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High Court turns down Chow bros bid to throw out adjudication, faces liquidation

Thursday 29th September 2011

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Wellington property developers and brothel owners Chow Group failed in its bid to throw out a building-dispute adjudication over an unpaid $837,000 bill.

In the High Court in Auckland, Judge Geoffrey Venning turned down an application from Michael and John Chow’s main investment vehicle to have a May decision overturned, even though adjudicator John Walton made an error of law, according to the Aug. 19 judgement published on the Ministry of Justice’s website yesterday.

The Chows were trying to get the ruling changed after refusing to make what would have been the fifth progress payment to engineering firm Clearwater Construction for work on Auckland’s Palace Hotel. The building was torn down by order of the Auckland Council in November when it began to collapse during work to erect a high-rise brothel opposite SkyCity Casino.

Judge Venning said Walton erred by not giving Chow Group the opportunity to comment on Clearwater’s submissions.

“The effect of the breach of natural justice was to deny Chow Group the opportunity to make further legal submission in response to Clearwater’s replay submissions,” Judge Venning said. “I do not consider it can be said the Chow Group has been prejudiced or that the breach requires this court to grant relief.”

The judge turned down the Wellington brothel owner’s other applications. Chow Group tried to claim Clearwater wasn’t entitled to lodge a payment claim as it hadn’t lodged a bond, and that Chow Group could avoid liability having said it was trying to claim insurance for the building’s collapse.

“The source of payment, whether it was to be the insurer or Chow Group was immaterial to Clearwater,” Judge Venning said.

In August, the Chows won the right for an urgent hearing to review the adjudication in a bid to head of liquidation proceedings filed by Clearwater in the High Court in Wellington.

Chow Group escaped prosecution when a city council report found there wasn't sufficient evidence to find the specific cause of the building's failure.

Until the Chows either pay Clearwater or get adjudicator John Walton's order overturned, it can't sell or transfer the Palace Hotel site.

In June they unsuccessfully tried to get the High Court to change Walton's order. Judge Rodney Hansen said the case was arguable, but didn't go into enough depth and couldn't be accepted.

In the June hearing, the Chows also tried to block Clearwater from pursuing legal proceedings by unsuccessfully claiming the engineering company was insolvent.


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