DHC Assets Limited v Arnerich - [2022] NZHC 1381

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-307 [2022] NZHC 1381

BETWEEN
DHC ASSSETS LIMITED

Plaintiff

AND

ANTONY IVO ARNERICH

Defendant

Hearing: 13, 14 December 2021

Appearances:

F J Thorp & L J Turner for Plaintiff

J D McBride & A J Steel for Defendant

Judgment:

13 June 2022

JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 13 June 2022 at 3:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Duthie Whyte, Auckland Doug Cowan, Auckland

DHC ASSSETS LIMITED v ARNERICH [2022] NZHC 1381 [13 June 2022]

Introduction

[1] This judgment determines a matter remitted back to this Court by the Court of Appeal following a successful cross-appeal by the plaintiff, DHC Assets Limited (DHC), against my judgment delivered on 2 October 20191 and which relates to a part of its claim against the defendant, Mr Antony Arnerich, for compensation pursuant to ss 131 and 301 of the Companies Act 1993. The part of DHC’s claim to which this judgment relates, are claims which were rejected by an adjudicator appointed pursuant to the Construction Contracts Act 2002 and which the High Court declined jurisdiction to address, as being matters appropriately determined by means of the arbitration proceeding which DHC had already commenced in respect of those claims rejected by the Adjudicator.

Background

[2] The full background to this dispute is set out in the judgments of the High Court, Court of Appeal2 and Supreme Court.3 For present purposes only a brief summary is necessary.

[3] In October 2011 DHC entered into a construction contract with Vaco Investments (Lincoln Rd) Limited (Vaco) for the design and construction of a commercial building on a property in Lincoln Road, Henderson, which Vaco owned and had leased to ASB Bank Limited (ASB).4 Mr Arnerich was the sole director and effective owner of Vaco, which held the property as trustee for the Vaco Trust, of which Mr Arnerich and members of his family were the beneficiaries. During the course of construction, a dispute between DHC and Vaco arose over DHC’s entitlement to recover the costs it had incurred as a result of time delays caused by significant changes to the building which were required by ASB.

1      DHC Assets Ltd v Arnerich [2019] NZHC 1695 [October 2019 judgment].
2      Arnerich v DHC Assets Ltd [2021] NZCA 225 [Court of Appeal judgment].
3      Arnerich v DHC Assets Ltd [2021] NZSC 121.
4      In fact it was Clearwater Construction Ltd (CCL) that entered into the construction contract with Vaco on or about 18 October 2011, and CCL subsequently assigned the contract to DHC with Vaco’s consent on 1 April 2012. See the October 2019 judgment, above n 1, at [70].

[4] In my judgment of 2 October 2019 I held that Mr Arnerich was liable to pay DHC the sum of $367,7685 being the amount awarded to DHC in the adjudication proceedings together with interest entered…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 1381
Decision Date: 13 June 2022

CaseChat Overview and Summary

The case of DHC Assets Limited v Arnerich involved a dispute between the plaintiff, DHC Assets Limited (DHC), and the defendant, Antony Ivo Arnerich, regarding compensation under sections 131 and 301 of the Companies Act 1993. This matter was remitted back to the High Court by the Court of Appeal, following a successful cross-appeal by DHC. The primary legal issues the court had to decide related to the interpretation of the construction contract between DHC and Vaco Investments (Lincoln Rd) Limited (Vaco), as well as the quantum of damages and interest DHC was entitled to recover from Vaco and subsequently from Arnerich. The court had to determine whether DHC was entitled to time-related costs and preliminary and general (P&G) costs arising from extensions of time granted due to variations in the construction contract. The court also needed to decide the appropriate interest rates and periods for calculating interest on the amounts owed by Vaco to DHC.

The court found that DHC was entitled to recover time-related costs and P&G costs associated with the variations and the extensions of time granted due to those variations. The court held that the construction contract provisions allowed for these claims and that the parties' conduct during the construction works supported this interpretation. The court also determined that contractual interest was payable on the amounts owed by Vaco to DHC, with the interest rates and periods calculated according to the terms of the construction contract. Finally, the court ruled that Arnerich, as a director of Vaco, was liable for the full amount of the debt that Vaco owed to DHC under section 301(1)(c) of the Companies Act 1993.

The court ordered Arnerich to pay DHC a total sum of $1,188,568.33, which included the amounts awarded by the adjudicator, interest on those amounts, and additional sums for time-related costs and interest thereon. The court also directed DHC to file and serve a costs memorandum within 10 working days from the delivery of the judgment, with Arnerich having a further 10 working days to respond, after which the court would determine DHC's costs on the papers.

Orders