Big Win for Subcontractors on Retentions 

The High Court of New Zealand has delivered a landmark ruling in Burt & Ors v Grant [2025] NZHC 2486, and it is great news for subcontractors who’ve had retentions withheld.

Ford Sumner, which powers Tradie law, was proud to represent the successful subcontractors in this case, securing a decision which provides long needed guidance for subcontractors’ rights and shows the value of the statutory trust built into the Construction Contracts Act 2002 (CCA).

Why this matters

If you’ve ever had money tied up in retentions, you know how painful it is when a head contractor collapses. Retentions are your money - earned on-site, through hard work - but despite the retention regime under the CCA, there has been liquidators and directors who have sidestepped their obligations. This case puts subcontractors firmly back in the driver’s seat.

The background

Stanley Construction Limited and Stanley Construction (Auckland) Limited went into liquidation on 5 September 2019, still owing subcontractors collectively $2,175,559.90 million in retentions.

The liquidators recovered some retention funds from project principals and then sued the company’s directors for failing to hold those retentions properly. But instead of paying subcontractors with such recovered funds, the liquidators tried to use the money to cover their own fees and expenses. Subcontractors, supported by Master Electricians, fought back—and won.

The Court’s decision

The High Court has confirmed that retention money is always held on trust from the moment it is withheld under the CCA. Directors who fail to safeguard those funds can be personally liable, and any payments they make to correct a breach are not company assets—they are the restoration of subcontractors’ money. Liquidators, too, must respect the trust nature of retention funds and cannot divert them for their own fees or other creditors.

What this means for subcontractors

This decision is a major win. It reinforces that retentions are not just another debt in a liquidation—they are ringfenced trust money that must flow back to subcontractors. Even if a head contractor goes bust, your right to those funds remains. And importantly, if you know of a company that has gone into liquidation owing you retentions in the last 6 years, this ruling shows there may still be avenues to recover those funds if the directors or liquidators did not handle them properly.

If you would like further, or more specific advice on this or general construction related issues, contact one of our experts. Rebecca Richter, Emily Gardiner, Jaesen Sumner