Raffles Apartments: Development company behind Napier project in liquidation, buyer wants out

The Raffles Apartments Napier project, on the edge of Napier CBD, where 30 apartments are being built. Photo / Gary Hamilton-Irvine

A man who bought an apartment at a still-to-be-finished Napier development says he now wants to “pull out” and recover his $50,000 deposit after the development company behind it was placed in liquidation.

A question mark hangs over the future of the Raffles Apartments project, where 30 new apartments are being built in a four-storey development on the edge of Napier’s CBD.

Herbert Construction Ltd, the sole director of which is developer Malcolm Herbert, is behind the Raffles St project.

Hawke’s Bay Today has reported in recent weeks the company has been in pay disputes with several contractors.

Herbert Construction Ltd was placed in liquidation following a court order on Thursday. It had been operating for two years.

An application was made in the High Court at Napier to put the company in liquidation over claims 500 hours of unpaid labour (about $28,000 in invoices) was owed to labour-hire company Workforce Solutions. Those invoices related to work done in April on the development.

Herbert, when contacted about the liquidation, replied with a short text message to say the development was “moving ahead without any issues”.

He also claimed in that text Herbert Construction Ltd was “only [a] subcontractor” without clarifying further.

Herbert Construction Ltd is the main company listed on the Raffles Apartments website for building and delivering the project, and the website also refers to a Herbert Group and Herbert Pacific Construction (both of which do not appear to be registered companies in NZ, according to the NZ Companies Register).

Herbert is also the sole director of MAH Enterprises and was a trustee of Thorn Place Trust, which have previously been involved in the project, according to publicly available documents.

Herbert previously said he was in “dispute” with the labour-hire company which started the liquidation application and “you are allowed to have a dispute”.

Three other contractors and service providers associated with the apartment project have also come forward to Hawke’s Bay Today in recent weeks, claiming they are owed money by Herbert Construction Ltd or other companies related to Herbert.

A unit owner, who did not want to be named, said he bought one of the Raffles apartments last year for $555,000, putting down a $50,000 deposit.

He said on Friday his instruction to his lawyer was to “pull out” of the purchase, given Herbert Construction Ltd was now in liquidation.

Work on the apartments was relatively quiet on Friday. Photo / Gary Hamilton-Irvine

He said when he signed the contract, the project “looked good on paper”.

“I was confident that this was going to be a good thing for me.”

However, he said he felt Herbert and his company had disrespected a lot of people, including those who had taken a gamble on buying an apartment, by allowing the construction company to go into liquidation.

“This is how he returns our faith in the project.”

The unit owner said his lawyer was of the opinion there were clauses in his contract allowing him to pull out and recover his deposit in cases such as the developer becoming insolvent.

MCNZ Group - the parent company of Workforce Solutions - general manager Ellie Stone said they had unsuccessfully tried to recover $28,000 worth of invoices through a collection agency, which led to the court proceedings.

She said she hoped the liquidation process would help recover that money.

“Definitely we are going to continue with the liquidation, and we are going to provide as much information as we can to the liquidators to make sure other people don’t get as hurt as much as we have been hurt.”

She said if the money could not be recovered through the liquidation process, “at least I have made other people aware”.

Workforce Solutions paid its workers who contributed to the development.

Benjamin Francis and Garry Whimp have been appointed liquidators.

The project site was relatively quiet when Hawke’s Bay Today visited on Friday, with only a small number of workers visible.

Herbert previously told Hawke’s Bay Today the plan was to complete the project in February 2025.

Herbert’s former company also liquidated

In 2013, another of Herbert’s companies, Herbert Construction Company Ltd, was put into liquidation following a court order.

That company owed creditors over $900,000 and most of that money was never repaid, according to a final liquidators’ report.

There are laws against setting up similar companies, known as phoenix companies, once a company has gone into liquidation.

However, the Ministry of Business, Innovation and Employment (MBIE) confirmed those rules were not breached by Herbert when he set up Herbert Construction Ltd in 2022, because the rules only apply for five years after a liquidation.

“Herbert Construction Ltd was incorporated nine years after the commencement of the liquidation of the failed Herbert Construction Company Ltd, meaning that the time limitation around the formation of a new company was not triggered and no breach had occurred,” MBIE’s Vanessa Cook said last month.

“The Government is currently progressing a package of reforms to help make sure the rules governing companies are clear, workable and fit for purpose.

“These reforms are the first step in a phased approach to make improvements to New Zealand’s company law.”

Last year, Herbert and another of his companies, MAH Enterprises, were fined $96,000 after an investigation found 42 breaches of employment law involving migrant workers, including not paying annual leave entitlements.

Gary Hamilton-Irvine is a Hawke’s Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.