The River Trading Limited v CLH Construction Limited
[2025] NZHC 2326
•18 August 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-000741
[2025] NZHC 2326
BETWEEN THE RIVER TRADING LIMITED
Plaintiff
AND
CLH CONSTRUCTION LIMITED
Defendant
Hearing: 4 August 2025 Appearances:
H Huang for the Plaintiff
G Chen, director of the Defendant
Judgment:
18 August 2025
JUDGMENT OF ASSOCIATE JUDGE COGSWELL
This judgment was delivered by me on 18 August 2025 at 2.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Great Wall Lawyers, Auckland
THE RIVER TRADING LTD v CLH CONSTRUCTION LTD [2025] NZHC 2326 [18 August 2025]
Introduction
[1] The River Trading Limited (River) applies to liquidate CLH Construction Limited (CLH) based on its failure to comply with a statutory demand served on it on 29 January 2025. River says that CLH’s failure to comply with a statutory demand raises a rebuttable presumption that CLH is insolvent, and that it is just and equitable that it be placed into liquidation.
[2] The application for liquidation is opposed by CLH through its director, to whom I granted leave to represent CLH in this application.
Issues
[3]The issues I need to determine on this application are:
(a)Was the statutory demand validly served?
(b)Is there a substantial dispute as to the debt?
(c)Is CLH solvent?
Issue one—was the statutory demand validly served?
[4] Section 387(1)(c) of the Companies Act 1993 (Act) provides that a document may be served on a company by leaving it at the company’s registered office or address for service. Service may be affected in a number of ways, including by affixing the document to the front door or the front gate of the property.1 Service is affected if there is a reasonable prospect of it actually bringing the document to the defendant’s attention so as to ensure no miscarriage of justice will result.2
[5] The evidence establishes that on 29 January 2025 the statutory demand was served on CLH by River’s process server. The statutory demand was affixed to the front door of CLH’s registered office address and address for service, which is
1 Denize Trustee Co Ltd v Waimauri Ltd [2020] NZHC 1718 at [30].
2 Above n 1, at [21].
14a Strabo Place, Windsor Park, Auckland. I have a sworn statement from the process server, together with photographic evidence proving compliance with s 387(1)(c) of the Act.
[6] Mr Chen for CLH denies receipt of the statutory demand and says that he was in China until 31 January 2025. That being the case, he still had ample time to apply to set aside the statutory demand or to at least engage with River regarding the allegedly disputed debt. I do not accept that the statutory demand was not received by CLH.
[7]CLH was validly served with the statutory demand.
Issue two—is there a substantial dispute?
[8]When considering the validity of the dispute, I take account of the fact that:
(a)CLH did not raise any dispute about the outstanding invoices from the time they were issued until after the date for filing a defence to the liquidation application had passed;
(b)CLH did not respond to the statutory demand, in particular, it did not apply to set the statutory demand aside; and
(c)CLH did not file a statement of defence within the prescribed 10 working day period, nor did it apply to restrain advertising and for the proceedings to be stayed.
[9] Instead, Mr Chen appeared on behalf of CLH at the first call of the application for liquidation in the Liquidation List in this Court and sought and obtained permission to file a statement of defence out of time.
[10] The Court is able to draw an adverse inference from a company’s failure to take the steps set out above when later attempting to raise disputes that should have been raised at an earlier time. Having now done so, the Court is entitled to review critically the substance and validity of the claimed defences.
[11] The defendant in circumstances such as these must demonstrate a strong prima facie case of the existence of a genuine dispute, one that is “real and not fanciful or insubstantial” and the grounds of the dispute must be “clear and persuasive”.3
[12] CLH was the head contractor in various residential construction projects and retained River as subcontractor for concrete-related services.
[13] River had standard terms and conditions which CLH agreed to. Notably, those terms and conditions made it CLH’s responsibility to:
(a)confirm the finished heights, levels and falls required;
(b)mark and set out finished levels; and
(c)ensure adequate compaction of sub-base and proper placement of reinforcing steel.
[14]Many of CLH’s alleged complaints fall into these categories.
[15]There are three projects in issue:
(a)a property in Howick, where the work was completed in October 2023;
(b)a property in Remeura, where the work was completed in November 2023; and
(c)a property in Massey, where the work was completed in January 2024.
[16] The work comprised pumping and placing concrete on site to form work constructed by CLH.
[17] In the period between November 2023 and November 2024, River chased CLH for payment. It failed to make payment of the outstanding invoices.
3 Waikato Motors Ltd v West End Property Developments Ltd [2019] NZHC 865 at [5].
[18] A letter from River’s lawyers in January 2025 making demand on CLH for payment went unanswered.
[19] Liquidation proceedings followed which, as set out above, CLH failed to respond to in a timely fashion.
[20] The responses from CLH prior to liquidation proceedings being filed was to seek further time to pay (it never did), to say that the matter was with CLH’s accountant (it wasn’t), to say that Mr Chen would talk to his “boss” (there was no such person) and that part payment would be made soon (it never was).
[21] Having had many opportunities to raise disputes about the quality of the workmanship undertaken by River, CLH now seeks to raise disputes about workmanship and allegations that it was entitled to set off claims it is being required to meet against the invoices River sues for.
[22]There are a number of difficulties with this submission.
[23] First, River was a subcontractor providing concrete pumping and concrete placing labour to CLH as the main contractor. Under its terms and conditions, design was the responsibility of CLH. River says that it placed concrete based on pre-set box heights established by CLH and under the instruction and supervision of Mr Chen as CLH’s site manager.
[24] Second, none of the owners of the three sites referred to above have filed or advanced any claim against CLH. Given the period of time that has elapsed since the work was done, it seems unlikely that CLH is at risk of claims from those owners now. On being pressed on the defects with the Massey property, Mr Chen admitted that the issue was resolved at no cost.
[25] Third, Mr Chen’s evidence is generalised, opinion evidence unsupported by any independent expert verification. The owners’ evidence is repetitive and unconvincing. The evidence does not support a claim that there were serious deficiencies with River’s work.
[26] Fourth, if CLH actually had serious concerns about the workmanship that was so apparent on completion, then that does not explain why CLH continued to engage River for many months after the allegedly defective work was carried out.
[27] Fifth, there was no allegation about poor workmanship made by CLH at any relevant time prior to the first call date of these liquidation proceedings. There is ongoing correspondence from CLH to River in which CLH confirmed that payment would be forthcoming. At the time when this was occurring there was no mention of any claim for poor workmanship or justification for withholding payment. Those claims were only raised later in response to the liquidation proceedings.
[28] To the extent it is able, River has responded to the generalised complaints made by the owners in relation to the workmanship issues with the remaining properties in Howick and Remuera.
[29] Howick property – the complaints here are generalised only. This work comprised concrete placement and broom finish, to CLH’s levels. Cracking is within tolerances. The removal of the bar chairs was done on instruction of CLH. The placement of steel reinforcement is CLH’s responsibility in River’s terms and conditions.
[30] Remuera property – there can be no complaint about the invoices for pumping concrete onto site which total $4,960.41. The complaints about workmanship were not raised at the time and any issue regarding levels are excluded by River’s terms and conditions.
[31] Standing back and bearing in mind that CLH had numerous opportunities to raise these alleged disputes with River, I consider that CLH has failed to demonstrate a substantial dispute as to the amounts outstanding to River. There is also the issue that part of the invoices outstanding are for concrete pumping services about which there can be no dispute.
[32] Accordingly, I find that there is no substantial dispute as to the amounts outstanding.
Issue three—is CLH solvent?
[33]There is no adequate evidence of CLH’s solvency before the Court.
[34] There is merely a statement in CLH’s statement of defence that the company is solvent and still in operation, and Mr Chen’s submissions state that the company continues to trade profitably with positive net assets exceeding $300,000.
[35] There is no independent evidence to support the proposition that CLH is solvent, such as financial statements or an affidavit from CLH’s accountant.
[36] The presumption of insolvency created by the failure to meet the statutory demand is not rebutted.
Result
[37]For the reasons set out above, I find:
(a)the statutory demand was validly served on CLH;
(b)there is no substantial dispute to the debt that is the subject of the statutory demand; and
(c)the defendant has not proven that it is not insolvent.
[38] Accordingly, I make an order that CLH Construction Limited be placed into liquidation and the Official Assignee is appointed liquidator.
[39] My order is stayed until 2.00 pm on the eleventh working day following the date of release of this judgment.
[40] Should CLH Construction Limited pay the sum of $22,144.60 before that time, time being of the essence, then there will be no order liquidating CLH Construction Limited.
[41]I award costs to the plaintiff on this application on a 2B basis in the amount of
$13,145.00 plus reasonable disbursements of $2,298.96, a total of $15,443.96.
Associate Judge Cogswell
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