The builders of Auckland’s abandoned $300 million 57-level Seascape apartment tower have won a court ruling, saying the developer must pay them $33m within five working days, or it can declare the business insolvent.
A minute issued yesterday by Justice Greg Blanchard in the High Court at Auckland backed China Construction New Zealand against developer Shundi Customs over that $33m statutory demand.
“I order Shundi to pay the sum in the statutory demand within five working days of the date of this minute. I confirm that, absent payment within that period, CCNZ may make an application to put Shundi into liquidation,” he wrote.
On November 11, the builder represented by Graeme Christie and others was prevented from taking further action to enforce its $33m Building Disputes Tribunal award.
BusinessDesk had previously reported that China Construction was supposed to have given Shundi a guarantee from its parent company, but that had been delayed because of documents not being registered with the relevant authorities in China in time.
Work on the Customs St East tower stopped last August after that tribunal decision by John Green.
The judge gave the background yesterday, saying that paperwork was now in order.
“In my judgment of November 11, 2024, I made an interim order prohibiting China Construction New Zealand Ltd (CCNZ) from taking any further action consequent on the determination by John Green dated August 2, 2024 or bringing or continuing any proceedings in connection with the determination pending registration of the parent company guarantee provided by China Construction Eighth Engineering Division Corp Ltd (CCEED) with the State Administration of Foreign Exchange (SAFE) in China,” he wrote.
“In my judgment, I also declined an application by Shundi Customs to set aside a statutory demand that CCNZ served on Shundi on August 23, 2024. The statutory demand seeks payment of the amount of approximately $33 million that the determination ordered Shundi to pay to CCNZ under the construction contract between the parties. However, the interim order prevented CCNZ from enforcing the statutory demand pending registration of the PCG [Parent Company Guarantee],” he wrote.
The PCG had now been registered in China.
China Construction, therefore, considers that the interim order no longer applies.
“However, as a precaution, it seeks confirmation from the court that the interim order is no more. The reason CCNZ seeks this confirmation is that Shundi has raised concerns about the way in which the PCG has been registered. Specifically, Shundi’s concerns are that the registration of the PCG will expire on August 31, 2028 and is subject to a value cap of $130 million,” the minute said.
Shundi is concerned that the registration will expire on August 31, 2028 because it considers that this may not allow enough time to enforce the guarantee. This is because, if Shundi is successful with its judicial review application, and therefore the amount that Shundi is required to pay to CCNZ as a result of the determination becomes repayable to Shundi, CCNZ and/or CCEED could defer enforcement of the guarantee.
The judge wrote: “I do not think Shundi’s concern about the expiry date is justified. There are three years and five months between now and the expiry date. This is more than sufficient time to reach a final outcome if Shundi pursues matters expeditiously. It could considerably accelerate the process by pursuing arbitration proceedings against CCNZ and CCEED immediately.”
Shundi was also concerned about a $130m value cap because it considered that it was possible that CCNZ could ultimately end up being liable under the construction contract for more than that.
“Again, I do not think that Shundi’s concern about the value cap is justified. I agree with CCNZ that the Court is not concerned here with all amounts that CCNZ could possibly end up being liable to pay Shundi under the construction contract. The Court is concerned only with the liability that would arise if the determination is reversed and therefore the amount that Shundi is required to pay to CCNZ as a result of the determination becomes repayable. In that regard, CCNZ says that the amount that Shundi is required to pay as a result of the determination is approximately $42 million,” the judge wrote.
Shundi said the way that the guarantee had been registered in China constituted a breach, but the judge wrote that if this is so, while it might be significant in some other context, “I do not see it as being relevant for present purposes. It is not relevant to the question of whether the way in which the PCG is registered as matters stand now is sufficient to allow Shundi to enforce the PCG against CCEED to secure repayment of the amount that Shundi is required to pay as a result of the determination, in the event that the determination is reversed”.
The judge confirmed that the interim order halting China Construction’s proceeding was no longer in effect.
Shundi Customs has been approached for comment on the ruling. The developer is understood to be in a position to give a possible update next week.
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Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.
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