Golden Land Civil Limited v BNG Drainage Limited
[2025] NZHC 3054
•15 October 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-1204
[2025] NZHC 3054
BETWEEN GOLDEN LAND CIVIL LIMITED
Applicant
AND
BNG DRAINAGE LIMITED
Respondent
Hearing: 18 September 2025 Appearances:
L P Santana De Mattos for Applicant V M Poland for Respondent
Judgment:
15 October 2025
JUDGMENT OF O’GORMAN J
This judgment was delivered by me on 15 October 2025 at 11 am pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
…………………………………
Solicitors:
Turner Hopkins, Auckland GML Lawyers Ltd, Auckland
GOLDEN LAND CIVIL LTD v BNG DRAINAGE LTD [2025] NZHC 3054 [15 October 2025]
Introduction
[1] Golden Land Civil Ltd (applicant) seeks directions in this proceeding that it is no longer bound by the terms of an undertaking given to BNG Drainage Ltd (respondent) in respect of funds held in its solicitor’s trust account. Accordingly, it seeks orders that those funds may now be paid back to the applicant.
[2] The undertaking was provided in the context of liquidation proceedings initiated by the respondent. On 8 November 2024, the applicant paid the amount of a disputed invoice, namely $102,933.92, into its solicitor’s trust account on terms agreed between the parties. Interest has been accruing on that sum since then.
[3] At the hearing, I declined to make the orders sought, with reasons to follow. These are those reasons.
Factual background
[4]On 20 March 2023, the respondent issued an invoice to the applicant for
$102,933.92 for drainage work performed at a civil works project. The applicant did not pay by the due date. The respondent served a statutory demand on 12 August 2024, which was not met or opposed. On 26 September 2024, the respondent filed proceedings seeking to put the applicant into liquidation.
[5]On 8 November 2024, the applicant disputed the debt and paid the sum of
$102,933.92 into the trust account of Turner Hopkins (the applicant’s solicitors). Those funds were subject to an undertaking recorded in two documents:
(a)At 3.43 pm on 8 November 2024, Mr Li (director of the applicant) emailed Turner Hopkins, stating the following:
The sum of $102,933.92 currently in Turner Hopkin’s Trust Account is deposited under an irrevocable undertaking by Golden land civil limited, Turner Hopkins are to hold the funds in trust to satisfy any agreement between the parties to this proceeding or an order of the Court.
(b)In a letter dated 8 November 2024 from Turner Hopkins to the lawyers then acting for the respondent, they disputed that their client was the contracting party and contended that the liquidation proceeding was an abuse of process. They required that the liquidation proceeding be discontinued by 5 pm on Monday 11 November 2024, supported by the following statement in para 4 of the letter:
Without any admission of liability, our client has paid the claimed amount of $102,933.92 into our Firm’s Trust Account with an irrevocable undertaking that the amount will be used to satisfy any agreement met between the parties and or any Court order.
[6] On 11 November 2024, the respondent discontinued the liquidation proceedings, relying on the undertaking.
[7] On 13 November 2024, in an email sent at 1.09 pm the applicant’s solicitors confirmed that the undertaking remained in place following discontinuance of the liquidation proceeding, stating the following:
Thank you for your email and notice of discontinuance.
Yes you are correct that the funds will continue to be in our account until this matter is settled as per the undertaking given.
Please note we sought instructions and will contact you as soon as we hear back from our client.
[8] On 10 December 2024, the applicant wrote to the respondent disputing that there was a contract between the parties (whether oral or in writing) and alleging that the respondent’s contract (if any) was with Dreamland Construction Company Ltd (Dreamland). The applicant said that if the respondent failed to respond to the letter by 13 December 2024, the applicant would have “no other option but to make an application to the Court seeking an order that the sum of $102,933.92 currently in our firm’s trust account, as per the undertaking given, be transferred back to our client. Our client will further seek legal costs against your client for seeking such orders”.
[9] On 12 December 2024, the respondent’s solicitors responded that they had received no instructions since discontinuance but that the letter had been forwarded on.
[10] On 16 December 2024, GML Lawyers wrote to Turner Hopkins advising that they were newly instructed to act for the respondent. They requested information and said that their client was now overseas, so they would not be able to respond until next year.
[11] On 17 December 2024, the applicant forwarded the requested information and sought a response by 17 January 2025, failing which they reiterated that they would seek a court order for the release of the funds.
[12] On 22 January 2025, the applicant followed up asking for a response. On 23 January 2025, GML Lawyers responded that they had followed up with their client and would advise once they had further instructions.
[13] In the absence of any such response, on 14 May 2025 the applicant initiated the present application to revoke the undertakings and release the funds.
[14] On 18 June 2025, the respondent filed and served its notice in opposition and affidavit in support. That same day, the respondent commenced proceedings in the District Court seeking judgment, plus interest and costs, on the alleged invoice debt against the applicant.
[15] A half-day fixture was set down for 18 September 2025 to hear the present application for release of the funds. By joint memorandum dated 5 September 2025, counsel sought vacation of the fixture and a stay of this proceeding pending determination of the District Court proceeding.
[16] In a minute issued the same day, Gault J declined to adjourn the hearing. Taking into account other proceedings competing for fixture time, the Court considered it was not in the interests of justice to adjourn or vacate the fixture or stay the proceeding, because an alternative date could not be for some time and the matter needed to be resolved one way or another without further delay.
Legal principles
[17] Section 110 of the Lawyers and Conveyancers Act 2006 requires that money received by a practitioner on behalf of any person must be held exclusively for that person and paid to that person or as that person directs. Section 111(1) imposes an obligation to account properly for trust money.
[18] In addition, r 10.5.2 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 provides that when a lawyer receives funds on terms requiring them to hold the funds in a trust account as a stakeholder, the lawyer must adhere strictly to those terms and disburse the funds only in accordance with them.
[19] In Insight Legal Ltd v Slavich, the Court held that where an undertaking provides for funds to be held pending agreement or court order, there is no basis for implying additional terms; the solicitor must hold the funds until one of the specified conditions is met.1 The solicitor cannot unilaterally decide to release the funds or act on the instructions of only one party.
[20] If a court order is necessary, the Court has a broad discretionary power to direct release, as part of its supervisory jurisdiction over solicitor obligations.2 Courts discharge undertakings when the original purpose is no longer served or continuance is otherwise inequitable.3
Submissions
Applicant’s submissions
[21] The applicant argues that the undertakings should be revoked and the funds released because their purpose has been fulfilled, namely securing the discontinuance
1 Insight Legal Ltd v Slavich [2022] NZHC 1050 at [28]–[29]; and De Meyer & Slavich v Insight Legal Ltd [2023] NZCA 82 at [23] (application for extension of time to appeal declined, including because there was demonstrably no merit in the appeal).
2 National Westminster Finance New Zealand Ltd v Bryant [1989] 1 NZLR 513 (HC) at 516; Commissioner of Inland Revenue v Bhanabhai [2007] 2 NZLR 478 (CA) at [49]; and Horsham Downs Estate Ltd v Ganda & Associates HC Auckland CIV–2009–404–1497, 3 August 2009 at [12].
3 Insight Legal Ltd v Slavich, above n 1; Ngati Te Ata v New Zealand Steel Mining Ltd [2015] NZCA 547, [2016] NZAR 38 at [30]; and Amende v Kennedy [2017] NZHC 1593 at [14] (where the court recognised that an indefinite restraint may be unfair). See also Middleton v Mana Within Ltd [2025] NZHC 2529 at [23].
of the liquidation proceeding. Furthermore, the respondent has delayed matters and failed to take steps to resolve the dispute. After a lengthy delay, the applicant commenced this proceeding. The District Court proceedings were only commenced subsequently.
[22] The applicant submits that it has acted in good faith and made reasonable attempts to resolve the dispute. Delay on the part of the respondent should now preclude it from relying on the undertaking. In the alternative, the undertakings should be interpreted as containing implied terms:
(a)that the funds would only be held to secure the resolution of the original liquidation proceedings;
(b)that the funds should be released if no agreement or order materialises within a reasonable time; and
(c)the parties were implicitly required to act in good faith and not to frustrate settlement.
[23] The applicant submits that it would be unjust to continue to restrain the funds, particularly given its demonstrated solvency, the lack of any ongoing risk justifying security, and the respondent’s failure to engage meaningfully in settlement discussions. Equity and proportionality favour discharge because the respondent retains ordinary rights in the substantive proceedings.
Respondent’s submissions
[24] The respondent opposes revocation, arguing that there are two undertakings: one made by the applicant on 8 November 2024, and the other made by Turner Hopkins on 13 November 2024. Both remain operative until the underlying dispute is resolved by agreement or court order. The undertakings were not limited to the liquidation proceedings but were intended to secure the resolution of the substantive debt dispute.
[25] The respondent submits that it relied on the undertakings to its detriment by discontinuing the liquidation proceedings, and that the applicant should not be permitted to resile from its promise while the dispute remains unresolved. In particular:
(a)the high threshold for release from an undertaking has not been met;
(b)there has been no significant change of circumstances;
(c)the respondent’s delay in commencing the District Court claim is not disentitling;
(d)there is no evidence of hardship to the applicant; and
(e)the applicant’s own conduct (including a lack of meaningful engagement) means the funds should remain retained pending determination of the substantive claim.
[26] The funds subject to the undertakings are not security for costs, but the undertakings operate as a form of express trust or promissory estoppel. The undertakings created an obligation to hold the funds for the specific purpose of satisfying any agreement or court order, and any attempt to revoke contrary to that purpose would constitute a breach of trust or an unconscionable departure from a binding promise.
[27] The respondent disputes the implied terms as suggested by the applicant, arguing that the undertakings must be honoured according to their substance and intention, which was to secure the resolution of the substantive dispute. The applicant’s attempt to import additional implied terms is inconsistent with the express language and purpose of the undertakings.
[28] The respondent submits that the purpose of the undertakings remains alive, as the funds are to be held to satisfy any agreement or court order determining the underlying substantive dispute. This is yet to occur. The discontinuance of the liquidation proceedings did not exhaust the purpose of the undertakings, which were
always intended to secure the resolution of the substantive debt claim. That dispute will now be resolved in the District Court process.
Analysis
[29] I reject the argument that the undertaking given on 8 November 2024 was limited to securing the discontinuance of the liquidation proceeding. The Turner Hopkins email on 13 November 2024 expressly confirmed that the undertaking continued after discontinuance.
[30] The rationale of making such a payment into a trust account is to demonstrate that there is a substantive dispute and not a mere inability to pay. This means that the liquidation procedure is inappropriate. It does not follow that the funds can be withdrawn upon discontinuance. This depends on the terms of the undertaking, interpreted in context.
[31] In this case, the were two agreed circumstances in which the money could be paid out: agreement of the parties or a court order. The amount paid matched the invoice amount. As such, it was different from security for costs. The purpose was to ensure that the invoice would be paid if the respondent established that the invoice debt was payable by the applicant, or if the parties reached a compromise on that disputed issue. Otherwise, the Court has a broad discretionary power to direct release in any other situation, including to respond to obstructive delay. Therefore, there is no need for implied terms about timing and other matters. That is an unnecessary gloss that is not justified on the facts.
[32] Although there has been some delay on the part of the respondent to progress a quick resolution of the dispute, I also accept there are contributing factors:
(a)The respondent has changed solicitors.
(b)The change occurred near the Christmas holiday period, at a time when the client director also went overseas.
(c)Between 23 January and 14 May 2025, the new solicitors were considering the issue raised by the applicant about authority, namely the merits of the argument that the correct counterparty was Dreamland. This process included reviewing documents, and was a solicitor-client process that did not require communication with the applicant.
(d)In terms of engagement seeking to resolve the disputed issues, the applicant’s position was one of denying liability completely, rather than seeking to compromise, so no settlement discussions have been inhibited.
[33] Some criticism might fairly be made that the respondent’s lawyers did not provide any update between 23 January and 14 May 2025, but my assessment is that the delay has neither reached the point where the original purpose of the undertaking is no longer served, nor is continuance of the undertaking otherwise inequitable. A District Court process is now underway to resolve whether the applicant is liable to pay the invoice. Meanwhile, the funds should remain in its solicitor’s trust account subject to the terms of the undertaking.
[34]Accordingly, I decline the application for release of the funds.
Costs
[35] Under r 14.2(1)(a) of the High Court Rules 2016, the party who fails with respect to a proceeding or an interlocutory application should normally pay costs to the party who succeeds. However, the court retains a broad discretion under r 14.1.
[36] In this case, I consider that costs should lie where they fall for the following reasons:
(a)The respondent might have avoided the costs of this proceeding if it had been more proactive about communicating the steps it was taking and its intention to commence District Court proceedings. From the applicant’s perspective, filing this application was arguably necessary to trigger a response.
(b)The parties jointly sought to adjourn the hearing or stay this proceeding pending the determination of the District Court. In this way, the applicant was willing to avoid the costs of this hearing.
(c)The evidence in opposition addresses the substantive merits of the dispute, which would have been required for the District Court proceeding anyway.
Result
[37]The application is declined.
[38]Costs are to lie where they fall.
O’Gorman J
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