SOL Trustees Ltd v Giles Civil Ltd - [2014] NZHC 1813

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-000459

CIV-2014-404-000299 [2014] NZHC 1813

BETWEEN
SOL TRUSTEES LIMITED

Plaintiff

AND

GILES CIVIL LIMITED Defendant

Hearing: 5 May 2014

Appearances:

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

Judgment:

4 August 2014

JUDGMENT OF ASSOCIATE JUDGE SARGISSON

This judgment was delivered by me on 4 August 2014 at 4.50 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors / Counsel: Kensington Swan, Auckland
Haigh Lyon, Auckland
B P Molloy, Auckland

Case officer: Katrina Tauhinu

SOL TRUSTEES LIMITED v GILES CIVIL LIMITED [2014] NZHC 1813 [4 August 2014]

Introduction

[1] Sol Trustees Limited applies for orders under s 290 of the Companies Act

1993 to set aside two statutory demands. Giles Civil Limited served Sol Trustees with the first demand on 31 January 2014, claiming Sol Trustees owes it
$842,539.48 on its Payment Claim 13, and with the second demand on 26 February

2014, claiming $130,409.50 on its Payment Claim 14, each case for work undertaken pursuant to a construction contract.

[2] Under the Construction Contracts Act 2002 (the Act), if a payment claim is served on a party to a construction contract and payment of the lesser of the claimed amount or the amount scheduled in a payment schedule is not made within the time allowed in the contract or otherwise within 20 working days, the claimant is entitled
to recover the amount of the claim as a debt due.1

[3] Sol Trustees has not paid the amounts demanded of it. It contends it is entitled to an order setting aside the statutory demands on the basis that it has responded to the payment claims by providing responses that are sufficient to constitute valid payment schedules within the time allowed pursuant to the contract, and in respect of which there is a real dispute within the contemplation of s 290(4) of the Companies Act.

[4] The applications are opposed and the parties have requested that they be heard together.

Issues for determination

[5] There are two overarching issues that arise for determination in deciding whether or not there should be an order to set aside the statutory demands:

(a) Is there a substantial dispute as to whether or not the debt is owing or due? This turns on whether Sol delivered valid payment schedules in
response to Payment Claims 13 and 14 – which also turns on whether

1 Construction Contracts Act 2002, s 23.

it is able to treat those responses and its prior response to Payment

Claim 10 as a cumulative response; and if so

(b)Whether, for the purpose of such a response, it is able to rely on a set- off or counterclaim based on its claimed entitlement to liquidation damages under the contract for costs of delay.

[6] There is a remaining issue that arises from Sol’s submission that Payment Claims 13 and 14 are substantially the same and…

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] NZHC 1813
Decision Date: 4 August 2014

CaseChat Overview and Summary

Sol Trustees Limited applied to the High Court for an order setting aside two statutory demands served by Giles Civil Limited under section 290 of the Companies Act 1993. Giles served the first demand on 31 January 2014 for $842,539.48 on its Payment Claim 13, and the second on 26 February 2014 for $130,409.50 on its Payment Claim 14, each for work undertaken pursuant to a construction contract. Sol contended it was entitled to an order setting aside the statutory demands on the basis that it had provided responses to the payment claims that constituted valid payment schedules, and in respect of which there was a real dispute within the contemplation of section 290(4) of the Companies Act. The overarching issues were whether there was a substantial dispute as to whether or not the debt was owing or due, and whether Sol was able to rely on a set-off or counterclaim based on its claimed entitlement to liquidated damages under the contract for costs of delay. The court held that Sol had not provided valid payment schedules to Payment Claims 13 and 14, and therefore the statutory demands could not be set aside on the basis of a substantial dispute within the contemplation of section 290 of the Companies Act. The time for compliance with the statutory demands was extended to 15 working days from the date of judgment. Failing compliance, Giles may proceed with an action for liquidation. Costs followed the event. Giles was entitled to costs on a 2B basis plus disbursements as fixed by the Registrar.

Orders