Your Builder Limited v Ruban - [2024] NZHC 2462

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000499

[2024] NZHC 2462

UNDER Section 290 of the Companies Act 1993 and Part 19 of the High Court Rules 2016

IN THE MATTER

of an application to set aside a statutory demand

BETWEEN

YOUR BUILDER LIMITED

Applicant

AND

DMITRY RUBAN and ALEXANDRA MATVEEVA

Respondents

Hearing: 19 August 2024

Appearances:

K R Narayan / N Toma for the Applicant D A Cowan for the Respondents

Judgment:

29 August 2024

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 29 August 2024 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Martelli McKegg, Auckland D A Cowan, Auckland

YOUR BUILDER LTD v RUBAN [2024] NZHC 2462 [29 August 2024]

Introduction

[1] Dmitry Ruban and Alexandra Matveeva (the Owners) engaged Your Builder Ltd (Your Builder) to renovate and extend their house and construct swimming and spa pools on their property in Mt Eden. They paid a deposit and building work began.

[2] Work was suspended after around four months to renegotiate the scope of works. Then, the Owners purported to cancel the building contract on the basis that Your Builder’s work was defective. Your Builder disputed that the Owners were entitled to cancel the building contract, and purported to cancel the building contract themselves, forfeiting the deposit and applying it towards unpaid invoices, interest, lost profit, and legal fees.

[3] The Owners issued a statutory demand demanding repayment of the deposit. Your Builder applies to set aside the statutory demand on the grounds that it is solvent, and the debt claimed in the statutory demand is disputed. The Owners say that a statutory demand may be issued where a creditor is solvent, and there is no dispute that Your Builder is indebted to them for the deposit.

[4] The Owners have referred the wider dispute to adjudication under the Construction Contracts Act 2002.

[5] The issue for determination here is whether there is a genuine and substantial dispute that the deposit is owing and due to the Owners as a debt.

Further background

[6] On 24 July 2022, Your Builder and the Owners entered into a New Zealand Certified Builders Association Cost & Mark-Up (Renovations) contract (the building contract). The estimate for the scope of work was $1,244,786.62. The expected completion date was 16 August 2023, with allowances for automatic extensions of time for variations and unforeseen physical conditions (amongst other things).

[7] On or around 9 February 2023, the Owners paid the deposit required under cl 6.2 of the building contract in the sum of $124,478.66. Work commenced on or about 8 February 2023.

Work informally suspended

[8] In June 2023, an issue arose relating to the Owners’ budget for the work. On or about 8 June 2023, the Owners advised that they would not be able to pay more than $1,209,301.61. Work paused. The parties amended the…

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.

Continue reading Your Builder Limited v Ruban

Details

AGLC: Your Builder Limited v Ruban [2024] NZHC 2462
Case: [2024] NZHC 2462
Decision Date: 29 August 2024

CaseChat Overview and Summary

The case of Your Builder Limited v Ruban and Matveeva involves a dispute over the cancellation of a building contract between Your Builder Limited and the Owners, Dmitry Ruban and Alexandra Matveeva. The Owners engaged Your Builder to renovate and extend their property, paying a deposit and subsequently alleging defects in the work. The Owners purported to cancel the building contract, claiming the defects were severe enough to warrant termination, while Your Builder disputed the right to cancel and forfeited the deposit, applying it towards unpaid invoices, interest, lost profit, and legal fees. The Owners issued a statutory demand demanding repayment of the deposit, and Your Builder applied to set aside the demand, arguing the deposit was not owing as a debt. The court had to determine whether there was a genuine and substantial dispute that the deposit was owing and due to the Owners as a debt.

The court held that there was a genuine and substantial dispute regarding whether the deposit was owed to the Owners as a debt. The dispute primarily centered on whether the Owners were entitled to cancel the building contract due to alleged defects, and if Your Builder had a right to retain the deposit for damages, including lost profit. The court found that there were factual disputes about the nature and extent of the defects, whether Your Builder was given a reasonable opportunity to remedy any defects, and whether the defects could have been rectified by the completion date. These disputes were not suitable for resolution in a statutory demand proceeding and would be determined in the adjudication proceeding. Consequently, the court set aside the statutory demand, finding that there was a genuine and substantial dispute over the existence of the debt.

In conclusion, the statutory demand issued by the Owners on 23 February 2024 was set aside. The court determined that the genuine and substantial disputes regarding the nature of the defects, the opportunity to remedy them, and the potential for rectification by the completion date warranted setting aside the demand. The court also noted that Your Builder was entitled to costs as the successful party.

Orders