Construction Advantage Limited v Eljayej Holdings Limited

[2025] NZHC 1749

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2024-419-314

[2025] NZHC 1749

BETWEEN

CONSTRUCTION ADVANTAGE LIMITED

Plaintiff

AND

ELJAYEJ HOLDINGS LIMITED

Defendant

Hearing:	12 February 2025
Appearances:	KA Lomas and JM Perry for the Plaintiff CT Gudsell KC for the Defendant
Judgment:	1 July 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 1 July 2025 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Braun, Bond & Lomas, Hamilton

Evan Henderson Woodbridge, Marton

CONSTRUCTION ADVANTAGE LTD v ELJAYEJ HOLDINGS LTD [2025] NZHC 1749 [1 July 2025]

Introduction

[1]    Construction Advantage Limited (CAL) applies for summary judgment for payment of the amount claimed in its final payment claim of $417,859.26 on the basis that the payment schedule issued by Eljayej Holdings Limited (EHL) in response does not meet the requirements of s 21 of the Construction Contracts Act 2002 (CCA). Where a compliant payment schedule is not issued within the required time, the party issuing the payment claim is entitled to recover the amount claimed as a debt due pursuant to the “pay now, argue later” regime provided by the CCA.1

[2]    Section 21 of the CCA requires a payment schedule to state a scheduled amount and, if less than the amount claimed, indicate the reasons for the difference and, if the payer is withholding payment on any basis, the payer’s reasons for doing so.

[3]    CAL submits that the reasons given by EHL in its payment schedule are not sufficient to meet the s 21 requirements.

[4]    The timing of the payment schedule and the recording of the scheduled amount as nil are not in issue. The sole issue is whether the reasons provided are sufficient to meet the requirements of the CCA.

[5]    I set out the principles applying to summary judgment and the relevant provisions of the CCA before considering the above question.

Summary judgment principles

[6]Rule 12.2(1) of the High Court Rules 2016 (HCR) provides:

The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

1      Construction Contracts Act 2002, ss 22–23. See also SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281 [2023] NZSC 22 at [6].

[7]    The principles applying to a plaintiff’s application for summary judgment are well established and are summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd:2

(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.3

(b)The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.4

(c)The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable.5

(d)In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it.6

[8]    Finally in terms of the summary judgment principles, a defendant is under an obligation to lay a proper foundation for its defence in the affidavits filed in support of its notice of opposition.7

2      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26] to [27].

3      Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.

4      MacLean v Stewart (1997) 11 PRNZ 66 (CA).

5      Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.

6      Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

7      Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.

The CCA regime

[9]    When the CCA was enacted, the purpose was to reform the law relating to construction contracts:

3        Purpose

The purpose of this Act is to reform the law relating to construction contracts and, in particular,—

(a)to facilitate regular and timely payments between the parties to a construction contract; and

(b)to provide for the speedy resolution of disputes arising under a construction contract; and

(c)to provide remedies for the recovery of payments under a construction contract.

[10]   Section 4 provides an overview of the CCA, referring to ss 19 to 24 as providing a procedure for making payment claims and responding to those payment claims.8

[11]   There is no dispute in this case that the payment claim complied with the requirements of s 20.

[12]The requirements for a valid payment schedule are set out in s 21:

21Payment schedules

(1)A payer may respond to a payment claim by providing a payment schedule to the payee.

(2)A payment schedule must—

(a)be in writing; and

(b)identify the payment claim to which it relates; and

(c)state a scheduled amount.

(3)If the scheduled amount is less than the claimed amount, the payment schedule must indicate—

(a)the manner in which the payer calculated the scheduled amount; and

(b)the payer’s reason or reasons for the difference between the scheduled amount and the claimed amount; and

8      Construction Contracts Act, s 4(e).

(c)in a case where the difference is because the payer is withholding payment on any basis, the payer’s reason or reasons for withholding payment.

[13]Section 22 then provides:

22Liability for paying claimed amount

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

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

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

1.   the time required by the relevant construction contract; or

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

[14]   If the payment schedule does not meet the requirements of s 21 then no valid payment schedule will have been issued, with the consequences set out in s 23:

23Consequences of not paying claimed amount where no payment schedule provided

(1)        The consequences specified in subsection (2) apply if the payer—

(a)becomes liable to pay the claimed amount to the payee under section 22 as a consequence of failing to provide a payment schedule to the payee within the time allowed by section 22(b); and

(b)fails to pay the whole, or any part, of the claimed amount on or before the due date to which the payment claim relates.

(2)The consequences are that the payee –

(a)may recover from the payer, as a debt due to the payee, in any court –

(i)the unpaid portion of the claimed amount; and

(ii)the actual and reasonable costs of recovery awarded against the payer by that court; and

(b)may serve notice on the payer of the payee’s intention to suspend the carrying out of construction work under the construction contract.

…

(4) In any proceedings for the recovery of  a  debt  under  this section, the court must not enter judgment in favour of the payee unless it is satisfied that the circumstances referred to in subsection (1) exist.

Did the payment schedule sufficiently indicate reasons?

Relevant legal principles

[15]   The requirements in ss 21(3)(b) and (c) are for the payer to “indicate” its reasons for the difference between the scheduled amount and the claimed amount    (s 21(3)(b)) and the reasons for withholding payment (s 21(3)(c)).

[16]   The New Zealand courts have taken guidance on the requirement to indicate reasons from the Supreme Court of New South Wales’ decision, Multiplex Construction Pty Ltd v Luikens:9

Section 14(3) of the Act, in requiring a respondent to “indicate” its reasons for withholding payment, does not require that a payment schedule give full particulars of those reasons. The use of the word “indicate” rather than “state”, “specify” or “set out” conveys an impression that some want of precision and particularity is permissible as long as the essence of “the reason” for withholding payment is made known sufficiently to enable the claimant to make a decision whether or not to pursue the claim and to understand the nature of the case it will have to meet in an adjudication.

[17]   A payment schedule will therefore comply with subss 21(3)(b) and (c) if the reasons are sufficient to explain to the payee why the scheduled amount is less than the amount claimed or payment is withheld, and allow the payee to assess whether to accept payment on the reduced basis or progress the matter through the dispute provisions in the contract.

[18]   The legislation is designed to allow for prompt payment for undisputed claims and to provide dispute resolution procedures for disputed claims.10 The payment claim/payment schedule process is fundamental to achieving this objective. It enables the payee to put forward its claim and the payer to give “full and unequivocal notice of all areas of difference or dispute in order to enable [the payee] to properly assess its future options”.11

9      Multiplex Construction Pty Ltd v Luikens [2003] NSWSC 1140 at [78], as cited in Westnorth Labour Hire Ltd v S B Properties Ltd HC Auckland CIV-2006-404-001858,19 December 2006 at [29]; Seating Systems Ltd v Kidson Construction Ltd [2012] NZHC 2217 at [21]; NCB 2000 Ltd v Hurlstone Earthmoving Ltd HC Auckland CIV-2010-404-008096, 23 June 2011 at [49]; CJ Parker Construction Ltd v Ketan [2017] NZCA 3 at [22]; and Fletcher Construction Co Ltd v Spotless Facility Services (NZ) Ltd [2020] NZHC 1942 at [60].

10 CJ Parker Construction Ltd v Ketan, above n 9, at [16].

11 Seating Systems Ltd v Kidson Construction Ltd, above n 9, at [28].

[19]   The Court of Appeal has confirmed the courts should use a pragmatic, common sense and contextual approach to whether a payment claim complies with the CCA, with each case falling for determination on its particular facts.12 By extension, the same must apply in respect of a payment schedule, as held in Fletcher Construction Co Ltd v Spotless Facility Services (NZ) Ltd (“Spotless”).13

[20]   In Spotless, the High Court considered the sufficiency of reasons in a payment schedule when Spotless sought to suspend works on the construction of the Commercial Bay development pursuant to s 23(2)(b) of the CCA on the basis that Fletchers did not issue a valid payment schedule. Spotless claimed that Fletchers did not comply with the s 21(3) requirements in relation to 46 deductions. Van Bohemen J made the following observations:

(a)“Depending on the circumstances, references in a payment schedule to notices or other correspondence may be sufficient to indicate those matters if it is clear that the payer and payee share a common understanding about the references”.14

(b)Where documents are relied upon, in order to satisfy the requirements of s 21(3), the documents must give an indication of the basis for and/or calculation of claims.15

[21]   His Honour then referred to the Court of Appeal’s direction in CJ Parker Construction that a pragmatic, common sense and contextual approach should be adopted and held:16

The [CCA] does not direct that side calculations and reasons on a line by line basis for each item are required whenever a payer proposes to pay a lesser amount than that claimed by a payee. The requirement is to indicate the reason or reasons for the deduction. How that is done may vary according to the circumstances of the contract and the practice of the parties, provided that the reason or reasons are adequately indicated.

12     CJ Parker Construction Ltd v Ketan, above n 9, at [25] and [27].

13     Fletcher Construction Co Ltd v Spotless Facility Services (NZ) Ltd, above n 9, at [54].

14 At [99].

15 At [102].

16 At [61].

Relevant correspondence in this case

[22]   The payment schedule in issue was in response to payment claim 28, dated 29 August 2024. This was the final payment claim in a two-year contract pursuant to which EHL had already paid CAL $18,541,560.02. The amount claimed in payment claim 28 was $417,859.26 (including GST) and was for the following variations:

(a)Variation 07 (Painting) – $267,665.19 (including GST);

(b)Variation 10 (Scaffold) – $23,664.02 (including GST);

(c)Variation 12 (Extension of Time) – $68,249.26 (including GST); and

(d)Variation 13 (Stonemason) – $20,293.59 (including GST);

[23]   In addition to the Variations, the payment claim included a claim for margin, of $37,987.20 (including GST).

[24]   On 5 September 2024, EHL issued a payment schedule certifying a nil amount as being payable and setting out the reasons for the difference between the scheduled sum and the claimed amount as follows:

Reasons for Difference between the Scheduled sum and the Claimed

Amount:

The Principal disputes the claimed sum is owed.

The claimed sum is disputed for the reasons set out in previous letters from Evans Henderson Woodbridge (EWH) (for the Principal) and Braun Bond and Lomas (BBL) (for the Contractor), in particular, but not exclusively, EWH letters to BBL dated 19 January 2024 and 28 February 2024.

Further, reliance is also placed on the earlier exchanges between Prime Solutions Limited for Eljayej Holdings Limited and Construction Advantage Limited (CAL), specifically addressing the disputed variations, namely VO 7- Painting, V010- Scaffolding, V012- EOT, VO 13 - Stonemason. The exchanges in question are within the possession of CAL and/or BBL.

[25]   CAL accepts the specific reference in the payment schedule to the letters from EHL’s solicitors, Evans Henderson Woodridge (EHW), to the solicitors for CAL, Braun, Bond & Lomas Limited (BBL), dated 19 January 2024 and 28 February 2024 incorporated the letters into the payment schedule. But CAL submits that the 19

January 2024 letter is marked “without prejudice” and does not set out any substantive reasoning for the variations being disputed or shed any light on the variations being rejected in their entirety. CAL submits similarly, the 28 February 2024 letter does not shed any light on the reasons for rejecting the variations beyond an assertion that CAL had failed to provide additional information or evidence to support the variations.

[26]   In terms of the references to earlier correspondence without dates, CAL submits the references are not sufficiently specific to justify incorporation.

[27]   In any event, CAL submits the subsequent provision of further information by CAL in December 2023 and the August 2024 payment claim should prevent reliance on the earlier-in-time correspondence.

[28]   In terms of the 19 January and 28 February letters incorporated, CAL submits they are patently insufficient by themselves, relying on the following context as being of particular importance:

(a)In October 2023, CAL issued a progress payment claim, which included a claim for the Variations (October Progress Claim).

(b)On 18 October 2023, EHL issued a payment schedule in response to the October Progress Claim indicating it was prepared to pay the claimed amount less $417,859.26 (including GST), the amount that is now the subject of payment claim 28. The stated reason for not paying the full amount claimed was “the new variation … has no supporting documentation to show what it is for, and how it is within the contract”. It further noted, “[o]nce the claim is fully substantiated, we will consider it”.

(c)Following EHL’s express request for supporting information, CAL says it provided some of that further detail by email on 12 December 2023. CAL says EHL did not substantively respond to it despite a further request by CAL on 16 January 2024.

(d)CAL then refers to BBL’s letter to EHW on 15 February 2024:

(i)stating that after a review of earlier correspondence, BBL could find no substantive response from EHL to the information provided to substantiate the variations; and

(ii)asking EHL to direct CAL to the relevant correspondence if it had provided comprehensive responses in an effort to refine the issues and understand EHL’s position;

(e)CAL submits EHL did not direct CAL to the correspondence as requested. The only response received was the letter of 28 February 2024, which CAL submits fell well short of the detail necessary for CAL to understand EHL’s position.

[29]   The above context as set out on behalf of CAL does not however refer to the 19 January 2024 letter specifically referred to in the payment schedule. While that letter was sent on a without prejudice basis, it is referred to in the payment schedule and was between the parties and therefore should be considered in assessing whether the reasons have been sufficiently indicated.

[30]I set out the letter in full:

Dear Kieran

RE:     ELJAYEJ    HOLDINGS    LIMITED    -     CONSTRUCTION
 ADVANTAGE LIMITED

1.Thank you for your email of 16 January 2024.

2.Our client has been at pains to engage with your client, in a pragmatic fashion since April 2023. It has addressed the presently outstanding variation items - VO 7, 10, 12 and 13 numerous times since that date.

3.Your clients email of 12 December responded specifically to matters raised with them in July 2023. The attachments address items VO 7 and V13.

4.There is no "additional material' provided on 12 December that our client hasn't seen before. If you dispute this then please specifically identify what it is that is 'new/additional' and we will take instructions.

5.The notification that your client has cc'ed Waikato Decorators and the Stone Mason in on a Construction Programme dated 12 April 2022 was brought to our attention on 29 September 2023 as an attachment to your firm's letter to ours. It is also attached to an email dated 3 October 2023 from your client to Mr Adam O'Leary. We responded on 4 October to your firm, being aware of this assertion on your client's behalf. That disclosure does not change anything, contractually.

6.If your client has evidence from Waikato Decorators to support its assertions regarding contact with them post 2 May 2023 then please provide that to us now.

7.Our client has comprehensively addressed variation items 10, 12 and 13 in previous emails. There is nothing new to respond to and nothing more to add on our client's behalf.

8.Further, our client has also previously responded to the legal assertions made by your client regarding its interpretation of various clauses in the contract in relation to variations/ Covid and force majeure. They are not accepted.

9.As noted in our letter of 27 September 2023 (paragraph 19), we consider it is in our respective clients' best interests, to either get on with a meeting or the disputes process.

10.Our client is receptive to the former approach but equally open to moving to the formal disputes process.

11.Please advise your clients position within five (5) working days of the date of this letter.

[31]    The letter clearly records that EHL does not accept any new information was provided in December 2023 and asks CAL, if they dispute that, to specifically identify the new information.

[32]   Furthermore, the letter specifically refers to the four variations that are the subject of the payment claim and correspondence between the parties in respect of those variations since April 2023. The letter discusses VO 7 in paragraphs 5 and 6, asking for evidence from Waikato Decorators to support CAL’s assertions regarding contact with them post 2 May 2023. The letter further states that EHL has comprehensively addressed variations 10, 12 and 13 in previous emails and that there is nothing new to respond to and nothing new to add. Additionally, the letter records that EHL has previously responded to the legal assertions made by CAL regarding the interpretation of various clauses in the contract relating to variations and force majeure

and that they are not accepted. The letter then refers to EHL’s letter of 27 September 2023 by date.

[33]   The 27 September 2023 letter was sent by EHL’s solicitors and noted that no response had been received to their letter of 21 September 2023. The letter referenced the continued dialogue between the parties themselves and email exchanges between their clients after the 3 July 2023 payment claim 24 in relation to the items making up HCV#35 but recorded that EHL was now prepared to pay in full items 2, 4, 8, 9, and 14, half of items 5 and 10, and 83 per cent of item 12. The 27 September letter further records that EHL was proceeding on the basis that variation 7 was withdrawn. In addition it records that EHL is not satisfied that items 11 and 13 are payable for the reasons advanced following the issue of claim 24, noting that those claimed items were in dispute and saying their status cannot change by simply including them in claim number 25. The letter says that EHL is open to discussion in relation to items 5, 10, 11, 12 and 13, and that EHL is prepared to take a commercially pragmatic approach and pay $718,514.71. EHL’s solicitors suggest that for the items that remain in dispute, the parties meet on a without prejudice basis within the next ten working days, and failing resolution follow the dispute resolution process in the contract.

[34]   By way of background leading up to this letter I note that variations 7, 10, 12, and 13 were in fact first included in payment claim 24 (relating to work completed in June 2023) as part of an item described as “HCV#035 CE #346 - CAL additional cost of construction claim” totalling $1,207,698.25. Payment claim 24 attached a document titled “CAL Additional Costs to Projects”, which provided a breakdown of the $1,207,698.25 claimed in HCV#035 CE #346. Mr O'Leary's evidence for EHL is that in a series of emails, he responded to each of the variations included in the breakdown that EHL disputed, including variations 7, 10, 12, and 13, those four being the subject of the final payment claim in issue.

[35]On 29 August 2023, CAL issued payment claim 25 with a revised variation of

$1,163,447.21. Mr O'Leary responded to this on 20 September 2023, listing the variations and recording whether a variation had been paid in full, was disputed, or CAL had agreed to withdraw it. The list records CAL had agreed to withdraw variations 7 and 13 and that variations 10 and 12 were disputed and the parties should

follow s 13 of the contract. The email stated “we remain committed to working with you on this and resolving the remaining disputed amounts”.

[36]   The following day, 21 September 2023, EHW wrote to BBL reiterating that EHL continued to dispute items in payment claim 24 that had been repeated in payment claim 25 saying:

As we understand it, all of the items claimed in your client’s purported Claims 24 and 25 relate to variations to the Construction Contract. Pursuant to NZS3915:2005, s.9, variations to the contract are to be in writing, subject to the comments made in s.9.2.4.

We asked our client for any material in this regard. It advises that it has nothing in the way of a written order. Possibly your clients may hold material that it holds that may satisfy the requirements of s.9.

If the material does not exist, it seems to us that Claim 25 provides no grounds available to your clients to proceed as suggested in your letter of the 14th inst.

[37]   The letter further recorded that EHL had advised EHW that after receipt of claim 24, the parties agreed to refer matters to the contract’s dispute resolution process. Noting step one under the contract is to refer the matter to an expert agreed by the parties, the letter records EHW had asked EHL to suggest candidates and invited CAL to do likewise, with a view to agreeing on an expert. At the time this letter was sent, a summary judgment claim was being threatened on the basis that a compliant payment schedule had not been issued in response to payment claim 25.

[38]   EHL’s solicitors then followed up for a response with their 27 September 2923 as described above.

[39]   On 29 September 2023, CAL’s solicitors responded to EHL’s solicitors’ 27 September letter making an offer to settle the dispute for $797,535 plus GST, emphasising that the offer takes into account variations 7, 10, 12 and 13. EHL paid CAL $735,563.53 that same day.

[40]On 3 October 2023, CAL sent an email to EHL beginning:

Further to your conversation with John earlier today, please find attached our response as below:

[41]   The email then set out CAL’s position in respect of each of variations 7, 10, 12, and 13.

[42]   A letter was sent on 4 October 2023 from EHL to BBL, referring to the email of 3 October 2023 and recording that the only matters that remain in dispute in whole or in part are items 7, 10, 12 and 13, with the letter noting:

While there are issues around the validity of the proposed reinstatement of the ‘withdrawn’ item/variation 7 claim, we consider that a pragmatic, rather than overly legalistic, approach here is more likely to benefit the respective parties.

[43]   The letter continues with EHW inviting CAL to revisit the process proposed for resolution of the remaining issues in dispute as set out in their earlier letter.

[44]   On 17 October 2023, CAL issued payment claim 26 which included under HCV#046 CE#388 a claim for $363,355.89 (excluding GST) which is the same amount claimed in payment claim 28 and in issue in this proceeding. Payment claim 26 specifically claims the amounts associated with variation 7, as reinstated by CAL, 10, 12 and 13. The email accompanying the payment claim recorded that “the claim includes items EHL has disputed on grounds not acceptable to CAL.”

[45]   As noted above at [28(b)], on 18 October 2023, EHL issued a payment schedule to payment claim 26 with a scheduled amount of $50,433.97 (excluding GST) for two of the items claimed but recording in respect of HCV#946 CE #388, which is the amount in issue here:

A new variation (HCV#046 CE #388 – updated value for CAL final construction costs) has no supporting documentation to show what it is for, and how it is within the contract. The onus here is on the Contractor to show that any Variation meets all of the requirements of the Contract. Once the claim is fully substantiated, we will consider it.

[46]   On 26 October 2023, CAL accepted Mr O'Leary's response as a valid payment schedule and noted that it was reviewing the information provided to EHL and would respond.

[47]   On 12 December 2023, CAL sent an email to Mr O'Leary responding to the invitation to present further information. The response included attachments for

variations 7 and 13. However CAL’s letter recorded that variations 10 and 12 had been paid in part, 50 per cent in respect of variation 10 and 83 per cent in respect of variation 12, and said deductions could not therefore be justified as, if the entitlement was agreed, then CAL considered the full amount claimed should follow rather than there being any deduction.

[48]   On 16 January 2025 CAL’s lawyers emailed EHL’s lawyers referring to the additional information provided and asking for a response to the December email within seven days.

[49]   The letter of 19 January 2024, as set out above, followed on behalf of EHL, including recording that there was no “additional material” that EHL had not seen before and asking CAL, if they dispute that, to specifically identify what the new/additional material is.

[50]   CAL’s lawyers responded to the 19 January 2024 letter on 15 February 2024, recording that after receiving the 16 January letter they had reviewed earlier correspondence to consider whether EHL had in fact given a substantive explanation for the basis of its dispute in each case. In respect of variation 7, CAL’s lawyers recorded that EHL’s correspondence did not address the notification of Waikato Decorators and the stonemason and instead dismisses it, suggests there are issues around the validity of the proposed reinstatement of the withdrawn item, although those issues are not identified, and that the correspondence refers to adopting a pragmatic rather than overly legalistic approach. CAL’s letter goes on to say that although EHL claims variations 10, 12, and 13 were comprehensively addressed in previous emails, CAL can find no substantive response to the various information summaries CAL had included with its December 2023 offer to resolve matters.

[51]   CAL noted that collectively, EHL’s complaints could be described as complaints of “poor project management”, which CAL did not accept, saying that CAL has provided evidence and explanations about each variation but that EHL has not engaged with those explanations. The letter goes on to say that CAL had attempted to pragmatically resolve this matter, but its December offer was rejected without any counteroffer.

[52]   The letter further reiterates that CAL remains willing to meet but wants to ensure that the meeting is productive and asks that EHL specifically address the matters raised in its 12 December 2023 correspondence, recording that if EHL believes it has already provided comprehensive responses to the matters raised in that email to direct them to the relevant correspondence.

[53]   EHL’s solicitors responded on 28 February 2024 saying that quoting from earlier letters in selected fashion is not getting their clients anywhere and as noted in the letter of 19 January 2024, EHL did not consider that there was any additional information in the December correspondence for the reasons explained in that letter.

[54]   EHL’s solicitors refer to the fact that in the 19 January letter, they invited CAL to identify any new additional information, but that nothing has been identified. The letter expressly records that EHL does not accept the assertions made by CAL in relation to its dealing with Waikato Decorators for the reasons stated in its earlier emails and that nothing provided since those emails changes their view. It further records that in point 6 of the 19 January letter, EHL invited CAL to provide evidence from Waikato Decorators, but nothing has been provided. The letter then states that EHL considers it has exhaustively attempted to address matters both in direct communication and through legal input without success and that as matters currently stand, EHL sees no reason to make any additional payments in respect to the remaining disputed variations and does not now see any merit in a meeting of the parties.

[55]   Almost six months later, on 29 August 2024, CAL sent the final payment claim 28 together with the defects liability certificate. The payment schedule was then issued on 5 September 2024 as recorded above.

Did payment schedule 28 sufficiently indicate the reasons?

[56]   As this is a summary judgment proceeding, the onus is on CAL to establish that it is not reasonably arguable that the payment schedule sufficiently indicated the reasons. I am not satisfied that CAL has reached this threshold in terms of the evidence that is before the  Court.   The two letters referred to in the payment schedule of     19 January 2024 and 28 February 2024 in turn referred to earlier correspondence concerning the variations including the 27 September 2023 letter. The 27 September

letter in turn referred to the 21 September 2023 letter by date. I consider that the earlier correspondence referred to by date, being the letters of 21 and 27 September 2023, ought to be incorporated into the payment schedule as there would have been a common understanding as to what that correspondence was because of the specific reference to it by date.17

[57]   The 21 September 2023 letter expressly recorded that the reason for disputing the variations was that pursuant to the contract, variations are to be in writing subject to cl 9.2.4.

[58]   CAL submits that following that correspondence, further information was provided by CAL so that EHL can no longer rely on those earlier letters. But EHL disputes that further information has been provided. And CAL does not dispute this in its replies to EHL’s 19 January and 28 February 2024 letters or answer the requests to direct EHL’s solicitors to the new information by CAL.

[59]   The requirement for the principal to “indicate” its reasons is to sufficiently explain why the scheduled amount is less than the claimed amount and why payment is being withheld so as to allow the payee to assess whether to accept payment on the reduced basis or progress the matter through the dispute resolution provisions in the contract.

[60]   I consider that there is no question that the payment schedule sufficiently indicates both the reasons for why the scheduled amount is less, because variations 7, 10, 12 and 13 are disputed, and that those disputes arise because EHL considers the variations are not properly claimed in accordance with the contract or evidenced as required.

[61]   The fact that EHL has paid part of variations 10 and 12 does not affect this conclusion because EHL’s solicitors expressly recorded that EHL preferred to adopt a pragmatic rather than overly legalistic response.

17     Fletcher Construction Co Ltd v Spotless Facility Services (NZ) Ltd, above n 9, at [99].

[62]   CAL emphasised that there needs to be a common understanding and submitted that it does not understand the reason why EHL disputes the variations. But the requirement is not for EHL to indicate the reasons to allow CAL to understand the dispute itself but simply to allow CAL to assess whether to accept the deduction or follow the dispute resolution provisions. The “common understanding” referred to in Spotless was a common understanding of the references providing reasons, not of the dispute itself.18 If a common understanding of the dispute were required the “pay now, argue later” regime would be significantly undermined as it would create considerable uncertainty as to whether a payment schedule complied.

[63]   Here there is no question that the items to which the payment schedule relates are variations 7, 10, 12 and 13 and that the reasons EHL is withholding payment is because EHL does not consider that the variations are properly claimed in accordance with the contract or evidenced as required. CAL has not established that any further information provided (disputed by EHL) has rendered those reasons out of date. The payment schedule therefore sufficiently indicates the reasons so as to allow CAL to assess whether to accept the deductions or proceed with the dispute resolution process.

[64]In these circumstances summary judgment must be declined.

Result

[65]The application for summary judgment is declined.

Costs

[66]   Costs are reserved in accordance with the usual position for an unsuccessful plaintiff’s application for summary judgment as set out in NZI v Philpott.19

Directions

[67]   No statement of defence has yet been filed. In accordance with r 12.12(1) of the High Court Rules 2016, I therefore direct:

18     Fletcher Construction Co Ltd v Spotless Facility Services (NZ) Ltd, above n 9, at [99].

19     NZI v Philpott [1990] 2 NZLR 403 (CA) at 406.

(a)the defendant is to file and serve its statement of defence by 25 July 2025; and

(b)the parties are to file a joint memorandum (with any differences set out) addressing the matters referred to in r 7.3 by 8 August 2025.

Associate Judge Sussock