Hawkins in court fight with Vector, Transpower

Artist's impression of the new substation in downtown Auckland.

New Zealand's second largest building company is in a dispute with Transpower and Vector over the contract for work done as part of a $419 million Auckland substation upgrade.

Hawkins finished work on Hobson Street substation project last year but it is now seeking entitlements under its contract from Transpower and Vector, while the power companies are seeking adjustments to work done by the construction firm.

"They're holding back retentions, for example, of well over $1 million and things like that," Paul Davison, the Queen's Counsel representing Hawkins, said this morning.

Transpower and Vector are also seeking to enforce payment of a performance bond from Hawkins, Davison said.

A performance bond is issued to a client while work is being undertaken to make sure it is done in accordance with a contract. If it is not, the client is entitled to the bond as compensation.

However, Hawkins says the bond cannot be enforced at this stage, now that the work has been done.

The construction company has applied for an interim injunction in the High Court at Auckland, to try to stop Vector and Transpower from enforcing the bond, which would require the money involved to be paid.

This application, mentioned briefly before Justice Peter Woodhouse this morning, is due to be heard later this month.

Lawyers for the power companies gave an undertaking to the judge this morning that they would not call in the bond until 2 days after this application was decided.

The Hobson Street substation upgrade attracted controversy in 2012, when the Serious Fraud Office executed search warrants on two premises linked to Hawkins and the project.

After an investigation and trawling through thousands of documents, the SFO said there were no grounds for it to launch a criminal prosecution.

Hawkins is the country's second largest construction company after Fletcher Building, based on the value of its annual workload.