SOL Trustees Ltd v Giles Civil Ltd - [2014] NZCA 539

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA454/2014 [2014] NZCA 539

BETWEEN
SOL TRUSTEES LIMITED

Appellant

AND

GILES CIVIL LIMITED Respondent

Hearing: 1 October 2014

Court:

French, Venning and Dobson JJ

Counsel:

B P Molloy and R W H Kirwan-Jones for Appellant
D M Hughes and E E Cowle for Respondent

Judgment:

10 November 2014 at 3.00 pm

JUDGMENT OF THE COURT

A The appeal is dismissed.

BThe appellant is to pay the respondent costs for a standard appeal on a band A basis with usual disbursements. Allowance for one counsel only.

REASONS OF THE COURT

(Given by Venning J)

Introduction

[1] SOL Trustees Ltd (SOL) appeals a decision of Associate Judge Sargisson dismissing its application to set aside two statutory demands issued by Giles Civil
Ltd (Giles).1 The primary issue on appeal is whether Associate Judge Sargisson was

1 SOL Trustees Ltd v Giles Civil Ltd [2014] NZHC 1813.

SOL TRUSTEES LTD v GILES CIVIL LTD CA 454/2014 [2014] NZCA 539 [10 November 2014]

correct to find SOL had failed to provide a valid payment schedule,2 with the effect that Giles was entitled to serve its statutory demands to recover two outstanding payments as due debts.

Background

[2] SOL and Giles were parties to a construction contract in relation to a 20 lot subdivision at 258–272 Okura River Road, Auckland. SOL was the principal and Giles was the contractor. The contract terms included the terms in New Zealand Standard 3910:2003 Conditions of Contract for Building and Civil Engineering Construction.

[3] Airey Consultants Ltd (Airey Consultants) was appointed as engineer under the contract. Airey Consultants had two roles, to act as advisor to and representative of SOL as principal, and, independently of both SOL and Giles, to make decisions under the contract, value work and issue certificates.

[4] The parties also agreed a process for the certification of progress payments. Giles was to send its payment claims to both SOL and Airey Consultants. Airey Consultants would then issue a provisional progress payment schedule certifying the amount due. SOL then had three working days to respond.

[5] Construction commenced on 17 December 2012. The original scheduled completion date under the contract was 17 May 2013. The work was not completed by that date.

[6] Issues arose when Airey Consultants sent a provisional progress payment

schedule certifying Giles’ payment claim 10 for $565,366 to SOL on 19 October

2013. By email of 22 October to Airey Consultants, SOL’s director Mr Hamilton advised the claim was disputed. He also prepared a spreadsheet claiming “Project Overrun Costs”, being costs SOL claimed it had incurred because of the delays. On SOL’s calculations the total loss attributed to the delayed completion was
$1,121,747.

2 Construction Contracts Act 2002, s 21.

[7] Although Mr Hamilton initially asked Airey Consultants to keep the spreadsheet confidential, all parties met on 25 October 2013 to discuss the contract. At the meeting Mr Hamilton provided a copy…

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: [2014] NZCA 539
Decision Date: 10 November 2014 at 3.00 pm

CaseChat Overview and Summary

SOL Trustees Ltd (SOL) appeals a decision of Associate Judge Sargisson dismissing its application to set aside two statutory demands issued by Giles Civil Ltd (Giles). The primary issue on appeal is whether Associate Judge Sargisson was correct to find SOL had failed to provide a valid payment schedule, with the effect that Giles was entitled to serve its statutory demands to recover two outstanding payments as due debts. The appeal court found that SOL's responses to the payment claims were not valid payment schedules, as they did not indicate a scheduled amount or address the claims in detail. The court emphasised the importance of following the payment procedures outlined in the Construction Contracts Act 2002 to ensure regular and timely payments between parties. The appeal is dismissed, and SOL is ordered to pay Giles' costs for a standard appeal on a band A basis with usual disbursements.

Orders