Holding in its favour what appears to be a worthless $85.6 million arbitration ruling against insolvent contractor Canam Construction Ltd, Auckland Trotting Club’s disastrous foray into property development now sees it suing Canam directors Loukas Petrou, Nicholas Page and Andrew Clark.
In 2015, Auckland Trotting awarded Canam Construction a $78.3 million contract for building residential apartments at its Alexandra Park track in Green Lane. Canam was fired from the job three years later. Another company completed the work.
A liquidators’ report filed after Canam put itself into liquidation describes as primary causes of the company’s collapse problems over Auckland Trotting’s supply of steel from China and a stop work notice imposed by Auckland Council.
Auckland Trotting’s dispute with Canam went to arbitration. Canam was ruled liable to pay $85.6 million; primarily costs of delayed completion and the extra amount Auckland Trotting had to pay for completion by another contractor.
With Canam Construction not worth suing, Auckland Trotting has fired writs far and wide claiming damages from: Canam’s directors; Canam’s holding company; and other Canam subsidiaries where it is alleged Canam stashed money.
In a preliminary High Court hearing, Associate judge Gardiner dismissed some, but not all, of the claims made against director Loukas Petrou. If Auckland Trotting can prove that Mr Petrou failed to properly perform his Companies Act duties as director of Canam Construction, then Auckland Trotting as an unpaid creditor can recover from him directly, Judge Gardiner ruled. Auckland Trotting alleges Canam directors were reckless.
Auckland Trotting also alleges Mr Petrou and fellow director Nicholas Page breached the Fair Trading Act, making misleading representations about Canam Construction’s financial viability. The High Court was told of tender documents in 2015 stating Canam as having a strong balance sheet, healthy cashflows and no debt. In contrast, a specialist report prepared partway through construction when Canam sought to renegotiate the contract described the company as facing an unsurvivable $14.8 million loss on the project, while the Canam Group claimed to be solvent.
It was Canam Construction’s failure to get a parent company guarantee within five days of being awarded the contract and its subsequent refusal make good on its promise to get a guarantee that justified subsequent cancellation by Auckland Trotting.
Auckland Trotting Club Inc v. Canam Group Ltd – High Court (13.07.23)
23.116