Fletcher Building is being sued for $7.5 million by utilities contractor Electrix, one of the subcontractors on the Christchurch Justice and Emergency Services Precinct.
The NZX-listed company lost more than $400 million constructing the facility for the Ministry of Justice. It finally opened in September 2017.
The High Court at Auckland heard today how Electrix had worked on the project for more than three years and was paid approximately $21 million. However, it claims it should get another $7.45 million for work that it did.
The case, set down for several weeks, will shed light on what happened with the multimillion-dollar project which caused losses to Fletcher’s building and interiors unit.
Electrix’s lawyer Kelly Quinn told the court that Fletcher is also embroiled in another dispute over the project with Opus, but that matter was not central to Electrix’s case. This was hotly disputed by Fletcher’s lawyer Kerry Fulton who said that was speculation which was not supported by evidence.
Fletcher is counterclaiming against Electrix, saying that it had actually overpaid the engineering firm which is ultimately French-owned. It says it should have only paid Electrix $14 million.
In opening submissions before Justice Matthew Palmer, Quinn explained that the Electrix claim was not in contract, but quasi-contract or the legal doctrine of quantum meruit.
“If work is done in expectation of a contract, and done in circumstances where the defendant knows or ought to know that the plaintiff wishes to be paid - which is going to follow 99 percent of the time - then the plaintiff should be paid a reasonable sum for the work done,” Quinn said.
Electrix had said in its tender documents it could do the job for $16.9 million, but says that more work was required after the ministry rejected the detailed design for the electrics, setting the project back.
Further letters of intent sent by Fletcher show that the NZ-listed company wanted to further contract with Electrix, Quinn claims.
Fletcher’s lawyer is to present the company's counterclaim later in the proceeding.
As the subsidiary of foreign firm Vinci, Electrix is required to file its financial statements to the Companies Office. They show it posted a profit of $5.9 million in calendar 2018 on revenue of $250.4 million.