Union Green apartment developer lost $35m when Ebert Construction failed: Liquidator

Inside Union Green where the developer lost $35m when the first builder failed. Photo / Dean Purcell

The company that developed Auckland's 155-unit Union Green apartments lost $35 million when its builder Ebert Construction went under, according to a liquidator's report.

Now, that developer has itself failed and wants the $35m back from insolvency professionals in charge of Ebert, which failed three years ago.

Grant Reynolds of Reynolds and Associates has been appointed liquidator of Union Green developer West Village Capital Partners, put under on Monday last week.

Reynolds issued his first report on Monday, describing the financial fallout from the apartment project and the toll it took on a number of parties.

West Village is listed as owing unsecured non-preferential creditors $17m: $12.5m to its suppliers and $4.48m in related party advances made to that business.

Stephen Bruce Murdoch of Manurewa is West Village's sole director. The company is owned by Hawk I Construction of Upper Hutt whose sole director and shareholder is Logan Jon van Vlierden.

Units occupied but development fallout continues. Photo / Dean Purcell

Reynolds said the company incorporated in 2013 developed the apartments and initially appointed Ebert Construction as the main contractor but that went under in 2018.

"Due to the collapse of Ebert, [West Village] suffered a loss under the construction contract in the amount of $35m, a claim was made with the Ebert liquidators," Reynolds wrote referring to Grant Thornton partners David Ruscoe and Tim Downes.

Dominion Constructors then won the contract to continue and finished the job but Reynolds said problems also arose between that new builder and West Village.

Disputes were about claims on the construction contract, which were referred to the Building Disputes Tribunal but West Village lost the case.

"Recently, a determination of the disputes was made in favour of Dominion triggering payment of a debt," Reynolds said.

People have lived in the apartments for some time. Photo / Dean Purcell

"The adverse determination caused a default with the company lenders who shortly thereafter appointed the receivers," Reynolds wrote, referring to the September appointment of McGrathNicol's Andrew Grenfell.

"The position of the company is that the determination made in the Building Disputes Tribunal is flawed and that, prior to the liquidation, its lawyers were asked to apply for a judicial review seeking an order that the determination made in favour of Dominion be quashed," Reynolds said.

Because of that unfavourable decision, West Village's shareholder decided to call in Reynolds.

Bell Gully, Chapman Tripp, Cuesko, DCF, Callisto One, Energyco, Glaister Ennor, Lowthers, Mercury, Peddlethorp, Reliance Utilities and Dominion Constructors are West Village's creditors identified to date.

Reynolds said it was too early to determine what would be paid during the course of the liquidation but asked other unsecured creditors to complete claim forms and file those.

Although West Village had a claim against Ebert over the Union Green project, it wasn't known yet if a dividend would be received from the Ebert liquidation, Reynolds said.

West Village's receivers are Kare Johnstone and Grenfell of McGrath Nicol.

Ebert Construction left Union Green partly built. Photo / Jason Oxenham

The apartments are at 39-47 Union St near the Southern and Northwestern Motorway onramps at Spaghetti Junction. They ae directly behind Sugartree apartments between Union St and Nelson St.

In October 2018, the Herald reported how Ebert was placed in liquidation, after receivers were appointed in July.

Ebert, which went down working on 15 sites, owed creditors more than $45 million.

The liquidation followed a shareholder vote.

In July 2016, the Herald reported on difficulty finding a builder for Union Green.

Farhad Moinfar, a director of Myland Partners with Andrew Fawcet, had hoped building work would start that year but said the industry was extremely stretched and that meant a slightly later start date.

Dominion Constructors picked up where Ebert Construction left off. Photo / Dean Purcell

"It's probably taken longer to secure a builder in this construction market than we would have anticipated but that's the same for anyone. We hoped to start on-site in April. So it's just a few months behind," Moinfar said at the time.

"But we'll still be within the contractual time frames for the buyers. People will be able to move in within the contractual time," Moinfar said five years ago.

When Ebert went under, the site was inactive for months and buyers expressed concern. One person who paid just under $100,000 for an apartment due to be finished in 2017, and settled for just under $1m, regrets paying the deposit, which could have been invested in finished buildings.

The buyers were dealing directly with solicitors for Myland Partners.

Units up but developer down. Photo / Dean Purcell

By November 2018, Moinfar had announced a deal with new contractor Dominion Constructors. Dominion managing director Brett Russell confirmed his company's involvement.

Since then, directorships and ownership of West Village have changed.

Dominion finished the apartments where people have lived for some time.

.