BuildLaw: In Brief 11.08.2009

There have been 4 cases recently  considering issues under the Construction Contracts Act.  These are outlined below and, as always, you can read the entire case on the Building Disputes Tribunal website under the Resources Section.

IQ HOMES LTD V GRAEME NEIL SMITH, RICHARD DOUGLAS FISHER AND BELINDA MAY FISHER AS TRUSTEES OF THE FISHER FAMILY TRUST (CIV 22009-009-1314, DC CHCH, 28 JULY 2009)

An application was made by IQ Homes to enforce an adjudicators determination against the trustees of the Fisher Family Trust.  The application was opposed on the basis that the property that was the subject of the adjudication was a residential property thereby preventing enforcement of the determination.

The Court held that a family trust could be treated as a residential occupier as an ordinary family trust does nothing to restore any power imbalance that may be between a builder and individuals and there is typically no commercial purpose behind a family trust.  This decision is in direct conflict to the recent decision of the District Court in Hamilton (Grant Hamilton Construction v Japek Trust) and it seems likely that this issue will eventually be resolved by the High Court.

REDHILL DEVELOPMENT (NZ) LTD & ORS V GREEN & HEB CONTRACTORS LTD (CIV 2009-404-3784, HC AK, 5 AUGUST 2009)

Redhill commenced judicial review proceedings after it unsuccessfully defended an adjudication claim commenced by HEB seeking payment of $2.1m.  The basis of the review proceedings concerned whether an adjudicator had jurisdiction to make further determinations once he had concluded that the developer had lodged a payment schedule out of time or whether his jurisdiction was at an end and the parties were obliged to proceed to court to obtain judgment.  It also concerned whether an adjudicator can hold that a landowner who is associated with the developer can liable under the Act if that landowner acquires part of the construction site after the works were completed.

Following a review of the Act, the Court held that the adjudicator had jurisdiction to continue to determine the matter notwithstanding the fact that he held that no valid payment schedule had been issued.  In regards to the issue as to associates, the Court held that Parliament must have intended that a contractor should be able to invoke s50 so as to be able to look to landowning associates of the developer for payment regardless of when the associates acquired their land.

PLIMMERTON COURTYARD LIMITED V KEITH RICHARD HUNTINGTON AND ANOR HC WN CIV 2009-485-772 14 July 2009

This case concerned an application for interim relief under the Judicature Act to prevent enforcement of an adjudicator’s determination in Court.  After reviewing the background to this matter, and providing some highly critical comments about the conduct of both parties, the Court held that no enforcement proceedings were to be taken until such time as the application for judicial review is determined.

HOLMES CONSTRUCTION WELLINGTON LTD V REES HC AK CIV 2006-404-004219 17 July 2009

The latest decision from the High Court in the Holmes Construction matter considered an application by Rees to set aside a bankruptcy notice.  The Court provided a comprehensive review of the law and noted that the judgment debtor was inviting the Court to do precisely what the Court of Appeal has ruled cannot be done under the Insolvency Act 1967.  The Court concluded this has nothing to do with the processes of the Court, but is an attempt by the judgment debtor to have the Court produce a result which is expressly excluded by the current statute law as interpreted by the Court of Appeal and held that the judgment debtor is not permitted to raise a counterclaim, set-off or cross-demand under s19(1)(d) of the Insolvency Act 1967.

An Authorised Nominating Authority
under section 65 of the Construction Contracts Act 2002