CBC Construction (Auckland) Limited v Auckland Concrete Limited

[2019] NZHC 1104

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-92

[2019] NZHC 1104

BETWEEN

CBC CONSTRUCTION (AUCKLAND) LIMITED
Applicant

AND

AUCKLAND CONCRETE LIMITED

Respondent

Hearing:	14 May 2019
Appearances:	M L Broad and L Rozendaal for the Applicant K A Badcock for the Respondent
Judgment:	14 May 2019

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:

Kensington Swan, Auckland Badcock Law, Rotorua

CBC CONSTRUCTION (AUCKLAND) LIMITED v AUCKLAND CONCRETE LIMITED [2019] NZHC 1104 [14 May 2019]

[1]    CBC Construction (Auckland) Limited applies to set aside a statutory demand of Auckland Concrete Limited dated 15 January 2019 requiring it to pay $352,300.36 including GST, plus actual and reasonable costs of recovery of $2,817.50. The statutory demand says that the $352,300.36 is “a debt due pursuant to a progress payment claim dated 25 October 2018 (PC19), issued under s 20 of the Construction Contracts Act 2002 of which only part payment has been made, in relation to CBC Construction (Auckland) Limited, Waterford Apartments – Block 2, Hobsonville contract”.

[2]    CBC, a construction contractor, had the head contract to build apartments at Hobsonville. Auckland Concrete Limited, a concreting contractor, had the concreting subcontract between April 2017 and October 2018 for the Hobsonville job. Auckland Concrete says that CBC’s indebtedness arose under the sudden death provisions of the Construction Contracts Act 2002. On 25 October 2018 it gave CBC ‘Payment Claim 19’. It was for $355,188.82 (excluding GST); with GST the total amount payable was

$408,467.14. The payment claim specified the due date for payment as 30 November 2018. An invoice accompanying the payment claim also stated that the due date for payment was 30 November 2018. On 30 November 2018 CBC sent Auckland Concrete a payment schedule under s 21 of the Construction Contracts Act, rejecting many  of  the  claims   by  Auckland  Concrete  and  stating  a  schedule   amount   of

$56,166.78 (including GST). It paid Auckland Concrete that sum on the same day. Auckland Concrete Ltd says however that the sudden death provisions under ss 22 and 23 of the Construction Contracts Act have taken effect, because CBC gave its payment schedule too late. In issuing the statutory demand it has brought into account the payment of $56,166.78. The statutory demand is for the balance of the amount stated in the payment claim of 25 October 2018. CBC, on the other hand, says that it did give its payment schedule in time. The difference between the parties turns on which party’s version of the terms of contract applies and on their conduct during the contract. CBC says that the governing terms are set out in its subcontract agreement which it sent to Auckland Concrete on 11 April 2017. On the other hand, Auckland Concrete says that the terms are set out in its response, which it sent on 20 April 2017.

Preliminary matters

[3]    Auckland Concrete served its statutory demand on 16 January 2019. CBC filed and served its application on 30 January 2019. That was within time under s 290 of the Companies Act 1993.

[4]    At the start of the hearing Mr Broad sought leave to tender a further affidavit by a Ms Cooke in response to a second affidavit by a Mr Ross. Mr Ross’ affidavit was filed by Auckland Concrete after CBC had given its evidence in reply. The time for Auckland Concrete to serve its evidence had expired and CBC had properly given evidence in reply. It is inappropriate for parties to try to add further evidence once the applicant has given its reply evidence. I declined leave for either affidavit to be used in the hearing.

Principles on applications to set aside statutory demands

[5]    The purpose of a statutory demand under s 289 of the Companies Act is to give a presumption of insolvency which may be used to support a liquidation application. If a company served with a statutory demand does not comply with it within 15 working days of service, it will be presumed to be unable to pay its debts if a liquidation application is commenced within the prescribed time after the time for complying with the notice has expired. In some cases it may be unjust to allow that presumption of insolvency to arise, notwithstanding that the company has not complied with the demand. One of those cases is where the company contends that it has good reasons for not paying the debt, as when it disputes its liability. Parliament has recognised that in s 290(4)(a) of the Companies Act by allowing a statutory demand to be set aside if there is a genuine and substantial dispute whether the debt is due.

[6]    The principles on which the courts decide applications under s 290(4)(a) are well established:

(a)The onus is on the applicant to show that there is arguably a genuine and substantial dispute as to the existence of the debt.

(b)The court is not required to resolve the dispute, but only to determine whether there is a substantial dispute that the debt is due.

(c)Merely asserting that a debt exists is not sufficient.

(d)Material short of proof is required to support a claim that the debt is disputed. If there is such material available, the dispute should normally be resolved other than by proceedings in a Companies Court.

(e)It is not usually possible to resolve disputes on questions of fact on affidavit evidence alone, particularly when issues of credibility arise.

[7]    For authorities I refer to United Homes 1988 Ltd v Workman and North Harbour Equine Hospital Ltd v Little.1 There is also guidance from the Court of Appeal in Industrial Group Ltd v Bakker:2

The statutory scheme … for applications to set aside statutory demands [is] a summary proceeding … The section calls for a prompt judgment as to whether there is a genuine and substantial dispute. It is not the task of the Court to resolve the dispute. The test may be compared with the principles developed in cognate fields such as applications to remove caveats [and] leave to appeal an arbitrator’s award … The tight time constraints distinguish the s 290 discretion from that to be exercised on, say, a summary judgment application, where the presence of complex legal issues is not necessarily a bar to remedy. As with leave to appeal an arbitrator’s award, the hearing should, in the normal course, be short and to the point, and the judgment likewise.

The Court of Appeal reaffirmed that in AAI Limited v 92 Lichfield Street:3

It is important to keep in mind the words of the statute. What the applicant must show is that the dispute it raises has substance; the applicant must explain to the Court what the dispute is; under the dispute so shown there must be a real and not a fanciful or insubstantial dispute … The Court must also keep in mind the requirement that what is intended to be a summary judgment should not be converted into a full-blown trial.

(Citations omitted).

1      United Homes 1988 Ltd v Workman [2001] 3 NZLR 447 (CA) and North Harbour Equine Hospital Ltd v DK Little Corproate Trustee HC Auckland, CIV-2006-404-7587, 19 February 2007.

2      Industrial Group Ltd v Bakker [2011] NZCA 142 at [24]-[25].

3      AAI Limited v 92 Lichfield Street [2015] NZCA 559 at [22].

The claim for costs in the statutory demand

[8]    A creditor can issue a statutory demand under s 289 of the Companies Act only for a debt that is already due. It is not possible to make a claim for a debt that has not yet fallen due and the demand itself cannot trigger the debt. Auckland Concrete Limited has included in its statutory demand a claim for costs. I understand that it has done so in reliance on s 23(2) of the Construction Contracts Act, which states the consequences where a debt has fallen due for non-compliance with a payment claim. The section provides that the payee may sue the payer for the debt and may recover the actual and reasonable costs of recovery awarded against the payer by the Court.

[9]    Auckland Concrete Limited could not invoke that provision when it issued the statutory demand. At that stage no court had awarded it any costs. Outside s 23(2) there is no other basis on which Auckland Concrete Limited can claim that CBC owed it costs. The claim for costs in the statutory demand is a ground for striking out that part of the statutory demand, regardless of the merits of the rest of the claim.

[10]   I have found it increasingly common for creditors to include in statutory demand claims for costs in preparing and serving a statutory demand when the costs are not lawfully recoverable at that stage. While the Court might order costs on making a liquidation order, that does not mean that that can be anticipated in the statutory demand. I find the practice of including improper claims for costs in a statutory demand to be potentially oppressive, particularly for unsophisticated companies. I regard the costs demand as an unacceptable aspect of using a statutory demand. I discourage it by taking that matter into account in my costs decisions.

Construction Contracts Act 2002

[11]   The Act applies to the subcontract between CBC and Auckland Concrete Limited. In this case CBC is the payer and Auckland Concrete Limited is the payee (as defined in s 19). A payee may give a payment claim to a payer under s 20 of the Construction Contracts Act. The requirements in s 20(2) for a payment claim are:

(2)A payment claim must—

(a)be in writing; and

(b)contain sufficient details to identify the construction contract to which the payment relates; and

(c)identify the construction work and the relevant period to which the payment relates; and

(d)state a claimed amount and the due date for payment; and

(e)indicate the manner in which the payee calculated the claimed amount; and

(f)state that it is made under this Act.

[12]   While a payment claim must state the due date for payment, the claim is not required to state the date for a payment schedule under s 21. That is significant because in this case Auckland Concrete Limited says that the date of payment and the date for giving a payment schedule do not coincide. Section 21 allows a payer to respond to a payment claim with a payment schedule. It must be in writing, must identify the payment claim to which it relates, and must state a scheduled amount. The scheduled amount is the amount of a payment specified in the payment schedule which the payer proposes to pay to the payee in response to the payment claim. Section 22 provides:

22 Liability for paying claimed amount

A payer becomes liable to pay the claimed amount on the due date for the payment to which the payment claim relates if—

(a)a payee serves a payment claim on a payer; and

(b)the payer does not provide a payment schedule to the payee within—

(i)the time required by the relevant construction contract; or

(ii)if the contract does not provide for the matter, 20 working days after the payment claim is served.

[13]   Under s 22 the time for providing a payment schedule is not necessarily tied to the time for making payment. The time for providing a payment schedule may be specified under the relevant construction contract. It is a matter on which the parties are free to bargain – that at least is common ground between the parties in this case.

The contract

[14]   In 2016, CBC called for tenders for the Hobsonville job. It sent out fresh invitations to tender in February 2017. Auckland Concrete is one of those that responded.  It  submitted  a  quote  in  February  2017  and  an  amended  quote  on 10 March 2017. There was a meeting on 16 March 2017. The record refers to it as a subcontract tender clarification meeting. It was attended by representatives of Auckland Concrete and CBC. The minutes record a checklist with notes as to matters agreed. Part of the minutes contain the words “subcontract agreement” and:

We acknowledge that these meeting minutes, the ‘Subcontractor Checklists’ and work described in the ‘Scope of Works’ all form part of any subcontract agreement between the parties at this meeting.

Beside that appear the signatures of representatives of CBC and Auckland Concrete Ltd.

[15]   CBC places some store on matters that were apparently agreed in the minutes. It notes that the head contract is described as “NZS 3910:2013 and attached schedules”, and that there is a reference to the CBC subcontract agreement with attachments. It relies on a provision that subcontractor payments will be made by CBC on or about the 30th of the month after submission (which is recorded as having been agreed). There is provision for retentions,  which  may  be  withheld  under NZS 3910:2013.

[16]   Towards the end of the document, there is a question, “Are any of the subcontractors’ standard clarifications/tags included in this contract?” The letter “Y” is circled, and there is handwriting which says, “See quote”. CBC says that the relevant quote document is that dated 10 March 2017, not the earlier quote of February 2017. It says that is important because some of the matters that Auckland Concrete rely on for its case were in the February quote but had been deleted from the 10 March quote.

[17]   CBC contends that an agreement was made at the meeting on 16 March 2017. Auckland Concrete submits otherwise. On this I am with Auckland Concrete. The meeting was what the documents describe as a “subcontract tender clarification

meeting”. That is a meeting between parties who are planning to enter into a contract and want to have discussions to that end but have yet to conclude a contract.

[18]   Importantly, one of the matters left to be resolved at the meeting was price. CBC invited Auckland Concrete to see if it could adjust its price. The version of the minutes in evidence shows a subcontract value in accordance with Auckland Concrete’s initial quote and an amendment made on 11 April 2017 where an adjusted price is shown. Everyone agrees that the adjusted price was the price for the contract, but that was set only on 11 April 2017.

[19]    After the meeting one of the CBC staff wrote to Auckland Concrete indicating that further information was required and requesting some fine-tuning on the question of price. That conduct is consistent with the parties working towards entering into a contract on 16 March but not having made one at that stage.

[20]   A CBC letter of 16 March talks of “finalising a contract”. That suggests that a contract had not been made yet. Auckland Concrete’s staff say that they left the meeting feeling confident that they were going to get the job, but they had not been told expressly that they had got it at that meeting.

[21]   On 11 April 2017 CBC’s quantity surveyor, Mr Lewis, who had attended the meeting, emailed Auckland Concrete. His email included this:

We hereby confirm that we are proceeding with Auckland Concrete to carry out the concrete works, trade works on the above project. Please find attached a copy of the following documents that need to be signed and returned to finalise our contract for the above project:

Subcontract agreement – sign and witness as required on page 16, also initial bottom left corner of all pages including attachments.

Please email the above information back to me.

[22]   The email then requested further information prior to starting work on site. The letter also contained this:

Please be aware that we will not able to process any payments until we receive the above documents (a copy of the signed subcontract agreement).

[23]   In response Mr Burton of Auckland Concrete sent an email on 20 April 2017 at 4.20 am. His email says:

Please find attached a copy of contract as requested. I have made amendments to this as per my markups. I think a more standard form of contract would be better, but understand time constraints. As such I have marked up as attached. Please let me know if you have any issues and want to talk through this.

[24]   The attachment was the subcontract agreement sent by Mr Lewis, but with significant alterations. There is no  evidence  of  any formal  response  by CBC  to Mr Burton’s email.

[25]   Mr Broad submitted that after the meeting on 16 March 2017 there was work on the contract before the email of 11 April 2017. He referred to that as indicating the parties were already in a contract. I am not persuaded that means the parties were already contractually bound. It can happen that parties planning to enter into a contract may be negotiating the terms after they have already started work. In that event the terms of the contract operate retrospectively to the start of the work, even though the contract is made later.4

[26]    I also need to comment on the differences between the CBC form of the subcontract agreement and the amendments made by Mr Burton. I do not intend to describe all of them, but some of the differences are significant.

[27]   A primary point of difference for this case goes to payment terms. Clause 5(a) says:

Unless otherwise stated in the schedule to the subcontract agreement, the subcontractor shall submit to the contractor its monthly payment claim (not being the final payment claim) no later than the 25th day of each month, or on such other period as stated in the schedule.

[28]Clause 5(d) in its original form stated:

In respect of the works, should the contractor intend to pay less than the payment claim submitted by the subcontractor (not being the final payment claim), the contractor will provide a payment schedule indicating the amount of proposals to pay, how it has calculated that amount, and the reasons for the difference between that claimed and the amount the contractor says is due for

4      Trollope & Colls Ltd v Atomic Power Constructions Limited [1963] 1 WLR 333.

payment. The payment schedule and any payment due under it shall be provided not later than 22 working days after the first day of the month following the date of submission of the payment claim by the subcontractor under clause 5(a) above.

Auckland Concrete changed the last sentence to say that the payment schedule and any payment under it shall be provided not later than:

20 working days after the payment claim is served.

[29]   Clause 5(e) in the original provides that the contractor is not required to pay the subcontractor unless certain conditions have been met, but that has been deleted. Clauses as to final payment claims and final payment schedules have been struck out.

[30]   Other important differences are that Mr Burton has struck out a provision in the agreement which tied the subcontract to the head contract, a back-to-back provision. He also struck out the provisions for retentions, the resolution of disputes, and a set-off provision.

The parties’ conduct

[31]    Auckland Concrete sent monthly payment claims throughout the contract. CBC has analysed them. The payment claims invariably specify the due date for payment as the 20th  of  the  following  month,  apart  from  the  payment  claim  of 25 October 2018 which specified the 30th of the following month. The dates when the payment claims were delivered varied, not always on or before the 25th of the month, and sometimes early the next month.

[32]   CBC delivered payment schedules in response to the payment claims. It delivered one payment schedule on 20 December 2017, obviously to take Christmas into account, but all other payment schedules were made from the 28th to the 31st of the month. Apart from the December 2017 payment schedule, none of the payment schedules were delivered at the time required under Auckland Concrete’s version of the contract.

[33]   While Auckland Concrete’s version of the contract deleted any provision for retentions, when it submitted its payment claims it allowed for retentions. In helpful

supplementary submissions Mr Broad went through the contractual provisions relating to retentions. The contract terms refer to them as being under the “declining scale and release regime” set out in NZS 3910: 2013. The significant point here is that at least for the first year Auckland Concrete Limited took into account retentions in making payment claims. That was consistent with CBC’s contract terms but was inconsistent with its own terms.

Payment claim 19

[34]   Payment claim 19 was issued on 25 October 2017. It is stated to be for a claim period from 11 April 2017 to 31 October 2018 with a stated due date for payment as 30 November 2018. It is silent as to when any payment schedule should be delivered, but that is because that is not required under s 20 of the Construction Contracts Act. Apart from the matter of the due date for payment of 30 November 2018, there is no challenge to the validity of payment claim 19.

[35]   The payment claim is extensive. It attaches many variation orders. Mr Harvey, CBC’s quantity surveyor, prepared the payment schedule in response. Of interest he prepared it on 22  November  2018,  but  it  is  agreed  that  it  was  not  sent  until  30 November 2018. The payment schedule provides an itemised response. Apart from the question of timing, there is no suggestion that it is not a valid payment schedule under the Construction Contracts Act. It contains a calculation showing the balance due after making various deductions, and after taking retentions into account.

[36]   The case for Auckland Concrete is that under the version of the subcontract that Mr Burton sent to CBC on 20 April 2017, the payment schedule was due on     22 November 2018. That is, under the amendment to cl 5(d), within 20 working days of the payment claim of 25 October 2018. The payment  schedule was required on  22 November 2018, even though the payment claim specified 30 November 2018 as the due date for payment. Auckland Concrete says that the date for providing a payment schedule does not need to be the same as the due date for payment. That is recognised in s 22 of the Construction Contracts Act. It says that because the payment schedule was not provided on time, the full amount of the payment claim fell due under s 22 and is recoverable under s 23 of the Construction Contracts Act.

[37]   That argument depends on the court finding that CBC is bound by the terms of the subcontract agreement that Mr Burton sent on 11 April 2017. Mr Burton’s email was sent to a Mr Lewis, a former quantity surveyor at CBC. Mr Lewis has not sworn an affidavit; I am told, however, that he is no longer employed by CBC and is now living in Barbados. The absence of an affidavit is accordingly understandable.

[38]   Auckland Concrete says that it was the last one to submit terms of contract; the parties entered on performance; and that performance amounted to acceptance of its terms of its offer. It says it got the last shot in and refers Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd.5 It also says that where a written contract has not been signed by both parties, there may be acceptance by conduct. It refers to Brogden v Metropolitan Railway Company and Savvy Vineyards 3552 Limited v Kakara Estate Limited.6 Auckland Concrete says that the parties conducted themselves in accordance with its terms and CBC is accordingly bound by its conduct. CBC is bound by cl 5 in the terms amended by Auckland Concrete. It had to get its payment schedule in by 22 November 2018.

[39]    There are however objections to this position. First, there is a genuine dispute whether Mr Burton’s email was sent to Mr Lewis. Auckland Concrete Limited has provided an affidavit by a Mr Ross, who has qualified himself as an expert on Microsoft-based computer systems. He says that he has checked Auckland Concrete Limited’s Microsoft Office 365 email accounts and has analysed emails sent and received between Mr Burton’s and Auckland Concrete Limited’s email addresses, and the email address of Mr Lewis at CBC. He checked Mr Burton’s outbox to confirm that there was an email addressed to Mr Lewis sent on Thursday 20 April at 4.20 a.m., and that it did include a 5MB attachment. He says that the email could not have been fabricated because Microsoft Office 365 is a cloud-based solution managed by Microsoft. A user cannot access that system to fabricate an email. He therefore concludes that Mr Burton did send the email to Mr Lewis with the attachment at the time stated. He has also looked at other email entries for email addresses between  Mr Lewis and Auckland Concrete, and says that emails were both sent and received.

5      Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401 (CA).

6      Brogden v Metropolitan Railway Company (1877) 2 App Cas 666; Savvy Vineyards 3552 Limited v Kakara Estate Limited [2014] NZSC 121, [2015] 1 NZLR 281.

He says that he has established that CBC was also hosted on the Microsoft Office 365 platform. If Mr Lewis had not received the email there would have been a non- delivery report, but he was unable to find any such non-delivery report.

[40]   In response CBC has provided an affidavit from a Ms Cooke, an employee of Classic Technology Solutions that provides ICT services to CBC. Because there is already an existing relationship with CBC, she accepts that she might not necessarily qualify in all respects as an expert and may not be able to comply in all respects with the code of conduct for experts. She says however that she has searched CBC’s email system to see whether Mr Burton’s email to Mr Lewis was received. She made some searches herself, and she asked other staff and employees to make searches. None of the searches resulted in the email being discovered within the Office 365 mailbox of Mr Lewis. She says that to establish conclusively whether the email was received would entail interrogating an audit log, but for various technical reasons that does not seem to be possible at present.

[41]   In support of its submission that CBC did receive Mr Burton’s email, Auckland Concrete referred to s 214 of the Contract & Commercial Law Act 2017:

An electronic communication is taken to be received, —

(a)in the case of an addressee who has designated an information system for the purpose of receiving electronic communications, at the time the electronic communication enters that information system; or

It  was   submitted   that   under   the   definition   of   “information   system”   under s 213(2), as both CBC and Auckland Concrete use the Microsoft Office 365 programme, they are on the same information system. Accordingly, the sending of the email by Mr Burton amounted to receipt by CBC.

[42]   CBC’s evidence that the email was not received cannot be dismissed as implausible. Evidence that the email was not received counts as evidence that the email may not have been sent. There is then a conflict of evidence on a factual matter between CBC and Auckland Concrete Limited on this question of sending the email. On an application under s 290 I cannot and I should not resolve that disputed question of fact. The question of sending the email remains a point of dispute. I cannot dismiss

it as frivolous, given the trouble that both sides have gone to to get people with technical expertise to try to resolve the question.

[43]   Second, the Brogden principle does not necessarily apply here. The courts have in some cases recognised that the principle does not always apply. Burrows, Finn & Todd on the Law of Contract in New Zealand puts the matter this way:7

There are a small number of cases where the courts must disregard external appearances of assent to, or rejection of, an offer because the offeree’s actual state of mind is known to the offeror. An offeror who knows the offeree and does not intend to accept the offer cannot seek to establish a contract by pointing to conduct which might lead a bystander to think there was assent.

[44]   The alterations that Auckland Concrete made to the subcontract were drastic and not alterations any ordinary contractor would be likely to accept. Deleting the back-to-back provision under which the subcontract is tied into the terms of the head contract would never be acceptable to any ordinary contractor in the position of CBC. Equally, retentions invariably go without saying, yet Mr Burton purported to exclude them. He must have known that what he was proposing would not be acceptable to CBC. Auckland Concrete was arguably opportunistic in seizing on the lack of response to his email to say that Auckland Concrete’s terms prevail, when Mr Burton would have known full well that they were most unlikely to have been accepted. In short, the point made by Burrows, Finn & Todd is arguable for CBC.

[45]   Finally, there is the question of performance. The way that the parties performed the contract is more consistent with the CBC terms of contract than with the terms of contract in Mr Burton’s subcontract in the email of 20 April 2017. CBC sent its payment schedules no earlier than the 28th of the following month. That was consistent with its terms of contract, but inconsistent with Auckland Concrete’s terms of contract. This was seemingly tolerated for the first 18 payment claims.

[46]   And there is the question of the retentions. Importantly, Auckland Concrete Limited deducted retentions in its payment claims. If it genuinely believed that its terms of contract were those that prevailed, it would not have made any allowance for

7      Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn & Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at 57. The text cites Airways Corporation New Zealand Ltd v Geyserland Airways Ltd [1996] 1 NZLR 116 (HC) at 125.

retentions in its payment claims. Its conduct is more consistent with CBC’s terms of contract applying rather than its own.

[47]   This can be put two ways. The first is the parties’ subsequent conduct can be taken into account to show which of two competing contracts applies. If the parties have conducted themselves in accordance with one set of terms, rather than a competing set of terms, the parties can be taken as having intended the first set of terms to have applied. I see that as consistent with the Supreme Court’s decision in Gibbons Holdings Ltd v Wholesale Distributors Ltd.8

[48]   The other way is how Mr Broad put it for CBC. That is on the basis of an estoppel. Even if the Auckland Concrete terms apply, the parties conducted themselves throughout the contract as though the CBC terms apply. That can be shown by the retentions being withheld and by payment schedules being submitted seemingly out of time (according to Auckland Concrete’s terms of contract). That shows a course of conduct which would have led CBC to assume that the parties were following its terms of contract. Auckland Concrete’s acquiescence in this can be seen as giving rise to an estoppel by conduct which would make it unjust and unreasonable for it to then change course on the very last payment claim and insist after the event that a payment schedule has been submitted out of time, after it has accepted late payment schedules for the earlier payment claims.

Outcome

[49]   For the above reasons I find that the claim for payment of the statutory demand is subject to a genuine and substantial dispute. That is because it is arguable for CBC that it was not out of time when it gave its payment schedule on 30 November 2018. Once it is arguable that its payment schedule was within time, there is a genuine dispute as to its liability under the payment claim and under the statutory demand. Accordingly, I make an order setting aside the statutory demand.

8            Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277.

[50]   Auckland Concrete Ltd is to pay CBC Construction (Auckland) Limited costs on the application. I take the demand for costs in the statutory demand into account in fixing costs. I do that under r 14.6(3)(d) of the High Court Rules. That is because the practice of making unjustified claims for costs on statutory demands ought to be discouraged. Extra costs are being awarded as a deterrent. I fix the amount of extra costs at $1,000. I trust that counsel can agree on costs. If they cannot, memoranda may be filed.

……………………………….

Associate Judge R M Bell