Mainzeal
could not recover a two million dollar performance bond put up for construction
of the Geyser project in Parnell, Auckland.
It failed to achieve practical completion before receivership in
February 2013. A multi-level car stacker
did not work properly.
Contractor Mainzeal
took out a performance bond with insurer AAI Ltd as part of its contract with
Samson Corporation Ltd for a $37 million project spread across five commercial buildings. With damages of some $7400 per day running
against Mainzeal from March 2012 for late completion, Samson agreed to a
reduction in daily damages after going into partial occupation. The two later disputed whether practical
completion was ever achieved. An
engineer’s certificate signed in August 2012 signed off the project as
practically completed with the exception of a car stacker. Spread across four levels and destined to
take 165 cars, parking was supposed to be served by an automated stacker
lifting and rotating cars. The High
Court was told of multiple issues: on its first test the stacker broke down
after ten minutes operation; software did not work as specified; incorrect
flooring levels hampered operation.
Continuous operation required manual supervision.
Justice Hinton ruled
the engineer’s certificate did not comply with contract requirements for a
practical completion certificate by excluding one item, the car stacker. At the time, both Mainzeal and Samson treated
it as evidence practical completion had not been achieved, she ruled.
Samson was entitled to
the two million dollars. It had incurred
expenses in excess of this amount to trouble-shoot and remedy car stacker
problems. Prior to the court hearing, the
two million dollar performance bond was paid into the trust account of AAI Ltd’s
lawyer.
Richina
Pacific v. AAI Ltd – High Court (20.07.17)
17.085