Developer's 'shelter' under attack

By ANDREW LAXON

Developers of leaky buildings are under attack for hiding behind shelf companies that protect them from angry homeowners and creditors.

The Building Subcontractors Federation claimed yesterday that Trebe NZ, the builder of Wellington's leaking and toxic mould-infected Marion Square apartments, was apparently set up to avoid liability.

Trebe went into voluntary liquidation last week

Federation chief executive Peter Degerholm said the company, which used to be known as Ebert NZ and traded as Ebert Construction, had become embroiled in contractual disputes.

It changed its name to Trebe NZ (Ebert spelled backwards) and continued to defend the claims, while forming a new company called Ebert Construction.

All three companies had used the same trading name in letters to creditors.

Trebe's voluntary liquidation meant subcontractors had wasted thousands of dollars in legal action chasing uncollectable debts, he said.

The company's total debts were unknown, but would be measured in hundreds of thousands of dollars.

Mr Degerholm believed the Marion Square owners, whose case against Trebe goes to the High Court next month, would face the same problem.

"Whatever the reason for the company law change, the clear effect has been to leave creditors with the shell of the former company, while its 'clone' or 'phoenix' version continues to thrive."



Mr Degerholm said he was asking Commerce Minister Lianne Dalziel and the Ministry of Economic Development for a law change to stop such unacceptable behaviour.

Ebert Construction is a high-profile company in Auckland and Wellington. Builders were at work yesterday on an apartment block the company is building on the Strand in Parnell.

A Wellington manager of Ebert Construction, Mike Philips, refused to comment on Mr Degerholm's claims, saying Trebe's affairs were in the hands of the liquidator.

Lawyers and building industry experts have told the Herald that many developers use shelf companies to avoid liability - a practice they regard as morally dubious but not illegal.



Meanwhile, National warned that the leaky building crisis could reach "plague proportions" as it outlined plans to set up a Weathertightness Tribunal for out-of-pocket homeowners.

Party leader Bill English proposed that a District Court judge would chair the tribunal.

Mediation would be the first step, but if no agreement could be reached, the dispute would go to a panel of independent industry experts for a binding decision.

He said the best way to set up the tribunal would be through the Construction Contracts Bill, which was already before Parliament.

National would move next week that the bill be referred back to a select committee so this could be done. The bill could still be back before Parliament by October 15.

National has not yet consulted other parties to see if they would support the tribunal. Unless Labour agrees, National's best chance appears to be with junior Coalition partner United Future.

Mr English said homeowners with large claims might still prefer to use the court system.

* One of New Zealand's biggest developers, Taradale, has placed another large project on hold because of concerns about leaks in its homes.

Taradale Hamilton was to have put stage one of its Sherwood Place - a $70 million development near Ruakura with 312 apartments - on sale in June.

Construction was to start when 60 per cent of the units had sold.

But the leaking building crisis has prompted the company to delay the start of the project as it undertakes a "design review".

Taradale general manager Bill Ritchie said the apartments would now go on sale in November "and we should be building by about May".

* If you have information about leaking buildings,
email the Herald or fax (09) 373-6421.

Further reading
Feature: Leaky buildings

Related links