Subcontractor’s unsigned, undated $77,510 demand chases variations already in dispute
The High Court has ordered indemnity costs against a subcontractor whose unsigned statutory demand appeared to come from an AI debt collection service.
In TW Civil & Infrastructure Ltd v Mac Civil Construction Ltd [2026] NZHC 3174, handed down 14 October 2026, the court set aside a $77,510 demand that Mac Civil Construction Ltd (Mac) issued against TW Civil & Infrastructure Ltd (TW). It also ordered Mac to pay TW’s costs on an indemnity basis.
TW engaged Mac under a $292,758 (plus GST) fixed-price subcontract for directional drilling and pipe installation on the Mission Hills Rising Main project, part of TW’s head contract with Napier City Council. TW had paid Mac $305,373.70, less retentions, for the completed works.
The demand covered a November 2025 invoice for variations that Mac claimed. In a formal notice rejecting them under the subcontract and in later correspondence, TW said that Mac had shown no lost time while drilling through hard ground and had caused a standdown itself by breaking a water main. Mac disagreed and, in January 2026, said that it would be getting legal advice. TW heard nothing more until the demand arrived on 6 July 2026.
Under s. 290(4)(a) of the Companies Act 1993, the court may set aside a statutory demand if there is a substantial dispute about whether the debt is owing or due. The court found that TW had shown a fairly arguable basis for denying liability “by some margin.”
The court said that correspondence at the time clearly recorded the dispute and that it did not need to decide who was right.
“If the claim is disputed, and there is some foundation for the dispute, then it is unsuitable for the statutory demand process,” the court said.
Mac neither opposed the application nor appeared.
On costs, the court said that indemnity awards were exceptional and required flagrant misconduct, citing examples that included demands not issued through a solicitor. It found many such factors present. Mac knew about the dispute and failed or refused to engage with TW before and after issuing the demand.
The court described the demand as unsigned, undated, “clearly not issued by or on advice from solicitors” and “seemingly generated by an AI debt collection service.”
TW’s lawyers emailed Mac several times without reply, including a warning that TW would seek full solicitor-client costs.
The court accepted that issuing the demand in these circumstances was “a misuse of the statutory demand process.”
The court found TW’s legal invoices reasonable and ordered Mac to pay $14,950 in indemnity costs plus $1,040 in disbursements. TW had put scale costs on a 2B basis at $8,580.
