Street and Cook Construction Company Limited v Cambridge Terraces Limited
[2022] NZHC 2385
•16 September 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-313
[2022] NZHC 2385
BETWEEN STREET AND COOK CONSTRUCTION COMPANY LIMITED
ApplicantAND
CAMBRIDGE TERRACES LIMITED
First Respondent
BBH HOLDINGS LIMITED
Second RespondentDONALD GRANT MCKINNON
Third Respondent
Hearing: 15 September 2022 (by way of telephone conference) Appearances:
G M Brodie and B M Saegers for Applicant
A Marsh for First, Second and Third Respondents
Judgment:
16 September 2022
JUDGMENT OF EATON J
[1] On 5 August 2022, Doogue J granted the applicant’s application for a freezing order against the first, second and third respondents.
[2] The freezing order was made in respect of assets including Units 1 and 4, 243 Cambridge Terrace Christchurch (the apartments).
[3] The grounds for the order were that the first respondent is indebted to the applicant in the sum of $485,542.50. Following the applicant company having obtained a determination in its favour from the Disputes Tribunal the Court was satisfied of a danger that a judgment or prospective judgment would be wholly or
STREET & COOK CONSTRUCTION CO LTD v CAMBRIDGE TERRACES LTD [2022] NZHC 2385 [16
September 2022]
partly unsatisfied because the assets of the first respondent might be either removed from New Zealand or disposed of, dealt with or diminished in value. In relation to the second and third respondents, the Court was satisfied there was a danger of a judgment or prospective judgment being wholly or partly unsatisfied because the second and third respondent hold, or are using, or have exercised, or are exercising a power of disposition over assets of the first respondent and in a position of control or influence over those assets.
[4] By application dated 14 September 2022, the respondents apply without notice for a discharge of the freezing order. That application is supported by an affidavit from the third respondent in a memorandum of counsel. Counsel’s memorandum addresses the urgency of the application and records that although the application is made without notice it is agreed it can be dealt with on a “Pickwick” basis. Documents were served on the applicant on the afternoon of 14 September 2022.
[5] The apartments are subject to a sale and purchase agreement. The proposed settlement date was on 5 October 2022, however, the purchaser has asked for early settlement to occur and, if possible, by Friday 16 September 2022.
[6] In order to allow early settlement the respondents propose that the freezing order be discharged and the sum in which the respondent is said to be indebted to the applicant of $485,542.50 be held in a solicitor’s trust account pending resolution of the disputes between the applicant and the first respondent, a court order or otherwise as agreed between the applicant and first respondent. An undertaking to that effect was provided on 14 September 2022.
[7] The applicant does not agree to the freezing order being discharged. An urgent telephone conference was convened before me as Duty Judge this morning. Mr Brodie appeared on behalf of the applicant. He opposes the application on the grounds the respondents ought to be required to pay the monies to the applicant in accordance with the “pay now, argue later” policy of the Construction Contracts Act 2002.
[8] In my view, Mr Brodie seeks to use the freezing order as a tool to enforce the debt. I do not accept that argument. The purpose of the freezing order was to ensure
that assets held by the respondents were not dissipated. If the apartments are sold and the sale proceeds are held in a solicitor’s trust account on an appropriate undertaking, the respondent is in the very position they are in, secured by a freezing order.
[9] As a fall-back position, Mr Brodie does take issue with the terms of the undertaking. It currently provides that the monies will be held by solicitors “on trust for Street and Cook Construction Limited and Cambridge Terraces Limited pending resolution of the disputes between Street and Cook Construction Limited and Cambridge Terraces Limited, a court order, or otherwise as agreed between Street and Cook Construction Limited and Cambridge Terraces Limited.”
[10] Mr Brodie’s concern is that the terms of the undertaking permit the monies to be held in the solicitor’s trust account for an extended period rather than being paid over to the applicant, consistent with what he submits is its obligations under the Construction Contracts Act.
[11] During the course of the conference, Mr Brodie proposed a resolution whereby the freezing order is varied to permit the sale of the apartments and for the monies to be held in the solicitor’s trust account as a term of the varied freezing order. Whilst Mr Marsh maintains that the discharge of the freezing order is appropriate, he accepts that the alternative of a variation meets the respondents’ object of permitting the early sale of the apartments.
[12] Finally, Mr Brodie raised the issue of interest on the monies payable. Agreement was reached that the sum to be held in the solicitor’s trust account should be $500,000 to include interest.
[13] Following the telephone conference and at my invitation, on 16 September 2022 counsel filed a consent memorandum agreeing the terms of a variation of the freezing order. I agree the proposed variation is appropriate.
Result
[14]Clause 7 of the freezing order is varied to read:
(a)The freezing order is made in respect of the sum of $500,000.00 from the net sale proceeds of units 1 & 4, 243 Cambridge Terrace, Christchurch, which sum is to be held on trust by Kearneys subject to the terms of the freezing order.
[15]Costs of the respondent’s application reserved.
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Eaton J
Solicitors:
Kearneys, Christchurch
Barbara Saegers Construction Lawyer, Christchurch
Copy to:
Geoffrey Brodie, Barrister, Christchurch Andrew Marsh, Barrister, Christchurch
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