Any suggestion Auckland volume home builders are creaming it took a knock when the High Court reduced the profit margin Hawkins Homes could recover as damages after a customer defaulted, down from a claimed fifteen per cent profit margin to 7.5 per cent.
Litigation followed Hawkins Homes troubled involvement in a Clarks Beach subdivision on southern shores of Auckland’s Manukau Harbour.
Hawkins Homes settled out of court its argument over an agreed purchase of ten sections in the Clarks Beach Waterfront Estate from developer Knight Investments Ltd, controlled by Daniel Nahkle.
This left Hawkins committed to a home and land package deal on what was described as lot 114.
In early 2022, Gregory and Michelle Nefdt agreed to buy lot 114 from Hawkins for $490,000 and agreed in a separate contract to have Hawkins build a home for them on site.
The Nefdts were relocating from Thames.
The High Court was told the Nefdts later refused to settle, cancelling both the land purchase and home build contracts.
Hawkins Homes in turn defaulted on its purchase of lot 114 from Knight Investments, becoming liable for damages when Knight Investments resold at a lower price.
The Nefdts denied they were liable to pay damages to Hawkins Homes. Misrepresentations about a time line to completion of their new home justified cancellation, they said.
The Nefdts said they made it clear from the outset that the build had to be completed by end of 2022 so they could shift in.
Justice Downs ruled there had been no misrepresentation by Hawkins Homes.
In his initial telephone inquiry to Scott Hawkins, Mr Nefdt did not emphasise that a 2022 completion would be an essential term of the build contract, Justice Downs ruled.
A follow-up email by Mr Hawkins made it clear that progress was dependent upon subdivision titles being issued to Knight Investments.
Subsequent communications by Mr Hawkins talked of ‘expected’ deadlines.
In addition, the Nefdts’ agreement for sale and purchase specifically excluded liability for delays beyond Hawkins Homes’ control.
Hawkins claimed $158,800 damages for its loss of profit on the two contracts wrongly cancelled by the Nefdts. This loss amounted to a fifteen per cent profit margin.
Justice Downs said this figure was based on a single similar instance where a customer defaulted.
A more modest profit margin might be expected for a builder operating a volume-oriented business model, he said.
Damages were ordered at a court-imposed profit margin of 7.5 per cent.
Amount to pay was reduced by the Nefdts’ forfeited deposit.
In total, they were ordered to pay $75,245.
Knight Investments Ltd v. Hawkins Group Ltd – High Court (15.12.25)
26.054