Wellington Developments Limited v Cannon Point Development Limited - [2024] NZHC 1798

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-384

[2024] NZHC 1798

UNDER the Construction Contracts Act 2002 and Part 7 of the High Court Rules 2016

IN THE MATTER

of an application for an interim injunction

BETWEEN

WELLINGTON DEVELOPMENTS LIMITED

Applicant

AND

CANNON POINT DEVELOPMENT LIMITED

Respondent

Hearing: On the papers

Counsel:

J Sumner for the Applicant

Judgment:

4 July 2024

(REDACTED) JUDGMENT OF GORDON J

This judgment was delivered by me on 4 July 2024 at 10 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:
Ford Sumner, Wellington

WELLINGTON DEVELOPMENTS LTD v CANNON POINT DEVELOPMENT LTD [2024] NZHC 1798 [4
July 2024]

[1]The Registrar has referred this file to me in my capacity as Duty Judge.

[2] The applicant, Wellington Developments Ltd (WDL) has made an application dated 2 July 2024 on a without notice basis seeking an interim injunction for retentions totalling $94,131.88 (including GST) to be placed by the respondent, Cannon Point Development Ltd (CPDL), into the trust account of Ford Sumner Lawyers’ Westpac Bank trust account (application).

[3] The retentions are presently held by CPDL pursuant to a construction contract for civil works.

[4] WDL says the application seeks to have the status quo maintained, namely that WDL’s retentions are held on trust so as to ensure that the retentions cannot be misapplied or dissipated by CPDL before a determination is made by an adjudicator regarding the release of the retentions.

[5] WDL’s position is that the retentions should be released in full without set-off due to what it says was the repudiation of the contract between the parties which lead to cancellation of the contract on 12 January 2024. A Notice of Adjudication has been served on CPDL seeking a determination by way of adjudication on this issue.

Background

[6] WDL has filed a memorandum of counsel dated 2 July 2024 and an affidavit of Guodong Sun, a director of WDL, sworn 2 July 2024 in support of the application. WDL has also filed an undertaking as to damages. Out of an abundance of caution WDL has also filed a draft statement of claim and notice of proceeding. Of relevance to the application, the second cause of action alleges breach of contract by failing to release retentions.

[7] The background, in summary, is that in late 2021 WDL entered into an informal arrangement with CPDL to carry out bulk earthworks and associated works on CPDL’s development site in Upper Hutt (the Development).

[8] The contract works were described as Stage 1 and Stage 2 with the stages being carried out sequentially. The Development is still incomplete.

[9] Mr Sun says as a result of a high degree of trust between him and the developer, Simon Zhang, there was no written contract between WDL and CPDL for Stage 1. Due to the requirements of CPDL’s financiers, a written contract was entered into between WDL and CPDL for Stage 2.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Wellington Developments Limited v Cannon Point Development Limited [2024] NZHC 1798
Case: [2024] NZHC 1798
Decision Date: 4 July 2024

CaseChat Overview and Summary

Wellington Developments Limited (WDL) has applied to the High Court for an interim injunction to have the retentions held by Cannon Point Development Limited (CPDL) placed in the trust account of Ford Sumner Lawyers. The retentions amount to $94,131.88 including GST and are held by CPDL pursuant to a construction contract for civil works. WDL seeks to have the retentions placed in the trust account to ensure they are not misapplied or dissipated before the release of the retentions is determined by an adjudicator. WDL contends that the retentions should be released in full due to the repudiation of the contract between the parties and the subsequent cancellation of the contract. An adjudicator has been engaged to determine this issue.

The Court was required to decide whether an interim injunction should be granted on a without notice basis to place the retentions in the trust account of Ford Sumner Lawyers. The Court applied the tests for an interim injunction, which include whether there is a serious question to be tried, whether the balance of convenience lies in favour of granting the injunction, and whether the overall justice of the case favours the grant of an injunction. The Court found that WDL had an arguable case that the retentions must be released to WDL without set-off due to the alleged repudiation of the contract and the subsequent termination of the contract. The Court also found that the balance of convenience and the overall justice of the case favoured the grant of an interim injunction. The Court accepted that WDL would be unable to recover its retentions if it was required to proceed on an on notice basis, given the concerns that CPDL would misapply or dissipate the retentions.

The Court made the following orders: (a) that the respondent place the retentions totalling $94,131.88 (including GST) in the trust account of Ford Sumner Lawyers within 24 hours of the order being served on it and hold them on interest-bearing deposit pending further order of the Court, an adjudicator or arbitrator, or agreement in writing between the parties; and (b) that the respondent pay the costs of and incidental to the application. The Court listed the application for call in the Judge’s Chambers List at 10 am on Monday 8 July 2024 to give CPDL an opportunity to be heard.

Orders