Salem Limited v Top End Homes Limited CA169/05

The case of Salem Limited v Top End Homes Limited involved a dispute over the payment of a final sum under a construction contract. Top End Homes Limited, a building company, had undertaken the conversion and refit of premises in Whangarei to enable them to be let by Salem Limited, a commercial landlord, to a government department. A dispute arose over the payment of $279,687.56. Top End Homes Limited obtained summary judgment against Salem Limited, and the latter appealed the decision. The primary issue before the court was whether Salem Limited's failure to respond to a payment claim made by Top End Homes Limited under the Construction Contracts Act 2002 entitled Top End Homes Limited to recover the amount of the claim as a debt due.

The court held that the ground of appeal was not available to Salem Limited because it had admitted in its pleadings that a payment claim had been made. The court further reasoned that the statutory scheme of the Construction Contracts Act 2002 was designed to facilitate regular and timely payments between parties to a construction contract. If a property owner does not respond to a payment claim by serving a payment schedule, the contractor is entitled to recover the amount of the claim as a debt due. The court concluded that the entry of summary judgment was appropriate and dismissed the appeal.

In terms of costs, the court initially awarded $3,000 in costs and usual disbursements to Top End Homes Limited. However, the court reconsidered the costs order and concluded that the appropriate course was to direct payment of costs in the same terms as initially ordered, that is, costs of $3,000 with usual disbursements. The court held that the entitlement to actual and reasonable costs was linked to recovery of the debt due in either the High or District Courts, and not in the Court of Appeal.