Corrections problematic ‘rapid deployment’ of modular prison cells agreed with Decmil Construction in 2017 winds its way through the courts. Decmil is in liquidation insolvent claiming Corrections owes $64 million. In turn, Corrections demands $69 million it claims are costs to complete the contract.
Touted as a practical solution to a then rapidly rising prison muster, the modular units were to be fabricated in China for installation at low security prisons around New Zealand. A $196 million contract was awarded to a New Zealand subsidiary of ASX-listed Decmil Group. The project was a financial disaster. Decmil walked off the job in February 2020, pointing the finger at Corrections. In turn, Corrections blamed Decmil alleging failures to meet contract progress targets.
Two months later, Decmil Group put its New Zealand subsidiary into liquidation appointing Perth-based insolvency specialist Dermott McVeigh as liquidator. The liquidator’s most recent report states Decmil has 170 unsecured creditors claiming $130 million. The liquidator disputes Corrections’ status as a creditor; Decmil is looking to recover damages from Corrections.
Corrections wants to arbitrate their dispute, as required by the 2017 contract. The liquidator refused; liquidation freezes contractual rights. In the High Court, Justice Dobson ordered arbitration proceed. Ground rules for the arbitration had been established before Decmil went into liquidation. Arbitration rather than litigation was viewed as a better method to cut through their complex construction dispute. Arbitration could result in a clear definition of who owes whom how much, Justice Dobson, indicated. The High Court was told Correction’s detailed claim against Decmil runs to 47 pages.
Corrections v. Decmil Construction NZ Ltd – High Court (11.11.20)
20.174