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Haley Construction Limited v Evolving Projects Limited

Haley Construction Limited v Evolving Projects Limited

Case [2015] NZHC 2490 12 October 2015

Breach of Contract

Unconscionable Conduct

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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000568 [2015] NZHC 2490

UNDER the Companies Act 1993

IN THE MATTER

of an application for putting EVOLVING PROJECTS LIMITED into liquidation

BETWEEN

HALEY CONSTRUCTION LIMITED Plaintiff/Respondent

AND

EVOLVING PROJECTS LIMITED Defendant/Applicant

Hearing: 28 September 2015

Appearances:

K McMullen and S Cowan for Applicant (Defendant) T J Twomey for Respondent (Plaintiff)

Judgment:

12 October 2015

JUDGMENT OF ASSOCIATE JUDGE OSBORNE AS TO STAY OF LIQUIDATION PROCEEDINGS

Introduction

[1] Evolving Projects Limited (Evolving) seeks a stay of a liquidation proceeding brought by Haley Construction Limited (Haley).

[2] Evolving won a fixed-price contract to build a multi-premises commercial building in Ilam, Christchurch. Haley was Evolving’s carpentry subcontractor. The Construction Contracts Act 2002 applied to the subcontract.

[3] Haley undertook its work in relation to what the parties described as stages 1 and 2 pursuant to fixed-sum subcontracts documented in a Subcontract Agreement. Haley’s payment claims in relation to stages 1 and 2 were met. The parties did not
agree upon a fixed sum for stage 3. Rather, they agreed upon varied terms which

HALEY CONSTRUCTION LIMITED v EVOLVING PROJECTS LIMITED [2015] NZHC 2490 [12 October
2015]

provided for agreed hourly rates (to be paid fortnightly as with the earlier stages) and timesheets to be signed daily by Evolving (through its director, Kevin Phillips).

[4] In June 2015, Haley obtained summary judgment in the District Court for

$61,623.34 on the basis of unmet payment claims.1 Evolving has not appealed that judgment.

[5] Haley then issued a statutory demand under s 289 Companies Act 1993 for the judgment sum and accrued interest. Evolving neither satisfied the demand nor applied to set it aside.

Application for stay

[6] Pursuant to r 31.11 High Court Rules, Evolving seeks both an order staying further proceedings in relation to its liquidation and an order restraining publication of advertising.

[7] Upon filing, Evolving’s application was treated urgently.2 The Court made an interim order restraining advertising pending this hearing.3

The issue

[8] The issue is whether, by reason of the counterclaim which Haley filed in the District Court in March 2015 for $199,070.78 (plus GST), the Court should stay the liquidation proceeding.

The stay jurisdiction

[9] In this case the Court is not dealing with an application for a stay pending the hearing of an appeal.

[10] The jurisdiction invoked arises both expressly under r 31.11 High Court

Rules and as a matter of the Court’s inherent jurisdiction.4

1      Haley Construction Ltd v Evolving Projects Ltd [2015] NZDC 11641.
2      As required by High Court Rules, r 31.11(2).
3      Haley Construction Ltd v Evolving Projects Ltd [2015] NZHC 2279.

[11] The principles applicable in this jurisdiction are well settled by a number of authorities and have been repeatedly applied. Counsel accepted that the authorities identify the following principles:5

(a) The Court has an inherent jurisdiction to stay winding-up proceedings where the debt upon which such proceedings are founded is the subject of genuine dispute. In those circumstances the plaintiff cannot…

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.

Continue reading Haley Construction Limited v Evolving Projects Limited

Details

AGLC: Haley Construction Limited v Evolving Projects Limited [2015] NZHC 2490
Case: [2015] NZHC 2490
Decision Date: 12 October 2015

CaseChat Overview and Summary

In the High Court of New Zealand, Haley Construction Limited, the plaintiff, brought an application for the liquidation of Evolving Projects Limited, the defendant. Evolving sought a stay of the liquidation proceedings and an order restraining publication of advertising. The issue before the court was whether the court should stay the liquidation proceedings due to the counterclaim filed by Haley. The court held that the jurisdiction invoked arose expressly under rule 31.11 High Court Rules and as a matter of the court's inherent jurisdiction. The court held that the principles applicable in this jurisdiction were well settled by authorities and have been repeatedly applied. The court held that the statutory demand was issued to obtain payment for a debt. The court further held that the stay application had been trumped by s 79 of the Construction Contracts Act. The court dismissed the application of Evolving on the basis of lack of merit. The court ordered that the defendant pay the plaintiff the costs of the application, the quantum of which was to be fixed by the Registrar.

Orders