An ongoing dispute between Carterton District Council [CDC] and Central Hawkes Bay Earthmovers [CHBE] has reached the High Court, with a judge ruling the council will not, for now, receive a $343k bond over damaged wastewater treatment ponds.
The judge has also said the council “arguably” did not comply with the notice procedure under the contract “in that it has effectively only given CHBE three working days to remedy the default” before resuming possession of the site in 2021.
The dispute is years in the making, with its origins in 2018 when CHBE was contracted to undertake upgrades to the Wastewater Treatment Pond Upgrade Project, part of which included earthworks and lining three new ponds.
The work had an expected completion date of May 2019, but was delayed by a contentious mudfish relocation task, the discovery of a high level of unsuitable ground material, the need for additional drainage work, bad weather, ephemeral channel relocation, and Covid-19 lockdowns.
As delays continued into 2021, the council’s project management team discovered the new pond liners had been damaged and CHBE was removed from the site.
CDC chief executive Geoff Hamilton said the council had since completed the work and repaired the damaged liner.
He said CDC’s costs to complete this work, repair the liner, and other claims against CHBE were in excess of the bond value, which is why the council had called the bond.
However, Judge Andrew Skelton has ruled to set aside the council’s statutory demand for the bond because there were still substantial disputes that needed to be worked through.
These disputes included whether CHBE was liable for damages and whether CDC validly resumed possession
of the wastewater site.
The bond would be retained until the contractual disputes resolution process was completed.
Hamilton said the claim on the bond was just one aspect of the council’s cost recovery process against CHBE.
“This judgment does not affect our claims against either the bond issuer [Trade Guarantee + Surety Limited] or CHBE, it merely reorganises the sequence of events, and defers when the bond can be called on,” he said.
“We continue to work on the best outcome for our community, making sure we only continue with our claims where the likelihood of success outweighs the investment required.”
In the court ruling, CHBE did not accept the extent and cause of the damage as claimed by CDC and said they were “wrongfully” expelled from the site before they could do further investigations to determine the extent and cause of the damage and the appropriate repair. Judge Skelton said, “there is an issue as to whether the council breached the contract when it resumed possession” of the site.
CDC relies on the certification of default given by the engineer on July 29 2021 to underpin its notice of default and resumption of possession of the site.
On August 9, 2021, seven working days into the 10 working day period allowed under the contract, the engineer issued a Notice to Contractor [NTC] 122, which set out the specific actions that CHBE was required to undertake, including information it was to provide to remedy the alleged default.
The engineer stated that the actions were required to be completed by August 12, 2021 [the expiry of the 10-working day period].
Judge Skelton said: “It is arguable that the council has not complied with the notice procedure under cl 14.2.1 in that it has effectively only given CHB three working days to remedy the default.”
“Strict compliance with such notice provisions is required.”
LDR is local body
by RNZ and NZ On Air.