Plus Construction NZ Limited v Kiwi Steel NZ Limited
[2015] NZHC 2188
•11 September 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2015-404-1293 [2015] NZHC 2188
IN THE MATTER OF Section 290 of the Companies Act 1993 BETWEEN
PLUS CONSTRUCTION NZ LIMITED Applicant
AND
KIWI STEEL NZ LIMITED Respondent
Hearing: 4 September 2015 Appearances:
A W Johnson for Plus Construction
M C Kilham for Kiwi SteelJudgment:
11 September 2015
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
11.09.15 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
PLUS CONSTRUCTION NZ LIMITED v KIWI STEEL NZ LIMITED [2015] NZHC 2188 [11 September
2015]
[1] Plus Construction NZ Limited (Plus Construction) applies to set aside the statutory demand dated 25 May 2015 served on it by Kiwi Steel NZ Limited (Kiwi Steel). It claims there is a substantial dispute about whether or not a debt is payable; and that Plus Construction has a set-off and/or counterclaim that exceeds any amount owing to Kiwi Steel.
[2] The statutory demand claimed a sum of $118,000 was “owing in respect of materials provided as set out in an attached tax invoice”. That invoice notes the sum of $118,000 was GST inclusive and related to “steel supply”.
Background
[3] Plus Construction is a building, house and construction company. Kiwi Steel is a supplier of steel products.
[4] Plus Construction and Kiwi Steel had a pre-existing business relationship since September 2013 by which steel was purchased from time to time.
[5] Each side has its own account about how the debt arose and regarding whether or not it is still due.
[6] Plus Construction contracted to undertake the construction works of a residential apartment building in Customs Street East, Auckland.
[7] Leading Edge NZ Limited (Leading Edge) entered into an agreement with Plus Construction by which it would supply steel and perform construction works for Plus Construction. Leading Edge purchased its steel supply from Kiwi Steel.
[8] James Kim (Mr Kim) was employed by Plus Construction as a project manager. Bob Haddon (Mr Haddon) was a director of Leading Edge and on whose behalf he signed a subcontractor agreement dated 9 April 2014. Mario Lee (Mr Lee) was the chief financial and strategic officer of Kiwi Steel.
[9] This same debt claim was the subject of an earlier proceeding in this Court1
when Plus Construction applied to set aside an earlier statutory demand dated 23
September 2014 from Kiwi Steel for the same core amount although the second did not claim interest as the first had done. At that time Plus Construction’s Mr Kim had deposed that in July 2014 a discussion had taken place between Plus Construction and Kiwi Steel regarding Kiwi Steel taking over Leading Edge’s subcontractor position; that Plus Construction did not object to that occurring.
[10] Mr Kim said the arrangement required Plus Construction to receive a credit note from Leading Edge in relation to the balance owing under its earlier invoice. That invoice was dated 31 March 2014 when Leading Edge invoiced Plus Construction in a total sum of $334,033 of which $147,660 was paid on 9 April 2014 and $110,000 on 1 July 2014.
[11] Mr Kim said the agreement required Kiwi Steel to accept all of the responsibilities Leading Edge had under the contract, including acknowledging its obligations to complete any remedial work and/meet any monetary obligations that would otherwise be imposed upon Leading Edge.
[12] Mr Kim stated that condition was fundamental to Plus Construction for if Kiwi Steel was to take over the benefits of the subcontract it also needed to take over all of the potential liabilities.
[13] Mr Kim deposed that ultimately issues arose as to the performance of the subcontractor agreement. Those included:
(a) An alleged failure to properly install hold down bolts; (b) A problem with the priming of the steel columns;
(c) Failure to complete variation work agreed upon;
(d) Wasted expenses incurred in hiring a digger and a cherry picker;
1 CIV 2014-404-2496
(e) Potential liquidated damages for failure to complete contract on time.
[14] After the first statutory demand was served Mr Kim says he continued to make queries with the head contractors engineer as to the cost of the remedial work and delays.
[15] In summary it was Plus Construction’s position it was not in contract with Kiwi Steel but rather it entered into a subcontractor agreement with Leading Edge until July 2014 when discussion took place about whether Kiwi Steel would take over Leading Edge’s subcontractor responsibilities; that Plus Construction was only prepared to agree to this happening if Leading Edge issued a credit note for the balance of the monies relating to the previous invoices and if Kiwi Steel took over all liabilities under the subcontract (including liabilities for previous non- performance by Leading Edge)
[16] At that time Kiwi Steel agreed to withdraw its first statutory demand while reserving its right to issue proceedings in the District Court to determine the parties’ dispute. Kiwi Steel’s then solicitors noted they had read the contents of an affidavit of Plus Construction’s Mr Kim dated 22 September 2014 but did not necessarily accept Plus Construction had valid grounds to dispute liability for the amount sought by the statutory demand.
The second statutory demand
[17] Evidence on behalf of Plus Construction’s setting aside application was provided again by Mr Kim and also by Mr Han Lee who was employed as an assistant project manager with Plus Construction.
[18] Mr Han Lee by his affidavit dated 9 June 2014 expresses surprise about the reissue of the statutory demand. He assumes Kiwi Steel is relying on an email he sent on 18 December 2014 in which he noted:
Further to our meeting today, Plus Construction confirms payment of
$118,000 will be made no later than 31 January 2015.
[19] He deposes that although his email indicated that payment would be made:
This was at all times subject to what was discussed and agreed at a meeting I attended earlier that day. In particular, that any payment to be made by [Plus Construction] to [Kiwi Steel] would be conditional upon [Plus Construction] continuing with its involvement in the subject building project. This is what was discussed and agreed at the meeting.
[20] He states he had sighted minutes prepared by Kiwi Steel following the meeting which included:
James Kim confirms that there was no dispute on the invoice figure of
$118,000 still owed. $118,000 must be paid by Plus Construction to Kiwi
Steel. Plus Construction to provide a dated of payment within a 19
December 2014 in writing to Kiwi Steel… Plus Construction will honour
the payment to Kiwi Steel whether or not Plus Construction continue with the project and Mr Kung Jae Jang assures that all liabilities will be cleared before leaving the country if the project was not to continue.
[21] Mr Han Lee states that the minutes do not reflect what was agreed at the meeting; that Mr Kim did not confirm there was no dispute on the invoice figure of
$118,000. He says what was made clear was that there would be a dispute if Plus
Construction did not continue with the building contract.
[22] Mr Han Lee stated:
[15] Consistent with [Plus Construction’s] understanding of what was agreed, it sent an email to [Kiwi Steel] on 23 January 2015 indicating an invoice and statement had been sent to the owner and therefore [Plus Construction] would be ready for payment accordingly. This email tied the payment [to Kiwi Steel] to the owner continuing with the contract. This has not occurred and [Plus Construction’s] invoice has not been fully paid.
[23] In his affidavit Mr Kim supports what Mr Han Lee deposed, and affirms the contents of the affidavit he filed in response to the initial setting aside application.
[24] Mr Kim confirms that following the 18 December 2014 meeting Mr Han Lee sent an email indicating a payment of $118,000 would be made no later than 31
January 2015. He adds:
[12] … I confirm however that the reference to payment was (as discussed at the meeting) to be subject to the applicant’s continued involvement in the … construction project. I accept that the email does not say that, however that was what was discussed and agreed at the meeting and was the basis upon which the email was sent.
[25] Mr Kim states that unfortunately Plus Construction was not able to continue with its involvement in the construction project because its contract had been cancelled and an arbitration process was then under way.
[26] Referring to the minutes of the meeting prepared and circulated by Kiwi Steel Mr Lee comments that they did not accurately reflect the agreement that was entered into.
Kiwi Steel’s evidence in opposition
[27] Mr Lee deposes that Kiwi Steel is a leading supplier of steel products in New Zealand and the Asia-Pacific. He says it does not undertake any installation work and operates as an international steel merchant, trader and processor. He said that on
11 December 2013 Kiwi Steel entered into an agreement for sale and purchase of the assets of Leading Edge and that on 14 February 2014 Kiwi Steel’s related company Leading Edge Fabrication Limited (Leading Edge Fabrication) was incorporated and on 19 February 2014 Kiwi Steel nominated Leading Edge Fabrication as purchaser of Leading Edge’s assets. Mr Lee says the Leading Edge purchase did not include any of Leading Edge’s contracts and the Leading Edge purchase expressly excluded from the purchase any liabilities of Leading Edge that were not expressly included in the Leading Edge purchase.
[28] Mr Lee understands that in or around February 2014 Leading Edge had entered into a subcontractor agreement with Plus Construction under which it agreed to carry out work on Plus Construction’s construction project at Customs Street East, Auckland; that between entry into the original agreement and 12 March 2014 Plus Construction, Leading Edge and Leading Edge Fabrication had some discussion about Leading Edge Fabrication taking over the subcontract and on 12 March 2014
Leading Edge Fabrication signed a subcontractor agreement with Plus Construction. Mr Lee says the parties subsequently decided that Leading Edge should do the work rather than Leading Edge Fabrication and on 9 April 2014 Plus Construction and Leading Edge signed the final subcontractor agreement under which the project would be carried out. Kiwi Steel was not he says a party to the subcontractor agreement or any of the previous subcontracts with Plus Construction.
The 23 June 2014 meeting
[29] Mr Lee deposes that Plus Construction was under some financial strain and on 18 June 2014 Mr Kim sent text messages to him advising that Plus Construction was having cash flow problems. On 23 June 2014 there was a meeting of representatives from Kiwi Steel, Mr Haddon of Leading Edge and Mr Kim of Plus Construction. Mr Lee says it was agreed that Kiwi Steel would pay $118,000 on behalf of Plus Construction to Leading Edge to assist Plus Construction with paying its debts on the basis that Plus Construction would repay Kiwi Steel by 31 July 2014.
[30] Mr Lee says Kiwi Steel was happy to provide Plus Construction with some short-term financial support to assist Plus Construction, a business run by fellow Koreans operating in New Zealand; that Kiwi Steel did not have any other connection with the project.
[31] On 7 July 2014 in accordance, Mr Lee says, with the loan agreement Kiwi
Steel emailed an invoice to Plus Construction dated 30 June 2014 for the sum of
$118,000 and paid that sum to Leading Edge. Payment of that sum was effected by: (a) Transferring the sum of $37,198,09 to Leading Edge;
(b)Paying the sum of $42,801.92 to H J Asmuss & Co Limited (H J Asmuss) on behalf of and at the direction of Leading Edge; and
(c) That the remaining $38,000 would be offset against amounts owing at that time to Kiwi Steel by Leading Edge.
[32] In response to Kiwi Steel’s invoice that on 8 July 2014 Mr Kim emailed Mr
Lee and copied to Mr Haddon the message:
Hi Eddy
Your invoice is accepted by Plus. Bob
Please send me credit note for the same amount.
[33] Mr Lee says Kiwi Steel has never been party to the subcontractor agreement and nor did it at any time agree to accept Leading Edge’s obligations under the subcontractor agreement or agree to undertake any construction work on the project. Kiwi Steel he says did not conduct steel installation work, nor did it undertake any work on the project.
[34] Mr Lee accepts that from time to time Leading Edge assigned to Kiwi Steel the right to obtain payment under debts owed to it by Plus Construction under the subcontractor agreement for the purposes of repaying debts owed by Leading Edge to Kiwi Steel. He says Leading Edge did not at any time assign any obligations to Kiwi Steel under the subcontractor agreement and Kiwi Steel never assumed responsibility for the performance of Leading Edge’s obligations under the subcontractor agreement. As a result, at various times, Kiwi Steel issued invoices to Plus Construction for amounts that Plus Construction owed to Leading Edge under the subcontractor agreement.
[35] The evidence is that when Plus Construction did not pay the amount agreed Kiwi Steel instructed solicitors to take recovery action. In response Kiwi Steel’s solicitors received a letter from Plus Construction’s solicitors dated 18 September which while indicating Plus Construction’s basis of a defence to the claim confirmed the willingness for the parties to resolve their issues “in good faith including recognising all appropriate obligations… [to] work towards a fair and reasonable solution”.
The 18 December 2014 meeting
[36] Mr Lee deposes that on 18 December he met with Mr Kim, Mr Han Lee and Mr Kyung Jae Jang from Plus Construction, together with Mr Haddon of Leading Edge. He said there was a discussion regarding payment of the debt and that Mr Kim confirmed Plus Construction would pay the debt and that the remainder of the discussion focussed on the relationship between Plus Construction and Leading Edge and whether Plus Construction would continue its work on the project.
[37] In that outcome on 23 December 2014 Kiwi Steel sent the minutes to Plus Construction by email for approval. Plus Construction did not respond to the email and Mr Lee states Kiwi Steel took it that Plus Construction agreed to the minutes circulated. Those minutes noted inter alia:
- Plus Construction (James Kim) confirms there is no dispute on the invoice figure of $118,000 still owed.
- $118,000 must be paid by Plus Construction to Kiwi Steel. Plus Construction to provide a date of payment within 19 December 2014 in writing to Kiwi Steel.
- Plus Construction will be assessing the profitability of the Customs Street project remaining and depending on the assessment, Plus Construction will decide whether to continue with the project or not. Plus Construction will report to Korea on the continuity of the project and based on this will bring money in from Korea. Plus Construction will honour the payment to Kiwi Steel whether or not Plus Construction continue with the project and Mr Kyung Jae Jang assures that all liabilities will be cleared before leaving the country if the project was not to continue.
- CP (Jonathan) will pay Leading Edge NZ Limited to carry on supplying the project if Plus Construction does not continue the project.
- Decision of Plus Construction continuing the project to be made during the next two weeks from date of meeting.
- Kiwi Steel to confirm to Plus Construction if a payment was to be made at the end of January if there will be any problems with creditor insurance.
[38] The minutes also and separately address issues regarding Leading Edge’s
claim of payments due for variation works carried out.
[39] Following the meeting Mr Han Lee of Plus Construction on 18 December
2014 emailed Kiwi Steel with that message referred to in paragraph [18] herein;
confirming that Plus Construction would pay the sum of $118k by 31 January 2015:
Leading Edge’s position in support of Kiwi Steel
[40] In his affidavit in support of Kiwi Steel’s position Mr Haddon deposes, inter
alia:
(a) That Leading Edge, Leading Edge Fabrications Limited and Plus Construction entered into discussions about whether Leading Edge Fabrications would take over the original agreement;
(b)That Leading Edge had signed a version of the subcontractor agreement on the basis that the parties were discussing the possibility of Leading Edge Fabrications carrying out the work on the project, but that agreement was subsequently overtaken by final agreement between Plus Construction and Leading Edge dated 9 April 2014;
(c) All work on the project was done under the final subcontractor agreement and by Leading Edge, not Leading Edge Fabrication;
(d)On 7 November 2013 Leading Edge issued a payment claim to Plus Construction for the supply of $191,360.00 worth of steel and shop drawings for the project, the steel and shop drawings having already been delivered to Plus Construction;
(e) Plus Construction was unable to pay the invoice and entered into a short-term arrangement with Kiwi Steel under which Kiwi Steel would pay Leading Edge $118,000 in part payment of the invoice;
(f) Kiwi Steel paid Leading Edge the sum of $118,000 on 8 July 2014 by way of a payment to Leading Edge of $37,198.08, a payment of
$42,801.92 to H J Asmuss & Co Limited on Leading Edge’s behalf and a set-off of $38,000 against amounts owed to Kiwi Steel by Leading Edge;
(g)That he was present at the meeting on 18 December 2014 and confirms Mr Lee’s description of the events and the meeting minutes later provided as being correct.
[41] Mr Haddon’s evidence is that Plus Construction agreed that the debt was
owing and that there was no dispute in relation to it.
[42] He confirms Leading Edge is and always was the sole subcontractor under the sub-contract agreement; that from time to time he agreed on behalf of Leading Edge to assign the right to obtain payment of the debts owed by Plus Construction to Kiwi Steel in order to satisfy debts owed by Leading Edge to Kiwi Steel. He says Kiwi Steel’s only involvement was in providing temporary funding and recovering debts owed by Plus Construction to Leading Edge. He said Leading Edge had never consented to any assignment, novation or any transfer of its obligations under the subcontract agreement.
Plus Construction’s response
[43] Mr Kim’s reply affidavit on behalf of Plus Construction denies the existence of a loan agreement.
[44] Mr Kim’s reply affidavit attaches copies of text messages between he and Mr Lee in June 2014. Mr Kim suggests that what was agreed at the 23 June 2014 meeting was that Kiwi Steel would advance $118,000 to Leading Edge; that Plus Construction was not involved in that transaction but was very keen for the money to be lent to Leading Edge which, because of its financial difficulties, was failing to meet its obligations under the subcontract agreement to Plus Construction.
[45] Mr Kim says the $118,000 which Mr Haddon deposed was paid to Leading Edge by Kiwi Steel was in fact paid to Kiwi Steel and to J H Asmuss & Co Ltd and was not advanced to Plus Construction and Plus Construction had no liability to either Kiwi Steel or H J Asmuss.
[46] Mr Kim deposes that one of the reasons why Kiwi Steel was prepared to make the advance to Leading Edge was that Kiwi Steel had in December 2013 entered into an agreement to purchase the assets of Leading Edge and subsequently that there were discussions as to whether Kiwi Steel’s subsidiary (Lead Edge Fabrication Limited) would take over Leading Edge’s sub-contract obligations to Plus Construction.
[47] Mr Kim adds:
[17] This did not happen in the end, but I understand it remained in Kiwi Steel’s interest to assist Bob [Mr Haddon] in fulfilling his company’s obligations. This was because Bob was to become a manager of Leading Edge Fabrications Limited. The real value in Kiwi Steel buying the assets of Leading Edge was in acquiring Bob’s skill and knowledge.
[48] Regarding the claim that by his email sent on 8 July2014 wherein Mr Kim indicated that Kiwi Steel’s invoice was accepted by Plus Construction, Mr Kim states:
[18] …Although I used the word “accepted”, as set out in my email of 1
September 2014, the acceptance was conditional upon Bob providing a corresponding credit note from Leading Edge. This is what had been agreed in discussions.
[49] Regarding affidavit evidence that Mr Kim confirmed Kiwi Steel’s invoice would be paid and that there was no dispute as to the existence in the amount of the debt Mr Kim responds he does not agree with that recollection. He said that what was discussed was that if Plus Construction was going to be able to continue as subcontractor it would accept liability and pay $118,000 to Kiwi Steel on the basis that it had no ongoing liability to Leading Edge (to pay it under the subcontract, for the steel). Mr Kim contends their discussions in relation to making this payment were always subject to Plus Construction being able to continue as contractor on the project but that did not happen and therefore the implementation of the arrangement did not take place.
Overview of the parties’ respective positions
[50] The case is about:
(a) The availability of a defence;
(b) A conflict over important evidence;
(c) Those meetings of the parties on 23 June 2014 and 18 December
2014;
(d) Whether Plus Construction throughout remained in debt to Leading
Edge in an amount agreed to be about $118,000;
(e) Issues raised by the first statutory demand and what impact those may have had in defence of the second statutory demand;
(f) The emails dated 18 December 2014 and 25 January 2015.
Legal principles
[51] There is no dispute regarding these. In summary:
(a) An applicant must show there is arguably a genuine and substantial defence as to the existence of the debt;
(b) The mere assertion that a dispute exists is not sufficient;
(c) If sufficient material of a dispute is available then the dispute should normally be resolved other than by means of proceedings in the Companies Court;
(d)Usually it is not possible to resolve disputed questions of fact on affidavit evidence alone;
(e) The Court is able to resolve issues of credibility on affidavit evidence where that evidence is contrary to contemporaneous documents or earlier statements of the parties;
(f) An applicant should place before the Court information which at least has the appearance of sufficient reliability that it can be said that a Court dealing with the matter could accept the account given as being
correct.2
2 Denize Farms Ltd v Spotburn Farms Ltd (In liq) HC Auckland CIV 2011-404-5374, 16 December
2011 at [13].
Considerations
[52] Counsel for Plus Construction identifies a number of factors as challenging
Kiwi Steel’s account of a loan arrangement. These include:
(a) That the statutory demand refers to an invoice for steel supply.
(b)Not until this proceeding has it been suggested the debt relates to a short loan arrangement nor has Kiwi Steel given details regarding calculation of the amount allegedly loaned.
(c) That Mr Kim deposed to the sum in question having been paid to Leading Edge to assist Plus Construction to pay its debts when in fact it appears the sum was used to pay a creditor of Leading Edge (H J Asmuss & Co Ltd) and by Leading Edge retaining $37,198.08 for its own purposes, and by $38,000 being a paper transaction only of an offset.
[53] The Court’s review of the parties’ affidavits highlights differences regarding what was discussed and agreed at two meetings on 23 June 2014 and 18 December
2014.
[54] Prior to the 23 June 2014 meeting Leading Edge invoiced Plus Construction for about $334,000 of which Plus Construction had paid $257,660. It is Plus Construction’s position that Kiwi Steel considered taking over Leading Edge’s sub- contractor responsibilities but that Plus Construction would only agree to this if Leading Edge issued a credit note for the balance of monies owing in relation to unpaid invoices. Also Plus Construction said Kiwi Steel should take over all liabilities under the subcontract including the previous non-performance by Leading Edge.
[55] In his affidavit Mr Kim set out the extent of liabilities relating to Leading
Edge’s defaults under the subcontract agreement.
[56] It is clear that these issues were not the subject of the 23 June 2014 meeting. Documented evidence of issues with installation work carried out by Leading Edge was apparently first referred to in Mr Kim’s email dated 1 September 2014.
[57] The email did acknowledge an agreement to pay $100,000 to Kiwi Steel once Leading Edge had given it a credit in respect of work that had not been done. The clear inference in the email is that there is no suggestion that Kiwi Steel was responsible for issues regarding building defects. The first detailed explanation of a claim to the contrary was provided by Plus Construction’s solicitors by their letter dated 18 September 2014 but in terms which clearly acknowledges the subcontract was until then with Leading Edge for the solicitor noted:
Our client is prepared to accept that your client had taken over as subcontractor in place of Leading Edge… That concession is, however, conditional upon our client receiving a credit note for the balance of invoices issued to it by Leading Edge…
[58] Clearly Kiwi Steel did not at that meeting of 23 June offer to assume Leading Edge’s contractual responsibilities or liabilities. Leading Edge owed Kiwi Steel for steel supplied that had been or was to be installed by Leading Edge pursuant to its contract with Plus Construction. Plus Construction had not fulfilled its payment obligations – whether for good reason or not - and in this respect it was agreed a sum of money of about $100,000 was due by Plus Construction for payment to Leading Edge. Because that sum was unpaid Leading Edge could not meet Kiwi Steel’s account or other commitments it had.
[59] Kiwi Steel says it was agreed it pay $118,000 to Leading Edge on behalf of
Plus Construction and that Plus Construction would repay that sum by 31 July 2014.
[60] In that regard Kiwi Steel issued its invoice indicating the debt was for the supply of steel and at the sum of $118,000 was inclusive of GST.
[61] Much was made in Plus Construction’s opposition to the initial statutory demand and is also repeated in the context of present argument, about the fact that Kiwi Steel has always claimed the sums due from Plus Construction were about a loan whereas the invoice clearly identifies the loan sum as due for steel supplied.
[62] Again it seems to the Court that these issues only arise in the context of asserting the existence of a dispute whereas the evidence clearly indicates there has been no misunderstanding by Plus Construction regarding Kiwi Steel’s claim of a payment due.
[63] Further by email dated 8 July 2014 Mr Kim on behalf of Plus Construction responded to Kiwi Steel stating:
Your invoice is accepted by Plus.
[64] That response was copied to Leading Edge with a request of Leading Edge to send them a credit note for the same amount.
[65] That email is important. It does not support claims that Kiwi Steel had assumed responsibility as a subcontractor. Also the suggestion that Leading Edge should give it a credit note supports rather than contradicts claims of a loan arrangement.
[66] Kiwi Steel withdrew its first statutory demand shortly after receipt of a letter from Plus Construction’s solicitors dated 18 September 2014. Negotiations between the parties regarding payment continued and a meeting was held on 18 December
2014. The minutes of that meeting record a commitment by Plus Construction even if the development project did not proceed any further.
[67] A reasonable inference from those minutes is that Plus construction has cash flow issues.
[68] Following that meeting Plus Construction emailed Kiwi Steel and others confirming payment would be made by 31 January 2015.
[69] By email dated 23 December Kiwi Steel sent copies of the meeting minutes to Plus Construction and others with the request that recipients confirm by email they had received, read and agreed on the content of the minutes.
[70] It is a fact that Plus Construction only questioned the accuracy of the minutes by the affidavits of Mr Han Lee and Mr Kim filed in reply to Kiwi Steel’s opposition to the setting aside application.
Conclusion
[71] Plus Construction’s evidence was often vague when providing detail of its claims of what was or was not agreed – particularly when challenging retrospectively the accuracy of contemporary written record.
[72] Evidence defending a claim should identify a fairly arguable basis and should be sufficiently reliable. The Court considers these factors absent support for Plus Construction’s position.
[73] Plus Construction clearly accepted responsibility for repayment of $118,000. Initially it said it was on the basis that Kiwi Steel assumed sub contractual responsibilities including for defects not even then identified. Then its position was that payment was not due because Leading Edge had not provided a credit note for the amount Plus Construction agreed to pay.
[74] Now its position is that there was an agreement to pay but it was conditional on the development project being continued and because it was not continued there was now no obligation to pay. But, this account clearly is disputed by the meeting record recording Plus Construction’s commitment to pay even if the project was discontinued. Plus Construction was offered the opportunity to challenge the 18
December 2014 meeting minutes but it did not.
[75] In the Court’s view the evidence available to dispute contemporary written
records supporting an agreement to pay is unreliable and thoroughly questionable.
[76] As earlier commented, there was quite clearly no agreement reached about any party taking over Leading Edge’s contract. Nor would it have been commercially sensible. There is no evidence that Kiwi Steel was itself engaged other than as a provider of building material. Also as at June 2014 most of Leading
Edge’s subcontract work had been completed. It would not have made sense for Kiwi Steel to accept obligations for work carried out but unpaid for. Besides, Leading Edge strongly supports Kiwi Steel’s account of the June 2014 meeting.
Result
[77] There is not a sufficient reliability of substance to claims of an arguable defence and therefore the setting aside application is dismissed.
[78] The Court makes an order extending the time for compliance with the statutory demand until 4:00pm on the tenth working day after the date of issue of this judgment.
[79] Plus construction will pay Kiwi Steel’s costs on a 2B basis together with
disbursements approved by the Registrar.
Associate Judge Christiansen
0
0
1