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Hellaby Resource Services Ltd v Body Corporate 197281

Hellaby Resource Services Ltd v Body Corporate 197281

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-000869

[2021] NZHC 554

BETWEEN
HELLABY RESOURCE SERVICES LIMITED

First Plaintiff / Fourth Counterclaim Defendant

TBS REMCON LIMITED

Second Plaintiff / First Counterclaim Defendant

AND

BODY CORPORATE 197281

Defendant / Counterclaim Defendant

MAYNARD MARKS LIMITED

Second Counterclaim Defendant

HOBANZ PROJECT ASSIST LIMITED

Third Counterclaim Defendant

Hearing: 16 November 2020

Appearances:

J Q Wilson and R D H Massey for the Second Plaintiff

R J Hollyman QC, N G Lawrence and W J Revell for the Defendant

Judgment:

14 April 2021

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 14 April 2021 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

HELLABY RESOURCE SERVICES LTD v BODY CORPORATE 197281 [2021] NZHC 554 [14 April 2021]

Introduction [1]

Issues
TBS’s application for summary judgment[3]
The Body Corporate’s application for a stay of enforcement[4]
TBS’s application for stay of the Body Corporate’s counterclaim[5]

Factual background

Procedural background
TBS’s claim for the Unpaid Balance[23]
The Body Corporate’s counterclaim against TBS[28]
The Body Corporate’s counterclaim against Maynard Marks[35]
The Body Corporate’s counterclaim against HOBANZ[39]

TBS’s application for summary judgment

Legal principles[41]
Submissions[45]
Does the Body Corporate have an arguable defence?[47]
Residual discretion[60]
Discussion[68]

The Body Corporate’s application for stay of enforcement

Legal principles[86]
The Body Corporate’s submissions[92]
TBS’s submissions[95]
Discussion[97]

TBS’s application for a stay of the Body Corporate’s counterclaim

Issues[116]
Is the arbitration agreement inoperative or incapable of being performed?[119]
Is the arbitration agreement enforceable under s 11 of the Arbitration Act?[144]

Result

Introduction

[1] TBS Remcon Ltd (TBS) applies for summary judgment against Body Corporate 197281 (the Body Corporate) for payment of a debt under a construction contract. Hellaby Resources Services Limited (Hellaby) formerly owned TBS. TBS maintains that that amount plus the costs of enforcement are recoverable as a statutory debt, against which no counterclaim can be raised under the Construction Contracts Act 2002 (the CCA). It also applies for a stay of the counterclaim the Body Corporate has raised, saying that it needs to be pursued separately, through arbitration.

[2] The Body Corporate opposes summary judgment as it says it has an arguable defence. It also contends that this is a case where the Court should exercise its residual discretion to decline summary judgment to avoid oppression or injustice to the Body Corporate. If the Court decides to order summary judgment, the Body Corporate seeks a stay of enforcement pending resolution of the Body Corporate’s counterclaim, as enforcement would result in a substantial miscarriage of justice.

Issues

TBS’s application for summary judgment

[3]The issues in relation to this application are:

(a)Has TBS satisfied the Court that the Body Corporate has no arguable defence to TBS’s claim?

(b)Even so, should the Court exercise its residual discretion not to order summary judgment?

The Body Corporate’s application for a stay of enforcement

[4] In relation to the Body Corporate’s application…

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: [2021] NZHC 554
Decision Date: 14 April 2021

CaseChat Overview and Summary

TBS Remcon Ltd (TBS) applies for summary judgment against Body Corporate 197281 (the Body Corporate) for payment of a debt under a construction contract. Hellaby Resources Services Limited (Hellaby) formerly owned TBS. TBS maintains that that amount plus the costs of enforcement are recoverable as a statutory debt, against which no counterclaim can be raised under the Construction Contracts Act 2002 (the CCA). It also applies for a stay of the counterclaim the Body Corporate has raised, saying that it needs to be pursued separately, through arbitration. The Body Corporate opposes summary judgment as it says it has an arguable defence. It also contends that this is a case where the Court should exercise its residual discretion to decline summary judgment to avoid oppression or injustice to the Body Corporate. If the Court decides to order summary judgment, the Body Corporate seeks a stay of enforcement pending resolution of the Body Corporate’s counterclaim, as enforcement would result in a substantial miscarriage of justice. The Body Corporate has no arguable defence to TBS’s claim to the Claimed Debt. The Body Corporate’s allegations about the Remaining Defects provide no defence to the Claimed Debt. The Body Corporate’s counterclaim against TBS is prevented from being raised in TBS’s proceeding to recover the Claimed Debt, by s 79 of the CCA. I am not persuaded that the circumstances of this case justify me exercising my residual discretion to decline summary judgment. I conclude that the Body Corporate’s arguments about the desirability of having all the issues between the parties resolved together do not provide a foundation for me to exercise my residual discretion to decline summary judgment. Enforcement of the judgment will mean that the Body Corporate will be unable to afford to pursue its counterclaim or unable to gain support from unit holders to pursue its counterclaim against TBS for defective and incomplete remedial works. The Body Corporate’s interests prevail. The Body Corporate is not a consumer within the meaning of s 11 of the Arbitration Act 1996. The arbitration agreement is not a consumer arbitration agreement. Summary judgment is entered against the defendant, Body Corporate 197281 on the second plaintiff’s claim contained in the Amended Statement of Claim dated 3 August 2020. Enforcement of the order for summary judgment and associated costs is stayed until the counterclaim of Body Corporate 197281 dated 1 September 2020 is determined or until further order of the Court. The second plaintiff’s interlocutory application dated 16 September 2020 for a stay of the counterclaim of Body Corporate 197281 is dismissed.

Orders