Hellaby Resource Services Ltd v Body Corporate 197281 - [2019] NZHC 2641

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-869

[2019] NZHC 2641

BETWEEN HELLABY RESOURCE SERVICES LIMITED
Plaintiff

AND

BODY CORPORATE 197281

Defendant

Hearing: 1 October 2019

Appearances:

J Q Wilson and R D H Massey for the Plaintiff

R J Hollyman QC and W J Revell for the Defendant

Judgment:

16 October 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 16 October 2019 at 4.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 16 October 2019

HELLABY RESOURCE SERVICES LTD v BODY CORPORATE 197281 [2019] NZHC 2641
[16 October 2019]

Background

[1] The plaintiff, Hellaby Resource Services Ltd (“Hellaby”), seeks summary judgment in relation to a debt it claims it is entitled to enforce as assignee.

[2] The debt is said to arise under a construction contract entered into in November 2014 (“the Contract”) between TBS Remcon Ltd (“TBS”) and the defendant, Body Corporate 197281 (“the Body Corporate”).

[3] Hellaby says it was assigned the debt under a Deed of Assignment dated 12 December 2018 with TBS and another party. Hellaby says the debt is due and payable pursuant to the Construction Contracts Act 2002 (“the Act”). Hellaby says the Act prevents the Body Corporate from raising defences such as set-off or abatement to its claim.

Issues

[4] A preliminary issue arises as to whether the Deed of Assignment is effective so as to permit Hellaby to bring this proceeding given the Contract contains a prohibition on assignment.

[5] The Contract is based on the standard form contract NZS 3910-2013. It provides as follows:

2.9 Assignment 2.9.1
Neither party shall assign the whole or any part of the Contract without the prior written consent of the other party. Such consent shall not be unreasonably withheld or delayed.

2.9.2

The assignment or transfer of shares in or the restricting of the Contractor so that the effective control of the Contractor passes to Persons other than those holding it at the date of this Contract will be an assignment of this Contract for the purpose of this clause.

[6] Under the Deed of Assignment, TBS and Hellaby and a third party agreed as follows:

3.Assignment of Rights

3.1With effect on and from the date of the payment referred to in clause 2.1 of this Deed being received by SRG, the Assignor hereby irrevocably and unconditionally assigns all contractual rights and recourse that it has:

(a)under the Relevant Agreement against Body Corporate 197281 regarding the recovery of the Mountain Road Receivable; and

(b)under the Mountain Road Financing Agreement against Body Corporate 197281 to receive any Financing Payment,

(together, the Assigned Rights).

[7] SRG Contractors NZ Ltd (“SRG”), the third party to the Deed of Assignment, is the ultimate holding company of TBS. The payment referred to in the above clause is set out at cl 2.1 of the Deed of Assignment as being $2,988,868.67. Under cl 2.1, Hellaby had to pay that sum…

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: [2019] NZHC 2641
Decision Date: 16 October 2019

CaseChat Overview and Summary

Hellaby Resource Services Ltd has sought summary judgment against Body Corporate 197281 to enforce a debt arising from a construction contract. The defendant contends that the assignment of the debt to Hellaby is invalid because it contravenes a prohibition on assignment in the contract. The primary issue for the court was whether the assignment was effective given the prohibition on assignment in the contract. The court found that the prohibition on assignment was intended to prevent the assignment of the parties’ rights under the contract, including accrued debts. Accordingly, the assignment was ineffective and the defendant had a reasonably arguable defence to the claim. The court also rejected the defendant's argument that the debt was not payable because of deficiencies in the administration of the contract by the engineer. The court held that the purpose of the payment claim regime under the Construction Contracts Act 2002 was not undermined by such deficiencies. The court dismissed the application for summary judgment and reserved costs.

Orders