The remnants of Hawkins Construction is in the gun for allegedly defective repairs following the Christchurch earthquakes, insurer IAG claims. The insurer has taken Hawkins to court worried that $57.4 million received after selling its New Zealand business is at risk of disappearing down a rabbit hole, leaving IAG carrying the risk alone.
In March 2017, Hawkins Group, now known as Orange H Group Ltd, sold its construction business to Downer New Zealand. Insurer IAG has dragged Hawkins Construction into a plethora of Christchurch re-remediation claims where it is alleged Christchurch earthquake repairs prior to 2017 are defective. IAG used Hawkins to carry out remediations. The full number and value of IAG’s re-remediation claims were supressed in the High Court. Evidence was given that eleven are ready for trial.
IAG has threatened to get Hawkins bank accounts frozen to ensure there is enough left to meet potential claims. Of an eighty million dollar deal, Hawkins got $57.4 million upfront. The balance payable later. To placate IAG, Hawkins said it would give thirty working days notice of any intention to pay a dividend to Hawkins’ shareholders. This was not enough for IAG. The High Court was told IAG wrote to Hawkins’ directors seeking detailed financial information about Hawkins’ solvency and its financial position. Not satisfied with the answers, IAG went to the High Court demanding the information be made available. In particular, IAG expressed concerned about the level of indebtedness between Hawkins and shareholder McConnell Ltd. Thirty days notice of a dividend to shareholders is of little moment if a shareholder is being ‘paid’ through repayment of loans.
The financial information demanded would generally only be available to senior executives and directors, Justice Venning said. IAG has not proved that there is a danger Hawkins will not be able to meet any potential liability for re-remediation claims, he said.
IAG hinted it was considering bringing McConnell directors to court to establish details of the relationship between McConnell Ltd and Hawkins.
[Post-judgment note: Orange H Group/Hawkins Construction was put into receivership by its shareholder in May 2018]
IAG New Zealand v. H Construction Ltd (formerly Hawkins Construction Ltd) – High Court (18.04.18)
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