Manukau Welders 1982 Limited v Gibson O'Connor Limited HC Auckland CIV 2007-404-005608 - [2008] NZHC 2575

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2007-404-005608

BETWEEN MANUKAU WELDERS 1982 LIMITED Plaintiff

ANDGIBSON O'CONNOR LIMITED Defendant

Hearing: 8 April 2008

Appearances: B Rooney for Plaintiff
J W Chapman for Defendant

Judgment: 17 September 2008 at 2 pm

JUDGMENT OF ASSOCIATE JUDGE ROBINSON

This judgment was delivered by me on 17 September 2008 at 2 pm, Pursuant to Rule 540(4) of the High Court Rules

Registrar/Deputy Registrar
Date……

Solicitors: Callaghan & Co, PO box 1434, Auckland
B Rooney, PO Box 3320, Shortland Street, Auckland

MANUKAU WELDERS 1982 LIMITED V GIBSON O'CONNOR LIMITED HC AK CIV 2007-404-005608
17 September 2008

[1] The plaintiff brings proceedings for the recovery of $194,530.49 together with interest and costs. This is the amount the plaintiff claims the defendant owes it in terms of a contract between the plaintiff and the defendant for structural steel and erection work on the construction of Alfriston College in 2003. Of the amount claimed, the plaintiff seeks summary judgment against the defendant for $36,647, being money retained by the defendant which the plaintiff claims to be now due and payable in terms of its contract with the defendant.

[2] The defendant in opposing the application for summary judgment claims an equitable set off because the plaintiff did not complete work under the contract and there were variations of the contract work which have not been taken into account. The defendant also disputes the plaintiff’s calculation of interest.

Background

[3] The defendant accepted the plaintiff’s tender to undertake structural steel work on the construction of Alfriston College under sub-contract on 16 January
2003. The contract provided for a fixed price of $1,195,000 plus GST to be paid for the work. The contract also contained the following provision for retentions:

a) Rententions: Retentions shall be 5% for the first $400,000 with
2.5% on the balance. 50% to be released on practical completion,
20% to be released 3 months after practical completion provided there are no outstanding defects or uncompleted work, and the
balance released at the end of the defects liability period.

[4] The contract also contained a provision for interest at the rate of 1.25% of the average monthly interest rate as certified by a trading bank manager which is, or would be, currently payable by the plaintiff for overdraft facilities. The interest is to be compounded monthly.

[5] In terms of the contract, the period of defect liability was fixed at three months from the date of practical completion.

[6] On 30 June 2003, the defendant sent to the plaintiff a document which purported to vary the contract by:

i) Extending the period of defect liability from 3 to 12 months.

ii)Reducing the interest rate for late payment to the overdraft interest rate.

There is no evidence that the plaintiff acknowledged acceptance of these variations to the contract.

[7] Following the commencement of the work, the plaintiff sent the defendant monthly claims for payment for work completed in terms of the contract. The defendant did…

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

AGLC: Manukau Welders 1982 Limited v Gibson O'Connor Limited HC Auckland CIV 2007-404-005608 [2008] NZHC 2575
Case: [2008] NZHC 2575
Decision Date: 17 September 2008

CaseChat Overview and Summary

The plaintiff, Manukau Welders 1982 Limited, filed proceedings against the defendant, Gibson O'Connor Limited, to recover $194,530.49, along with interest and costs. The plaintiff claims this amount is owed under a contract for structural steel and erection work on the construction of Alfriston College in 2003. The plaintiff seeks summary judgment for $36,647, which it claims the defendant retained and now owes. The defendant opposes the summary judgment, arguing for an equitable set-off due to alleged incomplete work by the plaintiff and unaddressed variations to the contract. Additionally, the defendant disputes the calculation of interest.

The court had to determine whether the defendant's set-off claims could legally reduce the plaintiff's entitlement to the retained amount and whether the defendant had valid grounds to dispute the plaintiff's calculation of interest. The court had to examine the terms of the contract, the nature of the retentions, and the defendant's right to set-off against the plaintiff's claims.

The court found that the defendant had not provided sufficient evidence to substantiate its set-off claims. The retention amounts held by the defendant were undisputed, and any set-off claims were insignificant compared to the amounts disputed in the payment schedule prepared by the defendant. The court ruled that the defendant failed to establish a valid set-off, and the plaintiff was entitled to summary judgment for the retentions totaling $36,647 plus GST, making a total of $41,227.88. The court also noted that the defendant's liability for interest should be calculated based on the rates specified in the alleged contract variation of July 2003. The plaintiff was awarded costs on a 2B basis with disbursements as fixed by the registrar.

Orders