SRG GLOBAL REMEDIATION SERVICES (NZ) LIMITED v BODY CORPORATE 197281 [2022] NZCA 518

SRG GLOBAL REMEDIATION SERVICES (NZ) LIMITED v BODY CORPORATE 197281 [2022] NZCA 518[2 November 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA487/2021[2022] NZCA 518BETWEEN SRG GLOBAL REMEDIATIONSERVICES (NZ) LIMITEDAppellantAND BODY CORPORATE 197281First RespondentAND MAYNARD MARKS LIMITEDSecond RespondentAND HOBANZ PROJECT ASSIST LIMITEDThird RespondentAND HELLABY RESOURCE SERVICESLIMITEDFourth RespondentHearing: 22 June 2022 (further submissions received 20 July 2022)Court: French, Courtney and Dobson JJCounsel: A R Galbraith KC, J Q Wilson and D J Brinkman for AppellantR J Hollyman KC, N G Lawrence and W J Revell for FirstRespondentNo appearance for Second, Third and Fourth RespondentsJudgment: 2 November 2022 at 3 pmJUDGMENT OF THE COURTA The appellant's appeal against the High Court decision stayingenforcement of its judgment against the first respondent is allowed andthe High Court decision quashed.B The appellant's appeal against the High Court decision declining to staythe first respondent's counterclaim is dismissed and the High Courtdecision confirmed.C The first respondent's cross-appeal is dismissed.D The first respondent must pay the appellant costs on the cross-appealcalculated on the basis of a standard appeal, Band B together with usualdisbursements. We certify for second counsel.E There is no award of costs in relation to the appeal.F Costs in the High Court are remitted to that Court for determination inlight of this judgment.____________________________________________________________________REASONS OF THE COURT(Given by French J)Table of ContentsPara noIntroduction [1]Background [8]Was the Judge correct to find no arguable defence? [38]The Construction Contracts Act [39]The High Court decision [47]Discussion [49]Did the Judge err in declining to exercise her residual discretion towithhold the entry of judgment? [59]Arguments on appeal [59]Discussion [65]Did the Judge err in staying enforcement of the summary judgment? [84]Did the Judge err in declining to grant a stay of the counterclaim? [109]The High Court decision [109]Discussion [114]Outcome [152]Costs [155]Introduction[1] Body Corporate 197281 (the Body Corporate) and SRG Global RemediationServices (NZ) Ltd (SRG) are parties to a construction contract under which the BodyCorporate is the Principal and SRG the Contractor.[2] They are in dispute and each has filed claims in the High Court against theother. SRG is seeking payment from the Body Corporate for money owing to it forconstruction work under the contract. The Body Corporate is resisting payment andhas filed a counterclaim alleging that the construction work undertaken by SRG wasdefective and incomplete.[3] In the High Court, Associate Judge Gardiner held that the Body Corporate hadno arguable defence to SRG's debt claim and entered summary judgment for theamount owing. However, at the same time she stayed enforcement of the judgmentpending the outcome of the Body Corporate's counterclaim. It is currently scheduledfor hearing in July next year.1[4] In addition to seeking summary judgment in respect of its own claim, SRG alsoapplied for an order staying the Body Corporate's counterclaim proceedings in theHigh Court and referring the proceedings instead to arbitration. The Associate Judgedeclined that application.2[5] Both parties were dissatisfied with aspects of the High Court decision and nowappeal to this Court.[6] SRG appeals the decision to stay enforcement of its judgment. It also appealsthe decision declining to refer the counterclaim to arbitration. Both those decisionsbeing interlocutory in nature, SRG required leave to appeal which it obtained from theAssociate Judge in a separate leave judgment.3 For its part, the Body Corporatecross-appeals the decision to grant summary judgment.1 Hellaby Resource Services Ltd v Body Corporate 197281 [2021] NZHC 554 [Judgment underappeal] at [155].2 At [155(e)].3 SRG Global Remediation Services (NZ) Ltd v Body Corporate 197281 [2021] NZHC 1929[High Court leave decision].[7] Before turning to discuss the background of the case, we record that during theevents at issue SRG had a different name. It was called TBS Remcon Ltd (TBS). TBSwas identified as the party in the High Court judgment under appeal. The judgmentrefers throughout to TBS and does not mention SRG. The name SRG only firstappears in the leave decision. To avoid confusion, we therefore refer to TBSthroughout this judgment.Background[8] The Body Corporate is the body corporate for a 99-unit apartment complex inAuckland. In 2008 it was discovered that the complex was suffering from waterdamage. Then followed a number of investigations and varying estimates of the costof repairs. One of the investigations was undertaken by the second respondentMaynard Marks Ltd in 2010. Maynard Marks is an engineering firm and was engagedby the Body Corporate.[9] In 2014 the Body Corporate entered into the construction contract with TBSto carry out remediation work. The contract incorporated the general conditions ofcontract under NZS 3910:20134 with Maynard Marks named as Engineer to theContract. The contract (described as lump sum with a portion of cost reimbursementitems) recorded that the repair work would cost $7,590,272.58 "or such greater orlesser sum as shall become payable under the Contract". The contract also providedthat the repair work was to be carried out in five stages, one stage for each of the fiveblocks comprising the complex.[10] NZS 3910:2013, which as mentioned was incorporated into the contract, setsout a process for the making of progress payments to a contractor during the course ofbuilding work. The process is based on a system of payment claims and paymentschedules and is an adaptation of the payment regime contained in theConstruction Contracts Act 2002 .[11] We address the relevant provisions of the Construction Contracts Act later inthis judgment but at this juncture it is sufficient to note that the only difference between4 New Zealand Standard: Conditions of contract for building and civil engineering construction.the statutory regime and the contract between TBS and the Body Corporate is theprovision of provisional payment schedules.5[12] The contract provided that on service of a payment claim from TBS,Maynard Marks was to issue a Provisional Progress Payment Schedule.The payment schedules were provisional for 12 working days6 during which time theBody Corporate as Principal was able to notify Maynard Marks and TBS in writing ofany amendments or deductions it intended to make from the sum certified byMaynard Marks. In the absence of any such notification, the ProvisionalProgress Payment Schedule became the Final Progress Payment Schedule. Thescheduled amount was payable by the Body Corporate within 17 working days ofservice of TBS's payment claim.[13] TBS commenced the remediation work in late 2014. The first block wascompleted in December 2016. The final block was completed in June 2018.[14] During the course of the work, it was discovered that the damage was fargreater than had previously been thought due to the existence of hitherto unknownadditional defects. This resulted in a very large number of variation claims approvedby Maynard Marks. The Body Corporate paid for the work undertaken to rectify thefurther defects on a "cost plus agreed margin basis".[15] As a result of the variations, the remediation costs escalated dramatically,prompting the Body Corporate to seek a fixed price guarantee. At a meeting held inDecember 2017, TBS advised the Body Corporate that it estimated the total costs tobe $32 million.[16] Subsequently in March 2018 the Body Corporate and TBS agreed a credit termextension enabling the Body Corporate to defer payments after the due date, theinterest rate on any deferred payments to be 9.75 per cent per annum, compoundingmonthly.5 Construction Contracts Act 2002, s 22.6 Working Day is defined in the Contract as a "calendar day other than any Saturday, Sunday, publicholiday, or any day falling within the period from 24 December to 5 January both inclusive,irrespective of the days on which work is carried out".[17] The Body Corporate continued to request a fixed price guarantee and inJune 2018, the Body Corporate and TBS agreed a total fixed contract price of$35 million. The agreement was documented by way of a deed of variation(the variation agreement).[18] As at September 2018, the Body Corporate had paid TBS the sum of$32,188,700.35 leaving a balance owing of $2,711,299.65 plus interest.The outstanding amount represented the total of eight FinalProgress Payment Schedules issued between December 2017 and July 2018.7[19] In December 2018, two important things happened.[20] The first was that TBS's parent company Hellaby Resource Services Ltd(Hellaby) sold TBS to SRG Contractors NZ Ltd (SRG Contractors).8SRG Contractors is an Australian-based company.[21] The second was that on 12 December 2018, a deed of assignment was enteredinto by TBS, its old owner Hellaby and its new owner SRG Contractors. Hellabyagreed to pay SRG Contractors the amount owing by the Body Corporate under theconstruction contract on the basis that TBS would assign the debt to Hellaby and assistHellaby in recovering it.[22] The Body Corporate was advised of the assignment of the debt and on19 December 2018, 22 February 2019 and 7 March 2019, Hellaby served theBody Corporate with demands for payment.[23] The Body Corporate's justification for not paying was that it claimed certainareas of the remediation work had not been completed and that some of the work thathad been done was defective (the remaining defects).[24] When payment was not forthcoming, Hellaby filed proceedings against theBody Corporate seeking recovery of what it said was an accrued debt.7 In each case those Progress Payment Schedules became final because no amendments were made.8 Now called SRG Global Group (NZ) Ltd.Hellaby asserted that the Body Corporate had no arguable defence to its claim andapplied for summary judgment. The Body Corporate opposed the application forsummary judgment.[25] A preliminary issue arose and that was whether a clause in the constructioncontract prohibiting assignment of contractual rights without the consent of the otherparty meant that the deed purporting to assign TBS's rights to Hellaby was ineffective.The Body Corporate had never consented to the assignment. Associate Judge Lesterheld the deed was ineffective and that accordingly Hellaby had no standing to applyfor summary judgment. Its application was accordingly dismissed.9[26] TBS was then joined as a second plaintiff to the proceeding. An amendedstatement of claim was filed on 3 August 2020 and leave obtained under r 12.4(2AA)of the High Court Rules 2016 to bring a second application for summary judgment.10[27] On 1 September 2020, the Body Corporate filed a statement of defence toTBS's claim. It also filed a counterclaim against TBS as well as Maynard Marks andthe third respondent HOBANZ Project Assist Ltd (HOBANZ).[28] The counterclaim against TBS pleads five causes of action: breach of contract,negligence, money had and received, breach of s 9 of the Fair Trading Act 1986 andbreach of s 35 of the Contract and Commercial Law Act 2017. The central allegationsin respect of all the pleaded causes of action are that the repair work was carried outimproperly and that inadequate information was provided regarding the variations andthe cost of the remediation works. The action for money had and received is based ona claim that had the Body Corporate been aware of the remaining defects it wouldnever have accepted the payment claims and paid the amounts it did in relation to theremaining defects.[29] The remedies sought include the cost of remedying the remaining defects or anorder for specific performance requiring TBS to do everything and meet all costsnecessary to repair the remaining defects to the required standard as well as damages9 Hellaby Resource Services Ltd v Body Corporate 197281 [2019] NZHC 2641 at [31] and [47].10 Hellaby Resource Services Ltd v Body Corporate 197281 [2020] NZHC 2131 at [32].for consequential losses. As at the date of the judgment under appeal, the cost of thefurther remedial work was said to be unknown without further invasive testing but wasestimated to be $5,235,910. That exceeded the amount of TBS's debt claim, which atthe date of the judgment under appeal was $2,826,299.65.[30] The Body Corporate's claim against Maynard Marks pleads three causes ofaction: breach of contract, negligence and breach of the Fair Trading Act. The centralallegations are that Maynard Marks breached its obligations to the Body Corporate byfailing to identify all the defects, failing to properly advise the Body Corporate aboutthe most economical option of demolishing and rebuilding the complex, and failing toproperly advise it about the wisdom of the contractual arrangements it was enteringinto with TBS. It is further alleged that Maynard Marks breached its obligations tothe Body Corporate by continually approving TBS's variation orders and requests.[31] The remedies sought against Maynard Marks are similar to those soughtagainst TBS but also include a claim for an inquiry into damages caused by the lostopportunity to demolish and replace the complex.[32] The third counterclaim defendant HOBANZ is a consulting firm engaged bythe Body Corporate to provide design, procurement and implementation servicesregarding the remediation work. Three causes of action are pleaded: breach ofcontract, negligent misstatement and breach of s 9 of the Fair Trading Act. As notedby the Associate Judge,11 these causes of action focus on alleged failures by HOBANZwhen advising the Body Corporate to proceed with the repair works, to enter into itscontractual arrangements with TBS and to pay the variations. The same remediesclaimed against Maynard Marks are also claimed against HOBANZ.[33] On 18 September 2020, TBS filed a protest to jurisdiction, protestingthe Court's jurisdiction to hear the counterclaim on the grounds of anarbitration agreement.11 Judgment under appeal, above n 1, at [39].[34] The hearing before Associate Judge Gardiner was limited to thesummary judgment proceeding and the application for a stay of the counterclaimagainst TBS. The other counterclaim defendants took no part in the hearing.[35] Both the Body Corporate and TBS filed extensive affidavit evidence.The evidence filed by the Body Corporate included evidence from experts identifyingby reference to photographs those aspects of the remedial work they say are defective.[36] As mentioned, the Associate Judge held that the Body Corporate had noarguable defence to TBS's application for summary judgment. She accordinglyentered judgment in the latter's favour but stayed enforcement of it pendingdetermination of the counterclaim. The Associate Judge declined to refer thecounterclaim between the Body Corporate and TBS to arbitration.12[37] We turn now to address the issues on appeal, dealing first with the finding thatthe Body Corporate had no arguable defence to the application for summary judgment.Was the Associate Judge correct to find no arguable defence?[38] The Associate Judge's ruling was based on certain provisions of theConstruction Contracts Act. In order to understand the arguments on appeal, it isnecessary to provide a more detailed exposition of the key sections.The Construction Contracts Act[39] The purpose of the Act, as stated in s 3, is to reform the law relating toconstruction contracts and in particular:(a) to facilitate regular and timely payments between the parties to aconstruction contract; and(b) to provide for the speedy resolution of disputes arising under aconstruction contract; and(c) to provide remedies for the recovery of payments under a constructioncontract.12 Judgment under appeal, above n 1, at [155].[40] The payment regime allowing a party to recover a payment by making a writtenpayment claim to which the party liable for that payment may respond by means of awritten payment schedule is set out in ss 19–24.[41] Sections 20 and 21 detail the information that must be provided inpayment claims and payment schedules.[42] Section 22, headed "liability for paying claimed amount", provides that a payerbecomes liable to pay the claimed amount in the event that the payer does not providea payment schedule to the payee within the time required by the construction contractor, if the contract does not provide for the matter, 20 working days after thepayment claim is served.[43] Under s 23, if the payer does not provide a payment schedule in time and thenfails to pay the claimed amount, the consequences are that the payee is entitled torecover the unpaid portion of the claimed amount from the payer together with costsas a debt due in any court.[44] Section 24 governs what happens if a payment schedule is provided tothe payee in time and indicates a scheduled amount that the payer proposes to pay.In the event of non-payment of the scheduled amount or part thereof, the payee mayrecover from the payer the unpaid portion of the scheduled amount and costs as a debtdue to the payee in any court.[45] At the centre of this part of the appeal is s 79. It relevantly states:Proceedings for recovery of debt not affected by counterclaim, set-off, orcross-demandIn any proceedings for the recovery of a debt under section 23 or section 24or section 59, the court must not give effect to any counterclaim, set-off, orcross-demand raised by any party to those proceedings other than a set-off ofa liquidated amount if—(a) judgment has been entered for that amount; or(b) there is not in fact any dispute between the parties in relation to theclaim for that amount.[46] The policy underpinning the payment regime and in particular s 79 has oftenbeen described as "pay now, argue later".13The High Court decision[47] The Body Corporate did not dispute that the payment claims underpinning theamount sued for were made by TBS in accordance with the Construction ContractsAct, that provisional payment schedules were issued and that it never notifiedMaynard Marks of any deductions or amendments.14[48] In those circumstances, the Associate Judge was satisfied that a liability aroseunder s 24 in respect of which no undetermined counterclaim, set-off or cross-demandcould be raised. Section 79 of the Act applied and the Body Corporate therefore hadno arguable defence.Discussion[49] In its cross-appeal, the Body Corporate advances four reasons as to why theAssociate Judge was wrong to reach this conclusion.[50] The first is that the Body Corporate's claim against TBS could and should havebeen characterised as an abatement which would take it outside the scope of s 79.In support of that contention, the Body Corporate relied on an oral judgment of theHigh Court in Coffee Culture Franchises Ltd v Home Straight Park Trustees Ltd.15[51] Like the Associate Judge, we reject this submission. In our view, theBody Corporate's claim against TBS is clearly both in form and substancea counterclaim or cross-demand within the meaning of s 79. It is untenable to suggestotherwise. Coffee Culture was a very different case involving the interpretation ofan abatement clause in the lease of a café.13 See Tailored Building Solutions Ltd v Evans [2020] NZHC 2208 at [34]–[36], citingGill Construction Co Ltd v Butler [2010] 2 NZLR 229 (HC) at [9] andLaywood v Holmes Construction Wellington Ltd [2009] NZCA 35, [2009] 2 NZLR 243 at [52].14 Judgment under appeal, above n 1, at [52].15 Coffee Culture Franchises Ltd v Home Straight Park Trustees Ltd [2021] NZHC 577.[52] The second argument advanced by the Body Corporate is that theAssociate Judge should not have invoked the provisions of the Construction ContractsAct for summary judgment purposes when the particular circumstances of this caseare not the sort of circumstances the statutory payment scheme is designed to address.According to the Body Corporate, the statutory scheme is all about maintaining thecontractor's cash flow during the course of construction so they can pay their sub-contractors. Cash flow, so the argument runs, is not an issue in this proceedingbecause the project is completed, these were final payments and the Contractor has inany event already received full value by assigning the debt.[53] In our view, there is however nothing in the Act or the case law which wouldjustify such limitations being superimposed on the Contractor's statutory rights.The Act does not draw any distinctions between recovery of a final payment claim andan earlier one. Nor does it contemplate the court needing to inquire into howthe contractor intends to use the money it receives. The wording of s 79 is clear andunequivocal.[54] This argument, in our view, is also untenable.[55] The third argument advanced is that the Body Corporate does have an arguabledefence arising out of the conduct of Maynard Marks. There are, it is said, reasons tobe concerned about the engineer's conduct in approving the variation requests whichin turn bears on the legitimacy of the amounts being claimed by TBS.[56] A fourth and related argument is that the payment claims are unreliable due todefective workmanship and the uncertainty of the variations.[57] In our view, to accede to these arguments would be to seriously undermine thestatutory scheme and its policy of "pay now, argue later". Under the ConstructionContracts Act, TBS's entitlement to payment arises from the duly issued paymentschedules. A dispute between the Body Corporate and the Engineer cannot affectthose entitlements. Nor, as s 79 makes very clear, can the existence of allegations ofdefective workmanship.[58] We conclude that the combined effect of ss 21–23 and 79 of the ConstructionContracts Act means the Associate Judge's ruling of "no arguable defence" isunassailable.Did the Associate Judge err in declining to exercise her residual discretion towithhold the entry of judgment?Arguments on appeal[59] It is well-established that the court has a residual discretion not to entersummary judgment, even if satisfied the defendant has no arguable defence.The existence of this discretion arises from the use of the word "may" in r 12.2(1) ofthe High Court Rules.16[60] Mr Hollyman KC for the Body Corporate referred us to the following statementof the relevant principles in McGechan on Procedure:17(a) The discretion implied by the use of the word "may" is to berestrictively applied. In a great majority of cases, once the court issatisfied the defendant has no defence, there is no room for theexercise of discretion.(b) The residual discretion may be invoked to avoid oppression orinjustice to the defendant where:(i) The proceeding involves the actions or possible liability of athird party which is not before the court;(ii) The proceedings are such that the opportunity should be givento allow discovery or other interlocutory applications to beconcluded;(iii) The circumstances of the case disclose very unusual features,the presence of which leads the court to conclude that theentry of summary judgment would be oppressive or unjust; or(iv) The combination of complex issues of fact and law justify thedismissal of the application for summary judgment, either asa matter of discretion or because the court cannot be satisfiedthat the defendant has no defence.16 Bromley Industries Ltd v Martin & Judith Fitzsimons Ltd [2009] NZCA 382, (2009) 19 PRNZ 850at [57]–[67].17 Robert Osborne and others McGechan on Procedure (online ed, Thomson Reuters) at[HR12.2.11].c) Even where the court is not satisfied that a defence has beenmade out, in exceptional circumstances the application may beadjourned to allow for other processes to be followed.[61] In Mr Hollyman's submission, this case comes within the categories identifiedabove, particularly (b)(ii) and (iii), and it was therefore an error for the Associate Judgeto decline to exercise her residual discretion.[62] Developing this central contention, Mr Hollyman argued that the applicationsfor summary judgment and the grant of summary judgment are oppressive and unjustbecause:(a) TBS has applied for summary judgment in the face of clear evidencefrom the Body Corporate about incomplete/defective works.(b) There is evidence that unless summary judgment is declined, theBody Corporate will struggle to be able to afford and/or gain supportfor its counterclaim. That will result in the real issue — completenessof the construction works — being unresolved.(c) It makes logical sense for a claim for money owing based onconstruction work to be decided after the Court has made a decisionabout whether or not the construction work was properly carried out orcarried out at all.(d) The applications for summary judgment are an oppressive use of courtprocedure because they apply financial and emotional pressure to theBody Corporate and individual unit owners while avoiding thesubstantive issue.(e) The complex nature of the law and facts at issue in this proceeding hasresulted in TBS taking advantage of legislation which was not intendedfor the purpose for which it is now being used.[63] Mr Hollyman further argued that a grant of summary judgment alsocontravened the purpose of the High Court Rules "to secure the just, speedy, andinexpensive determination of any proceeding or interlocutory application".18[64] In support of these submissions, Mr Hollyman referred us to the cases ofSayles v Sayles19 and Herring v Herring20 as examples of decisions where the residualdiscretion has been invoked.Discussion[65] We are not persuaded by these submissions. In our view, withholding the entryof summary judgment would be contrary to s 79 and unjustified.[66] The submission that it makes logical sense for a claim for money owing basedon construction work to be decided after the Court has made a decision about thequality of the work runs directly counter to the Act. The exact opposite is what the Actsays must happen. The whole purpose of the statutory regime is to facilitate theefficient and speedy resolution of claims for payments under construction contracts.21And for the reasons already identified we reject the proposition that the particularcircumstances of this case somehow take it outside the purview of the Act.[67] It is, in our view, instructive that the Body Corporate has not been able to referus to any case where the residual discretion has been exercised in the constructioncontext. The two cases that are relied on involved the division of relationship propertywhich is governed by a radically different statutory scheme. As the Associate Judgenoted, a more pertinent decision is the decision of Westgate Town Centre Ltd vAuckland Council where the existence of a no set-off clause in the parties' contractwas held to preclude the exercise of the residual discretion.2218 High Court Rules 2016, r 1.2.19 Sayles v Sayles (1986) 1 PRNZ 95 (HC).20 Herring v Herring [2010] NZCA 500, [2011] 2 NZLR 433.21 Construction Contracts Act, s 3.22 Judgment under appeal, above n 1, at [81], citing Westgate Town Centre Ltd v Auckland Council[2018] NZHC 2489.[68] Quite apart from s 79, we are also not persuaded that the summary judgmentprocedure is being used in an oppressive or unjust manner.[69] As Mr Galbraith KC for TBS points out, TBS was promised payment of anagreed fixed sum under the variation agreement, a contract the Body Corporate enteredinto following detailed negotiations and after taking legal advice. There is alsoevidence that a full discussion about the pros and cons of accepting the fixed pricetook place at an extraordinary general meeting of the Body Corporate beforeTBS's offer was put to the vote.[70] Further, and importantly, the evidence shows the Body Corporate receiveda significant Government contribution towards the cost of the remedial work based ona representation that the Body Corporate would use the money to pay suppliersincluding TBS.[71] On 29 November 2018, the Ministry of Business Innovation and Employment(MBIE) that was administering the financial assistance package emailed theBody Corporate that it was in the process of considering the final claim for theremediation project. It asked the Body Corporate to confirm the total of the accountsrelating to the assistance package that remained unpaid and also to confirm that thefunds generated from the final claim would be used to pay those accounts. The emailended with a reminder that MBIE payments qualifying for the assistance packagewere only to be utilised in paying accounts relating to the remediation.23[72] The Body Corporate responded on 5 December 2018 with the names of thesuppliers involved in the remedial project, which it identified as HOBANZ,Maynard Marks and TBS, and said it could: confirm that funds the body corporate receives as a result of the [assistancepackage ] final payment Claim will be used to pay these suppliers[73] Following receipt of that confirmation, MBIE advised that based on thatinformation it was able to process and pay the final claim. That was actioned on23 There was also an email from MBIE to HOBANZ (as representative for the Body Corporate) dated27 November 2018 which said that the final payment claim had been reviewed and approved.14 December 2018 when the Body Corporate received the sum of $2,086,981.15.Of that sum $100,000 was earmarked for other suppliers, leaving approximately$2 million for payment to TBS.[74] The receipt of the assistance payment is significant in our view for tworeasons. The first is that had the Body Corporate paid the money to TBS it would havereduced a significant portion of the debt owing under the payment schedules. It chosenot to but has instead retained the money.[75] The second reason why the assistance payment is significant is that despitenot having paid the money to TBS and being unable to use it for any other purpose,the Body Corporate has still been able to advance its counterclaim. This obviouslyundermines the suggestion that it will be prevented from prosecuting the counterclaimby having summary judgment entered against it.[76] We accept that the amount now owing under the summary judgmentwell exceeds $2 million because of the high rate of contractual interest continuing torun. However, that is the result of a decision the Body Corporate chose to make, notthe result of oppressive conduct by TBS. Had the Body Corporate chosen to do whatit represented to MBIE it would do, the debt would have been significantly reduced.According to Mr Galbraith's calculations, which were not contested, had theassistance money been paid to TBS in December 2018, the shortfall could have beenmet by a levy of around only $8,350 per unit owner.[77] We acknowledge that this long drawn-out project, the unexpected escalation incosts, the large sums already paid and the prospect of yet more remedial work will beextremely stressful for the individual unit owners and will inevitably have impactedon their financial positions as well as the saleability of their homes. However, it isalso noteworthy that according to evidence from the Home Owners and BuyersAssociation of New Zealand Inc, $35 million is comparable to the costs incurred inthe remediation of other buildings of comparable size and complexity.24 Further,24 The source of this information is an affidavit of Roger Levie dated 22 August 2019. Mr Levie isthe co-founder and the Chief Executive of the Home Owners and Buyers Association of NewZealand Inc and also a director of HOBANZ.the Body Corporate's own evidence falls short of establishing it would be unable tobring its counterclaim were it required to pay the amount owing. It does not itselfassert that.[78] Noteworthy too is its failure to address the existence of a defects insurancepolicy raised by TBS in its evidence and discovered by HOBANZ. According toa Body Corporate newsletter from 2015, the Body Corporate committee voted toobtain the insurance policy following a resolution at an extraordinary general meeting.The policy is said to have provided for a ten-year warranty to rectify major defectsincluding structural and weathertightness defects, as well as providing cover inrelation to all work being completed under current building consents. The existenceof this policy and the extent of its cover is information within the knowledge ofthe Body Corporate. Yet it has provided no evidence about it.[79] An additional point is that Mr Hollyman's submissions are premised onthe basis that the counterclaim is strong. However, at this preliminary stage it is notpossible to assess the merits of the counterclaim with any degree of accuracy. It iscertainly arguable but there are also counter-arguments.[80] According to the affidavit evidence filed by TBS, the allegedly uncompletedwork was outside the scope of the work it was contracted to do. The work it wascontracted to undertake was completed and was certified by the Engineer as complete,with certificates being issued for the end of the defects liability period.The construction project was also certified by the Auckland City Council as beingcompleted in accordance with the building consents as well as the Building Code.Code compliance certificates were issued for each stage between August 2017 andJuly 2018. The evidence filed by TBS also challenges the cost estimates for the furtherrepair work, which TBS considers are significantly inflated.[81] In all these circumstances, we are not persuaded that the financialcircumstances of the Body Corporate and the fact of its counterclaim justifywithholding summary judgment.[82] We conclude the Associate Judge was correct to decline to withhold the entryof judgment.[83] The Body Corporate's cross-appeal is accordingly dismissed.Did the Associate Judge err in staying enforcement of the summary judgment?[84] Rule 17.29 of the High Court Rules provides that:A liable party may apply to the court for a stay of enforcement or other reliefagainst the judgment upon the ground that a substantial miscarriage of justicewould be likely to result if the judgment were enforced, and the court maygive relief on just terms.[85] The following general principles can be distilled from the case law:(a) The starting point is that the successful party is entitled to the fruits ofits judgment.25(b) The onus is on the applicant seeking a stay of enforcement to persuadethe court to exercise its discretion.26(c) A substantial miscarriage of justice must be involved, substantial beingmore than minor or insubstantial.27(d) It is not sufficient that a miscarriage of justice might result if thejudgment were enforced. It must be probable rather than possible.28The test is whether there is a "real and substantial risk".2925 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377,(2017) 23 PRNZ 598 at [10].26 Bay Cities Real Estate Ltd v Re/Max New Zealand Ltd HC Napier CIV-2010-441-134, 8 June 2011at [19(a)].27 At [19(b)]; and Marac Finance Ltd v Twilight Trustee Ltd HC Auckland CIV-2008-404-7291, 25February 2009 at [9].28 Crawford v Odin Enterprises Pty Ltd [2009] NZCA 199 at [29].29 Bay Cities Real Estate Ltd v Re/Max New Zealand Ltd, above n 26, at [28]–[29].(e) The court must undertake a balancing exercise where it recognises andreconciles the conflicting interests of both parties in such manner aswill best serve the overall interests of justice.30(f) The mere existence of a counterclaim is not sufficient. A miscarriageof justice is unlikely to result where a party is required to pay to anotheran amount owing and the payer is otherwise free to pursue its claimagainst the other party in the normal way.31(g) Other relevant factors may include the apparent strength or weaknessof the claim; the ability of the applicant to meet the judgment that isbeing enforced; and the potential bankruptcy or liquidation of a partyseeking to pursue an apparently strong claim.32[86] In granting the stay, the Associate Judge accepted the same argumentsadvanced by the Body Corporate that she had previously rejected when it came to theissue of the residual discretion.33 The Associate Judge justified the different responseon the basis there was a distinction between judgment and enforcement.34[87] On appeal, Mr Galbraith challenged the distinction drawn by theAssociate Judge between judgment and enforcement. In his submission, the statutoryprohibition against giving effect to a counterclaim in any proceedings for the recoveryof a debt logically encompasses both the determination of the debt claim andits enforcement. It was thus an error to split judgment and enforcement.[88] Developing this central contention, Mr Galbraith argued that theAssociate Judge's stay decision is inconsistent with the language, scheme andpurposes of the Construction Contracts Act and hence inconsistent with the Associate30 At [19(d)]; and Enright v Gold Metal Exports Ltd (1989) 3 PRNZ 243 (HC) at 245–246.31 Bay Cities Real Estate Ltd v Re/Max New Zealand Ltd, above n 26, at [19(e)]; and EconotekConstruction Ltd v Kale HC Gisborne CP8/87, 7 January 1988 at 8.32 Bay Cities Real Estate Ltd v Re/Max New Zealand Ltd, above n 26, at [19(f)]; and seeRaffles Education Corporation Ltd v Mills HC Auckland CIV-2008-404-5258, 16 February 2009at [13]; Goldsmith v Drummond HC Christchurch CP201/97, 21 July 1998 at 15; andNew Zealand Apple and Pear Marketing Board v Wallis (1990) 4 PRNZ 713 (HC) at 716–717.33 Judgment under appeal, above n 1, at [99]–[113].34 High Court leave decision, above n 3, at [15].Judge's own rulings on summary judgment and the residual discretion. The samereasoning that led the Associate Judge to decline to exercise her residual discretionapplied with equal force to the stay application. Just as the exercise of the residualdiscretion would frustrate s 79 of the Construction Contracts Act so too, he argued,does the granting of a stay. A stay prevents enforcement which prevents payment. Yetthe Act is all about payment and ensuring payment is not anchored to the determinationof separate disputes. That is exactly what the stay granted by the Associate Judge hasdone, the very thing the Construction Contracts Act is designed to prevent.[89] It followed, in Mr Galbraith's submission, that the Act and particularly s 79adds another dimension to the general law relating to the granting of stays. It was anadditional hurdle, a hurdle so high it was, he said, "impossible to jump".[90] We accept that none of the authorities cited on appeal by the Body Corporatedirectly addresses the issue of the extent to which s 79 is an impediment to a stay.35Further, unlike the present case, none of them concerns a court exercising its powersto stay enforcement of a final as opposed to an interim determination in the absenceof a concession from the judgment creditor. One case — an Australian decision —was also based on legislation that did not have a provision similar to s 79.36[91] We also accept for the reasons already discussed at [53], [57] and [66], that theAssociate Judge was wrong to agree with the Body Corporate that the ConstructionContracts Act had limited relevance in this case because construction had "longfinished" and the debt had been assigned.37[92] On the other hand, as even Mr Galbraith conceded in response to a questionfrom us, it must be too absolute a proposition to say that s 79 precludes the court fromever granting the stay of a judgment debt based on a payment schedule. In our view,express words would be required before the Court would be willing to contemplateascribing any such intention to Parliament.35 See Concrete Structures (NZ) Ltd v Palmer [2006] NZAR 513 (HC); Kariiti Ltd v DonovanDrainage & Earthmoving Ltd HC Whangārei CIV-2010-488-613, 19 November 2010; ConcreteStructures (NZ) Ltd v NMHB Ltd [2019] NZHC 268; and Cummins v Body Corporate 172108[2021] NZCA 145, [2021] 3 NZLR 17.36 Grosvenor Constructions (NSW) Pty Ltd (in administration) v Musico & Ors [2004] NSWSC 344.37 Judgment under appeal, above n 1, at [111].[93] As we see it, the correct approach in this case was to regard thestatutory context and the purpose of the Construction Contracts Act as highly relevantconsiderations in weighing the competing interests. The Act is not determinative butit is a cogent factor pointing away from granting a stay. It meant the case for grantinga stay needed to be particularly compelling. And in our view, it was not.[94] The case for a stay rested on two arguments. The first was that theBody Corporate, if required to pay the summary judgment now, would not be free topursue its counterclaim; and the second was that if the Body Corporate paid now andwas later successful in its counterclaim, there was a real risk it would never recover arefund of the money from TBS.[95] As to the first point, the Associate Judge concluded the counterclaim was"credible"38 and that she was "not satisfied that if the Body Corporate is required topay the Claimed Debt to TBS that it will be 'free to pursue its [counterclaim] in thenormal way'".39[96] By "credible" we assume the Associate Judge meant "arguable and made ingood faith" (as opposed to "strong") and therefore take no issue with that descriptionof the counterclaim. But in so far as the Associate Judge's statement suggests the onusof proof regarding the ability to bring the counterclaim was on TBS, that was plainlywrong. The onus of proof was on the Body Corporate, whose evidence about itsfinancial circumstances was, as the Associate Judge recognised, not as comprehensiveand as specific as it could (and we would add "should") have been.40 Indeed, asalready mentioned, the Body Corporate itself stopped short of saying it would beunable to bring the counterclaim if it had to pay the judgment debt.[97] The Body Corporate was not in a position to be able to say that because whilestill retaining the assistance money, it has in fact been able to advancethe counterclaim. The Associate Judge was cognisant of the assistance payment butin our view wrongly placed limited weight on it, reasoning that it does not cover the38 At [102].39 At [108].40 At [104].entire amount of the debt now in the vicinity of $3 million.41 However theAssociate Judge failed to take into account the fact that the reason there was now a gapof that order between the judgment debt and the assistance payment was due to adeliberate choice on the part of the Body Corporate itself. In our assessment,the assistance money was a significant piece of evidence bearing on the overallinterests of justice.[98] We also consider it was an error for the Associate Judge to decline to take intoaccount the existence of the insurance policy. The Associate Judge held there wasinsufficient evidence of its existence apart from the reference in the newsletter and shecould not draw any inferences from that reference.42 However, as mentionedthe policy was a discovered document and the reason there was no evidence aboutthe detail of the policy was because the Body Corporate had chosen not to adduce it.[99] We conclude that the decision to grant a stay on the basis of theBody Corporate's inability to pursue its counterclaim was arrived at as the result of anumber of errors and was wrong.[100] Turning to the concerns about the solvency of TBS. The Body Corporate hasconcerns that when TBS was sold, it ceased trading and is now just a shell company.It says that were the judgment debt to be paid to TBS, TBS will then immediately payit to Hellaby and as a result put it beyond the reach of the counterclaim.[101] The only evidence on this issue is first a bare assertion by the Chair of theBody Corporate to the effect that TBS has ceased trading and is a shell company andsecondly a bare denial of the correctness of both those statements by TBS's generalmanager. The latter deposes in his affidavit that "TBS continues to trade".[102] On appeal Mr Hollyman argued the absence of any information ordocumentation to support the general manager's bland assertion tends to reinforce theconcerns of the Body Corporate. He further submitted it was incumbent on TBSto provide this information and it should not be allowed to benefit from its own wrong.41 At [105].42 At [107].[103] In support of that submission, Mr Hollyman referred us to a passage in adecision of the English Technology and Construction Court Equitix ESI CHP(Wrexham) Ltd v Bester Generacion UK Ltd.43 In that case, a partial stay of theexecution of a summary judgment was granted on the grounds of thejudgment creditor's probable inability to repay the judgment debt. In the passagerelied upon by Mr Hollyman, the Judge, Coulson J, stated:44It is not appropriate for a party to recover £10 million by way of anadjudication and then, in answer to legitimate concerns raised by the other sideas to their financial position, effectively stonewall the requests until the lastminute and beyond.[104] The passage quoted actually follows after the Judge has concluded a partialstay should be granted for other reasons, the stonewalling being seen as confirminghis decision. More importantly, it was made against a quite different factualbackground to the one at issue here.[105] The comments quoted were made in relation to an entity known as an SPV(or special purpose vehicle), that is to say an entity created specifically for a one-offproject. Due to delays, the SPV terminated the construction contract between it andthe contractor at a time when the work had not moved beyond the preparatory stage.It subsequently notified the contractor it was no longer proceeding with the projectand then, relying on a clause in the contract regarding accounting after termination,issued an interim account. There was then a dispute about the validity of thetermination and the basis and accuracy of the interim account. The dispute wasreferred to an adjudicator who found in favour of the SPV and made an award ofapproximately £10 million, 80 per cent of which was comprised of the first fourmilestone payments which the SPV had originally paid to the contractor forpreparatory work.45 The stay was sought pending the outcome of a final accountingbetween the parties which the Judge said could possibly be "years down the line".4643 Equitix ESI CHP (Wrexham) Ltd v Bester Generacion UK Ltd [2018] EWHC 177 (TCC).44 At [78].45 At [25].46 At [72].[106] The fact the judgment creditor was an SPV was a critical factor in the grantingof a partial stay47 as well as the fact that any final reckoning between the parties was"far off in time".48 As the Judge pointed out, not only did the SPV have "no possibleincentive to remain in existence for a minute longer than it need[ed] to", it was also "overwhelmingly likely" it would be wound up "sooner rather than later".49 Further,there was also evidence that, in breach of its statutory obligations, the SPV had failedto file certain financial information with the Companies Office.50[107] In short, there was a proper evidential basis for the judgment debtor's claimsof probable insolvency which is lacking in this case. The fact TBS has been sold toan Australian entity of itself is not enough. While it would have been better had TBSprovided a detailed response, we are not persuaded that the failure to do so of itselfjustifies a stay.[108] For all these reasons, we consider that TBS's appeal against the stay decisionmust succeed.Did the Associate Judge err in declining to grant a stay of the counterclaim?The High Court decision[109] TBS's application to stay the counterclaim and refer it to arbitration forresolution was made in reliance on art 8(1) of sch 1 of the Arbitration Act 1996.[110] Article 8(1) provides:A court before which proceedings are brought in a matter which is the subjectof an arbitration agreement shall, if a party so requests not later than whensubmitting that party's first statement on the substance of the dispute, staythose proceedings and refer the parties to arbitration unless it finds that theagreement is null and void, inoperative, or incapable of being performed, orthat there is not in fact any dispute between the parties with regard to thematters agreed to be referred.47 The contractor was ordered to make immediate payment to the SPV of £4.5 million, with a further£1 million to be paid into court. The stay of execution was over the remaining £4.5 million plus.48 At [73].49 At [71].50 At [66].[111] The construction contract between TBS and the Body Corporate contained anarbitration agreement by virtue of its incorporation of s 13 of NZS 3910:2013. Thefull text of s 13 is attached as an appendix to the judgment under appeal. For ourpurposes it suffices to identify the salient features of what is a step by step disputeresolution process. Those features are as follows:(a) Subject to certain exceptions which do not apply here, s 13.2.1 statesthat every dispute or difference concerning the construction contract"shall be referred to the Engineer not later than 1 Month after theprovision of the Final Payment Schedule or more than 1 Month afterthe date on which any relevant Adjudicator's Determination is given tothe parties, whichever is the later".(b) The Engineer must give a written decision.(c) If either party requests a formal decision, the Engineer must provide aformal decision within 20 working days of receiving that request.(d) In the event either party is dissatisfied with the Engineer's formaldecision or no formal decision is given within the 20-working-day timeperiod, either party may within one month51 thereafter give notice thatthe matter be referred to mediation or arbitration.(e) Mediation will only take place if the other party agrees within10 working days of receiving the request for mediation.(f) If a mediation is requested but does not take place due to lack ofagreement, or takes place but fails to resolve the matter in dispute, thenwithin one month either party may by notice require the dispute to bereferred to arbitration.51 Defined in the Contract as a calendar month.(g) Unlike mediation, arbitration does not require the consent of bothparties. The dispute must be referred to a sole arbitrator whose decisionshall be final and binding on the parties.(h) The parties may at any stage agree to suspend any dispute resolutionunder s 13 due to any adjudication proceedings under the ConstructionContracts Act.[112] The Associate Judge described the agreement to arbitrate as "the final step ina staged dispute resolution process".52 In her view, the intention underlying s 13 isthat the escalating dispute resolution process culminating in arbitration is onlymandatory while the construction contract is being performed and up until one monthafter the Final Payment Schedule is issued. After that date, the arbitration agreementis no longer operative for the purposes of art 8(1) and the Body Corporate wastherefore free to pursue its counterclaim in the courts if it wished to do so.53[113] The Associate Judge accordingly declined the application for a stay.54Discussion[114] Article 8(1) contains three prerequisites to the grant of a stay. TBS thereforeneeded to persuade the Associate Judge that:(a) the counterclaim was a proceeding which had been brought in a matterwhich is the subject of an arbitration agreement;(b) the request for a stay was made no later than TBS's first statement onthe substance of the dispute; and(c) the arbitration agreement was not null and void, inoperative orincapable of being performed.52 Judgment under appeal, above n 1, at [124].53 At [128], [131] and [140]–[142].54 At [155(e)].[115] In the High Court, the Associate Judge found the first two prerequisites weremet but, as already mentioned, not the third.[116] On appeal, it is common ground that the counterclaim is a dispute or differenceconcerning the construction contract within the meaning of s 13.2.1. It has thus beenbrought in a matter which is the subject of an arbitration agreement and therefore thefirst requirement for a stay and mandatory referral to arbitration under art 8(1) issatisfied.[117] According to TBS, the second prerequisite was also not disputed in theHigh Court. However, the Body Corporate now contends55 that because TBS hadengaged on the merits of what was then a proposed counterclaim in correspondenceand affidavit evidence in the first summary judgment application, it was out of time infiling its stay application.[118] We disagree. TBS filed its application to stay the counterclaim and its protestto jurisdiction promptly after the counterclaim was filed on 1 September 2020.It would not make sense to find that communications prior to the filing of thecounterclaim could amount to the first statement on the substance of the dispute forthe purposes of art 8(1). Until the counterclaim was filed, there was no proceeding toprotest or stay.[119] The Associate Judge was therefore correct in our view to find that the first twoprerequisites under art 8(1) of the Arbitration Act were satisfied.[120] The key issue is whether she was correct to find that mandatory referral ofdisputes to the dispute resolution process in s 13 ended one month after theFinal Payment Schedule was issued and that thereafter the arbitration agreement wasno longer operative or capable of being performed.55 The Body Corporate raised this argument in a memorandum headed Notice of Intention to Supportthe Judgment on Other Grounds. However, because the Judge made an express ruling on the issue,the correct vehicle for challenge on appeal was a cross-appeal. TBS has not however beenprejudiced and we therefore address the merits of the argument.[121] The Final Payment Schedule in this case was issued in July 2019 and was notchallenged. The Body Corporate filed its counterclaim in the High Court more than ayear later in September 2020.[122] In contending that the Associate Judge erred in concluding thearbitration agreement became inoperable one month after the Engineer issued aFinal Payment Schedule, Mr Galbraith advanced the following arguments:(a) Both the District and High Courts have the power under art 7 of sch 2of the Arbitration Act to extend the time specified in anarbitration agreement for commencing arbitral proceedings for suchperiod as the court thinks fit if in its opinion undue hardship wouldotherwise be caused to the parties. That power is available even if thetime specified in the arbitration agreement has expired.(b) Either party could also initiate an adjudication under the ConstructionContracts Act which would result in a determination, which in turnwould also enable an arbitration to be commenced. The right to referdisputes to adjudication under s 25 of the Construction Contracts Act isnot subject to any time limitation.(c) In any event, an earlier decision of the High Court Miro PropertyHoldings Ltd v The Fletcher Construction Company Ltd indicates thatthe Body Corporate's failure to give a timely notice does not render thearbitration agreement inoperative.56(d) The Associate Judge's decision in this case is contrary to the generalprinciple that courts should not allow any inconsistencies oruncertainties in the wording or operation of the arbitration clause tothwart the parties' intention to submit disputes to arbitration.5756 Miro Property Holdings Ltd v The Fletcher Construction Company Ltd HC WellingtonCIV-2010-485-2540, 31 May 2011.57 Marnell Corrao Associates Inc v Sensation Yachts Ltd (2000) 15 PRNZ 608 (HC) at [61].(e) The decision in this case also leads to the undesirable outcome that aprincipal can circumvent the arbitration agreement by the simpleexpedient of delaying to invoke the s 13 process. That would be toallow it to take advantage of its own wrong, something the courts havesaid should not be allowed.58(f) Arbitration is the ideal forum for resolution of building disputes.The fact there are other counterclaim defendants who are not parties tothe arbitration agreement does not preclude arbitration.(g) Both parties view the construction contract as still on foot withcontractual obligations to be performed.[123] We acknowledge that in principle arbitration would have been a suitable forumfor resolution of the Body Corporate's counterclaim and also agree that the existenceof other counterclaim defendants would not of itself have been an impediment.59Nor would the fact that one of those other counterclaim defendants has now made across-claim against TBS. Once the three prerequisites of art 8(1) are satisfied, there isno room for any residual discretion. The court must order a stay.60[124] We acknowledge too that when interpreting an arbitration agreement, thegeneral approach is that courts should where possible uphold arbitration and theparties' intention to submit disputes to that process.61[125] However, in our view, the present case is not one where the Associate Judgehas allowed inconsistencies and uncertainties in the arbitration agreement to thwartthe parties' intentions. Contrary to Mr Galbraith's submissions, we consider thewording of the time limits in s 13.2.1 is clear and unambiguous and permits of onlyone interpretation, being the interpretation adopted by the Associate Judge. We are58 At [65].59 Construction Contracts Act, s 40 permits adjudicators to consolidate adjudication proceedingswith the written consent of all parties.60 Opus International Consultants Ltd v Projenz Ltd HC Auckland CIV-2003-485-1387, 17 March2004 at [19]; and Barbara Hunt and others Green & Hunt on Arbitration Law and Practice (onlineed, Thomson Reuters) at [ARSch1.8.06].61 Ursem v Chung [2014] NZHC 436, [2014] NZAR 1123 at [35].not persuaded by any of the arguments raised, whether viewed individually orcollectively, that the Associate Judge was wrong to deny a stay.[126] The existence of the right to refer disputes to adjudication and the existence ofthe right to apply to the court for an extension of time is undoubted. However, the factof the matter is that TBS has not taken either of those steps. That is hardly surprising.An application for an extension of time would appear unlikely to succeed given thelength of time that has now passed and the requirement to prove "undue hardship" tothe parties, plural.[127] Adjudication is similarly problematic. Undergoing what would be a lengthyadjudication hearing solely for the purposes of securing a determination as a means ofgetting to an arbitration otherwise out of time is simply impractical and might well beviewed as an abuse of the adjudication process. Additional complications would alsobe likely to arise as a result of the existence of potential liabilities to other counterclaimdefendants and the impact that factor would have on the parties' respective positions.[128] Nor in our view does the existence of these alternative pathways — asMr Galbraith termed them — bear on the plain meaning of the words "shall be referredto the Engineer not later than 1 Month after the provision of theFinal Payment Schedule" or somehow impose some superadded gloss on those words.[129] As for relevant case law, there appear to be very few decisions which haveconsidered the time limits in s 13 and those that have are of limited relevance. But, inour view, what authority there is does not support TBS's position.[130] Counsel referred us to three cases.[131] The first is a decision of this Court in Blain v Evan Jones Construction Ltd.62There a party to a construction contract with the plaintiff was resisting being joined tothe proceeding as a third party on the basis of being a joint tortfeasor with otherparticipants in the building process whom the plaintiff had sued. One of the arguments62 Blain v Evan Jones Construction Ltd [2013] NZCA 680.raised by the proposed third party was that s 13 of NZS 3910:200363 provided amandatory dispute resolution process for determining its liability to the plaintiff andtherefore it was wrong to join it to court proceedings.[132] This Court rejected that argument on the basis that the s 13 process was "anexclusive process only during the construction period".64[133] We accept that limited weight can be afforded this ruling because counsel forthe third party had conceded that at the end of the construction period, s 13 would nothave precluded the plaintiff from suing the builder in contract.65 However, the fact theCourt endorsed the concession is not without some significance.[134] The second case is a decision of Associate Judge Matthews in Minister ofEducation v PXA Ltd. There, the Court held that the arbitration agreement in aconstruction contract had ceased to be operative for the purposes of art 8(1) becausethe mandatory steps in the relevant dispute resolution process indicated the processdid not apply once the contracted work had been completed.66[135] There are a number of distinguishing aspects which render this decision alsoof limited relevance. The first is that unlike the present case, the arbitration agreementin question was not derived from NZS 3910:2013 but from a New Zealand Instituteof Architects standard form contract. The second distinguishing feature is thereference in the judgment to the construction contract being no longer current. If thatwas intended to mean the contract had been discharged by performance/termination,that is also different from this case where the Body Corporate is seeking specificperformance and so treating the contract as still on foot.[136] However, the mandatory steps in the dispute resolution process on which theAssociate Judge relied to support his conclusion are common to both cases.For example, the Associate Judge attached significance to the fact that it was theperson supervising the construction, the architect (in our case the Engineer) that had a63 This was an earlier iteration of NZS 3910:2013.64 At [61].65 At [61].66 Minister of Education v PXA Ltd [2015] NZHC 1330 at [32].primary role in ruling promptly on disputes as soon as they arise. Reliance was alsoplaced on the short time periods attaching to each of the mandatory steps and on theexistence of a prohibition — also to be found in s 13 — preventing the Contractorfrom suspending work as a result of a dispute proceeding.67[137] We agree with the Associate Judge in this case that these same features do tendto lend support to the proposition that the dispute resolution process in s 13 is intendedto only be mandatory during construction and shortly thereafter, namely only onemonth after the Final Payment Schedule is issued.[138] The third case is the decision on which Mr Galbraith relies to support hiscontention that earlier High Court authority indicates that the Body Corporate's failureto give timely notice does not render the arbitration agreement inoperable orineffective. The decision in question is Miro Holdings Ltd v The FletcherConstruction Company Ltd.[139] In Miro Holdings, Associate Judge Gendall granted a stay of a courtproceeding and referred the matter to arbitration despite the fact it had been some fiveyears since practical completion of the building works had been certified.68 TheAssociate Judge held that despite the length of time, the arbitration agreementcontained in the contract by virtue of s 13 of NZS 3910:2003 continued to run andtherefore it was still potentially within the power of either party to commence theprocess of resolving disputed claims under the s 13 procedures by seeking a decisionfrom the Engineer.69[140] Critically for present purposes, on our reading of the judgment, the reason whythe Associate Judge considered the arbitration agreement continued to run was becauseno final payment claim and no final payment schedule had ever been provided. In ourview, it is clear the Associate Judge would never have granted the stay had that notbeen the case.67 At [31].68 Miro Property Holdings Ltd v The Fletcher Construction Company Ltd, above n 56, at [12]–[13]and [64].69 At [48]–[49].[141] It follows that in our view this decision does not assist TBS. Quite the contrary.[142] Nor are we persuaded that to deny a referral to arbitration is to allow theBody Corporate in the circumstances of this case to take advantage of its own wrong.As the Associate Judge pointed out, neither party in this case chose to invoke the s 13dispute process even though there had been some discussions between them about theissues which, from the Body Corporate's perspective, only crystallised when itinvolved experts in July and August 2019.70 The evidence does not support anyinference that it deliberately delayed doing so in order to avoid arbitration. The realityis that it was not in a position to formulate any claim with precision within time.[143] We also doubt that the decision will incentivise future claimants to keep theirclaims under wraps and deliberately delay for a month. The advantages of arbitrationare too well-known, including in the construction world.[144] In so far as the Associate Judge's decision limits the opportunity to arbitrate onissues that do not become apparent until well after the Final Payment Schedule,we consider that is simply a consequence of the plain wording of s 13.[145] Concerns about the hardship this might cause are tempered by the fact thatrelief is available in the form of the courts' jurisdiction to extend time and theadjudication process. If credible concerns at a deliberate delay are present, then themerits of an application for extending time to invoke the arbitral process would beviewed quite differently. Our decision simply applies the clear meaning of s 13 to theparticular facts of this dispute.[146] For all these reasons we agree with the Associate Judge that, as she put it:71 the dispute resolution process contained in s 13 of theConstruction Contract ceased to be operational one month after issuance ofthe Final Payment Schedule in July 2019. At that point, the parties wereno longer required to refer disputes into the process, beginning with referralto the Engineer. Theoretically, the provisions could be re-enlivened byan adjudication determination but unless and until such an adjudication takesplace, the door to arbitration is closed.70 Judgment under appeal, above n 1, at [135].71 At [142].[147] TBS's appeal against the grant of a stay of the Body Corporate's counterclaimand mandatory referral to arbitration is accordingly dismissed.[148] In light of our decision it is strictly speaking unnecessary for us to address afurther argument raised by the Body Corporate based on s 11 of the Arbitration Act.72Under s 11 a consumer arbitration agreement cannot be enforced after a dispute hasarisen without the agreement of both parties. Section 11 only applies if one of theparties is an individual and entered into the arbitration agreement "otherwise than intrade" with a party who was "in trade". The first of those requirements — that theparty be an individual — was inserted by a 2007 amendment.73[149] The Body Corporate was not in trade but TBS was. The application of s 11 tothis case therefore turns on whether the Body Corporate is an individual.The Body Corporate emphasises that it is the body corporate of a residential complexand although it is a corporate entity, the word "individual" is apt to comprise a groupof individuals or a single entity comprising a group of individuals all of whom wouldin their own right be entitled to consumer protection.[150] The Associate Judge rejected that argument. She held having regard to theplain meaning of the word "individual" and the Parliamentary materials relating to the2007 amendment74 that it meant "natural persons".75[151] We agree for the same reasons. A corporate entity cannot be an individual forthe purposes of s 11.72 This argument was also raised in Memorandum Supporting the Judgment on Other Grounds.For the same reasons identified above at [117], n 55, it should have been raised by way of cross-appeal.73 Arbitration Amendment Act 2007, s 5(2).74 Law Commission Improving the Arbitration Act 1996 (NZLC R83, 2003) at [154]–[167]. As theAssociate Judge noted at [152] of the Judgment under appeal, the Bill was intended to implementthe recommendations of the Law Commission: Arbitration Amendment Bill 2006 (72-1)(explanatory note) at 1.75 Judgment under appeal, above n 1, at [152]–[154].Outcome[152] The appellant's appeal against the High Court decision to stay enforcement ofthe summary judgment against the first respondent is allowed and the High Courtdecision quashed.[153] The appellant's appeal against the High Court decision declining to stay thefirst respondent's counterclaim is dismissed and the High Court decision confirmed.[154] The first respondent's cross-appeal is dismissed.Costs[155] As regards costs, the parties were able to reach agreement on the basis on whichthey should be calculated. In accordance with that agreement, we therefore make thefollowing orders:(a) The first respondent must pay the appellant costs on the cross-appealcalculated on the basis of a standard appeal, band B together with usualdisbursements. We certify for second counsel.(b) The honours being evenly divided on the appeal, we make no award ofcosts in relation to the appeal.(c) We remit the question of costs in the High Court to that Court to bereconsidered in light of this judgment.Solicitors:Bell Gully, Auckland for AppellantFarry Law Ltd, Auckland for First Respondent