Hartner creditors veto liquidator

By ANNE GIBSON property editor

Creditors of failed Hartner Construction voted yesterday to retain the Official Assignee as liquidator, rejecting a Christchurch accountant for the role.

As they met, Associate Commerce Minister Laila Harre introduced a bill to Parliament designed to protect subcontractors and suppliers caught up in such collapses.

The creditors of the failed Auckland building company have little hope of recovering the millions they are owed. Hartner Construction, headed by Wayne Hartner, went into receivership in February, then into liquidation, with debts estimated at $28.5 million, mainly to suppliers and subcontractors on various building projects.



Donald Crichton, of Crichton Horne & Associates in Christchurch, had been nominated to take over as liquidator from the Official Assignee. He told creditors his firm was the "largest and best-known" insolvency practice in the South Island, could take on tough and complicated assignments such as Hartner and always got a payout.

But an e-mail campaign had been lobbying against appointing a private liquidator, said Lynn Saunders, southern regional manager for the Official Assignee - New Zealand Insolvency and Trustee Service - who ran the meeting yesterday.

Mr Saunders said afterwards that "misinformation" had been circulated via e-mail to postal voters before the meeting, recommending voting against the appointment of Mr Crichton.

The reason given was that it could stop the Government appointing a statutory manager to the Hartner companies, he said. "But it wouldn't have done so."

Mr Crichton said creditors' interests would be better served by a private liquidator because a private firm would have more independence and focus.

He said a Christchurch firm had been nominated because costs were lower there. The cost of living was less and he would charge only $165 an hour for his services.

But despite his assurances, the creditors at the Tamaki Yacht Club voted to retain the Official Assignee.

Creditors also voted in a 16-member liquidation committee.

A provisional list of the creditors showed the biggest single claim was from United Painting ( $1.5 million), followed by Boral Interiors ($1,457,223), Tyco NZ ($1 million), JP Construction ($894,225), PM Building ($515,367), Otis Elevator Co ($410,394), Grayson Engineering ($297,633), IBS Ltd ($390,645), Brookfields Lawyers ($369,154), D. Allen Decorators ($369,154), Airpro Mechanical ($351,258), Allendale Electrical ($340,376), Forman Commercial Interiors ($244,264), W.A. Chenery ($229,493), Key Building Suppliers ($213,963), Atlas Concrete ($197,215), T.B.S. Farnsworth ($196,167), MJH Engineering ($191,215), T.S. Bishop ($178,651), Stresscrete ($174,149).

Receiver John Waller is still examining claims. He has so far received $19.5 million worth from more than half the creditors on a list of more than 1000.

Some at yesterday's meeting had a copy of Ms Harre's new Construction Contracts Bill, expected to come into force before the end of the year.

It is designed to protect subcontractors and suppliers from falling victim to the fluctuating fortunes of developers or lead contractors, replacing the old Wages Protection and Contractors Liens Act, which was abolished in 1987.

Geoff Bayley, a disputes arbitrator and member of the working party which advised Ms Harre on the legislation, said he was generally pleased with the way it had been drafted.

However, he would be making submissions on three specific parts which could be improved.

Mr Bayley said the bill would change the face of construction.

"The bill will introduce 30-day adjudication of all disputes, default provisions for payment if the contract is silent, ban pay-if-paid and pay-when-paid clauses, require parties to give reasons for non-payment, allow parties to suspend work if no legitimate payment has been made and allow for a security interest to be declared on a person's property who doesn't pay someone."

He said it would apply to all commercial construction contracts and, under certain notification conditions, to all residential building contracts.

"Overall, this is a huge step forward and a credit to the Government acting decisively to protect all people in the construction industry."

He added: "There are some smaller aspects of the bill that will need some fine tuning and adding at select committee stage."

Alasdair Thompson, of the Northern branch of the Employers and Manufacturers Association, also welcomed the bill, saying: "When big firms go bust, smaller businesses have often carried heavy losses."