By ANNE GIBSON
In what may be the first of many visits to court, an Invercargill-based contractor has won a legal skirmish with the developer of Auckland's Princes Wharf.
The contractor, Amalgamated Builders, and the developer, Kitchener Construction Shed 20/24, are at loggerheads over the construction of the Shed 24 waterfront apartment block. Kitchener's owner, David Henderson, lives in an apartment in the next-door Shed 23.
The dispute dates back to the fall of Amalgamated's associate, Goodall ABL, which went into liquidation while building Mr Henderson's Shed 24 apartment block on the end of Princes Wharf, opposite the new Hilton Hotel.
Goodall ABL went into liquidation on March 1 last year, and work on the $17.4 million, 64-unit apartment block stopped.
On March 14, a deed of novation was entered into, releasing Goodall ABL from its obligations. Its parent company, Amalgamated, was substituted as the contractor.
Amalgamated put up a contractor's bond of $500,000 when it agreed to do the work. The bond was given by American Re-insurance Co and was payable on demand within two working days - provided certification advising of defaults was produced at the same time.
Work continued through last year, but numerous difficulties arose, and in February this year, the dispute came to a head.
Amalgamated claimed Kitchener had breached its contract and cancelled the agreement. Kitchener disputes the claim.
Each now demands a substantial sum of money from the other.
As a first step, Kitchener demanded payment on Amalgamated's $500,000 bond, leading to the court case in question.
Amalgamated resolved to fight the demand, and applied for an interlocutory injunction to stop Kitchener calling up the bond.
In the High Court at Auckland, Justice Robert Chambers granted the application, saying the circumstances which would allow the bond to be called up had not arisen.
In his written decision, Justice Chambers summarised evidence presented to him, which included statements about the financial stability of the Princes Wharf development and on Mr Henderson's wealth.
"I am satisfied on the evidence that the delay in getting the $500,000 will not cause the collapse of the development," the judge said.
"Kitchener and its financial backers now have too much invested not to complete the project.
"The project is within weeks of completion. There are a large number of purchasers waiting to settle as soon as the apartments are completed and defects are corrected.
"It is unrealistic to think, given the size of this development and the effort and money that has already gone into it, that it will be allowed to fall over at the eleventh hour for the sake of $500,000."
This was in response to evidence presented by Henderson's lawyer, Paul Dale, who, the judge said, had "tacitly acknowledged this point, but pointed out that any further borrowing by Kitchener is likely to be at the sharp end of the market."
The judge said Amalgamated's lawyer, Alan Stuart, had said the company's financial position was "not strong."
He said Kitchener was holding more than $560,000 in retention money owing to Amalgamated - which Mr Dale disputed.
As for Kitchener's financial stability, the judge said Mr Henderson had admitted it did not have substantial assets.
But Mr Henderson's money was held in a number of trusts.
"If Mr Henderson is as wealthy as he says he is, then one of his trusts should easily be in a position to lend Kitchener the $500,000 pending determination of the substantive dispute."
Amalgamated also sought an injunction stopping American Re-insurance from making the bond payment.
But Justice Chambers said it was unnecessary to grant this "because it clearly will not pay out without a proper demand from Kitchener."
After the hearing, Amalgamated owner Graeme Hill, of Queenstown, declined to comment, as did his lawyer, Trevor Savage of Invercargill.
But Mr Henderson was keen to comment, having recently hired public relations consultant Angela Griffen. He is also keen to keep out of the court room.
"It's just a fruitless, stupid exercise, and instead people should sit around the table and sort these things out," he said.
He criticised the quality of construction work on Shed 24, saying many of the apartments leaked.
Revealing that Kitchener Construction Shed 20/24 has a paid-up capital of only $100, he said he "fully intends" to call up the bond from Amalgamated.
"If ABL (Amalgamated) had any brains, they would deal directly with us because we know what the defects are in the building.
"Rather than pursuing matters through the High Court, they should give us the bond back and we would be cooperative."
Whatever the outcome, the parties are undoubtedly headed back for the courtroom, now that they have left the building site.
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