A dispute between a Tauranga builder and the Ministry of Education over school building weathertightness issues prompted liquidation, an official report says.
BDO Tauranga's Paul Clark is a joint liquidator of BayCom Construction and he indicated an impasse between the ministry and builder resulted in the company's fall.
"The director of the company advises that issues arose out of previous projects for the Ministry of Education. Settlement of the claim at an affordable level seemed probable right up until a meeting on 9 May 2016 when negotiations took a new turn and broke down," Clark said.
Jerome Sheppard, head of the ministry's education infrastructure service, could say little in response to the liquidator's report.
"This matter is being handled by the company-appointed administrator. We're not able to provide details until the liquidation process is completed," Sheppard said.
Robin Whiting, BayCom's director and 85 per cent shareholder, expressed frustration but said there was no option other than liquidation and he now plans to sell his Tauranga house.
"These are existing school buildings that have perhaps been altered or work has been done of them and they purportedly leaked. We had agreed to do some targeted repairs. But then they wanted roofs re-pitched and cavity walls. We believe that's a design issue. We believed that the ministry wanted significant portions of betterment which is unrealistic," Whiting said.
The schools had been built by other construction companies which were no longer operating in the area, Whiting said.
A 10-year timeframe for claims over those buildings was drawing near, hence the pressure was on to resolve issues, he said.
Some of the buildings BayCom lists on its web site as having worked on include Tauranga's Brookfield School, St Josephs's Catholic School at Opotiki, painting at Maungatapu School, Tauranga Boys College technical block, Waiariki Institute of Technology, John Paul College administration building and Aquinas College Tauranga.
The ministry spokesman said not all the schools were state-owned as some which had been worked on were owned by the Catholic church.
"Sacred Heart and St Joseph's are state-integrated schools. Their buildings are owned or managed by an independent proprietor," he said.
Clark said more in his report.
"In the subsequent weeks leading up to the liquidation, the ministry disclosed an amount which was acceptable to them to settle the matter or else it would proceed to trial. The ministry further indicated that absent settlement for the amount, High Court proceedings in respect of other projects completed by the company would shortly be filed. The company was unable to pay the amount requested or afford to defend the claim/s, so the shareholders elected to appoint liquidators," Clark wrote in his first liquidator's report filed with the Companies Office.
Whiting said he planned to sell his own family home, agents had already visited, some minor changes would be made to prepare it for sale and it would go on the market soon.
BDO's statement of financial affairs shows the company has a Westpac overdraft of $292,682. That bank is also listed as an unsecured creditors with cross guarantees of $482,000. Trade creditors are listed at $847,032 and shareholder advances of $314,000 have been made.
Whiting said he had to sell his Tauranga house, valued at more than $900,000 to repay the bank, but he owned another smaller property.
Between six and 12 staff had been laid off from the business but many had already found other jobs, he said.
"Five years ago, we employed 60 people. At the moment, we're around 25. We've worked on more than 12 schools. We've worked for the Ministry of Education for 16 or 17 years in Tauranga, Te Puke, Whakatane, Rotorua and Matamata. The ministry is just looking at the ones that are getting towards the 10-year period so the clock doesn't stop and that's the burden we have to deal with. This is a systemic failure throughout New Zealand," Whiting said.
BayCom was working on about six projects when the liquidation was called, Whiting said. The liquidators' intention was that these jobs be completed, Whiting said.
They include a St Johns ambulance building which is at gib-stopping phase as well as alterations to a number of houses, he said.
"We haven't walked away from anything at this stage. The liquidators say it's their preference to complete projects."