputed debt claimed by your client is much smaller than this.
Please let me know if there is anything else you need to understand the asset and liability position. My client invites Cato to allow the caveat over the smaller piece of land to lapse rather than applying to the High Court. This will save both parties legal fees and your client remains protected for its claimed/disputed debt.
Please don’t hesitate to call me if you would like to discuss.
…
[49] On 27 May 2025 Cato Bolam’s lawyer responded, agreeing to release one of the caveats:
Good morning Natalie,
FYI, in reliance on the representations about the value of equity in the second secured property and the documents provided, Cato Bolam has decided not to apply to sustain its (entirely valid) caveat.
[50] The result was that one caveat was allowed to lapse. The caveat over the larger and more valuable of the two properties remains on the title.
[51] Finally, Mansion has commenced a proceeding against Cato Bolam in the Waitakere District Court pursuing three causes of action. The first cause of action alleges that Cato Bolam did not perform its services to an acceptable standard, resulting in Mansion’s resource consent application being declined. Damages are sought but not quantified. The second cause of action alleges that Cato Bolam was negligent and caused Mansion loss. There is no pleading as to how loss was caused, nor is the loss quantified. The third cause of action alleges Cato Bolam agreed to provide its services for $300,000 to $350,000 and has charged above what was a fair and reasonable fee for the work. Mansion seeks damages in a sum to be quantified, or a declaration that “amounts are not owing by [Mansion] to [Cato Bolam]”. Cato Bolam has defended that claim.
The law
[52]Rule 31.11 of the High Court Rules reads:
31.11 Power to stay liquidation proceedings
(1)If an application for putting a company into liquidation is made under rule 31.3, the defendant company, or, with the leave of the court, any creditor or shareholder of that company or the Registrar of Companies, may, within 5 working days after the date of the service of the statement of claim on the defendant company, apply to the court—
(a)for an order restraining publication of an advertisement required by rule 31.9 or any other information relating to that statement of claim; and
(b)for an order staying any further proceedings in relation to the liquidation.
(2)The court must treat an application under subclause (1) as if it were an application for an interim injunction and, if it makes the order sought, it may do so on whatever terms the court thinks just.
(3)The inherent jurisdiction of the court is not limited by this rule.
[53] The relevant principles were summarised in Yan v Mainzeal Property & Construction Ltd (in rec & liq) as:2
(a)The court has the power to consider disputed debts in the context of an opposed liquidation proceeding or on applications for orders restraining advertising and staying proceedings.
(b)A liquidation order will not be made where there is a genuine and substantial dispute as to the existence of a debt such that it would be an abuse of the process of the court to order a liquidation.
(c)In such circumstances, the dispute, if genuine and substantially disputed, should be resolved through action commenced in the ordinary way and not in the Companies Court.
(d)The assessment of whether there is a genuine and substantial dispute is made on the material before the court at the time and not on the hypothesis that some other material, which has not been produced might, nonetheless be available.
(e)The governing consideration is whether proceeding with an application savours of unfairness or undue pressure.
(f)The court may have regard to a debtor’s counter arguments — but a genuine and substantial dispute is one that is “real and not fanciful or insubstantial”. The grounds of the dispute must be “clear and persuasive”. Material, short of proof, is required to support the claim that the debt is disputed.
2 Yan v Mainzeal Property & Construction Ltd (in rec & liq) [2014] NZCA 190 at [61]. See also
Waikato Motors Ltd v West End Property Developments Ltd [2019] NZHC 865 at [5]–[6].
Issue 1: Is the debt subject to genuine dispute?
[54] Mansion argues there is a genuine and substantial dispute whether it is indebted to Cato Bolam because:
(a)Cato Bolam failed to provide its services to an acceptable standard, with the result that Mansion did not obtain its resource consent;
(b)Cato Bolam overcharged Mansion for its services; and
(c)Cato Bolam has issued invoices on the basis of estimates given prior to commencement of the work when its work was to be charged at hourly rates.
Were Cato Bolam’s services provided to an acceptable standard?
[55] Mansion’s contention is that Cato Bolam did not provide its services to an acceptable standard and as a result the resource consent application was declined. Ms Xu says in her affidavit:
Cato [Bolam] did not adequately address the visual impact of the proposed development. This was the main reason the resource application was declined and I believe Cato [Bolam] should have done more to address this issue to Council’s satisfaction. [Cato Bolam’s] design team undertook redesign work on multiple occasions without asking for any input from me, in this process they should have made amendments to meet requirements so that the application was not declined on the basis of “visual impact”.
[56]Ms Xu goes on to say:
If the application had been granted I would have assumed that the work was overcharged but done to a good standard. Once the application was declined by EPA (Environmental Protection Authority) in November 2024 for a “gateway” issue (because the landscape, visual, amenity and character effects were more than minor) it became clear that the work done by Cato [Bolam] was not done to an acceptable standard. It was the declining of the application that revealed the [substandard] work done by [Mr] Solleder and the other Cato [Bolam] staff.
[57] Ms Tabb argues Cato Bolam held itself out as having the necessary skills to successfully lodge the resource consent application, and having already been granted preliminary approval into the COVID-19 fast-track consenting scheme Mansion
believed it was likely the application would be granted. Ms Tabb submits the principle of res ipsa loquitur applies because there is no plausible explanation for the failure to obtain the resource consent other than the negligence of Cato Bolam.
[58] I do not accept that Mansion has established an arguable case that Cato Bolam’s services were not provided to an acceptable standard. The failure to obtain resource consent cannot have come as any surprise to Mansion. It received the legal opinion from Russell McVeagh at an early stage advising that the application was unlikely to succeed. There is nothing which suggests Cato Bolam provided any assurances that, notwithstanding Russell McVeagh’s opinion, the application would be successful. Mansion’s argument also overlooks, as Russell McVeagh explained, that even if the application failed it would provide benefits for any later plan change application. It is not the case, as Ms Xu appears to suggest, that Mansion had no reason to pursue the application unless it understood it was likely to be granted.
[59] To the extent that the principle of res ipsa loquitur is still recognised,3 it has no application to the facts of this case. The principle is described in Scott v The London and St Katherine Docks Co, where Erle CJ explained:4
There must be reasonable evidence of negligence.
But where the thing is shewn to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care.
[60] There is an obvious explanation for why the resource consent application was unsuccessful. The application was known by Mansion to be one that was unlikely to succeed for the reasons set out in Russell McVeagh’s opinion. In those circumstances, if Mansion wished to advance an argument that Cato Bolam’s work was substandard it was incumbent upon it to provide some evidence as to how exactly that is the case. There is no such evidence beyond mere assertions. To illustrate the point, Ms Xu says that Cato Bolam did not adequately address the visual impact of the development
3 Stephen Todd (ed) Todd on Torts (9th Ed, Thomson Reuters Wellington 2023) at [6.5.3].
4 Scott v The London and St Katherine Docks Company (1865) 3 H & C 596, 159 ER 665 (Exch Ch) at 667, referred to in Stephen Todd (ed) Todd on Torts, above n 3, at [6.5.3].
which was the reason the application was declined. She does not, however, say how Cato Bolam could have done better and has provided no other evidence to support her position. That Ms Xu asserts Cato Bolam’s work must have been substandard is not evidence that it was so, nor is the fact that Mansion has filed proceedings in the District Court making the same assertion without any supporting particulars.
Overcharging
[61] Mansion’s contention that it has been overcharged begins from an incorrect assertion that Mr Solleder indicated that Cato Bolam was willing to work within Mansion’s budget of under or around $300,000. Ms Xu says that she mentioned to Mr Solleder that her budget was $300,000 and he thought that was achievable. That was not the basis upon which Cato Bolam agreed to do the work. Cato Bolam was to charge for its work at its then current hourly rates, but also provided an estimate for the project which was substantially greater than $300,000. Mansion agreed that Cato Bolam was to perform the work on Cato Bolam’s terms by signing the Instruction Confirmation Forms. There was never any agreement to perform the work for
$300,000.
[62] Ms Xu says that she was forced to sign the Instruction Confirmation Form on 23 December 2023 when Cato Bolam was refusing to lodge the resource consent application within the deadline. I do not accept this argument. Mansion was aware that Cato Bolam’s fees were to be paid prior to it lodging the resource consent application. Mansion knew this because Ms Xu had signed and returned the Instruction Confirmation Form of 8 September 2023 (cl 2 of the Specific Fee and Engagement Conditions) and had received the further Instruction Confirmation Form on 11 October 2023. The absence of any inappropriate pressure upon Mansion is reflected in Ms Xu’s advice to Mr Solleder in her email of 20 December 2023 that there was no need for lawyers to be involved.
[63] Ms Tabb argues there is evidence of overcharging because 142 hours of project management time was charged by Cato Bolam to Mansion in the single month of November 2023. She says that amounts to one Cato Bolam employee being engaged practically fulltime when Mansion did not ask for a fulltime project manager. I do not
see anything in this submission when Mansion provides no evidence that the project management work was unnecessary.
[64] Another example of alleged overcharging is said to be that Cato Bolam invoiced Mansion on 30 November 2023 for $256,851.36 (for work performed in the month of November 2023) and then invoiced a further $94,105.08 on 5 December 2023. Ms Tabb says the latter invoice equates to $47,000 per working day. That is incorrect. The 5 December 2023 invoice was for work forecasted in the month of December 2023. This was explained to Ms Xu in Mr Solleder’s letter of 5 December 2023. The work was subsequently performed and therefore this does not support Mansion’s contention of overcharging.
[65] While Ms Xu expressed concern the work had gone over budget, that does not of itself establish the existence of a genuine and substantial dispute as to whether Cato Bolam is a creditor of Mansion. At the 16 November 2023 meeting with Mr Solleder and again in her email of 20 December 2023 Ms Xu acknowledged that Mansion’s cashflow difficulties prevented it from making payment. Mansion then failed to honour its obligation to pay for the work prior to the resource consent application being lodged, and attempted to renegotiate Cato Bolam’s payment terms. Ms Xu also said a further $150,000 would be paid to Cato Bolam in March 2024 but that payment was not made. Mansion has also provided no evidence of overcharging despite the many months that have elapsed since the issue was first raised. The clear inference is that Mansion’s failure to pay reflected its financial circumstances and not overcharging by Cato Bolam.
Hourly rates
[66] The next argument raised is that Cato Bolam was to charge at hourly rates but charged Mansion based on its estimates. This relies upon the content of Cato Bolam’s invoices of 31 October 2023, 30 November 2023 and 5 December 2023 which refer to technical task items and a percentage of the cost of that work that had been invoiced. This is not, as Mansion contends, evidence that work was charged based on estimates, rather it reflects that Cato Bolam chose to cap its charges for most technical items in accordance with its estimate and absorbed unbilled time in doing so. Mansion has
provided no evidence that the amounts charged are excessive when considered against Cato Bolam’s time records which it has had since July 2024.
Summary of position
[67] Cato Bolam’s estimate of its fees up to lodgement of the resource consent application was $449,650 ($391,100 plus GST). Its fees to that point did not differ significantly from its estimate and totalled $460,523.98, which included additional work. Mansion has not shown there is an arguable case that Cato Bolam’s work was substandard or that Cato Bolam has overcharged for the work. Even on Mansion’s case, the amount it has paid Cato Bolam of $268,324 is substantially less than its own initial budget of $300,000 to $350,000. In addition, Cato Bolam has performed additional work after the resource consent application was lodged, for which it has rendered invoices that remain unpaid. I am satisfied that there is no substantial and genuine dispute as to whether Cato Bolam is a creditor of Mansion in a substantial sum.
Issue 2: Was the statutory demand defective?
[68] Cato Bolam’s statement of claim seeks an order for liquidation based upon Mansion’s failure to comply with the statutory demand.5 There is no pleading that Mansion is unable to pay its debts on other grounds. Mansion argues the statutory demand is defective and invalid.
[69]Section 289 sets out the requirements of a statutory demand:
289Statutory demand
(1)A statutory demand is a demand by a creditor in respect of a debt owing by a company made in accordance with this section.
(2)A statutory demand must—
(a)be in respect of a debt that is due and is not less than the prescribed amount; and
(b)be in writing; and
(c)be served on the company; and
5 Companies Act 1993, s 241(4)(1)(a).
(d)require the company to pay the debt, or enter into a compromise under Part 14 or otherwise compound with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within 15 working days of the date of service, or such longer period as the court may order.
[70] A defect in a statutory demand will not generally invalidate it or be a basis to set it aside. In the latter context, s 290(5) and (6) of the Companies Act provide:
290Court may set aside statutory demand
…
(5)A demand must not be set aside by reason only of a defect or irregularity unless the court considers that substantial injustice would be caused if it were not set aside.
(6)In subsection (5), defect includes a material misstatement of the amount due to the creditor and a material misdescription of the debt referred to in the demand.
[71] In Moorhouse Panel & Spray Ltd v The Energy Saving Company Ltd, Associate Judge Lester considered that the overstatement of the demand by more than 40 per cent was material and created a risk of substantial injustice in making a commercial solution between the parties less likely.6 In Pioneer Insurance Company Ltd v White Heron Motor Lodge Ltd, the Court of Appeal set aside a demand where the defendant company was liable for only 75 per cent of the debt claimed in the demand.7
[72] While s 290 and the cases referred to above are concerned with applications to set aside statutory demands and not applications under r 31.11, the Court may make an order granting a stay of a liquidation proceeding under r 31.11 when a proceeding has been commenced based on an invalid statutory demand.8
[73] Ms Tabb argues that the statutory demand is defective because the sum of the demand is based on the estimate of 11 October 2023 when Cato Bolam was to charge
6 Moorhouse Panel & Spray Ltd v The Energy Saving Company Ltd [2019] NZHC 1804.
7 Pioneer Insurance Company Ltd v White Heron Motor Lodge Ltd [2008] NZCA 450, (2008) 19 PRNZ 286.
8 New Zealand Meat Processors v FJ Ramsey Meats (Paerata) Ltd HC Hamilton M 359/97, 29 April 1998.
at hourly rates. She says an estimate does not create a debt and, what is more, none of Cato Bolam’s invoices reconcile with the estimate.
[74] There is merit in Ms Tabb’s submission. It is correct that Cato Bolam’s estimate did not create a debt. Cato Bolam’s entitlement to payment arose upon the issue of invoices for the performance of its work. The estimate was not, therefore, a proper basis to calculate any amount owing by Mansion. However, there are other concerns arising from the form of the statutory demand.
[75] The demand refers to the sum demanded as being “part payment of invoices payable by you for goods and services supplied … during the period 30 September 2023 to 5 December 2023”. Those can only be the invoices of 30 September 2023, 31 October 2023, and 30 November 2023, but not the 5 December 2023 invoice which was for work forecasted after 5 December 2023 up to lodgment of the resource consent application. However, those invoices had all been paid in full or in part. The balance owing in respect of them was $181,419, substantially less than the $211,441 claimed in the statutory demand.
[76] Then there is that the amount of the estimate is said to be $479,765 but was in fact $449,765 (including GST). The demand appears to include, without explanation, a Council processing fee of $30,000 which was not an item claimed on any of the relevant invoices.
[77] In addition, the payments made by Mansion are said to total $268,324, but that sum includes an amount of $28,750 in payment of Cato Bolam’s September 2024 invoice for work Cato Bolam says was not covered by its estimate.
[78] The statutory demand was drafted in a manner that sought to avoid Mansion’s contention that there was a genuine dispute as to the amount owing. However, the reliance upon Cato Bolam’s estimate as the basis for calculating the amount of the demand was incorrect for the reasons Ms Tabb advances. The demand also contains the other material errors I have identified. I consider the defects in the statutory demand were so significant that non-compliance with it was not a proper basis to found the application for liquidation of Mansion.
Issue 3: Does Cato Bolam hold reasonable security for payment of the debt?
[79] Mansion also argues that this proceeding should be stayed as Cato Bolam holds adequate security over its properties for payment of any debt owing to it.
[80] Neither party has argued that Cato Bolam does not have an equitable mortgage over Mansion’s land, or that an equitable mortgage is not a charge over property for the purpose of s 289(2)(d) of the Companies Act.9
[81] In this regard, in its notice of application Mansion states the statutory demand has been “satisfied by way of a charge granted by [Mansion] to [Cato Bolam] over 2 properties at 127 and 159 Pooks Road…”. Ms Tabb made submissions to the same effect and Ms Xu’s evidence is that:
However the caveats are lodged over 137 Pooks Road and 159 Pooks Road and will prevent Mansion from selling or borrowing against those properties. 137 Pooks Road is worth around $800,000 and 159 Pooks Road is worth at least $1,200,000. So Cato has security over $2,000,000 worth of property for a debt less than $200,000 that Mansion does not believe is actually owing.
[82] Since Ms Xu’s evidence was filed Cato Bolam has, of course, allowed one of its caveats to lapse, which is an issue I shall come to shortly.
[83] Mansion relies upon Covington Railway Ltd v Uni-Accommodation Ltd, where Covington applied for orders restraining advertising of a liquidation proceeding and staying any steps in that proceeding by Uni-Accommodation Ltd (UAL) on grounds which included that as to an amount of $500,000 a bank had provided a performance guarantee in favour of UAL in respect to Covington’s obligations.10
[84] The Court of Appeal noted that s 289 creates a rebuttable presumption that a company is unable to pay its debts. It also noted that there is compliance with a demand, and consequently no presumption of an inability by the company to pay its debts, if certain things are done within 15 working days or a longer period ordered by the Court to the reasonable satisfaction of the creditor. These things include the giving of a charge over the company’s property to secure payment of the debt.
9 Neil Campbell Campbell on Caveats (3rd ed, LexisNexis, Wellington, 2019) at [10.009(n)].
10 Covington Railways Ltd v Uni-Accommodation Ltd [2001] 1 NZLR 272 (CA).
[85] The Court considered whether or not the guarantee and the arrangements between Covington, UAL and the bank amounted to the giving by Covington of a charge over its property to secure payment of its debt and found it did. Relevantly it said:
[27] … There is no reason to read s 289(2)(d) as referable only to an event occurring after the demand is made. If in the circumstances it is reasonable to expect a creditor to be satisfied by a charge over the property of the company, why should it matter whether that was given before or after the making of the statutory demand? In assessing what is reasonable in the circumstances it is very relevant to take into account what has earlier been agreed to and done by the parties. And when the Court is considering only whether there has been reasonable satisfaction as to a particular amount immediately recoverable under an existing performance guarantee, it would seem to be of little relevance that there may have been a failure to provide other guarantees of further amounts.
[86] Cato Bolam argues there is insufficient evidence that its equitable mortgage provides satisfactory security for the amount owing to it. It says there is no sworn evidence (apart from Ms Xu’s assertions) as to the equity that exists in the property over which it has security. It says there is also a risk that the amount of Mansion’s first mortgage could be increased to encompass the entire equity. Cato Bolam also says to recover payment from its security the property would need to be sold by it as mortgagee or by Mansion.
[87] I do not accept Cato Bolam’s submission that it is not adequately secured to its reasonable satisfaction. In making this assessment I must have regard to what the parties have actually agreed. The correspondence referred to in [44] to [49] shows that when Mansion challenged Cato Bolam’s caveats, Cato Bolam’s lawyers asked that Mansion provide information as to the value of the properties over which it had lodged its caveats and the debts secured against them. This was so Cato Bolam could consider “whether a single secured property could be sufficient” and “our client will consider whether retaining only the caveat over the development block is sufficient”. “Sufficient” in this context plainly meant sufficient as security for payment of the debt Cato Bolam says it is owed by Mansion.
[88] Mansion responded to Cato Bolam’s request for information and invited further discussion if required. Cato Bolam’s lawyers did not request further information but agreed to allow one caveat to lapse “in reliance on the representations
about the value of the equity in the second secured property and the documents provided”.
[89] Clearly Cato Bolam was satisfied there was sufficient equity in one property as security for payment of what was owed to it. It is inconceivable, in my view, that Cato Bolam would have agreed to release one of its caveats if it was not so satisfied. If that was the case in May 2025 it must necessarily also have been the position in December 2024 when Cato Bolam lodged the caveats. I do not accept Cato Bolam’s submission that its reliance upon the information provided by Mansion was simply strategic, preserving its legal options should the representations be proved to be misleading. That does not adequately explain Cato Bolam’s decision to release one of its caveats and it is not clear what legal options it says were being preserved.
[90] I accept that to obtain payment Cato Bolam may have to rely upon its security and sell Mansion’s property and also that there could be a change of circumstances so that the security does not offer Cato Bolam the protection it believed to be the case. It could be expected that these were matters Cato Bolam considered when it asserted its right to take security over the land and when allowing one of its caveats to lapse. For present purposes, however, the critical time for assessing the adequacy of Cato Bolam’s security is when it asserted its interest in the properties immediately following the issue of the statutory demand, not at some hypothetical future time.
[91] I therefore find that Cato Bolam’s statutory demand was satisfied because it took security over Mansion’s properties to its reasonable satisfaction. Accordingly, on this ground also it does not have a proper basis for its application to put Mansion into liquidation and this proceeding will be stayed.
Result
[92] The application to restrain advertising and for a stay of this proceeding is granted.
[93] Mansion is entitled to costs on this application on a 2B basis together with reasonable disbursements, with such costs and disbursements to be fixed by the Registrar.
O G Paulsen Associate Judge
Solicitors:
Smith & Partners Ltd, Auckland N Tabb, Auckland
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