Infighting between contractors building a new prison at Waikeria in the Waikato saw Australian-owned lead contractor CPB demanding $3.5 million from Auckland fit-out contractor FZ Group with FZ claiming a letter it signed at CPB’s request mentioning the $3.5 million was simply a stratagem to get compensation from Corrections for project cost-overuns.
Waikeria prison’s extension has been blighted by delays and cost over-runs, particularly because of covid-19 lockdowns and subsequent shortages of building materials.
CPB Contractors Pty Ltd is lead contractor. Hamish Storey’s FZ Group Ltd was involved as sub-contracter; his company specialises in commercial carpentry and fitouts.
The High Court was told the two companies’ working relationship deteriorated through 2022. CPB said more staff were needed on the job and some of the work done was defective. FZ Group said it was held up by CPB’s failure to get the site ready for work.
This led to what was stated to be a ‘walk away’ agreement with FZ Group abandoning its contract.
Terms of this agreement came under scrutiny after FZ Group put in a Construction Contracts Act claim for what it said was work completed for CPB but not yet paid; a claim for just over $443,000. Three weeks later, CPB demanded FZ Group pay it $3.5 million.
Associate judge Skelton ordered CPB pay FZ Group’s $443,000 Construction Contracts claim; applying the Act’s ‘pay now, argue later’ principles. CPB was given two weeks to pay, or face winding up.
In turn, Judge Skelton blocked CPB’s attempts to wind up FZ Group for non-payment of $3.5 million, ruling a full court hearing is needed to determine circumstances surrounding FZ Group’s signature to the ‘walk away’ letter promising to pay $3.5 million.
CPB says the July 2022 letter blocks FZ Group from claiming any further contract payments and holds FZ Group liable for additional costs incurred bringing in another contractor to finish its work.
FZ Group says the letter was intended to support CPB’s claim against Corrections for project cost overruns and that it absolves FZ Group from any further liability.
CPB Contractors Pty Ltd v. FZ Group NZ Ltd – High Court (18.11.24)
25.035