$148m Tauranga building dispute: Hawkins v richlister Norman couple of Farmers

The Elizabeth Towers apartments in central Tauranga went up for sale in January. Photo / Alex Cairns

Commercial builder Hawkins has won a restraining action against a company whose directors include the richlister Normans of Farmers and Whitcoulls retailing fame in a dispute over a $148 million Tauranga development.

The builder sought the temporary order in the High Court at Auckland to stop the Normans’ Elizabeth Properties from calling on a $3m contractors’ bond.

Elizabeth Properties’ directors include husband and wife Anne and David Norman of James Pascoe Group. That business owns national retailers Farmers, Whitcoulls, homeware retailer Stevens, Pascoes the Jewellers, Stewart Dawsons and other interests.

Justice Ian Gault said the Elizabeth St development is a mixed commercial/apartment site with shops, food, 97 apartments and 23 townhouses in the centre of Tauranga. The project is named Thirty Eight Elizabeth.

In 2020, it was reported that the Farmers flagship store, including a retail and dining precinct, plus 97 luxury apartments and 23 sky townhouses, would be known as Elizabeth Towers.

In January, the Herald reported that apartments and villas in central Tauranga’s Elizabeth Towers had gone on sale, with thousands of pre-registered potential buyers – many from Auckland – offered the first bite.

The court decision just out showed how the dispute between Hawkins and the Normans’ company had shaped up.

In 2019, Hawkins won the contract to build the scheme for a $148m lump sum but it ran into delays, so in 2021 parties negotiated new terms, the decision said.

David Norman and wife Anne's Elizabeth Properties sought to call on Hawkins' $3m contractors’ bond regarding the Elizabeth St development.

The Normans’ Elizabeth Properties wanted liquidated damages from Hawkins of $22.5m over a number of problems.

But Hawkins challenged and opposed the claim.

In January this year, Elizabeth Properties said Hawkins was in breach of its contract by failing to pay the damages and the builder had 10 working days to put matters to rights.

In February, Hawkins started court action and applied for an injunction to stop the Normans’ company taking action.

Hawkins said the contract was a build-only construction contract. Hawkins is not responsible for design and the delays result from design defects and a failure by Elizabeth Properties through its consultants to address those design defects.

Elizabeth Towers in Tauranga as it neared completion earlier this year. Photo / Alex Cairns

Hawkins says the magnitude of these issues is apparent from the thousands of requests for information that Hawkins has issued to try to clarify the design.

Hawkins acknowledges these matters cannot be resolved in this proceeding, Justice Gault said. The builder also argued that calling on the bond would cause irreparable harm to its reputation with clients, future tenderers, subcontractors and banks.

Since 2017, Hawkins has had no calls on any bonds. Hawkins is now viewed as a trustworthy market player and has successfully tendered for large-scale central government, council and private-sector projects.

But Elizabeth Properties argued the harm Hawkins claimed was overstated and that the builder could avoid reputational damage by paying the liquidated damages.

Justice Gault ruled in favour of Hawkins, issuing an interim restraint on Elizabeth Properties from calling on the bond.

Hawkins and the ANZ were not entitled to release that bond, he decided.

Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.