In a recent case, the High Court has provided important clarification on the treatment of retention monies, reinforcing the statutory trust obligations under the Construction Contracts Act 2002 (CCA).
Retention monies under the CCA are trust property. In Burt v Grant [2025] NZHC 2486, the High Court has held that as a consequence, retention monies are to be held separately from a company’s assets in liquidation. Liquidators cannot treat recovered retention sums as company assets, nor apply them to their fees or use them to satisfy other creditors. The Court reinforced that retention monies are held on trust for a subcontractor from the moment it is deducted from a payment, regardless of whether it is held…