NMHB Ltd v Concrete Structures (NZ) Ltd

[2018] NZHC 2436

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2018-463-000016

[2018] NZHC 2436

BETWEEN

NMHB LIMITED

Plaintiff

AND

CONCRETE STRUCTURES (NZ) LIMITED

Defendant

Hearing:

24 May 2017

Appearances:

P Dalkie for the Applicant

K Badcock for the Respondent

Judgment:

18 September 2018

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 18 September 2018 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

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

Solicitors:

Dyer Whitechurch, Auckland K Badcock, Rotorua

P Dalkie, Auckland

NMHB LTD v CONCRETE STRUCTURES (NZ) LTD [2018] NZHC 2436 [18 September 2018]

Introduction

[1]                  This is an application to set aside a statutory demand under s 290 of the Companies 1993. The demand is for outstanding amounts said to be owing pursuant to payment claims under the Construction Contracts Act 2002 (“the CCA”). It is accepted the applicant issued no payment schedule in response within the statutory timeframe.

[2]                  The apposite test is clear: the Court may grant the application if satisfied there is a substantial dispute whether or not the debt is owing or is due; or if NMBH appears to have a counterclaim or set-off for equal or more than the amount sought.

[3]                  But at core my determination turns on a single legal issue: can a party claim for security under the Construction Contracts Act 2002 — payment in advance of the commencement of any construction work — in circumstances where such is provided for in the parties’ contractual agreement?

Context

[4]                  NMHB is a construction company engaged in a building construction project at 3 Rabone Street, Henderson. It engaged Concrete Structures to manufacture and supply concrete panels for that project.

[5]  Concrete Structures issued the statutory demand within the statutory timeframe: it is dated 16 February 2018, and was served on NMHB a few days later. It demands payment to the tune of $206,391.94 (including GST), that amount comprising two invoices:

(a)the first invoice — dated 25 September 2017, requesting payment of

$150,698.88 including GST; and

(b)the second invoice — dated 15 December 2017, requesting payment of

$75,349.44 including GST.

[6]                  Each invoice purports be a payment claim under the CCA, and counsel for NMHB does not dispute it initially received the claims as such.

The parties’ contractual understanding

[7]                  The invoices were also issued in reliance upon the parties’ own contractual understanding.

[8]                  Section 14 of the CCA provides for parties to modify the statutory terms by agreeing on their own “mechanism for determining” the ‘number’, ‘amount’, and ‘dates’ of payment. Without quibbling over irrelevant details, it appears to be common ground the parties agreed, in broad terms, on two specific contractual conditions:

(a)the requested concrete panels would be delivered to the construction site on the week starting 6 November 2017;

(b)50 per cent of the total payment would be made upfront, upon invoice, and the other 50 per cent paid after final delivery.

[9]                  In both invoices, the accompanying description reads “Manufacture…