Teak Construction Liquidation

Teak Construction Group Limited has now been placed into liquidation.

For many subcontractors, this immediately raises an important question: what happens to retentions?

Retention money withheld under construction contracts is not an ordinary unsecured debt. Under the Construction Contracts Act 2002, retentions are held on a statutory trust for the benefit of the subcontractor. They remain the subcontractor’s property and are not available to the liquidators.

Last year, Master Electricians funded and supported the collective subbie group action against the liquidators in the High Court in Burt v Grant [2025] NZHC 2486.​ The Court confirmed that retention monies held on statutory trust do not form part of a company’s assets in liquidation. They remain trust property for the subcontractors who are entitled to them.

That precedent was hard fought for by Master Electricians and is likely to have immediate relevance in the Teak liquidation.

If retention monies have been properly held on trust, the liquidators must identify and release them to the relevant subcontractors. If they have not been properly safeguarded, there may be personal exposure for directors where statutory trust obligations have been breached, including potential liability as constructive trustees.

Subcontractors affected by the Teak liquidation should obtain prompt legal advice as to their position and the steps required to protect their interests.

Master Electricians partner Ford Sumner Lawyers, have deep expertise in this area and already act for a group of subcontractors who currently have a court application against the liquidators to secure their clients retention monies.

Master Electricians will continue to advocate strongly for the proper treatment of statutory retention trusts and the protection of subcontractors’ property rights.

If you are affected, members can access 30minutes free legal support through ​Ford Sumner Lawyers. We also stress the importance of reviewing contracts before signing, as many retention risks can be mitigated upfront. Our Trade Master Construction Contracts course equips businesses to understand and manage contractual risk with confidence.