Super Power Earthmoving Limited v Dreamhome Construction Group Limited
[2025] NZCA 591
•11 November 2025 at 11.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA560/2024 |
| BETWEEN | SUPER POWER EARTHMOVING LIMITED |
| AND | DREAMHOME CONSTRUCTION GROUP LIMITED |
| Hearing: | 3 April 2025 |
Court: | Katz, Brewer and Gault JJ |
Counsel: | S L L Gallagher for Appellant |
Judgment: | 11 November 2025 at 11.30 am |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis, together with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Katz J)
Introduction
Super Power Earthmoving Ltd (Super Power) applied to liquidate Dreamhome Construction Group Ltd (Dreamhome) for failing to make payment of amounts due under a statutory demand.
Associate Judge Taylor declined the liquidation application.[1] Super Power now appeals.
Background
[1]Super Power Earthmoving Ltd v Dreamhome Construction Group Ltd [2024] NZHC 2139 [judgment under appeal].
The underlying dispute relates to unpaid invoices issued by Super Power to Dreamhome for earthworks allegedly performed in 2017, pursuant to a verbal agreement. Four specific invoices are in dispute, relating to work at different addresses in Auckland (the disputed invoices).
Dreamhome was unable to reconcile the work claimed in the disputed invoices with their project records. It disputed whether the work was done at all in relation to three of the invoices and expressed the view that some of the work in the disputed invoices was actually completed by third parties before the period Super Power claimed to have performed it. Dreamhome requested clarification and further evidence relating to the invoices from Super Power. None was provided.
There is a dispute as to when the invoices were first issued, with Super Power claiming they were issued in 2017 and Dreamhome claiming they were not issued until 2020.
On 22 September 2022, Super Power purported to reissue the disputed invoices in the form of payment claims under the Construction Contracts Act 2002, seeking the same amounts.
On 7 November 2022, Super Power issued a statutory demand for $220,536.62, which included a significant amount of interest ($176,986.11) on the claimed principal sum of $43,550.51. On 8 November 2022, Dreamhome received correspondence from Super Power’s lawyers (Righteous Law Ltd) demanding payment based on the payment claims.
On 15 November 2022, Dreamhome responded to Righteous Law in writing, reiterating the need for further evidence to support the claimed sums and denying Super Power’s entitlement to payment in the absence of such evidence.
Dreamhome’s application for leave to file a statement of defence out of time
Liquidation proceedings were served on Dreamhome on 12 January 2023.
On around 9 March 2023, Dreamhome notified Righteous Law of what it believed to be factual and legal issues with Super Power’s application and gave notice that Dreamhome would immediately take steps to defend its position unless the proceedings were withdrawn.
The proceedings were not withdrawn. Dreamhome then sought to file a statement of defence late, on 23 March 2023 — outside the required 10 working day period following service.[2] Dreamhome was accordingly required to seek leave to file its statement of defence out of time, which it did on 3 April 2023. Super Power opposed that application.
[2]High Court Rules 2016, r 31.17.
The Judge found that Dreamhome had established that it had an arguable defence to Super Power’s claim, as there was a substantial dispute as to the validity of the underlying debts on which the liquidation application was based.[3] Specifically, he found that there were disputes regarding:[4]
(a)the existence of a contract for the disputed works;
(b)whether Super Power actually carried out the relevant works;
(c)the validity of the payment claims under the Construction Contracts Act, given issues around proper service and whether there was adequate identification of construction work in the payment claims;
(d)the validity of the statutory demand, including the contractual entitlement to charge interest (which in this case was significant); and
(e)the extent to which Dreamhome had notified their dispute over the invoices to Super Power (which would need to be resolved at trial).
[3]Super Power Earthmoving Ltd v Dreamhome Construction Group Ltd [2023] NZHC 2265.
[4]At [61].
The Judge found the prejudice to Dreamhome of not allowing the statement of defence to be filed outweighs the prejudice to Super Power.[5] The position regarding Dreamhome’s solvency was found to be neutral. The Judge noted, however, that Dreamhome had paid the core debt of $43,550.51 into its solicitor’s trust account, indicating some level of solvency, and there was no evidence before the Court that Dreamhome was unable to pay its debts.[6]
[5]At [69].
[6]At [73].
Taking these factors into account, together with delays by Super Power in seeking to recover the debt, the Judge concluded that the overall interests of justice favoured granting leave to Dreamhome to file its statement of defence out of time.[7]
The High Court decision on the liquidation application
[7]At [76].
The matter then proceeded to a hearing of Super Power’s substantive liquidation application.
The Judge addressed four main issues: the existence of a substantial dispute in respect of the underlying debt; the validity of the payment claims under the Construction Contracts Act; the validity of the statutory demand; and Dreamhome’s solvency.
On the issue of whether there was a substantial dispute in respect of the underlying debt, the Judge stated that:[8]
[36] In my view, there is no change to the conclusions I reached in the [judgment granting leave to file a statement of defence] that a dispute exists between the parties as to whether the works to which the disputed invoices relate were pursuant to a contract which existed between the parties or not, and whether the relevant works were carried out by Super Power. Accordingly, this dispute is to be resolved at trial.
[8]Judgment under appeal, above n 1.
On the issue of the validity of the payment claims purportedly made under the Construction Contracts Act, the Judge found it was arguable that the payment claims submitted by Super Power did not validly create a debt due under ss 22 and 23 of the Construction Contracts Act because:[9]
(a)There was a dispute as to whether the claims complied with s 20 of the Construction Contracts Act regarding the identification of the construction contract and work.
(b)There was an argument that even if the claims were valid, Dreamhome’s communications disputing the debt were sufficient to constitute a payment schedule in substance.
(c)It was also arguable that the Court was entitled to look at the underlying merits of the claims in a liquidation application context, particularly when considering Laywood v Holmes Construction Wellington Ltd decision.[10]
[9]At [43].
[10]Laywood v Holmes Construction Wellington Limited [2009] NZCA 35, [2009] 2 NZLR 243.
The Judge further found that the statutory demand was arguably invalid, for the following reasons:[11]
(a)it has not been established that a contract for the construction works between Super Power and Dreamhome exists and, if it exists, whether it entitles Super Power to charge interest at the rates used to calculate the interest in the statutory demand; and
(b)the claim for interest was not included in the payment claims — arguably, there is a substantial mis-statement of the amount owing by Dreamhome in the statutory demand which, on the authority of Pioneer Insurance Company Limited, renders the demand invalid.
[11]Judgment under appeal, above n 1, at [45], referring to Pioneer Insurance Company Ltd v White Heron Motor Lodge Ltd [2008] NZCA 450, (2008) 19 PRNZ 286.
The Judge noted that if the statutory demand was invalid, then the application for liquidation based on it also could not succeed.[12]
[12]Judgment under appeal, above n 1, at [46].
As with his earlier decision, the Judge found that the position regarding the solvency of Dreamhome was neutral in relation to granting the application for liquidation.[13]
[13]At [50].
Based on these conclusions, the Judge concluded that the liquidation application should be dismissed.[14]
[14]At [51].
Although Super Power advanced five grounds of appeal, two of these were largely repetitive. The issues raised fall into three broad categories, which we address below.
Did the Judge have sufficient regard to Dreamhome’s “repeated failure to comply with the relevant debt recovery procedures”?
Super Power’s first ground of appeal is that:
There was not sufficient weight placed on [Dreamhome’s] repeated failure to comply with the relevant debt recovery procedures. [Super Power] took the appropriate enforcement steps to recover an outstanding debt. [Dreamhome] repeatedly failed to engage with the debt recovery process and only became engaged with the proceedings just prior to the liquidation list[.]
The key issue for the Court, under s 241(4)(a) of the Companies Act 1993, was whether it was satisfied that Dreamhome was unable to pay its debts. Pursuant to s 287(a) of the Companies Act, a company will be presumed to be unable to pay its debts if “the company has failed to comply with a statutory demand”, unless the contrary is proven. If the defendant company does not comply with a statutory demand served on it by a creditor and does not apply to set aside the statutory demand,[15] the onus falls on the defendant to establish that there is a genuine and substantial dispute as to its liability to pay.[16]
[15]Pursuant to s 290 of the Companies Act 1993.
[16]The presumption contained in s 287(a) applies: Yan v Mainzeal Property and Construction Ltd (in rec and in liq) [2014] NZCA 190 at [63].
Although Dreamhome failed to apply to set aside the statutory demand, this is not determinative. Rather, in Yan v Mainzeal Property and Construction Ltd (in rec and in liq) this Court stated that:[17]
… a company is not prevented from showing that indebtedness is disputed, even if it has failed to apply to set aside a statutory demand under s 290. In such a case, the failure of the debtor to apply to set aside a statutory demand means that the creditor is entitled to rely on the presumption of insolvency under s 287(a) of the [Companies] Act and the onus falls on the debtor to establish that there is a genuine and substantial dispute as to its liability to pay. ... Cogent evidence, short of actual proof that the debt is not payable, is required.
[17]At [63] (footnotes omitted).
Hence, the Court will not generally make a liquidation order if it is satisfied that there is a substantial dispute as to the validity of the debts relied upon, as such disputes are not suitable for resolution in the liquidation context (whether or not they are the subject of a statutory demand).[18] Provided that the Court is satisfied that there is a genuine and substantial dispute as to liability, an order for liquidation should not be made. Obviously, if a debt is genuinely disputed, the company may have good reason not to pay the debt. The absence of payment therefore does not give rise to an inference of insolvency.[19]
[18]At [74].
[19]New Y Trading Ltd v ANZ Food Holding Ltd [2017] NZHC 2702 at [5] and [6], citing Yan v Mainzeal Property and Construction Ltd (in rec and in liq), above n 16, at [61].
Further, as noted at [8] and [10] above, Dreamhome did engage with the demands made by Super Power, albeit through correspondence in the first instance. It omitted to file a state of defence within the required time period, but was subsequently granted leave to do so. The late filing of its defence was accordingly not a relevant consideration for the Court in determining the liquidation application.
We accordingly accept Mr Taylor’s submission on behalf of Dreamhome that there is no merit to this ground of appeal.
Did the Judge correctly apply ss 21 and 23 of the Construction Contracts Act?
Super Power’s second ground of appeal (and largely their fifth ground of appeal) is that the Judge placed insufficient “weight … on the required compliance of [ss] 21 and 23 of the Construction Contract[s] Act”. Miss Gallagher, for Super Power, submitted that it had complied with the Construction Contracts Act and issued a payment claim accordingly. Dreamhome failed to take the necessary steps pursuant to the Act to challenge that payment claim and accordingly became liable to pay the amount claimed by Super Power in its payment claim.
We find no error in the Judge’s reasons for rejecting this argument, as summarised at [18] above.
The Judge was correct to find that the statutory demand was arguably invalid as it had not been established that a contract for construction works even existed. No evidence was provided by Super Power that a contract (written or oral, or partly written and partly oral) was concluded with Dreamhome in relation to the work claimed. Accordingly, the relevance and applicability of the Construction Contracts Act, which applies only to construction contracts,[20] was not established on the evidence.
[20]As defined at s 5 of the Construction Contracts Act 2002.
Further, even if the Construction Contracts Act did apply, we find no error in the Judge’s conclusion that it was arguable that the payment claims submitted by Super Power did not validly create a debt due under ss 22 and 23 of that Act. First, there was a dispute as to whether the claims complied with s 20(2)(b) in that they arguably failed to provide “sufficient details to identify the construction contract to which the payment relates”. Second, it was arguable that they failed to comply with s 20(2)(c) by failing to adequately “identify the construction work” to which the claim related.
Further, as the Judge found, it was arguable that Dreamhome’s communications challenging the debt were sufficient to constitute a payment schedule — Dreamhome stated the amount that it recognised, being one invoice totalling $4062.38, and clearly detailed all areas it disputed (the other three invoices) and refused to pay.[21]
[21]As required by s 21. Compare to Seating Systems Ltd v Kidson Construction Ltd [2012] NZHC 2217 at [28]–[30]; and Melbourne Ltd v Bartlett Concrete Placing Ltd [2022] NZHC 1786 at [49]–[52].
The Judge held, as a final fall-back option, that it was arguable that the Court is entitled to look at the underlying merits of the claims even if Super Power had complied with the requirements of the Construction Contracts Act and Dreamhome had failed to issue a valid payment schedule. The appellant submitted that this appears to be inconsistent with this Court’s decision in Demasol Ltd v South Pacific Industrial Ltd.[22] While there appears to be force in that submission, nothing turns on this issue given our view that the Judge did not err in finding that it was arguable that Super Power did not comply with the requirements of the Construction Contracts Act and, further, that Dreamhome had, in substance, issued a valid payment schedule.
Did the Judge incorrectly apply ss 287 and 288 of the Companies Act 1993?
[22]Demasol Ltd v South Pacific Industrial Ltd [2022] NZCA 480.
Super Power’s third ground of appeal was that:
There was not sufficient weight placed on the Companies Act 1993 as His Honour inconsistently applied the requirements stipulated in sections 287 and 288 Companies Act 1993. Pursuant to sections 287 and 288 of the Companies Act 1993 and based on [Dreamhome’s] actions, [Dreamhome] would be deemed as being unable to pay its debts.
The fourth ground of appeal was to similar effect, including an assertion that:
… the legislation should be able to be relied on and provide certainty. His Honour has inconsistently applied the Companies Act 1993 as such he has erred by not granting [Super Power’s] application to place [Dreamhome] into liquidation.
Similar points were raised in the fifth ground of appeal. We infer that the appellant is referring to the presumption in s 287 that a company is presumed to be unable to pay its debts if it has failed to comply with a statutory demand, unless the contrary is proved. This argument appears to overlook that the presumption is rebuttable. Liquidation is not automatic when a company fails to pay a statutory demand, and a failure to automatically liquidate a company in such circumstances is not inconsistent with the statutory regime.
We have summarised the appropriate approach at [25] to [27] above. The Judge’s approach was consistent with that. A presumption of insolvency is rebuttable by evidence from the debtor in its response to a liquidation application. The Judge simply found that, in the circumstances of this case, the presumption had been rebutted, for the reasons we have summarised. That conclusion was open to him on the evidence and, in our view, was correct.
In conclusion, as none of the grounds of appeal have been made out, the appeal must be dismissed.
Result
The appeal is dismissed.
The appellant must pay the respondent costs for a standard appeal on a band A basis, together with usual disbursements.
Solicitors:
Righteous Law Ltd, Auckland for Appellant
Maria Taylor, Auckland for Respondent
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