Takanini Central Residential Ltd v Terra Group NZ Limited
[2016] NZHC 478
•24 March 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-000860 [2016] NZHC 478
BETWEEN TAKANINI CENTRAL RESIDENTIAL
LTD Applicant
AND
TERRA GROUP NZ LIMITED Respondent
AND
THE GROVE LAND COMPANY LTD Applicant
AND
TERRA GROUP NZ LIMITED Respondent
Hearing: 18 June 2015 Appearances:
S C Price and J H Morrison for both Applicants
A Barker for the RespondentJudgment:
24 March 2016
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 24 March 2016 at 5.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Minter Ellison, Auckland
Graham & Co, Auckland
A Barker, Auckland
TAKANINI CENTRAL RESIDENTIAL LTD v TERRA GROUP NZ LIMITED [2016] NZHC 478 [24 March 2016]
Summary
[1] Takanini Central Residential Limited (Takanini) and The Grove Land Company Limited (Grove) apply to set aside statutory demands made of them by Terra Group NZ Limited, which is an engineering consultancy. The demands were served on each applicant on 7 April 2015 pursuant to s 289 Companies Act 1993.1
They are:
(a) a demand on Grove for payment of $196,911.35; and
(b) a demand on Takanini for payment of $60,905.60.
[2] The demands claim these two sums as debts owing to Terra Group based on unpaid invoices for professional engineering design and consent authority approval, and contract administration and supervision.
[3] Each applicant disputes the demand made against it, and it says in the grounds of opposition that the claimed debts are not due because:
(a) In the numerous invoices that the demand relies upon, Terra Group has “fundamentally failed to identify the basis on which it is entitled to claim the amounts sought, let alone how the amounts are calculated”.
(b)Each applicant has a counterclaim against Terra Group for anticipated loss arising from the need to engage new engineering consultants.
[4] Each application to set aside the demand is opposed. In each case, the issues for determination are broadly twofold:
(a) Whether there are reasonably arguable disputes over the invoices upon which the demand is founded, because of a fundamental failure on
1 Takanini has also applied to set aside a demand for $196,370.15, and The Grove to set aside a demand for $18,483.66, both issued by Terra Group on 18 May 2015. Those applications were not prepared in time for the hearing in this matter, and accordingly are not dealt with in this judgment.
Terra’s part to identify the basis for claiming the amount sought and to show how those amounts are calculated.
(b)Whether the applicant has a reasonably arguable counterclaim which may offset any amounts claimed that are not subject to genuine disputes.
[5] If such disputes or counterclaims exist, the disputes and/or counterclaims ought not to be dealt with by statutory demand and liquidation proceedings, but rather by litigation in the ordinary way or by alternative dispute resolution if that is what the contractual arrangements between the parties.
Factual background
[6] In order to put the present dispute into its factual context, it is necessary to make brief reference to the background.
[7] The applicants are developers of large residential subdivisions principally intended for residential development. Takanini’s subdivision is located at Takanini School Road, Takanini, and Grove’s subdivision is located at Grove Road, Papakura. Terra Group was engaged by each applicant to provide engineering design and other services for the relevant subdivision.
[8] In each instance, Terra Group initially proceeded with engineering design work on the basis of oral arrangements with the applicants, commencing work for Grove in November 2012 and work for Takanini in January 2013, for which reasonably substantial fees were charged.
[9] Subsequently Terra Group entered into short form contracts with the applicants: in the case of Grove, in August 2013, and in the case of Takanini, in November 2013. Each of these contracts is based on the standard terms and conditions contained in the ACENZ / IPENZ standard short form contract for
consultant management.2
2 Association of Consulting Engineers New Zealand; Institute of Professional Engineers New
Zealand.
[10] Though the contracts were not signed by Grove and Takanini, it is not in dispute that Grove agreed to the terms of the short form contract at the end of August
2013, and that Takanini did likewise in the case of its short form contract towards the end of November 2013.
Grove’s contract
[11] The contract is dated 27 August 2013. The scope of work is set out as follows:
Project:
36 lots (Stage 1) – Engineering approval / Contract Admin / Construction Supervision.
Location: 61 Grove Road, Papakura.
SCOPE & NATURE OF THE SERVICES and PROFESSIONAL FEE
Stage 1-36 lots Civil engineering
Design, Consenting
$45,000 plus GST plus disb.
Construction, Administration, Observation
$90,000 plus GST plus disb.
Survey
$1,300 / new lot created + GST plus disb.
Note: escalation clause, adopt plus 5% for each following construction season.
[12] The contract states that the “design scope of work going forward utilises the work done to date”. The design work is described in five categories: earthworks; roading; water and drainage reticulation; storm water pond (temporary) including inlet/outlet control; and “utility services, reticulation, provider liaison and inclusion into engineering plan set”. Particulars (of a sort) are given for each category.
[13] The contract also sets out the scope of construction work in a similar manner. Such work includes “bulk earthworks across the full site”, and other works, but excluding “the pump construction”. It notes that the program period is for earth works and civil construction to be completed within one earthwork season, and it contains reference to contract tender documentation; construction administration; certification; and the obtaining of a s 224(c) certificate for Stage 1.
[14] The survey work is particularised by the description “reference to scheme plan design for subdivision; and 223C (stage 1) obtaining LINZ approval as to survey”. It appears no survey work was done, and no arguments arise in this application.
[15] Each of the three categories of work is subject to its own set of qualifying notes. One such note indicates that some of the work is to be done by third parties and that some design work is specifically excluded.
[16] The standard form conditions of engagement provide for variations and dispute resolution. They relevantly state:
[14] The client may order variations to the services in writing, or may request the consultant to submit proposals for variations to the services.
…
[18] Disputes shall first be referred to conciliation for settlement. Unresolved disputes shall be referred to arbitration in accordance with the Arbitration Act 1996.
[17] The contract also contains standard exclusions as follows:
In addition to the exclusions outlined in the attached letter, the estimate contained in the attached documents and the short form agreement for consultant engagement does not include the following unless otherwise stated:
(i) Any future work that may be required by Council, or any work requested by the Contractor, the Architect, the Structural Engineer, or the Client in respect of work outside the scope of the proposal including additional site investigations, foundation observations, inspection or testing during the construction phase, or subsequent requests for Producer Statements on the completion of the project.
(ii) Attendance at site meetings or meetings with Council outside the requirements of the findings in our reports and plans.
Any such additional work shall be charged and invoiced on a Time Basis for actual time and work hours spent on the project. Disbursements such as, but not limited to, typing, copying, travel time and kilometres will also be invoiced.
Takanini’s contract
[18] Takanini’s contract is dated 19 November 2013. The scope of work is set out as follows:
Project: subdivision design and construction observation
Location: 55 Takanini School Rd, Papakura
SCOPE & NATURE OF THE SERVICES and PROFESSIONAL FEE
Civil engineering Design, Consenting, Procurement
$110,000 + GST plus disb
Construction, Management, Observation
$110,000 + GST plus disb
[19] The scope of the design work is described by reference to seven categories of work, including “resource consent for subdivision and engineering approval”, and it sets out seven categories by way of expansion. These are earthworks; roading; water supply reticulation; stormwater reticulation, “s/w pond design (interim until Council’s permanent solution in place)”; utility services, reticulation, provider liaison and “inclusion into engineering plan set”; scheme plan design for subdivision, supplied by others; and sewer reticulation design. A qualifying note states that the “above documentation to be supplied to Client Planner for lodgement of consent application(s)”.
[20] The contract also sets out the scope of construction work as including “contract/tender documentation (NB: 5,000 per contract document); construction administration; certification; 224C”.
[21] The scope of works is subject to a set of qualifying notes which exclude certain items and state that progress payments are to be made on the 20th of the month following.
[22] As in the case of the Grove contract, the parties are bound by the short-term standard conditions of engagement including clauses 1 and 7 and any variations noted. Once signed, the agreement together with enclosed conditions and attachments replaces all or any oral agreement previously reached between the parties.
[23] The contract states that “the above estimate is valid for 30 days from the date indicated below”. The contract also contains the same set of standard exclusions as the Grove contract. The contract indicates that there is a program that is described as a “client provided program”.
The parties’ positions
[24] Terra Group contends that each applicant incurred substantial debts under the contracts, and for additional work, and that as at 7 April 2015 when it issued its statutory demands, $196,911.35 remains owing by Grove, and in the case of Takanini
$60,905.60 remains outstanding. Terra contends that there is no case to set aside any part of the statutory demands. Each applicant challenges Terra’s position. Each says that the existence of the entire debt claimed against it in its application is in substantial dispute.
[25] Notwithstanding these extreme positions, there does not appear to be any serious dispute that at least some of the debt claimed against each applicant is properly claimed (whether it is for work within the ill-defined scope of the work in the contract, or additional to that scope of work). Tellingly, in March 2015 each applicant advised of an intention to make part payment of the outstanding claim, without suggesting the advice was put as a compromise to settle a dispute. The advice implies acceptance by the applicants of at least a substantial part of Terra’s claims against them.
[26] It is clear on the evidence, however, that there is room for argument about aspects of the debt claimed against each applicant. It is necessary in this situation to deal with the basis of each applicant’s challenge to each of the invoices.
[27] It will then be necessary to consider the basis for the counterclaim alleged by each applicant. It is sufficient at this point to summarise the parties’ positions. For reasons I will come to presently, I am satisfied that neither applicant has demonstrated a sufficient basis for a reasonably arguable counterclaim. Whether or not it may yet do so is not an issue that I wish to be seen as determining – I simply am not satisfied that they have done enough to demonstrate the existence of tenable counterclaims.
[28] Before turning to the invoices it is appropriate to summarise the legal principles that apply to applications to set aside statutory demands.
Law
[29] Applications to set aside statutory demands are governed by s 290 Companies
Act 1993. Relevantly s 290(4) states:
(4) The court may grant an application to set aside a statutory demand if it is satisfied that—
(a) there is a substantial dispute whether or not the debt is owing or is due; or
(b) the company appears to have a counterclaim, set-off, or cross-
demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or
(c) the demand ought to be set aside on other grounds.
[30] The applicants rely on the first two grounds.
[31] The principles applying to applications of this type are well-established. They were summarised by Lang J in Risk Management Holdings v Fuji Xerox, and in this
case they apply as follows:3
3 Risk Management Holdings v Fuji Xerox Finance Limited HC Auckland CIV-2007-404-6908, 22
May 2008, at [22]-[23].
(a) In respect of the claims that the debts are disputed, the applicants must establish there is a genuine and substantial dispute as to the existence of the claimed debts. The mere assertion that a dispute exists is not enough; some material, though not proof, is required to support the claim that debts are disputed.
(b)In respect of the counter-claim issue, the applicants must establish that there is a reasonably arguable counterclaim or cross-demand; it will also be necessary to provide some material falling short of proof to support the existence of a counter-claim.
(c) It is not usually possible to resolve disputed questions of fact on affidavit evidence alone, especially when issues of credibility arise. As such, neither the dispute over the debt nor the counter-claim is to be finally resolved in this proceeding.
(d)Even if these requirements are made out, there remains a discretion under s 290(1) not to set aside the statutory demand, though it is only rarely exercised.4
[32] Consistent with the requirement that the dispute or counter-claim need only be arguable, the Court is not required to delve deeply into the evidence on an application such as this. The threshold for detailed argument on an application to set aside a statutory demand is low. See Industrial Group Ltd v Bakker, where the Court of Appeal observed:5
[33] “... the statutory scheme ... for application to set aside statutory demands [is] a summary proceeding ... The section calls for a prompt judgement as to whether or not there is a substantial dispute. The test may be compared with the principles in cognate fields such as applications to remove caveats [and], leave to appeal an arbitrator’s award ... The tight time constraints distinguish a s 290 discretion from that say exercised on say, a summary judgment application, where the presence of complex legal issues is not necessarily a bar to a remedy. As with leave to appeal an arbitrator’s award, the hearing should, in the normal course be short and to the point.
4 Alfex Doors and Windows Ltd v Alutech Windows and Doors Ltd (2001) 16 PRNZ 963 (CA).
5 [2011] NZCA 142 at [24], [25].
[34] I bear that comment in mind in my decision. It is important, in cases such as this, that this Court does not overstep its role in this summary proceeding by attempting to determine disputed issues of fact. In order to have a statutory demand set aside, in whole or in part, it will be enough if the party upon which the demand is made is able to cast doubt on a proportion of the debt. Given the large number of invoices the parties in this case have inevitably presented the Court with large quantities of affidavit evidence, which has regrettably has contributed to the delay in the completion of this decision. Though I have delved into significant detail in this application, in an effort to assist the parties, I must discourage applicants from filing statutory demand proceedings where such extensive analysis is required. The statutory demand procedure is a summary one meant to require a minimum of evidence.
Discussion – Grove
Disputed invoices
[35] The affidavit evidence given in support of the application (and expanded upon in reply) claims essentially that:
(a) Terra Group has claimed for construction supervision without meaningful supporting material to identify what was done and when. The contract stipulates a fixed fee of $90,000 plus GST for construction supervision for Stage 1 of the Grove subdivision, but Terra Group’s invoices for contract supervision for Stage 1 significantly exceed that fee by approximately $35,000. Additionally, Terra Group has been paid
$70,670 plus GST (78.5% of the fixed fee total) for construction supervision, though the related on-site construction work is far from being completed.
(b)Terra Group has also claimed variations in Stage 1 and additional works for Stage 2 of the subdivision without meaningful supporting material. It is therefore impossible to identify who did what and when. Some variations have in fact never been authorised.
(c) Because of those disputes, the interest claimed as payable on the invoices is properly disputed.
(d)Grove has a counterclaim because Terra wrongfully refused to undertake further work unless and until the disputed invoices were paid. Grove has been forced into the position of having to engage another engineering consultancy, which will attract unanticipated additional costs.
[36] Grove has not satisfied me that it has an arguable dispute in relation to the entire amount of the demand. It has satisfied me that it has an arguable dispute in respect of part. My reasons follow presently. Before coming to these reasons, I refer in more detail to the invoices.
The invoices
[37] Grove challenges invoices for claims that the parties have described as “historic” and “current” in their correspondence.6 Terra says $90,632.26 is owing on eight historic invoices, and that $88,156.65 is owing on three current invoices. These sums, plus the most recent unpaid invoice claiming for contract interest on unpaid sums, make up the overall claim of $196,911.35 in the statutory demand.
[38] The historic invoices were all issued between August 2014 and January 2015.7 They were the subject of discussions between Terra and Grove throughout January and February 2015, and a further round of discussions in late March 2015. The current invoices were issued in early March, and were also the subject of the discussions in March. The discussions failed to produce an agreed outcome on the historic and current invoices. This ultimately led to the issue of the statutory demand against Grove.
[39] Putting aside the invoice for interest, the disputed invoices claim for several categories of work – Stage 1 construction supervision (including administration and
6 I adopt these terms when referring to the disputed invoices.
7 The amount originally claimed in these invoices was $156,211.72. Grove made partial payments in February and March 2015 which (together with a small credit allowed in October 2014) left
$90,632.26 unpaid.
construction observation); settlement marker and slab monitoring; and variations covering a range of activities; and Stage 2 engineering design and approval.
[40] Four of the invoices are for construction supervision. At issue is an overall unpaid sum of $35,412.23. Three of these invoices are historic and have unpaid balances as follows:
(a) invoice 361, $3,876.36 (being the unpaid balance claimed for work completed in September 2014).
(b) invoice 446, $9,539.25 for work completed in October 2014. (c) invoice 643, $6,796.50 for work completed in January 2015.
[41] The fourth, invoice 734, is current. It was issued in early March 2015 for work undertaken in February 2015, for an unpaid sum of $19,532.60. That sum has a component for construction supervision of $15,200.12 and a second component for settlement marker and slab monitoring of $4,332.48.
[42] Six of the invoices are for variations (variations 2-7). All but the last of these are historic. The overall amount Terra claims is $98,103.40, as follows:
(a) Invoice 256 for Variation 3 - unpaid balance of $8,510 (for work on
Revision B – engineering plans completed in August 2014).
(b)Invoice 380 for Variation 2 (overland flood plan and minimum floor and pad level) and Variation 4 (s 92 requests) - unpaid balance of $31,722.75 (for work completed in September 2014).
(c) Invoice 447 for Variation 4 - $14,093.25 (progress claim for work on s 92 information requests completed in October 2014).
(d)Invoice 491 for Variation 5 – unpaid balance of $8,912.50 (for progress claim for work on Stage 1, 2 and 3 Scheme Plan, completed in November 2014).
(e) Invoice 644 for Variation 5 (scheme plan, stages 1, 2 and 3) and Variation 68 (re-check of construction schedule) - $7,181.75, for work completed in December 2014.
(f) Invoice 733 for Variation 7 - $27,683.15, for Pump Station work completed in February 2015.
[43] The remaining invoices relate to:
(a) Stage 2 Engineering design and consent authority approval – the amount claimed is $40,890 in invoice 736, issued in early March.
(b) The claim for interest - the amount claimed is $18,122.33 in invoice 804.
[44] In order to deal with Terra’s statutory demand, it is necessary to consider each invoice , and the question whether there is apparent substance to the first of Grove’s grounds in its application – that Terra fundamentally failed to identify the basis of its entitlement to the amount sought in each invoice, and the basis for its calculation. I begin with the historic invoices for construction supervision. These are invoices
361, 446 and 643. Then I will deal with the current invoice for construction supervision. I will come next to the historic invoices for variations, and finally to the remaining current invoices and the invoice for interest.
Assessment
Historic invoices for construction supervision
[45] The principal evidence in support of Grove’s application is contained in an affidavit of Cameron Dargaville. He is Chief Financial Officer for Equinox Capital Limited, which provided development management services to Grove for the subdivision. He says in relation to invoice 361 (which was for $14,507.11 for construction supervision) that in October 2014 Terra provided a credit note of $3,450
and that on or about 23 February 2015 Grove paid $7,181.75 as part of a negotiated
8 The claim for variation 6 is $2,875 for re-checking construction quantities.
payment plan (where Grove agreed to pay $20,000 plus GST per month against “the billing overruns” on invoice 361, and several other historic invoices9) on the basis that Terra resolve all the subdivision design issues and provide information required by the consent authority to enable it to issue approval for a pump station.10 In relation to the unpaid balance of $3,876.36, he argues that Terra has not provided timesheets, relevant rates or other information to indicate what attendances were allegedly done; and that in fact, based on the time spent on site, the invoice for the unpaid balance is excessive.
[46] In relation to invoices 446 and 643, Mr Dargaville sets out that on or about
6 March Grove paid $2,151.07 of invoice 643 for slab monitoring work, leaving the balance now claimed for construction supervision. He adds in relation to the unpaid amounts on both invoices ($9,539.25 and $6,796.50) that Grove has given no details as to how they are arrived at, and argues that in fact the invoices relate to periods in which there was little or no work on site and accordingly the amounts are excessive. Additionally, he contends that:
(a) On 20 March 2015 he emailed Terra regarding invoices that Grove wanted credited or further explanation on. He sought credits for invoices
446 and 643 on the basis that the charges were overly high given they were for observation when there was little or no work on site.
(b)On 23 March Terra agreed by email to allow a 50% set-off of each invoice but no credits have been received. Had such credits been applied, Grove would have been willing to pay 50% of each invoice despite that little or no work was done in October 2014 and January 2015.
(c) In any event Terra has not provided the timesheets or other material to indicate who did what work or to support the invoices. Accordingly, they
remain disputed.
9 These are historic invoices issued for work completed to end November 2014.
10 This supports Terra’s contentions that the work expanded.
[47] Mr Dargaville comments in a similar vein about invoice 734, noting the lack of timesheets and other detailed information to support the invoice. He says invoice 734 (which is for both construction supervision and settlement marker and slab monitoring) was one of the invoices he identified in his email of 20 March 2015 that he wanted a credit for. He says the supervision charge of $13,217 “does not align with the fixed fee arrangement of $90,000 which included observation”. He adds that as the work only started on site on 9 February 2015, the amount claimed is excessive, in any event. He pointed to the same lack of timesheets and the like to support the invoice.
[48] In its evidence in response, Terra has provided the timesheets for these and other disputed invoices where Grove challenges the work that has been done. Terra says that it applied its standard rates for the work done. In reply, Grove has not pointed to anything in the timesheets for invoices 361, 446 and 643 which suggests that Terra may have charged for work that was not actually undertaken. There does not appear to be anything of substance to suggest the contrary in relation to any of these invoices. The criticism that Terra has not provided meaningful material to support invoices 361, 446 and 643 is therefore answered. The remaining issue is whether the time charged is arguably excessive given the fixed fee arrangement and that on-site work was limited in September, October and January (which Terra appears to concede).
[49] Dealing first with invoice 361, nothing else is said in the evidence in support of Grove’s application that is suggestive of a tenable justification for why the unpaid balance remains in dispute. Mr Dargaville does not suggest that the unpaid balance was to be written off as part of the negotiated payment plan he has referred to. Though there are indications in the evidence that Terra would carry part of the overall sum covered by the plan, in the evidence he has given by way of reply, Elliott Knight (the Development Manager for Equinox) rejects the notion that the plan was binding. He says the negotiation over the plan failed over the question of whether Terra would “waive” $40,000 of the disputed invoices as Terra only wanted to discount $20,000.
[50] Tellingly, however, Mr Dargaville’s email of 20 March 2015 supports Terra’s contention that it is entitled to the unpaid balance on invoice 361. The email sets out Grove’s position on all of the unpaid historic invoices (which include invoice 361). The email punctiliously identified the amount of $90,632.36 “overdue”, and the particular invoices that Grove required credits for; and advised that the “balance owing of circa $55k will be paid forthwith”. Invoice 361 was not one of the invoices for which a credit was sought. It was to be paid as part of the $55,000 balance. The inevitable inference is that Grove accepted liability for it.
[51] I turn next to invoices 446 and 643. The timesheets for these invoices appear unexceptional and provide details showing how the claimed amounts are arrived at. However, the argument that the amounts claimed are in any event overly high because there was little or no work on site in October and January is not answered by the 20 March email. The email challenges these invoices and seeks 100% credit. Terra’s response claims some of the time charged for October 2014 and January 2015 was in fact for work additional to the work originally contracted for. Whether Grove gave approval for all or any of it is uncertain. Quantum is therefore uncertain.
[52] Despite the uncertainty, I am not persuaded that Grove has established an arguable case for a 100% deduction of these invoices. Mr Dargaville recognised there was some on-site work, and his own evidence that Grove “would have been willing to pay 50% of each invoice” indicates the extent of Grove’s grievance about excessive charges was limited. It is no answer that Terra failed to apply credits for
50%. The proper course to resolve the question about the 50% that was disputed, as
Terra pointed out, was to use the dispute resolution procedures in the contract.
[53] I cannot resolve whether Terra is entitled to 100% of its claims for construction supervision in invoices 446 and 643 on the information presently before the Court. That exercise would require a detailed examination of the evidence which would almost certainly leave unanswered questions in a summary application of the present kind. That does not, however, necessarily mean that the entire demand for construction supervision must be set aside as Grove suggests. Grove has the onus of showing a tenable dispute over the sums claimed, and the extent to which those sums are genuinely disputed.
The current invoice for construction supervision
[54] I come then to the remaining invoice for construction supervision and slab monitoring. This is invoice 734.
[55] The principal contention in Mr Dargaville’s evidence is confined to the charge of $13,217 for construction supervision. He says it does not align with the fixed fee under the contract. In his email of 20 March 2015 his complaint was similarly confined to the same charge. He said:
The supervision charge of $13,217 doesn’t seem to agree with the original
$90k fee which included observation, tender documentation, construction admin cert, and s 224C. 11
[56] However, Grove’s earlier correspondence indicates that it well understood and agreed as a matter of principle that Terra should not be held to the fixed fee for construction supervision work to be undertaken in February. Elliott Knight of Grove advised Terra on 20 January 2015 that Grove would be paying for observation on- site throughout the construction from February onwards. This confirmation went hand-in-hand with his acknowledgment that most of the $90,000 fixed fee for construction supervision had already been paid out for work already undertaken.
[57] There is more than a hint in the email of 20 March that Mr Dargaville recognised the contradiction between the two positions. He added, as if by qualification:
Further, more work only started on site on 9 Feb (19 days), so it should be part month in any event.
[58] In a move to bolster its criticism, Grove now adds that it has not received timesheets or other material to justify the amount claimed. Those timesheets have however been provided by Terra in its evidence in opposition. Grove makes no substantial criticism of them in its evidence in reply. These timesheets show that
preliminary work in fact began on 3 February. Nothing of substance has been raised
11 With GST this is $15,200.12. Allow 63% of it, giving $9,576.08. Therefore deduct $5,624.04 from overall bill of $19,582.60 and allow $13,958.56.
by Grove about that. I am satisfied therefore that the complaint lacks substance in relation to construction supervision work.
[59] There is nothing of substance that challenges those components of the invoice which relate to work other than construction supervision. I see no basis to allow any deduction for those components.
[60] The result is that I accept that there is a tenable dispute about construction supervision claims to the extent of 50% of invoices 446 and 643 ($6,707.30) but that Grove has failed to demonstrate that it has an arguable dispute in relation to invoices
361 or 734. The dispute it relies upon in respect to those invoices does not go beyond mere assertion.
[61] I turn then to the disputed claims relating to variations, and the question whether there is apparent substance to Grove’s contention – that Terra fundamentally failed to identify the basis of its entitlement to the amounts sought, and the basis for calculation. I begin with the historic invoices for variations.
Variations
[62] Grove challenges Terra’s claims for variations 2 to 6 made in the five historic invoices for variations. All were issued prior to February 2015. It also challenges the claim for variation 7 made in Terra’s invoice 733, issued in early March 2015.
[63] It is not in dispute that, under the terms of the contract, variations are chargeable on a time and attendance basis. However, Grove’s contention is that Terra Group has not identified the basis for its entitlement. The contention is based on arguments that are broadly twofold.
[64] The first is common to all of the invoices - that Terra has not provided proper timesheets or other records to show that the amounts claimed are justified, and that they are excessive in any event. The second is that there was a more fundamental failure on Terra’s part in relation to variations 2, 4, 5 and 6 – that it never obtained Grove’s approval for them. (Grove concedes it gave approval for variations 3 and 7).
Grove adds additional complaints in some instances, such as that some work was due
to Terra’s own inefficiency.
[65] It is on these bases that Grove says the relevant components of these invoices are subject to substantial dispute. At issue is whether Grove has demonstrated that there is such a dispute. Grove has the onus.
Variation 6
[66] I begin with variation 6. Grove’s contention that there is a genuine dispute
can be dealt with in short order.
[67] The amount claimed for this variation is $2,875, in invoice 644. The invoice states that the variation was for a “re-check” of the construction quantities. At first glance there might appear to be a tenable dispute as to whether there was approval for this variation:
(a) Terra says it was instructed to do this work. It has exhibited a copy of an email sent to Grove which it says confirms the instruction. It adds that at a subsequent meeting, Grove confirmed that the work was to take place at additional cost.
(b)Grove does not accept that the email is confirmation or that there was oral confirmation. It points to an email in response that states, “OK – don’t worry, can’t afford it! Will review with Gary briefly at our next
2 pm”.
[68] It is apparent however that the parties moved on. As Mr Dargaville deposes, on 23 March 2015 Terra emailed Grove and agreed to an offset. The email chain shows that the agreed offset was 50%, and that Grove confirmed it. If Grove has a dispute about variation 6, it is about the 50% of the quantum of invoice 644, which Grove says Terra Group has failed to credit, and it is confined therefore to $1,437.50.
[69] I turn next to variation 4.
[70] Variation 4 is the subject of claims in invoices 380 and 447. The amounts claimed are $16,520 and $14,093.25 (or $18,998 and $16,207.24 inclusive of GST).12 The invoices state that they are for progress claims for s 92 requests (pond design, recharge pits and footpaths). Mr Dargaville says in relation to invoice 380 that Auckland Council’s s 92 requests related to quality issues with Terra’s design, and that the variation was not approved. He says Mr Soo, a development manager
who worked on the subdivision, confirms this position in his affidavit. In fact Mr Soo does not say that the variation was not approved. He says the Council issued a number of requests, and that many of the requests related to the quality of Terra’s documentation.
[71] Mr Dargaville and Mr Soo’s evidence is essentially the same in relation to invoice 447. I am not satisfied that their evidence does set up an arguable dispute that Terra Group failed to obtain approval for variation 4.
[72] It is clear that Grove recognised that the standard form contract allows for s 92 requests as variations, and that generally they are outside the scope of the work covered by the agreed fixed fees. Its own evidence shows that on 9 December 2014 it made a partial payment for invoice 491 of $22,563, and that the payment “related to variations 3 and 4.13 Variation 4 in that instance also related to s 92 requests on
the same subject matter as the s 92 requests claimed for in invoices 380 and 447.14
[73] Additionally, Mr Dargaville’s own email correspondence contradicts his evidence about the variation 4 s 92 requests in invoices 380 and 447. In that email he claimed a credit of 50% of invoice 447 on the basis that it was “overly high given that Terra designed the pond in the first place”, and a 50% credit of 50% of “Pond
892, $16,520 plus GST, same reason as above”. I am satisfied therefore that
50% liability for the amount claimed in these two invoices for variation 4 (s 92 requests) is not the subject of any real dispute, and that approval for variation 4 is
implicit.
12 The total amount claimed is $35,205.24 inclusive of GST.
13 The total claimed in invoice 491 was $31,475.50.
14 The invoice relates to claims for variations 3, 4 and 5.
Variation 2
[75] A similar position applies to variation 2. The relevant invoice is 380. The amount claimed is $17,065 plus GST ($19,624.75). The invoice states that it is for “BC – OLF show home & minimum floor & pad level”. Mr Dargaville and Mr Soo say this variation was not approved. Mr Soo also says the work would have been covered by a prior report from Terra, and implies that it should be covered by the fixed fee arrangements in the short form contract. In response Terra points to its email to the contrary effect, sent to Mr Soo on 22 August 2014, and says that Mr Soo instructed it to continue.
[76] Relevantly, the Grove’s email of 20 March 2015 contains no hint of any continuing concern on Grove’s part that the work claimed for as variation 2 was covered by the parties’ fixed fee arrangements. In the email a single concern is raised about invoice 380. It does not relate to variation 2; it relates to the claim for variation 4 (s 92 requests). Additionally, as if to qualify his assertion that variation 2 was not approved, Mr Soo says “the final cost” of the variation was never communicated prior to the issuing of the invoice.
[77] Moreover, it is clear that a payment was made for variation 2 on
23 February 2015. The payment was for $9,222 towards invoice 380.15 It is to be inferred from the payment that variation 2 had approval. That invoice was for variations 2, 3 and 4, for a total claimed of $41,224.15. Grove’s later email advice of
20 March 2015 makes plain that the payment was not for variation 4, as it put the proposition that the parties should each carry 50% of the full amount claimed in the invoice not for that variation but for variation 4. The proposition is not one that Grove would have made had it intended the February payment to be applied to reduce the claim for that variation. As the amount of the payment exceeds what was claimed in the invoice for variation 3, the payment had to have been made at least
partly for variation 2. To suggest a commercial developer like Grove would have
15 The invoice claimed $41,224.15 for variations 2, 3 and 4. Variation 4 is for the s 92 requests.
made such a payment for a variation it had not approved (whether prospectively or retrospectively) is implausible.
[78] Grove has not discharged the onus of proving that variation 2 was not approved. I am satisfied that it approved variation 2, just as I am satisfied that it approved variation 4. If Grove has an argument of substance relating to the invoices for variations 2 and 4, it is the same argument that it relies upon in relation to variations 3 and 7. It is an argument as to quantum rather than liability. However, Terra has provided the timesheets. Nothing of substance has been said by Grove about them.
Variation 5
[79] I turn to the remaining variation that Grove says it did not approve. This is variation 5. The relevant invoice is invoice 491. It is for the “stage 1, 2 and 3 scheme plan”. It claims $7,750 plus GST ($8,912.50).
[80] In this case, Grove has also failed to discharge the onus that there is substance to its claim that it did not approve the variation. Materially, Mr Dargaville’s evidence is that the invoice was one of five invoices covered by the payment plan that he contends was negotiated on or about 23 February 2015.16 That assertion necessarily implies that the variation was approved.
[81] The contents of Mr Dargaville’s email of 20 March 2015 carry the same implication. The email contains no hint of a complaint about invoice 491 and variation 5, and it can only be assumed that the amount claimed in invoice 491 for variation 5 was allowed for in the acknowledged “balance owing of circa $55k” that Grove promised to pay “forthwith”.
[82] Grove’s only remaining criticism is based on the repeated complaint about timesheets. The timesheets have been provided and are unexceptional.
16 Grove says the payment plan related to five of the disputed invoices that were issued between
August 2014 and January 2015. These were invoices 256, 361, 380, 447 and 491.
[83] There is therefore no arguable basis for any deduction in relation to the amount claimed for invoice 491 for variation 5.
[84] I come then to the invoices for the remaining variations – variations 3 and 7.
Variation 3
[85] The disputed invoice for variation 3 is invoice 256, for $8,510. The work is
described as “V3 – Rev B, Engineering Plans”.
[86] I accept that there is a genuine argument about quantum in relation to this invoice. Though variation 3 is an approved variation, as Grove points out, the supporting timesheets do not refer to variation 3. Unanswered questions remain as to the basis for the amount claimed in this particular invoice. Quantum is therefore uncertain. The amount claimed in the statutory demand must be adjusted accordingly.
Variation 7
[87] The relevant invoice is invoice 733, dated 28 February 2015. This invoice claims $27,683.15 as a progress claim for variation 7 (pump station meeting and design).
[88] As it has in the case of other variations, Grove repeats its contention that this invoice is not supported by timesheets or other supporting material. Terra has provided the timesheets. In this instance, as in others, they are unexceptional. However, there is more than a suggestion in the evidence that quantum is genuinely disputed. The evidence does not however support Grove’s contention that there is an arguable case for a 100% deduction.
[89] Though Grove may well have an arguable case for a partial deduction, its own correspondence indicates that it cannot sustain a viable argument for the 100% deduction it claims. The correspondence shows that Grove approved an estimate of
$15,000 plus GST for this work, and that on 20 March 2015 Mr Dargaville argued for a reduction. While he appeared to press for 100%, he acknowledged that Grove
received an estimate on 24 February of “12 – 15k” and noted “on the face of it we should agree at the higher end of the estimate shouldn’t we as that was what Elliott okayed and we haven’t had any proper advice from you that it would be exceeded”. This is clearly a concession.
[90] While it is clear that liability is accepted for the upper figure of $15,000, any additional amount is uncertain. Allowing for GST on the $15,000 (which takes the amount that Mr Dargaville plainly concedes to $17,250), any arguable deduction is limited to $10,433.15.17
[91] I turn then to the remaining invoices.
Remaining invoices
[92] Putting aside momentarily the invoice that claims contract interest on late payments, there is one other remaining disputed invoice – invoice 736 for Stage 2
Progress Claim for engineering design and consent authority approval. The amount claimed is $40,890.
[93] There is no dispute that this Stage 2 design work is wholly outside the scope of the work contracted for in the short form contract for Stage 1. There is no formal contract for this Stage 2 work, but it is common ground that Grove asked Terra to commence at least some of the work.
[94] Grove relies on its general complaint that no timesheets have been provided, and that the amount charged is excessive. It also expands on that complaint in its evidence.
[95] In its evidence in opposition Terra has provided the supporting timesheets, which Grove takes issue with. What emerges is a dispute as to the extent of the work that Terra was asked to undertake. Mr Dargaville says that Terra’s 20 January 2015 proposal for Stage 2 was not accepted in its entirety, and that Terra was authorised
only to undertake engineering earthworks, including the preliminary drainage work.
17 After deducting $10,433.15 for invoice 733, the balance at this point is $77,723.60.
[96] Elliott Knight says his understanding is that Terra could not have done much work at all. In support he says:
(a) He did not accept Terra’s fee proposal for $118,250 for extensive Stage 2 work. Rather, he indicated that Terra could commence the earthworks approval work along with the preliminary drainage work only.
(b) Based on the limited nature of his instruction and Terra’s own proposal,
he understood that the costs would be relatively minor prior to April
2015.
(c) On 24 February 2015 Terra advised him by email that it was behind on the Stage 2 work because it was concentrating on pump station work.
(d)The timesheets for the invoice show that Terra in fact commenced work eight days before approval had even been given (on 28 January 2016).
(e) On 3 March he emailed Terra and instructed it to stop all work on Stage 2 and to send a statement and the plans to support what work was done. That was never provided, and as a result Grove engaged another engineer to do the work.
[97] There is more than an element of uncertainty about all of Grove’s contentions. Furthermore, there appears to be some support in the evidence for Terra’s contention that it was promised the Stage 2 work in return for deferring claims for the increased demands made upon it for construction supervision. I cannot resolve the conflict in the varying accounts given by each side, and while it is abundantly clear that something is owed to Terra for Stage 2 work, I am left with the impression that quantum is genuinely disputed, and that it cannot be resolved in the context of the present proceeding. The argument is one for another occasion.
[98] I turn finally to invoice 804. This is the claim for interest of $18,122.33 on unpaid invoices. I accept Grove’s contention that because there are dispute invoices, any invoice payable cannot be determined in the context of the present application.
Counterclaim
[99] It remains to consider whether Grove has demonstrated that it has an arguable counterclaim which would justify an order setting aside the entire statutory demand.
[100] Very little is said in Grove’s evidence that would indicate the basis for such a counterclaim. It does little more than infer that Terra Group wrongfully refused to continue to perform its contractual obligations under the short form contract when it was not paid. I do not regard that as a sufficient basis to establish an arguable counterclaim. Moreover, given my finding that Grove has failed to show that it is not liable for all of the amounts claimed against it, any counterclaim based on a wrongful failure to perform must be highly questionable. Certainly Grove leaves unanswered significant questions about the basis for any counterclaim.
[101] In the circumstances I am not satisfied that Grove has established an arguable counterclaim. Its second ground for setting aside the statutory demand therefore fails.
Result – Grove
[102] For the above reasons, in my assessment the extent of any genuine dispute in relation to:
(a) The sum of $90,632.26 claimed as owing on eight historic invoices is limited to $34,257.42:
(i) $6,707.30 on invoices 446 and 643. (ii) $1,437.50 on invoice 644.
(iii) $17,602.62 on invoices 380 and 447. (iv) $8,510 on invoice 256.
(b)The sum of $88,156.65 claimed as owing on the current invoices is limited to $69,355.48:
(i) $10,433.15 on invoice 733. (ii) $40,800 on invoice 736. (iii) $18,122.33 on invoice 804.
[103] Accordingly the statutory demand made against Grove is set aside in the amount of $103,612.90. The balance of the demand for $93,298.45 stands. Grove has 10 working days to pay that sum, failing which Terra Group may file an application for liquidation. The order is made pursuant to s 291 Companies Act
1993.
Discussion - Takanini
Disputed invoices - Takanini
[104] The affidavit evidence given in support of Takanini’s application claims
essentially that:
(a) Terra Group has claimed for construction supervision without meaningful supporting material to identify what was done and when. The contract stipulates a fixed fee of $110,000 plus GST for construction supervision for the Takanini subdivision. Terra Group has been significantly overpaid for construction supervision, bearing in mind the limited on-site construction work that has been completed.
(b)Terra Group has also claimed for a variation and additional works without meaningful supporting material. These works have, in fact, never been authorised. It is therefore impossible to identify who did what and when.
(c) Because of those disputes, the principal amounts and interest claimed as payable on the invoices are properly disputed.
(d)Takanini has a counterclaim because Terra wrongfully refused to undertake further work unless and until the disputed invoices were paid. Takanini has been forced into the position of having to engage another engineering consultancy, which will attract unanticipated additional costs. Terra has also been responsible for defective work which will have to be remedied.
[105] Takanini has not satisfied me that it has an arguable dispute in relation to the entire amount of the demand. It has satisfied me that it has an arguable dispute in respect of part. I begin with the invoices.
Disputed invoices
[106] Takanini challenges invoices for claims totalling $49,315.03 that are both “historic” and “current”.18 Terra says $20,413.08 is owing on three historic invoices, and that $28,901.95 is owing on three current invoices. These sums, together with the most recent unpaid invoice claiming $11,590.50 for contract interest on unpaid sums, make up the overall claim of $60,905.60 in the statutory demand.
[107] The historic invoices were all issued between August 2014 and February
2015. These were the subject of the same discussions that took place between Terra and Grove throughout January and February 2015, and the further round of discussions in late March 2015. The current invoices were issued in early March, and were also the subject of the discussions held in March. The discussions failed to produce an agreed resolution any of the Takanini invoices, and this led to the issue of the statutory demand against Takanini.
[108] Putting aside the invoice for interest, the disputed invoices claim for several categories of work.
18 I adopt these terms when referring to the disputed invoices.
[109] Two of the invoices were for construction supervision (the first being an historic invoice). At issue is an overall unpaid sum of $16,715.39, made up as follows:
(a) Invoice 573, $2,777.83 (claimed as a progress claim for work completed in December 2014).
(b) Invoice 732, $13,937.56 (for work completed in February 2015).
[110] Two of the invoices are for Live Works Engineering Approval. The first of these ha been treated by the parties as historic rather than current in their discussions. The invoices are:
(a) Invoice 708, $7,354.25, for works completed in November / December
2014 and January 2015.
(b) Invoice 731, $13,340.00, for work completed in February 2015.
[111] The next invoices is an historic invoice for a variation, Invoice 243 - $10,281 ($2,058.50 for work on Water Main Revision B, and $8,222.50 for design changes for Veolia). This was completed in July 2014.
[112] There are two remaining invoices as follows:
(a) Invoice 735 - $1,624.38 for progress claim for resource consent, completed in February 2015.
(b) The claim for interest - the amount claimed is $11,509.58 in invoice 806.
[113] In order to deal with Terra’s statutory demand, it is necessary to consider each invoice, and the question whether there is apparent substance to Takanini’s primary grounds for its application. I begin with the two invoices for construction supervision. Then I deal with the invoices for live works engineering approval. I will come next to the remaining invoices for work undertaken, and finally to the invoice for interest.
Assessment
Invoices for construction supervision
[114] Mr Dargaville has provided the principal evidence in support of Takanini’s application, as he did in the case of Grove’s application. He argues for 100% credits for invoices 573 and 732. He does so not on the basis that there should be no charges, but essentially because the charges were “overly high” given that they were for observation when there was little or no work on site. He says in fact the first invoice relates to a period when the site was largely shut down, and the second to a very short period of on-site work between 5 February to 28 February 2015. Mr Dargaville adds that Terra has given no details as to how the amounts claimed were arrived at.
[115] Mr Dargaville also relies on the same email of 20 March 2015 that he discussed in relation to Grove’s application. As in Grove’s case, he set out the invoices that were disputed on behalf of Takanini for which he wanted credits or further explanations.
[116] Mr Dargaville sought credits for three invoices, and only one of those was for construction supervision. It was invoice 573, claiming $2,777.83. The two other invoices for which he sought credits were invoices 708 and 731 (both for Live Works Engineering Approval). Relevantly, he did not seek any credit for the second of the construction supervision invoices, invoice 732 (for $13,937.56).
[117] In his evidence Mr Dargaville comments further on the discussions in March about invoice 573. He contends that:
(a) On 20 March 2015, Terra agreed in a reply email to “offset 50%”
($1,388) of invoice 573, and asked for confirmation.
(b) Had such a credit been applied, Takanini would have been willing to pay
50% of the invoice despite little or no work having been done in
December 2014. However, no credit has been received.
[118] Mr Dargaville also points out that Terra rejected the request to credit the amount claimed for construction supervision in invoice 732. He adds in relation to both construction supervision invoices that Terra has not provided the timesheets or other material to indicate who did what work or to support the invoices. Accordingly, they remain disputed.
[119] I am not persuaded that there is any tenable argument for a 100% deduction for the amount claimed in invoice 573, for construction supervision. If Takanini has a dispute about the amount claimed, it is about the 50% of the quantum of the invoice that Terra was willing to allow. It is confined therefore to $1,388.92.
[120] Mr Dargaville comments in a similar vein on invoices 708 and 731 for work relating to Live Works Engineering Approval noting the lack of timesheets and other detailed information to support the invoice. He also says that Terra agreed to provide an email to Elliott Knight of Takanini to present a fee quotation for this work, but that Takanini never received the quotation. He points out that Elliott Knight says in his affidavit that Terra Group had indicated that the cost of this work would be no more than $5,000, and that it was on this basis that Terra Group was instructed to proceed.
[121] Mr Knight has produced email correspondence that indicates Terra’s
agreement to present a fees quotation for the work.
[122] Mr Clark, Terra’s development manager, says he does not recall giving an estimate of $5,000, but that “it is probably accurate for that work which we did complete”. He adds that around two weeks later Terra was instructed to complete the full engineering scheme plans for the live work area, and that involved significant additional work. He acknowledges that he should have provided a fee estimate for this new work, but was simply too busy on other aspects of the project. He contends that Takanini was fully aware of what Terra was doing, and of the significant additional work.
[123] What emerges is a dispute as to whether this additional work was indeed approved (whether as a variation or otherwise), and if so, what the basis for charging
was. This is not a dispute that can be resolved in the context of the present application.
[124] The result is that there is a tenable dispute about all but $5,750 ($5,000 plus GST) for this work, and the statutory demand should be adjusted accordingly by the sum of $14,944.25.
The remaining invoices for work
[125] Turning to invoice 243, this is an historic invoice claiming $10,281 for variations described as “water main Rev B” and “design changes for Veolia”. Mr Dargaville deposes that the water main was designed by Terra as was covered by its fixed fee engagement. He says for this reason no variation has been approved. He also says that Terra has not provided timesheets or relevant rates, or provided any information to support the invoice.
[126] Terra points out that the work for Water Main Revision B was done pursuant to a specific request from Mr Soo on 6 May 2014. The actual costs were significantly reduced from $7,292 to $2,058.50. This charge is not the subject of any query in the email of 20 March 2015. I find that it is not the subject of any arguable dispute.
[127] Terra also points out that the component of invoice 243 that relates to Veolia is for information requests that are outside the scope of the fixed fees, and that the invoice was calculated on a time and attendance basis. No real dispute is raised by Takanini in relation to this position. I find that there is no arguable dispute in relation to this component of the invoice.
[128] I turn next to invoice 735, for progress claim for resource consent. Terra says that this work was undertaken between 11 and 13 February 2015 and involved, among other things, the preparation of a preliminary scheme plan in preparation for a pre-application meeting with the Council. The meeting was held on
12 February 2015, for which Terra undertook preparatory work and arranged the
meeting at Takanini’s request. Terra points out that it has now provided the
timesheets.
[129] In response, Mr Dargaville does not dispute that this is an item of work not covered by the parties’ fixed fee arrangements. Rather, he makes the same point about timesheets that he has in other instances. However, in his evidence in reply he has not raised any ongoing issue with the time records. He falls back on the criticism that Terra did not provide any estimate or discuss any variation prior to issuing the invoice. Pertinently, this criticism did not feature in his email of
20 March 2015, where he sought neither a credit or an explanation for the invoice. Rather, the approach he took to this invoice and the other current invoices was set out in the following comment:
February 15 $28,901.95 current – these invoices were submitted on the
4th March (note we received responses on the 4th and 5th March re these invoices).
Total due 20 March: $49,315.03. Total due now.
As soon as we can get the above sorted, I can see what can be paid now to top up the $100k needed.
[130] The clear indication from this advice is that the invoice was not one that was subject to any query or credit, and that it was to be paid. The issue was one of timing for Takanini while it sorted out those invoices that it did have queries about. It is implicit in the advice that the work covered by the invoice was indeed approved, and that the charge was accepted.
Invoice for interest
[131] I turn finally to invoice 806. This is the claim for interest of $11,590.50 on unpaid invoices. I accept Takanini’s contention that because there are dispute invoices, any invoice payable cannot be determined in the context of the present application.
Counterclaim
[132] It remains to consider whether Takanini has demonstrated that it has an arguable counterclaim which would justify an order setting aside the entire statutory demand.
[133] What is said in Takanini’s evidence to indicate for a counterclaim is
essentially twofold:
(a) That Terra Group wrongfully refused to continue to perform its contractual obligations when it was not paid for invoices that were genuinely disputed. I do not regard that as a sufficient basis to establish an arguable counterclaim. My finding that Takanini has failed to show that it is not liable for all of the amounts claimed against it means that any counterclaim based on a wrongful failure to perform must be highly questionable.
(b)That numerous issues have been identified with the services provided by Terra Group, including lack of road cover for a 600 mm pipe for undersized manholes, the lack of stormwater details in Terra Group’s design, and water main difficulties with alignment. There is no attempt to assess the cost of remediating the work complained of.
[134] Takanini leaves unanswered significant questions about the basis for any counterclaim. There is no assessment of the possible cost of remediating the work complained of. The proposed new engineering consultant, Envivo, has provided an assessment of the cost of its services as engineer at an estimated fee of $30,000 plus GST and disbursements for two months.
[135] In the circumstances I am not satisfied that Takanini has established an arguable counterclaim, but if I am wrong about that, there is nothing to indicate that monies withheld by Takanini from Terra would not be sufficient to cover its additional costs.
Result – Takanini
[136] For the above reasons, in my assessment the extent of any genuine dispute in relation to the disputed invoices is as follows:
(a) Invoice 573 - $1,388.
(b) Invoices 708 and 731 - $14,944.25.
(c) Invoice 806 - the interest claim for $11,590.50. [137] The amount involved is $27,922.75.
[138] Accordingly the statutory demand made against Takanini for $60,905.60 is set aside in the amount of $27,922.75. The balance of the demand for $32,982.85 stands. Takanini has 10 working days to pay that sum, failing which Terra Group may file an application for liquidation. The order is made pursuant to s 291
Companies Act 1993.
Costs
[139] Costs on the two applications are reserved. My preliminary impression is that as each side has been partly successful, costs should lie where they fall, but if costs remain in issue then memoranda may be filed and served within
15 working days.
Associate Judge Sargisson
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