AUCKLAND DRAINAGE PLUMBING SERVICES LTD v WHITE ROSE BUILDERS NEW ZEALAND LTD [2019] NZHC 890

AUCKLAND DRAINAGE PLUMBING SERVICES LTD v WHITE ROSE BUILDERS NEW ZEALAND LTD[2019] NZHC 890 [18 April 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-0964[2019] NZHC 890BETWEEN AUCKLAND DRAINAGE PLUMBINGSERVICES LIMITEDPlaintiffAND WHITE ROSE BUILDERSNEW ZEALAND LIMITEDDefendantHearing: 15 November 2018Appearances: D Purusram for the PlaintiffM R Taylor for the DefendantJudgment: 18 April 2019JUDGMENT OF ASSOCIATE JUDGE SMITHThis judgment was delivered by me on 18 April 2019 at 3.30pm,pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors / Counsel:Victorian Lawyers Ltd, AucklandKiwiLawyers, AucklandM Taylor, Auckland[1] The plaintiff (Auckland Drainage) applies for an order putting the defendant(White Rose) into liquidation. The application is made in reliance on an unansweredstatutory demand issued by Auckland Drainage on 18 April 2018.[2] White Rose defends the application on the basis that:(a) Auckland Drainage is not a creditor of White Rose.(b) There is a substantial and genuine dispute over the alleged debt, whichhas been the subject of an adjudication order under the ConstructionContracts Act 2002 (the CCA). White Rose says that, under thatdetermination, no further sums were payable by it to AucklandDrainage.(c) White Rose is trading and is solvent.Background[3] White Rose contracted with the Supreme Sikh Society of New Zealand (theSociety) for certain construction work to be carried out at the Society's Temple at70 Takanini School Road, Takanini (the Temple property). On or about 28 June 2015White Rose subcontracted to Auckland Drainage the excavation work for the project(the subcontract).[4] The excavation work under the subcontract was carried out by AucklandDrainage over approximately three to four months between July and October 2015.Auckland Drainage says that it also performed a number of other works for WhiteRose, unrelated to the subcontract. It says that the total amount owing to it by WhiteRose, including on the subcontract, is $250,378.17.[5] White Rose says that the excavation work was poorly carried out by AucklandDrainage. It also says that during the project, it was required to pay a total of$167,902.87 direct to Auckland Drainage's own subcontractors, as Auckland Drainagewas unable to pay them.[6] White Rose says that it agreed to one variation to the contract for theexcavation work, providing for the removal of additional fill material at a cost of$94,000. At the conclusion of the project, it took the view that it had paid AucklandDrainage in full for the work done by it.[7] Auckland Drainage took a different view. On 12 December 2015 its director,Mr Lal, sent an email contending that a further sum of $135,471.81 was owed toAuckland Drainage. Further demands were made, on 7 March 2016 for $148,777.20,and on 18 February 2017 for $160,000. White Rose says that additional demandstotalling $132,627.20 were made in the course of various meetings between the partiesin which attempts were made to resolve the dispute.[8] The parties were unable to resolve the dispute, and in April 2018 AucklandDrainage issued the statutory demand. The amount demanded was $397,977.80,including GST. White Rose says that the statutory demand did not come to theattention of its directors at the time. One of them, Mr Singh, was overseas at the time.He has given evidence that, if the demand had come to his attention, White Rose wouldhave applied to set it aside.[9] The liquidation claim was filed by Auckland Drainage on or about 21 May2018. White Rose has filed a statement of defence, in which it contends that the issueof the statutory demand was an abuse of process, as the alleged debt remained indispute.[10] On or about 11 July 2018 White Rose commenced an adjudication proceedingunder the CCA claiming a refund of the amounts it had paid to Auckland Drainage'ssubcontractors. White Rose contended that those payments should be regarded asoverpayments made by it to Auckland Drainage under the subcontract.[11] On 13 July 2018, Auckland Drainage's liquidation claim was called in thisCourt. It was adjourned so that the adjudication process under the CCA could becompleted.[12] The claimant in the adjudication proceeding was White Rose, and therespondent was Auckland Drainage. The adjudicator was Mr David Clark. The partiesfiled submissions and evidence, and Mr Clark issued his determination on21 September 2018.[13] In its submissions to the adjudicator, Auckland Drainage contended that it wasentitled to be paid the further sums it says are owed to it by White Rose. Theadjudicator held that, on the basis of the evidence and submissions presented, therewere no further sums due to Auckland Drainage for work performed on thesubcontract. The adjudicator also found that White Rose was not entitled to any sumsfrom Auckland Drainage for the alleged overpayments. Mr Clark directed thatAuckland Drainage was to reimburse White Rose for its share (50 per cent) of theadjudicator's fees for the adjudication. White Rose says it has not yet received itsshare of those fees from Auckland Drainage.The law relating to liquidation claims[14] Auckland Drainage's liquidation claim is made pursuant to s 241 of theCompanies Act 1993 (the Act) and r 31.3 of the High Court Rules.[15] A liquidation order may be made under s 241(4)(a) of the Act if the Court issatisfied that the defendant company is unable to pay its debts. Pursuant to s 287 ofthe Act, a company will be presumed to be unable to pay its debts if "the company hasfailed to comply with a statutory demand", unless the contrary is proved.[16] If (as in this case) the company does not comply with a statutory demandserved on it by a creditor, and does not apply to set aside the statutory demand unders 290 of the Act, the onus falls on the company to establish that there is a genuineand substantial dispute as to liability to pay.[17] The fact that the debtor company may not have applied to set aside thecreditor's statutory demand is not determinative. In Yan v Mainzeal Property andConstruction Ltd (in receivership and in liquidation) the Court of Appeal said:11 Yan v Mainzeal Property and Construction Ltd (in receivership and in liquidation) [2014]NZCA 190, at [63] and [74].A company is not prevented from showing that indebtedness is disputed, evenif it has failed to apply to set aside a statutory demand under s 290. In such acase, the failure of the debtor to apply to set aside a statutory demand meansthat the creditor is entitled to rely on the presumption of insolvency unders 287(a) of the Act and the onus falls on the debtor to establish that there is agenuine and substantial dispute as to its liability to pay ... Cogent evidence,short of actual proof that the debt is not payable, is required.It must also be kept firmly in mind that the Court will not generally make aliquidation order if the debts relied upon are found to be in substantial disputeand not suitable for resolution in the liquidation list. That is so whether or notthe disputed debts are the subject of the statutory demand.[18] In New Y Trading Ltd v ANZ Food Holding Ltd, Associate Judge Bell referredto the decision of the Court of Appeal in Yan, concluding that the court hearing aliquidation claim is not required to make a determination as to liability. As long as theCourt is satisfied that there is a genuine and substantial dispute as to liability, an orderfor liquidation should not be made. His Honour also noted that, if a debt is genuinelydisputed, the company may have good reason not to pay the debt. The absence ofpayment therefore does not give rise to an inference of insolvency.2[19] Mr Purusram accepted that a liquidation order should not be made on a debtwhich is disputed by the company in good faith, but submitted that where the matterin dispute is not substantial the Court hearing a liquidation claim may neverthelessdecide the dispute, in order to save the expense of having the dispute decided inanother forum.3 He also noted that the Court may, in an appropriate case, order theamount in dispute to be paid into Court pending the determination of the dispute.4Evidence and submissions for Auckland Drainage[20] Auckland Drainage relies on affidavits sworn by its director Sanjesh Lal, on5 October 2018 and 1 November 2018. A further affidavit by Mr Lal was tendered atthe hearing.2 New Y Trading Ltd v ANZ Food Holding Ltd [2017] NZHC 2702 at [5] and [6].3 Referring to Re Horizon Pacific Ltd (1977) 2 ACLR 495.4 Referring to Group Rentals NZ Ltd v Pramb Wong Enterprises Ltd [1995] 1 NZLR 763.[21] Mr Lal said that, as at 5 October 2018, the total figure due by White Rose onthe subcontract was $230,074.49. In addition, he said that $20,303.68 (the balanceafter payments made by White Rose totalling $59,000) is owing on other contractsunder which Auckland Drainage carried out work for White Rose.[22] Mr Lal acknowledged that the original amount for the works under thesubcontract was $175,000, but said that he made two verbal agreements with WhiteRose's director (Mr Singh) for further works on the Temple property. He said that thefirst (verbal) agreement was made on 9 October 2015, confirmed by email by WhiteRose on the same day. The second verbal agreement was made on 20 October 2015.[23] Mr Lal said that there had been several dealings between the parties in the past,and most of those dealings were on the basis of verbal agreements which weresuccessfully implemented.[24] Mr Lal said that works under the subcontract started on or about 1 July 2015.The subcontract provided that the excavation was to take place by 680 loads.However, by mid-August 2015 it was discovered that the dirt that had to be removedwould be more than twice what was initially anticipated. White Rose prepared a newquote for completion of the work, and Mr Lal said that the Society ended up payingWhite Rose more than twice its originally quoted figure.[25] The total amount of all Auckland Drainage's invoices was $551,003, comprisedin four invoices it says were issued on 1 December 2015. The amounts invoiced wereas follows:(i) Excavation work for the originally contracted680 loads $175,000(ii) Excavation work for a further 365 loads $94,000(iii) Final excavation works for 635 loads $163,195(iv) Works described in the tender document,including rubbish and fence removal $118,808[26] Mr Lal said that Auckland Drainage received a total of $153,025.64 fromWhite Rose for work carried out on the subcontract, by payments made between 1 July2015 and 23 July 2015.[27] Mr Lal acknowledged White Rose's claim that it paid Auckland Drainage'ssubcontractors a further sum of $167,902.87. Allowing for those payments, thebalance owing was reduced to $230,074.49 (total amount billed $551,003, minuspayments made by White Rose ($153,025.64) and amounts paid by White Rose tosubcontractors ($167,902.87)). With the $20,303.68 owing on other contracts, thetotal amount owing by White Rose on all contracts was said to be $250,378.17.[28] Mr Purusram characterised the two alleged oral agreements as agreedvariations to the subcontract. He submitted that the election by Auckland Drainage tobreak down the billing for the excavation works into three separate invoices isconsistent with its contention that there were three separate agreements for theexcavation work, namely the subcontract and the two subsequent variationagreements.[29] The fourth invoice dated 1 December 2015, for the further sum of $118,808,referred to preliminary and general work done by Auckland Drainage as per the tenderdocument (in fact there was no tender process, but there was a written specificationfor the work to be performed under the subcontract). The work was said to comprisethe removal of a fence, rubbish removal, pulling sand, and preparing "geocloth" for100mm. Auckland Drainage contends that this invoice has not been disputed by WhiteRose.[30] Auckland Drainage submits that White Rose has been using delaying tactics toavoid making payments, and has not raised any genuine and substantial dispute overits claims. While White Rose claims that work was done poorly by AucklandDrainage, there is no evidence of any claim being made to that effect until thisproceeding was commenced. Nor is there evidence of White Rose having respondedto Auckland Drainage's payment claim, with a payment schedule under s 21 of theCCA. By operation of s 22 of the CCA, White Rose therefore became liable to payAuckland Drainage the sums claimed in its invoices. The unpaid amount became adebt due to Auckland Drainage, under s 23(2)(a) of the CCA.[31] Auckland Drainage also submits that White Rose's actions in paying AucklandDrainage's subcontractors confirms the additional work and the existence of thevariations for which Auckland Drainage contends. On balance, it is more probablethan not that White Rose is indebted to Auckland Drainage in the sum of $250,378.17.White Rose has failed to discharge its burden of establishing that the dispute allegedby it is based on substantial grounds, and if and to the extent the Court accepts thatany dispute is not of a substantial nature, it should exercise its discretion to adjudicateon the dispute in this proceeding.5 In the alternative, if the Court concludes that thereis a substantial dispute, it is in the interests of justice that the amount in dispute be paidinto Court, pending the determination of the dispute in a different forum.Statement of defence, evidence and submissions for White Rose[32] In its statement of defence, White Rose first pleaded that it did not challengethe statutory demand because it did not come to the attention of its directors.[33] In support of its contention that the issue of the statutory demand was in anyevent an abuse of process (as the sum demanded was not due), White Rose pleadedthe original contract and amount ($175,000), and acknowledged the variation worth$94,000. It then said that, despite "the agreed cost of the work", it paid AucklandDrainage around $403,000 for work performed (that sum includes the $167,902.87paid direct to Auckland Drainage's contractors).[34] White Rose then referred to the claim made by Auckland Drainage for a further$135,000, in December 2015. It said that no invoice was issued to support this claim,and there were no supporting documents. The amount claimed was unsubstantiated,and was for work carried out by separate contractors engaged by White Rose.5 Referring to Re Horizon Pacific Ltd [1977] 2 ACLR 495.[35] White Rose also referred in its statement of defence to counterclaims it says ithas against Auckland Drainage, in relation to:(i) damage caused by Auckland Drainage to a boundary fence;(ii) damage caused to the sports field around which the car park was to beconstructed; and(iii) the unlawful dumping of material on a third party property.[36] Finally, White Rose pleaded that it is solvent.[37] There were three affidavits filed by White Rose in support of its defence. Thefirst was sworn by its director, Ranvir (Lali) Singh, on 11 July 2018.[38] Mr Singh said that, prior to the receipt of the liquidation claim, he had heardnothing from Auckland Drainage since July 2017. There had been discussions in July2017, which followed on from various meetings held in relation to the dispute sincelate 2015. Mr Singh said that in the course of these meetings he made White Rose'sposition clear, namely that no further sums were due. He confirmed that, when thestatutory demand was issued, he was overseas. He said that the demand did not cometo the attention of the directors of White Rose.[39] Mr Singh described the Temple property. There is a Sikh temple on the Templeproperty, and next to the temple is a sports field. The Society wished to have a carpark built around the field. At the time, Mr Singh was a member of the Society, andsat on its executive committee. The committee agreed to engage White Rose toconstruct the car park.[40] Plans and drawings were prepared, and a building consent was obtained.Auckland Drainage provided its quote of $175,000 including GST for the excavationwork, and that was accepted by White Rose. The price was a fixed price, with thescope of the excavation work contained in the plans, drawings and building consent.The required excavation for the car park was to be to a depth of around 830mm. Otherwork on the car park, including stormwater and drainage, and roadworks, were to becarried out by other contractors.[41] Mr Singh said that there were issues over Auckland Drainage's performancefrom the very outset. He provided the following examples:(i) Destruction of an area for landscape garden (on an area next to the areato be excavated). Auckland Drainage excavated this areaunnecessarily, and additional work needed to be carried out to reinstatethe area.(ii) Over-excavation of the car park area. During the works, AucklandDrainage removed too much material. Replacement material had to bebrought in, and additional costs were incurred.(iii) Un-engineered imported fill material. Auckland Drainage created alarge hole in the excavated area when a digger became stuck. It thendumped poor quality un-engineered fill into the hole, including piecesof concrete and rubble. White Rose incurred costs removing thismaterial and arranging for properly engineered fill to be brought to thesite.(iv) Damage to sports field. There was damage to the sports field when anAuckland Drainage truck drove across it. A sign had been placedwarning contractors to stay off the field. The truck caused considerabledamage, and repair work had to be carried out, including replacementof topsoil.(v) Damage to boundary fence. Auckland Drainage excavated too close toa boundary fence, causing it to fall over. The neighbours took theSociety to the Disputes Tribunal, and the Society was told to pay toreplace the fence.(vi) Disposal of excavated material. Auckland Drainage had obtainedconsent to place excavated material on a site in Drury. However, itstopped using the Drury site part way through the project, and begancarting the material to a different site in Otahuhu. Then, it started tocart the material to a site in Bombay, and later to a different site justaround the corner from the Temple property. This last site was ownedby a local church, and it had not consented to the placing of the fill onits property. A lawyer for the church wrote to the Society, estimatingthat $300,000-$500,000 would have to be paid to remove the material.The church owner was looking to recover that cost from the Society.[42] Mr Singh said that he showed this lawyer's letter to Mr Lal and his partner,Ms Swamy, at a meeting in Mr Singh's office on a date in late December 2015. Hesaid that he explained at that meeting why Auckland Drainage's claims were disputed.He sent a letter to Mr Lal on 24 December 2015, attaching the letter from the church'ssolicitors, and requesting that Mr Lal handle the matter direct. The letter made nomention of any of White Rose's other concerns with the work carried out by AucklandDrainage.[43] Mr Singh acknowledged receiving the email from Mr Lal dated 12 December2015, claiming that White Rose owed Auckland Drainage $135,471.81. Invoices anda spreadsheet were attached setting out the amounts claimed and the amounts said tohave been paid by White Rose. Mr Singh said that, when he received the email, heimmediately called Mr Lal to discuss his position and the disputed claims.[44] Nothing further was heard until 7 March 2016, when White Rose received aletter from a solicitor, Peter Broad, contending that White Rose owed AucklandDrainage $132,627.20 plus $15,000 for further excavation work. The letter set outvarious claims made by Auckland Drainage.[45] In his July 2018 affidavit Mr Singh prepared the following table summarisingthe claims made in Mr Broad's letter and White Rose's response:Description & Cost My responseConnection of services (water andpower) from house to site office18 hours x $120 = $2,160This was done by White Rose. Wesupplied a site office, power andwater to the [Temple property].This was not work done by[Auckland Drainage] and was notwithin their scope of work.Removal of 15 existing trees fromsite$4,800I have no knowledge of what thisclaim relates to. I'm not aware ofany large trees on the [Templeproperty] and none are shown onthe plans. If some plants wereremoved in the course of theexcavation then this would havebeen part of the [subcontract] scopeof work.Excavation of sediment pond andstockpile on site19 hours x $120 = $2,280This was done by the drainlayer. Itwas not work carried out by[Auckland Drainage] and it was notpart of the [subcontract] scope ofwork.Removal of topsoil and landscapingalong right hand side southernboundary65 hours x $120 - $7,800I have no idea what this claimrelates to. It hasn't been explainedto me and it is not clear why[Auckland Drainage] could claimfor this work.Excavation of test pit holes at 20metres intervals for inspection20 hours x $120 = $2,400I have no idea what this relates to.It is not shown on the plans. It wasnot [Auckland Drainage's] scope ofwork. I don't consider that it waswork carried out by [AucklandDrainage].Hire of pressure spreading mats toallow work to continue during winterand reduce mud transfer to road$23,000I understand that [AucklandDrainage] hired some rubber matsto provide protection to the groundarea surrounding the excavation. Idon't understand why this is beingclaimed or why White Rose shouldhave to pay for this.Water blasting of the hired mats235 hours x $30 = $7,050Same comment as above. Further,235 hours seems extraordinarilyexcessive to waterblast some mats.Preparing the haul road35 hours x $120 = $4,200I don't understand what this claimrelates to. I don't know what the"haul road" is. I don't understandwhy we are being charged for this.Cartage of Surge for haul road fromHiggins yard to gurdwara site70 truck loads at $86 a load = $6,020Same comment ass above.Traffic management (cones andbarriers in carpark) = $15,000This was not done by [AucklandDrainage]. This work was done byWhite Rose. We installed securityfencing, signage, cones and safetybarriers to the carpark in order tokeep the public away from theconstruction site.Stockpile Knight and Dickey blacksand80 hours x $80 = $6,400This was done by Higgins as theycarried out the actual constructionof the carpark (road) whichincluded the use of black sand inthe basecourse layer. Annexed andmarked 'RS8' is a payment claimfrom Higgins.Removal of unsuitable fill material(soft sub-grade)24 loads x $257 = $6,168We don't know what this claim isabout. We didn't receive anynotification of this during the[subcontract]. I'm unclear whetherthe work was even carried out by[Auckland Drainage].Removal of material for Geotecharea due to soft sub-grade$3,000We don't know what this claims isabout. We didn't receive anynotification of this during the[subcontract]. I'm unclear whetherthe work was even carried out by[Auckland Drainage].Cleaning of carpark180 hours x $60 = $10,800We don't understand why we'rebeing charged for cleaning of thecarpark.Dismantling, removal and disposal ofexisting fence$5,100This is in relation to the fence thatwas damaged by [AucklandDrainage]. I don't understand whywe would be charged for this whenthe fence was damaged by[Auckland Drainage] and it was hisresponsibility to address.Excavation and removal of concreteand rubbish from Geotech area30 loads x $257 = $7,100We don't understand what thisclaim is about. We have had noexplanation.Legal costs$1,150[46] Mr Singh noted that these sums were claimed for alleged variation workswhich were not accepted by White Rose. He said that White Rose did not receive anynotification from Auckland Drainage during the course of the project that it consideredthat it was carrying out variation work for which additional sums would be claimedover and above the agreed fixed price (and the $94,000 variation).[47] Mr Singh acknowledged that he did not respond to Mr Broad's letter. He saidthat the claims in the letter were nevertheless not accepted, and that that was raisedwith Mr Lal at various further meetings.[48] Mr Singh referred to a meeting in late April/early May 2016 at the Templeproperty. He said that Mr Lal was unable to produce any support or documentationfor Auckland Drainage's claims. There was no resolution, and he told Mr Lal thatWhite Rose would not be paying anything further.[49] There was a further letter from Mr Broad in February 2017, claiming the sameamount. Mr Singh said that that led to further exchanges and meetings between himand Mr Lal's representatives. Mr Singh referred to a telephone call from Mr Lal on26 June 2017, in which Mr Lal asked for a further meeting. Mr Singh refused to meethim, as he did not consider anything could be resolved.[50] There were further unsuccessful meetings in an attempt to resolve the dispute,one of which lasted over 3 hours. Mr Lal was represented at these meetings by hispartner, Ms Swamy. Mr Singh said that neither she nor another associate of Mr Lal'swho attended the meetings, Carmen Hetaraka, was able to explain or substantiateAuckland Drainage's claims.[51] Mr Singh said that he had never seen or been provided with copies of thealleged second and third agreements Auckland Drainage claims to have entered intowith White Rose on 9 and 20 October 2015. White Rose did not sign any suchagreements. Nor did Mr Singh see invoices relating to the alleged second and thirdagreements until they were provided to his lawyer with an email dated 15 June 2018.[52] Mr Singh produced copies of eight invoices which he said had previously beensubmitted by Auckland Drainage. These invoices totalled $264,666.50.[53] Mr Singh described White Rose as a successful and solvent business, able tomeet its debts as they fell due.[54] The second affidavit for White Rose was provided by a chartered accountant,Mr Dinesh Raniga. Mr Raniga's firm have acted for White Rose for more than 6 years.[55] Mr Raniga said that White Rose has been actively and successfully trading. Itsshareholders have supported the business throughout.[56] Mr Raniga said White Rose continues to operate as a going concern. It had anet surplus of assets over liabilities of $730,996.70 at 31 March 2018. Thecorresponding figure at March 2017 was $800,033. Mr Raniga described modestlysuccessful trading years for White Rose in each of the three financial years to March2018 (profit before shareholder remuneration in those years ranging between$168,397.23 and $203,715.33). He expressed the view that White Rose was solvent,and able to pay its debts as they fell due.[57] Mr Singh provided a further affidavit on 31 October 2018. With it, he attacheda copy of the adjudicator's determination, given on 17 September 2018. He alsoproduced copies of the submissions presented to the adjudicator. He contended that,on the basis of the evidence and submissions presented to the adjudicator, theadjudicator had held that no further sums were due to Auckland Drainage for workperformed under the subcontract.[58] Mr Singh then addressed Mr Lal's substantive affidavit in support of theliquidation claim. He denied that there were multiple contracts, contending that therewas only one fixed price contract for $175,000, with a verbally agreed variation worth$94,000. He said the adjudicator accepted that that was the position.[59] Mr Singh said that Mr Lal's "discovery" that additional material would need tobe excavated from the site was what led to the discussions and agreed variation foradditional works at $94,000. That work has been paid for by White Rose.[60] Mr Singh denied that there was any evidence of additional work performed byAuckland Drainage. He reiterated that White Rose did dispute the claims made byAuckland Drainage.[61] Mr Singh contended that Auckland Drainage retrospectively issued some of itsinvoices, which he had not seen prior to Auckland Drainage's response to theadjudication claim. The relevant invoices were provided years after the project wascomplete.[62] Mr Singh also denied Mr Lal's contention that White Rose only paid a total of$153,025.64. The adjudicator accepted that payments of $239,000 had been made toAuckland Drainage direct (in addition to the payments it made to varioussubcontractors of Auckland Drainage). Mr Singh said that the total amount WhiteRose paid to Auckland Drainage (or on its behalf) for the works performed, was$406,902.87.[63] Mr Singh said that Mr Lal's assertion that Auckland Drainage is owed for workdone on other projects, was asserted for the very first time in Mr Lal's affidavit. At noprevious stage had there been correspondence from Mr Lal relating to the alleged debtfor work on other projects.The adjudicator's determination[64] White Rose claimed the sum of $137,902.87 from Auckland Drainage.[65] The adjudicator noted that the arrangement between the parties started with afixed price contract for the excavation works, for $175,000 including GST. He thenrecorded that on 28 September 2015 there was an oral variation which varied theoriginal fixed price sum by adding an additional $94,000 (including GST) to coverfurther work to be carried out by Auckland Drainage. The adjudicator recorded WhiteRose's contention that it had paid $239,000 (GST inclusive) to Auckland Drainage,and the $167,902.87 paid to various subcontractors of Auckland Drainage. WhiteRose's claim of $137,902.87 was the difference between the total amount it claimed tohave paid ($406,902.87) and the agreed subcontract price (as varied) of $269,000.[66] The adjudicator then recorded Auckland Drainage's contentions, including itscontention that it did not enter into a fixed price contract but (in effect) three separatecontracts (the subcontract on 28 June 2015, the first oral agreement on 9 October 2015for work valued at $102,305, and the second oral agreement on 20 October 2015 forwork valued at $163,195).[67] The adjudicator recorded Auckland Drainage's contention that the originalagreement was effectively based on a "cut to fill" measure, calculated at the rate of$257.00 per load. A total of 1,692 loads were removed from the Temple property. Inaddition to those claims, Auckland Drainage claimed that it had undertaken separatework at the request of White Rose, for which it had invoiced $118,808. It submittedthat it had performed work to a total value of $551,003, but had only been paid$153,025.24. On that basis, the balance due to it by White Rose was said to be$400,626.76.[68] The adjudicator referred to a "significant evidentiary dispute" betweenMr Singh and Mr Lal over "fundamental aspects of what constituted and defined theexcavation works". He found that it was impossible to reconcile the documents withwhat had or had not been allegedly paid.[69] On the claim by Auckland Drainage for $400,626.76, the adjudicator foundthat there was insufficient evidence to support the contention that Auckland Drainagewas entitled to charge on a "cut to fill" basis. In order to establish that it was entitledto any sums over and above the $269,000 accepted by White Rose, Auckland Drainagefirst had to prove that the subcontract was not a fixed price contract. The adjudicatorconsidered that any such contention would be difficult to reconcile with thesubcontract, which stated:This is an agreement between [Auckland Drainage] and [White Rose] tocomplete the excavation job at [the Temple property] at the cost of $175,000including GST.(Emphasis added)[70] The adjudicator said that, on the face of it, there appeared to be a fixed pricecontract to complete the work, subject only to the $94,000 variation accepted by WhiteRose. Even if that were not the case, the adjudicator considered that there wasinsufficient evidence to determine whether other payments (if any) were due toAuckland Drainage (Mr Singh contended that he had never received the request forfurther variations, and only agreed to the $94,000 variation).[71] The adjudicator pointed out that this finding did not mean to say that additionalclaims by Auckland Drainage could not be upheld in another jurisdiction – theadjudicator was simply not satisfied that there was sufficient evidence before him tofind that Auckland Drainage was entitled to the further sums it claimed.[72] The adjudicator applied similar reasoning in refusing White Rose's claim forthe $137,902.87 alleged overpayment. The adjudicator noted that White Rose clearlyagreed to make the payments that it did to the subcontractors and, in doing so, arguablyaccepted that making the payments to Auckland Drainage's subcontractors becamepart of its obligations under the subcontract. In the adjudicator's view, White Rosecould not turn around and assert that it was wrong to make those payments to thesubcontractors, at least without further and cogent evidence as to how the paymentscame to be made in the first place. And even if White Rose had made out itscontention, its claim for $137,902.87 would arguably be reduced by $30,000, beingthe difference between the $269,000 it agreed to pay to Auckland Drainage and the$239,000 actually paid.Reply evidence from Mr Lal[73] Mr Lal said that he did not believe the adjudicator had carefully considered allof the evidence given for Auckland Drainage in the adjudication proceeding. Inparticular, the adjudicator incorrectly concluded that there was no variation to thesubcontract, or he failed to take note of the fact that Auckland Drainage had issuedundisputed invoices under the CCA which had not been paid. Also, the adjudicatorhad failed to consider any correspondence between the parties, or their previousdealings. Figures published by the Society clearly indicate that White Rose was paidfor the excavation work carried out by Auckland Drainage.[74] Mr Lal then contended that, if the adjudicator was satisfied that White Rosecould not claim a refund of the amounts paid by it to Auckland Drainage's contractors,that would also imply that the existence of those payments was evidence of thesubcontract variations for which Auckland Drainage was contending.[75] In response to Mr Singh's evidence that the agreed oral variation under which$94,000 would be paid covered any and all excavation work to be carried out byAuckland Drainage at the Temple property, Mr Lal referred to a chart prepared by aMr Prameet Sharma of the company Prime Civil Ltd. Mr Lal had said in his earlieraffidavit that Mr Sharma was the main contact person from Prime Civil for the tippingwork, but was also involved in project management for White Rose. (White Rosedenies that Mr Sharma was ever involved in any relevant project management workfor it.) Mr Lal said the chart prepared by Mr Sharma, which was presented to theSociety, claimed variation money from the Society for work that Auckland Drainagehad performed. Mr Lal accused White Rose of being unwilling to pay that money onto Auckland Drainage. He said the amount of extra work carried out by AucklandDrainage was far greater than that contemplated by the $94,000 variation that WhiteRose says it agreed to, and that the receipt by White Rose of money for work carriedout by Auckland Drainage constituted an "unauthorised profit". (In his supplementaryaffidavit, Mr Singh had said that White Rose did not make any profit from the job, asit performed its work for the Society at cost. He said that in any event the arrangementsbetween the Society and White Rose had nothing to do with Auckland Drainage.)[76] In response to Mr Singh's contention that some of the Auckland Drainageinvoices were produced retrospectively, and that Mr Singh did not see them until hereceived Auckland Drainage's response in the adjudication proceeding, Mr Lal saidthat the invoices were issued under the CCA and emailed to White Rose. He said thatWhite Rose has never disputed the invoices, and that there is no evidence provided byit in support of the challenges it now makes to the invoices.[77] On the amounts paid by White Rose, Mr Lal said that Auckland Drainage bankstatements (produced in evidence) show that it only received $153,025.64 from WhiteRose for work done under the subcontract.[78] In response to Mr Singh's evidence about the work allegedly done by AucklandDrainage for White Rose on contracts unrelated to the subcontract, Mr Lal said thatthe invoices were discussed with Mr Singh, and a payment of $59,000 was receivedin 2015 from White Rose.[79] In response to the evidence of Mr Raniga, Mr Lal pointed out that no evidencewas produced showing White Rose's financial position in the year to 31 March 2016.He contended that that financial year would be crucial, as it would show the debthistory during the time White Rose started defaulting on payments to AucklandDrainage. The financial statements for that year would also have reflected the factthat the work done by White Rose for the Society was done at cost (if that was in factthe case).Further affidavit of Mr Lal produced at the hearing[80] At the hearing, Mr Purusram tendered a further affidavit of Mr Lal, attachingcopies of certain emails to White Rose relating to the subcontract. I received theaffidavit on the basis that Mr Taylor would consider it during the course of the hearingand let me know if he had any objection to it, or if his client wished to file any evidencein response. Mr Taylor did not object to the affidavit coming in, or seek any right toreply to it.[81] The affidavit attached copies of emails between Mr Lal (or Ms Swamy on hisbehalf) and Mr Singh. The first email, dated 12 October 2015, was an email sent byMs Swamy to Mr Singh attaching an invoice for the excavation work at the Templeproperty. The email said that 60 per cent of the job had been completed, and that thetotal due to be paid was $61,410.[82] There were further emails from Mr Lal to Mr Singh on 2 December 2015 and5 December 2016. The email dated 2 December 2015, referred to a "below email",which was presumably a reference to an email from Mr Lal to Mr Singh dated1 December 2015, attaching all the invoices that Auckland Drainage then consideredwere due for payment "for all the extra work [Auckland Drainage] has done at the[Temple property] plus the amount outstanding for the excavation". The 1 December2015 email said that Mr Lal had done a cost break down as requested by Mr Singh,and listed every detail to make things clear for understanding. Mr Lal invitedMr Singh to look through the documents and arrange to discuss them with him. Theattachments referred to in the 1 December 2015 email were not provided with Mr Lal'saffidavit.[83] The email from Mr Lal dated 5 December 2015 referred to the "attachedinvoices", but copies of the attached invoices were not provided with Mr Lal's furtheraffidavit. The email of 5 December 2015 expressed concern at the delays in makingpayment of Auckland Drainage's accounts. Mr Lal asked the reason why his companywas not being paid.[84] The last of the emails was dated 16 December 2015. In this email, Mr Lalreferred to several emails he had sent to Mr Singh without response. The emailreferred to an Excel spreadsheet Auckland Drainage had provided which was said tohave clearly listed all the extra costs Auckland Drainage had catered for which werenot part of the initial contract. Again, the spreadsheet was not provided with theaffidavit, but it was presumably a spreadsheet Auckland Drainage had provided withan email from Mr Lal dated 12 December 2015. Mr Lal said he could not understandwhy Auckland Drainage should have to meet these costs when White Rose had beenpaid for them. Mr Lal indicated Auckland Drainage's intention to instruct solicitors ifit was not paid.The issuesThe overarching issue[85] White Rose's failure to comply with the statutory demand, or apply to set itaside, entitles Auckland Drainage to rely on a presumption that White Rose isinsolvent.6 However, that failure is not necessarily fatal to White Rose's arguments.The issue is whether, notwithstanding that failure, White Rose has shown there is agenuine and substantial dispute over the claim against it.7The subsidiary issues[86] The following preliminary issues fall to be determined:(1) Did Auckland Drainage's invoices to White Rose constitute "paymentclaims" under the CCA, which Auckland Drainage is entitled to recoveras debts due under s 23(2)(a) of the CCA?(2) Is there a genuine and substantial dispute over whether (a) thesubcontract was for a fixed price of $175,000, or (b) Auckland Drainagewas entitled to bill under the subcontract according to the number ofloads it removed from the site?6 Companies Act 1993, s 287(a).7 Yan v Mainzeal Property and Construction Ltd, above n 1(3) Is there a genuine and substantial dispute over White Rose's contentionthat Auckland Drainage's claims for alleged additional excavation workcarried out by it under the subcontract were to be capped at $94,000?(4) Is there a genuine and substantial dispute over whether the partiesagreed, on or about 20 October 2015, that White Rose would pay foran additional 635 loads (billed by Auckland Drainage at $163,195)?(5) Is there a genuine and substantial dispute over whether White Roseagreed to pay for the work described by Auckland Drainage in itsinvoice of 1 December 2015 as "Preliminary & General Work Done by[Auckland Drainage] as per Tender Document Job Description forProposed Car-Park", and billed by it at $118,808?(6) Is there a genuine and substantial dispute over White Rose's contentionthat it paid Auckland Drainage $239,000 for work performed byAuckland Drainage under the subcontract (and not the $153,025.64 forwhich Auckland Drainage contends)?(7) Is Auckland Drainage entitled to a liquidation order based on WhiteRose's alleged failure to pay the balance of $20,303.68 said to be owingto Auckland Drainage on projects unrelated to the subcontract?[87] I will address each of those issues in turn.Issue (1) — Did Auckland Drainage's invoices to White Rose constitute "paymentclaims" under the CCA, which Auckland Drainage is entitled to recover as debtsdue under s 23(2)(a) of the CCA?[88] Mr Purusram relied on the following provisions of the CCA:14 Parties free to agree on payment provisions in constructioncontract(1) The parties to a construction contract are free to agree betweenthemselves on a mechanism for determining—(a) the number of payments under the contract:(b) the interval between those payments:(c) the amount of each of those payments:(d) the date when each of those payments becomes due.(2) To avoid doubt, the parties to a construction contract may expresslyagree to a single payment under subsection (1)(a).20 Payment claims(1) A payee may serve a payment claim on the payer for a payment,—(a) if the contract provides for the matter, at the end of therelevant period that is specified in, or is determined inaccordance with the terms of, the contract; or(b) if the contract does not provide for the matter in the case of aprogress payment, at the end of the relevant period referred toin section 17(2); or(c) if the contract does not provide for the matter in the case of asingle payment expressly agreed under section 14(1)(a),following the completion of all of the construction work towhich the contract relates.(2) A payment claim must—(a) be in writing; and(b) contain sufficient details to identify the construction contractto which the payment relates; and(c) identify the construction work and the relevant period towhich the payment relates; and(d) state a claimed amount and the due date for payment; and(e) indicate the manner in which the payee calculated the claimedamount; and(f) state that it is made under this Act.(3) A payment claim must be accompanied by—(a) an outline of the process for responding to that claim; and(b) an explanation of the consequences of—(i) not responding to a payment claim; and(ii) not paying the claimed amount, or the scheduledamount, in full (whichever is applicable).(4) The matters referred to in subsection (3)(a) and (b) must—(a) be in writing; and(b) be in the prescribed form (if any).21 Payment schedules(1) A payer may respond to a payment claim by providing a paymentschedule to the payee.(2) A payment schedule must—(a) be in writing; and(b) identify the payment claim to which it relates; and(c) state a scheduled amount.(3) If the scheduled amount is less than the claimed amount, the paymentschedule must indicate—(a) the manner in which the payer calculated the scheduledamount; and(b) the payer's reason or reasons for the difference between thescheduled amount and the claimed amount; and(c) in a case where the difference is because the payer iswithholding payment on any basis, the payer's reason orreasons for withholding payment.22 Liability for paying claimed amountA payer becomes liable to pay the claimed amount on the due date forthe payment to which the payment claim relates if—(a) a payee serves a payment claim on a payer; and(b) the payer does not provide a payment schedule to the payeewithin—(i) the time required by the relevant constructioncontract; or(ii) if the contract does not provide for the matter,20 working days after the payment claim is served.23 Consequences of not paying claimed amount where no paymentschedule provided(1) The consequences specified in subsection (2) apply if the payer—(a) becomes liable to pay the claimed amount to the payee undersection 22 as a consequence of failing to provide a paymentschedule to the payee within the time allowed by section22(b); and(b) fails to pay the whole, or any part, of the claimed amount onor before the due date for the payment to which the paymentclaim relates.(2) The consequences are that the payee—(a) may recover from the payer, as a debt due to the payee, in anycourt,—(i) the unpaid portion of the claimed amount; and(ii) the actual and reasonable costs of recovery awardedagainst the payer by that court; and(b) may serve notice on the payer of the payee's intention tosuspend the carrying out of construction work under theconstruction contract.(3) A notice referred to in subsection (2)(b) must state—(a) the ground or grounds on which the proposed suspension isbased; and(b) that the notice is given under this Act.(4) In any proceedings for the recovery of a debt under this section, thecourt must not enter judgment in favour of the payee unless it issatisfied that the circumstances referred to in subsection (1) exist.[89] Mr Taylor submitted that at no time prior to the filing of the written submissionby counsel for Auckland Drainage did Auckland Drainage ever assert that the invoicesissued by it constituted payment claims for the purposes of s 20 of the CCA, whichmight entitle the plaintiff to claim the amounts invoiced as statutory debts under s 23of the CCA (White Rose not having filed any payment schedules under s 21 of theCCA). Mr Taylor said that the contention that statutory debts existed under s 23 wasnever made in the correspondence between the parties' solicitors, and was notmentioned in the statutory demand. Nor did the liquidation claim assert that theamount said to be due was a statutory debt under s 23 of the CCA.[90] I think there is some merit in those submissions, and also in Mr Taylor'ssubmission that the issue of alleged failure to provide payment schedules was notraised by Auckland Drainage before the adjudicator. Arguably Auckland Drainagewaived any point over the absence of payment schedules when it elected not to putthat issue before the adjudicator.[91] In any event, I am satisfied that there is a genuine and substantial dispute as towhether the substantial invoices issued by Auckland Drainage which have not beenpaid (the invoices for $163,195 and $118,808, both dated 1 December 2015), satisfiedthe requirements of s 20 of the CCA. If they did not, White Rose would have beenunder no obligation to submit payment schedules under s 21, and no statutory debtcould have arisen under s 23(2)(a)(i).[92] The invoice for the $163,195 contained the following description of the workcarried out:Excavation completed for 635 loads @ $257.00 per load[93] Towards the bottom of the invoice, the following statement appeared:This is a Payment Claim under the Sub-Contractors Act 2002[94] I accept Mr Taylor's submission that this invoice arguably did not comply withs 20(2)(c) of the CCA, in that it did not state the relevant period to which the paymentclaim related. Nor did the invoice appear to comply with s 20(2)(d) — it did notcontain any statement of the due date for payment.[95] Further, I accept Mr Taylor's submission, based on T R Welsh v Gunac SouthAuckland Ltd, that there was arguably no sufficient statement in this invoice that theclaim was made under the CCA.8 The recipient of a payment claim made under s 20of the Act is entitled to have his or her attention drawn to the relevant statute, and areference to a non-existent statute (the Sub-Contractors Act 2002) arguably did notachieve that purpose.[96] The invoice for $118,808 arguably has similar deficiencies. It also stated thatthe invoice was a payment claim under the "Sub-Contractors Act 2002", and the8 T R Welsh v Gunac South Auckland Ltd BC2008/60075, 11 February 2008 (HC), in which Allan Jheld (at [22]) that the requirements of s 20(2)(f) are mandatory, and not subject to the substantialcompliance considerations referred to by the Court of Appeal in George Developments Ltd vCanam Construction Ltd ([2006] 1 NZLR 177) in respect of the other aspects of s 20.invoice contained no statement as to the period to which it related. The description ofthe work was as follows:PRELIMINARY & GENERAL WORK DONE BY [AUCKLANDDRAINAGE] AS PER TENDER DOCUMENT JOB DESCRIPTION FORPROPOSED CAR-PARK.REMOVE FENCERUBBISH REMOVALPULL SAND AND PREPARE GEOCLOTH FOR 100MM[97] While Auckland Drainage's invoices for excavation and removal workgenerally indicated that the amount charged was based on the number of loadsremoved, there appears to be nothing in this invoice which would have amounted tocompliance with the s 20(2)(e) requirement that the payee must indicate in his or herpayment claim the manner in which the claimed amount has been calculated.[98] Quite apart from those issues, there appears to have been no compliance withs 20(3), which requires that a payment claim must be accompanied by an outline ofthe process for responding to the claim and an explanation of the consequences offailing to respond.9[99] While the Court of Appeal held in George Developments Ltd v CanamConstruction Ltd that technical defects in a payment claim should not invalidate theclaim and thus frustrate the CCA's purpose of securing cash flow and speeding uppayments in the construction industry,10 I am satisfied that it is reasonably arguablefor White Rose that the combinations of the deficiencies in these two invoices wereeach sufficient to raise a substantial issue over their validity as payment claims underthe CCA.[100] That is sufficient to deal with the plaintiff's contentions on Issue (1). The twomajor invoices which have not been paid arguably did not qualify as valid paymentclaims under s 20 of the CCA. There is accordingly a genuine and substantial dispute9 Prior to 1 December 2015, when these two invoices are said to have been sent, this requirementwas restricted to payment claims served on residential occupiers.10 George Developments Ltd v Canam Construction Ltd, above n 8, at [43].over the plaintiff's contention that it is entitled to recover the amounts of these twoinvoices as statutory debts under s 23(2)(a) of the CCA.[101] In view of my findings below that it is arguable for White Rose that there wasa fixed price contract for the total sum (as varied) of $269,000, it is not necessary toconsider whether the other invoices issued by Auckland Drainage constituted validpayment claims under s 20 of the CCA. White Rose has sufficiently raised a genuineand substantial dispute on this issue.Issue (2) — Is there a genuine and substantial dispute over whether (a) thesubcontract was for a fixed price of $175,000, or (b) Auckland Drainage wasentitled to bill under the subcontract according to the number of loads it removedfrom the site?[102] I am satisfied that White Rose has raised a genuine and substantial dispute onthis issue.[103] On the face of it, the subcontract was for a fixed price contract under whichAuckland Drainage would "complete the excavation job" at the Temple property for$175,000 including GST. However Mr Lal said that it was expressly written down inthe agreement that the amount of loads to be excavated would be 680 loads, and thatas the work progressed it was decided that more than twice that amount of dirt wouldhave to be excavated and removed. He produced a copy of the subcontract on whichsomeone had added a handwritten note stating "As per initial plan 680 load was to beexcavated and dumped by [Auckland Drainage]". However, that note did not appearon the copy of the subcontract produced by Mr Singh, who said that the subcontractwas a fixed price contract, with the scope of the excavation work contained in theplans, drawings and building consent obtained for the work.[104] Mr Lal also said in his affidavit that the load amount of 680 loads was "inconformity with the load amount in the initial plan approved by Auckland Council on30 October 2014". He produced copies of an email from Prameet Sharma dated28 July 2015 about the original load figure confirmation, and a copy of the conceptplan for the work. Working from the concept plan, Mr Sharma calculated the originalvolume to be excavated and tipped was based on 4,915 square metres of carparkmultiplied by a depth of 800 mm — total volume 3,932 cubic metres. Allowing forsix cubic metre loads, Mr Sharma calculated a total of 653 loads. However, in hisemail of 28 July 2015 which was addressed to Mr Singh and copied to Mr Lal,Mr Sharma noted that the calculation of 3,932 cubic metres did not allow for a onemetre wider dig Auckland Drainage would have to do to be able to build kerbs on bothsides. Nor did it allow for any rain gardens or drainage materials to be removed.[105] Mr Sharma referred to a plan showing volume calculations based on actualwidths and works done on site. He mentioned that the scope shown now allowed forthe one metre extra, and also for the existing ground being on average 400 mm higher.The result of his calculations was that the new total volume for the excavation workwas double the original scope — allowing for 6 cubic metres per truck, AucklandDrainage would need to remove 1,120 loads.[106] Mr Sharma's email of 28 July 2015 was sent a month after the subcontract wassigned. In my view it does not appear to support Mr Lal's contention that, "it wasexpressly written down in the agreement that the amount of load to be excavated wasto be 680 loads". It appears from Mr Sharma's 28 July email that what the parties hadoriginally worked on was a car-park area of 4,915 square metres that would have tobe excavated to a depth of 800 mm. Based on those estimations Mr Sharma did notcome up with a figure of 680 loads, but a figure of 653 loads.[107] While Mr Sharma calculated that more work would have to be done to performthe subcontract than the parties may have originally allowed for, that in my view wouldnot necessarily be sufficient to convert what was on its face a fixed price contract for$175,000 including GST into a "charge-up" contract based on the number of loads tobe removed from the site. The issues raised in Mr Sharma's email might have entitledAuckland Drainage to claim for extra work, or it might be that a Court would take theview that Auckland Drainage, having inspected the plans (and presumably inspectedthe site) took the risk that its fixed price tender might not be sufficient for it to properlycarry out the work. I do not need to decide that for the purpose of answering thequestion posed by this issue, and there is in any event insufficient evidence for me todo so. It is enough to find, as I do, that White Rose's contention that the subcontractwas for a fixed price of $175,000 including GST, and not a charge-up contractaccording to the number of loads removed from the site, raises a genuine andsubstantial dispute. I therefore find for White Rose on Issue 2.Issue (3) — Is there a genuine and substantial dispute over White Rose'scontention that Auckland Drainage's claims for alleged additional excavationwork carried out by it under the subcontract were to be capped at $94,000?[108] Mr Singh says that the only contract White Rose entered into with AucklandDrainage for the Temple property was the subcontract. He said he had neverpreviously seen or been provided with the second and third contracts which AucklandDrainage alleges were entered into on 9 and 20 October 2015. However, he acceptedthat it was agreed that Auckland Drainage would carry out additional work at a cost of$94,000.[109] On 21 September 2015 Prameet Sharma sent an email to a number of parties,including Mr Beaurain of Dodds Civil, the engineers for the project, Mr Singh, andMr Lal. Mr Sharma noted that the original cut-to-fill plan done by Dodds Civilshowed the final design of the finished car-park versus the existing ground level.Mr Sharma considered that the total excavation volume would be substantially greaterthan that contemplated by the original plan.[110] Mr Sharma wrote to Mr Beaurain again on 8 October 2015, with a copy toMr Singh. He appears to have sent the email in his capacity as project manager forHiggins Contractors Ltd, the company who would complete the remaining works afterthe earthworks had been completed by White Rose by the end of October. Mr Sharmasaid that he would like to have a meeting regarding changes to the scope of the workat the Temple property. He said that all that was needed was a variation order fromDodds Civil to the Society confirming the extra/wider excavations, and also capturinga further eight listed items not allowed for in the original work schedule. Mr Beaurainresponded to Mr Singh and Mr Sharma by email also dated 8 October 2015.Mr Beaurain said that all he needed to verify all the variations was the originalschedule of quantities. Mr Beaurain proposed to compare that with what Mr Prameethad said was required in his email.[111] The next step that is apparent from the correspondence produced by the partiesis that on 9 October 2015 Auckland Drainage emailed to Mr Singh a draft form ofagreement dated 9 October 2015. The first paragraph of this draft agreement read:9th October 2015This is an agreement between [Auckland Drainage] and [White Rose] tocomplete the excavation job at [the Temple property] at the cost of $102,350including GST.The payment of $ of this job will be divided as below %.• $60,000 — deposit.• $22,350 — half completed.• $20,000 — final payment.Also this job has already started and will be completed by Saturday 10thOctober.[112] Later the same morning Mr Singh acknowledged receipt of the draftagreement. He said that White Rose also needed the original contract for $175,000including GST, as that "will help us to justify the variations". He asked for the copyof the earlier contract asap.[113] In a supplementary affidavit, Mr Singh acknowledged that there was a verbalarrangement agreed with Auckland Drainage to vary the subcontract by providing forpayment of an additional $94,000. He said that Mr Lal's discovery that additionalmaterial would need to be excavated from the Temple property was what led to thediscussions and to the oral variation of $94,000. He said that the $94,000 has beenpaid by White Rose, and it represented payment for any additional work which wasrequired.[114] In its response filed in the adjudication proceeding, Auckland Drainage saidthat after the "second contract for $102,350" was emailed to White Rose on 9 October2015 that agreement was discussed at the office of White Rose. Auckland Drainagecontended that Mr Singh said that "for now we will go with $94,000 and you continueworking. Once I am back from overseas we will sort out your payment then".[115] Mr Singh did not accept that description of the events in his evidence in theadjudication proceeding. He said that there was a meeting at his office on28 September 2015, and he and Mr Lal then agreed to an additional $94,000 for thecompletion of the work. Mr Singh said that he agreed to pay that as a variation, eventhough he considered the work was required to remedy Auckland Drainage's breachof contract and failure to properly perform the work.[116] Mr Singh then referred to the spreadsheet sent to White Rose by AucklandDrainage in support of its claims on or about 12 December 2015.[117] The schedule accompanied the email from Mr Lal dated 12 December 2015,in which Mr Lal asserted that, as of 12 December 2015, White Rose owed AucklandDrainage the total sum of $135,471.81 referred to in the Schedule. The Schedulecontained a section headed "Extra Over Above Original Quote". Underneath thatheading the following appeared:"Item Unit Quantity Rate TotalExtra over excavation due tounforeseen/agreed LS [ie "lump sum"]rated to remove extra material, excavateload and remove off site includingtipping.LS 1 $94,000 $94,000"[118] On 15 June 2018, Mr Michael Keall, the barrister then acting for AucklandDrainage, sent an email to White Rose's counsel, in which he referred to the threecontracts for which Auckland Drainage was then contending (the subcontract, a secondcontract entered into on 9 October 2015, and a third contract entered into on20 October 2015). In respect of the alleged second contract, Mr Keall said that theinvoice relating to this contract was "slightly discounted from the contract amount".That statement appears to be consistent with an agreed reduction in the amount of theclaim based on the alleged 9 October 2015 agreement, from $102,350 to $94,000.[119] Mr Purusram submitted that the fact that White Rose elected to makesubstantial payments direct to Auckland Drainage's subcontractors confirms thatWhite Rose accepted responsibility for variation payments going far beyond theadditional $94,000 it says it agreed to pay Auckland Drainage. But there is nosufficient evidence of the basis on which White Rose paid these subcontractors — forexample, payments may have been required simply to get the work completed whenAuckland Drainage was not paying its subcontractors, with the work done by thesubcontractors under new arrangements entered into by the subcontractors with WhiteRose. Whether that is what occurred or not is not clear, but if that is what occurred itdoes not necessarily follow that there was a corresponding variation to the subcontract(beyond the agreement for payment of an additional $94,000). Alternatively, if therewas a fixed price contract as White Rose contends, the effect of White Rose payingAuckland Drainage's contractors (thereby discharging Auckland Drainage's ownresponsibilities to that extent) may have been to create a corresponding liability owedby Auckland Drainage to White Rose. None of that is clear, and the evidence falls farshort of what would be required to justify a finding on this issue in AucklandDrainage's favour.[120] In my view it is at least arguable from the evidence produced (and particularlyfrom the spreadsheet sent by Auckland Drainage to White Rose on 12 December 2015,with its reference to a "lump sum") that there was an agreement on a fixed price of$94,000 for any extra work Auckland Drainage had to perform. It appears thatMr Sharma had identified by 21 September 2015 at latest the volume of material to beexcavated and removed over and above what Auckland Drainage says it contemplatedwhen it signed the subcontract, and Mr Singh says that a lump sum of $94,000 for theadditional work was agreed between he and Mr Lal on 28 September 2015. WhileMr Lal submitted a draft contract for the extra work containing a price of $102,350 on9 October 2015, the evidence shows that Auckland Drainage arguably did agree toaccept the figure of $94,000 that White Rose says was agreed for any additionalexcavation/removal work. For those reasons I find that White Rose has raised agenuine and substantial dispute on its contention that Auckland Drainage's additionalcharges for the allegedly unanticipated excavation/removal work were to be capped inthe sum of $94,000.Issue (4) — Is there a genuine and substantial dispute over whether the partiesagreed, on or about 20 October 2015, that White Rose would pay for anadditional 635 loads (billed by Auckland Drainage at $163,195)?[121] It follows from my conclusion on Issue 3 that there must be a genuine andsubstantial dispute on this issue, and that it is not suitable for determination in thecontext of a liquidation claim. I refer also to Mr Singh's denial of any contractallegedly entered into on 20 October 2015 that would have entitled Auckland Drainageto charge a further $163,195, and the absence of any explanation from Mr Lal as towhy White Rose would have agreed to pay such a substantial additional sum so soonafter the parties had agreed on a lump sum of $94,000 to complete the excavation andremoval work.[122] There is also a dispute over whether invoices were ever submitted for thiswork, at least before they were provided by Auckland Drainage's lawyer. Mr Singhspecifically denies ever receiving an invoice dated 1 December 2015 from AucklandDrainage for the sum of $163,195 (including GST), and he alleges that the invoicemust have been created later by Auckland Drainage.Issue (5) — Is there a genuine and substantial dispute over whether White Roseagreed to pay for the work described by Auckland Drainage in its invoice of1 December 2015 as "Preliminary & General Work Done by [AucklandDrainage] as per Tender Document Job Description for Proposed Car-Park", andbilled by it at $118,808?[123] The same result must follow on Issue (5) — Auckland Drainage has failed topoint to any specific agreement by White Rose to pay for preliminary and generalwork done as claimed by Auckland Drainage. The work appears to relate in generalterms to the excavation and removal work carried out by Auckland Drainage under thesubcontract as varied, and if it is arguable for White Rose (as I think it is) that all ofthe work performed by Auckland Drainage was to be carried out for a total fixed priceof $269,000 (including the $94,000 variation), it follows that there must be asubstantial dispute over Auckland Drainage's claim for an additional $118,808 forpreliminary and general work. I note also the various challenges to the claims thatMr Singh made in his evidence, as summarised in the table at paragraph [45] of thisjudgment (as best I can tell, the claims made in the invoice for $118,808 appear to beamong those discussed by Mr Singh in that table).[124] I find for White Rose on Issue (5).Issue (6) — Is there a genuine and substantial dispute over White Rose'scontention that it paid Auckland Drainage $239,000 for work performed byAuckland Drainage under the subcontract (and not the $153,025.64 for whichAuckland Drainage contends)?[125] The evidence of precisely what was paid by White Rose, how it was paid, andto whom, is by no means clear. However, in the spreadsheet prepared by AucklandDrainage and sent to White Rose on 12 December 2015 Auckland Drainage appearedto accept that White Rose had made payments totalling approximately $403,000,including payments made to Auckland Drainage subcontractors who had not been paidby it. I think that document, and the claim made at the time by Auckland Drainage fora sum of only approximately $135,000, makes it clear that there is a genuine andsubstantial dispute over whether White Rose has paid Auckland Drainage all it wasentitled to under the subcontract as varied. If it is arguable for White Rose thatAuckland Drainage was entitled to no more than $269,000 for the work, and AucklandDrainage appears to accept that White Rose has paid an amount in excess of that figure(including by payments made to Auckland Drainage subcontractors), then for presentpurposes the precise detail of what White Rose has paid and to whom does not matter.I accordingly find for White Rose on Issue (6).Issue (7) — Is Auckland Drainage entitled to a liquidation order based on WhiteRose's alleged failure to pay the balance of $20,303.68 said to be owing toAuckland Drainage on projects unrelated to the subcontract?[126] The claim for the $20,303.68 was not included in the statutory demand or inthe liquidation claim, and no application was made by Auckland Drainage to amendits claim. It is apparent from Mr Lal's affidavit that the claim goes back to 2015, beforethe subcontract work was undertaken, and Mr Lal offered no explanation for theapparent delay in pursuing this debt (if it is a debt).[127] In his supplementary affidavit, Mr Singh said that this claim has not previouslybeen asserted by Auckland Drainage, and at no stage has he received anycorrespondence from Mr Lal in respect of it. He said that White Rose paid AucklandDrainage in full for all work performed, including for the invoices produced by Mr Lalcovering the relevant work.[128] In a reply affidavit, Mr Lal said that he discussed the invoices with Mr Singh,and the total payment of $59,000 made by White Rose in 2015.[129] Mr Lal did produce copies of Auckland Drainage's bank statements showingdeposits which are said to constitute the $59,000 paid by White Rose for this work,but apart from a deposit of $40,000 made on 19 October 2015 that had the reference"Lali" (an apparent reference to Mr Singh), the statements generally did not show thepayer of the various sums deposited.[130] In circumstances where (i) the amount was not referred to in the liquidationclaim, (ii) White Rose claims that it has paid everything, and (iii) Auckland Drainageappears to have done nothing to pursue the debt for approximately three years, Iconsider that White Rose has raised a genuine and substantial dispute on this claim,and that it is not suitable for determination in the context of a liquidation proceeding.Other Matters[131] There were a number of other matters raised by counsel that I should mention.First, Auckland Drainage produced some evidence designed to show that White Rosewas paid by the Society for the work carried out by Auckland Drainage. For his part,Mr Singh denied that White Rose made any profit on its contract with the Society.[132] I do not think any arrangements made between White Rose and the Societywould necessarily affect the entitlement Auckland Drainage had under the subcontractas varied. No clear basis was put forward for any claim based on payments receivedby White Rose from the Society, and any issue over this must be in the "genuine,substantial dispute" category, and not appropriate for determination in a liquidationclaim.[133] Secondly, evidence was produced by White Rose (including an affidavit of itsaccountant, Mr Dinesh Raniga), designed to show that White Rose has been tradingsuccessfully and is solvent. In view of the fact that I have been able to determine thematter on the basis that White Rose has sufficiently shown that there is a genuine andsubstantial dispute over the amount claimed, it is not necessary for me to consider thisevidence, beyond noting that White Rose made a modest profit in the year ending31 March 2018 and appears to have positive shareholders' funds.[134] The third matter is the allegations made by White Rose of defectiveworkmanship by Auckland Drainage. In the event, it has not been necessary for meto make any findings on those allegations to reach a conclusion on the liquidationclaim. It is enough to note the existence of the claims, which, to the extent they mayhave any merit, provide further support for the view that the disputes between theparties are not suitable for determination in the context of a liquidation claim.[135] The last matter to mention is that I do not consider that the disputes raised byWhite Rose are either sufficiently insubstantial that the Court would be justified indeciding them in this proceeding, or that this is a case where it would be appropriateto order White Rose to pay the amount in dispute into Court. The disputes should inmy view be determined in an ordinary civil proceeding issued for that purpose.Result[136] The liquidation claim is dismissed. White Rose is entitled to costs on a 2Bbasis, plus disbursements as fixed by the Registrar.Associate Judge Smith