Unpaid, Christchurch electrical contractor Topa Partners could not be forced to give up its protected position having a caveat registered over title to a building site, but Topa took the risk of paying for any losses caused by construction delays.
JWL International Group Ltd, controlled by Jun Zhi, is constructing a motel, hotel and restaurant in Salisbury Street, Christchurch. Topa Partners Ltd had a $222,700 contract for the electrical fitout. Initially, progress payments were made. JWL International later stopped further payments, disputing the work done. Topa Partners registered a caveat over the land. The signed contract gave it a right to caveat. A registered caveat gives unpaid suppliers considerable leverage; no further dealings can be registered against the title without consent. Typically, re-financing grinds to a halt.
JWL International disputed Topa’s right to register a caveat. It said first there had to be a failure to pay ‘money due’ and there was no money due; payment was disputed. Associate judge Paulsen said contract wording permitted caveat registration when there was money ‘owing.’ Potentially, money was owing; Topa says it has a valid claim for work done. Plus, it claims damages for being kicked off the site, alleging JWL is in breach of contract.
JWL International offered to pay $30,000 into a solicitor’s trust account, to be held in trust until the dispute was sorted out. Topa refused the offer.
Judge Paulsen ruled the caveat stood, but Topa Partners is liable for any consequential damages should a later full court hearing find there was no justification for lodging the caveat. Mr Zhi said the caveat has delayed construction, increasing costs. Difficulties in project refinancing has forced sale of his own home to get ready cash, he said.
Topa Partners Ltd v. JWL International Group Ltd – High Court (17.02.20)
20.032