How the rot set into an empire

By ANDREW LAXON and ANNE GIBSON

When Tim Manning ran the school dance and the tuck shop at St John's College in Hastings, they made money. Even Massey University's Student Union turned a profit when he was president in 1981, he says, "for the first time in its long history".

In a profile supplied to the Herald in happier, pre-leaky building days, Manning claims he has been an entrepreneur all his life and it's easy to believe him.

Timothy Terence Manning looks and sometimes acts like a caricature of a rich, flashy property developer. The 43-year-old is charming, smooth talking and usually loves to promote himself in the media.

Until the money began to dry up a few months ago, he lived in the luxury 39-level Metropolis building in Auckland city and was renovating a second family home at Lake Rotoiti (not far from his troubled Marama Point development, where investors are still waiting for about $1 million in rental guarantees).

He drove a green 8-seater 2001 Toyota Landcruiser, owned by Taradale, with the number plate PROPRT (since replaced) and kept a corporate box at Eden Park.

A fanatical runner and sports lover, he flew to the United States last year to compete in the New York marathon and made his debut in the gruelling Coast to Coast endurance race across the South Island this summer.

Through a maze of property and finance companies - Manning has been a director of 91 companies, 49 of which are still operating - Taradale was on the verge of becoming a household name for all the right reasons.

The company built distinctive Mediterranean-style terraced homes in Auckland, Wellington, Queenstown and Rotorua, with hundreds more units planned in smaller North Island centres from Whitianga to Taupo. There was talk of a stock market listing. The company billed itself as the biggest developer of terraced and condominium-style housing in the country.

Since then things have gone spectacularly wrong. Taradale and two other companies associated with Manning face a $20 million lawsuit for leaks and rot at his flagship Sacramento development at Botany Downs and a growing list of leak problems at his other developments.

Creditors and investors at his Rotorua and Queenstown developments are owed more than $5 million. Most of the company's planned projects have ground to a halt and Auckland-based creditors have been asked for more time on bills which are up to nine months old. Two have lost patience and filed a winding-up order in the High Court at Auckland.

Manning has bounced back before. After selling double-glazing for window systems in Britain on his OE he founded Mail Order Systems in 1984, which he said pioneered computer software package sales through the post.

According to the Companies Office, this firm and its associates all failed, have been struck off and are in the hands of the Official Assignee.

Manning left the IT business and staged a financial recovery through property. He started out by buying run-down Ponsonby and Grey Lynn villas and sprucing them up for a profit.

This went so well that he founded Taradale - named after his Hawkes Bay roots - which he boasted was "the first developer of terraced housing in Ponsonby and one of the first to refurbish apartments in Auckland's CBD".

He moved out of renovations and into development. Within a decade, Taradale Properties had become one of the biggest forces on the real-estate scene. It pioneered a new style of housing in New Zealand - large American-inspired "gated" developments of between 50 and 150 terraced homes, designed to function as independent communities with their own on-site manager and usually a swimming pool, gym and tennis court for the owners to share.

The architecture tended to be a low-cost imitation of Mediterranean or Spanish Californian styles with many of the features now known to be typical of leaky building failures - plastered walls over untreated timber, roofs with no eaves and windows without protective flashings.

Within 13 years Taradale became the largest condominium developer in New Zealand. By early 2000 the company had moved from offices in Ponsonby to Takapuna and Manning was carving out a national empire, with developments from Auckland to Queenstown and many more in the pipeline.

Staff, their partners and "key consultants" were swept off to Fiji, Sydney, Queenstown and Pauanui in the Coromandel to enjoy luxury holidays. They partied aboard chartered boats on the Waitemata and Manning proudly distributed pictures of these events to his contacts, showing how successful he had become.

Manning posed with smiling mayors from Manukau to Queenstown opening new developments. The Auckland Regional Council, eager to encourage higher-density housing, praised Taradale's developments as the way of the future. A year on, that dream lies in tatters - mainly but not totally thanks to the company's high-profile role in the leaky building disaster.

Eight out of 10 finished developments featured on Taradale's website at this time last year are now known to have leak problems, ranging from minor to catastrophic.

Mike and Megan McCormick moved into their $265,000 new three-bedroom home at Sacramento on April 1 three years ago. They liked the five-minute walk to the Botany Town shopping centre, the small backyard where their two young boys could play and what seemed a comfortable, low-maintenance lifestyle.

THEY were less impressed when they found a crack running down their garage wall and a rotting pillar on the back patio with the toxic mould stachybotris growing inside. Building surveyors have told them their home is one of the better ones they've tested.

The couple alternate between virtually giving up on their home and believing it can still be fixed. They had always planned to move suburbs when their oldest started school but are now facing an uphill battle to sell.

Like other owners, the McCormicks will have to find $2800 to help to fund $430,000 of repairs and the $20 million lawsuit against Taradale and nine other defendants.

They don't like paying but believe the $160,000 set aside for immediate repairs to rotting balconies and staircases - which the builders and developer refused to carry out - are desperately overdue.

"We have to do the repairs to keep them safe for people to use," says Mike. "If people lean on them, they would fall right through."

The endless legal buck passing infuriates them. When the Weekend Herald asked Manning why he refused to take responsibility for Sacramento's problems, he replied he was merely a "facilitator" on the development.

Megan McCormick has heard this before.

"Who took our money?" she wants to know. "It's his responsibility to chase his sub-contractors."

Ann Wallace feels the same way. The 31-year-old legal secretary and Auckland University history student thought she was investing for the future when she bought a $149,000 one-bedroom apartment at Taradale's 105-unit Grange development in Albany.

Now water leaks into her walls through the pagoda beams, big cracks are appearing under the lounge windows and mould is sprouting around the verandah.

She says other units are worse - two have rot everywhere. A building consultant's report warns other homes in the Grange will not survive without major repairs.

Wallace cannot understand why her fellow owners will not sue Taradale, as Sacramento owners have done. The body corporate has decided to try further negotiations with Manning, which she regards as delaying the inevitable.

"This man has schmoozed our money out of us and at the end of the day he's walking away laughing.

"He was in charge of all those people [working on the Grange] as far as we're concerned."

Home buyers should think about what his excuses mean, she says. "If you buy off Tim Manning, he accepts no responsibility whatsoever because he's a 'facilitator'."

INVESTORS who bought into 176 apartments developed by Manning's companies at three resorts have also been stung for at least $2 million in unpaid rental guarantees.

The owners were attracted by promises of guaranteed rents for their units at Marama Point in Rotorua and the Whistler and Greenstone Terraces developments in Queenstown.

But when these failed to emerge, relations soured between Manning and his old business partner and New York marathon running mate Gary McNabb, who ran this side of the business.

McNabb filed a statutory demand for $470,000 against the Taradale companies involved. Manning hit back by applying for interim liquidation of the six companies, which he and McNabb owned jointly. Two sources close to the companies have independently given their version of events to the Weekend Herald.

They say Manning was not wholly to blame but did not give the companies enough money to market the developments and attract tenants. As a result, the low occupancy rates were hard to turn around.

The sources add that Manning intended to drip-feed money in each month. But by late last year, Taradale was reeling from the leaky building crisis and the money never came through. To make matters worse, the developments also had leak problems.

One Australian-based investor with a unit at one of Manning's Queenstown resorts said the roof of her unit was due to be lifted soon to find out how water was coming in and she would miss out on three week's rent.

"I tell my friends about this disastrous New Zealand property investment I made and ask them to think of the worst nightmare - this is what I'm in.

"This has just been daylight robbery," she said, estimating she was thousands of dollars out of pocket. "How can this be legal in New Zealand?"

Investors were so upset in January that more than 200 out-of-pocket unit owners at the resorts even formed a group, Taradale Investor Support.

Two Auckland specialist liquidation firms are trying to salvage as much cash for creditors and investors as possible from the disasters in Queenstown and Rotorua. Their reports so far show that creditors and investors are owed at least $5 million.

On top of that, Taradale has placed its Hamilton operation in liquidation, ahead of a winding-up order from BCA (Body Corporate Administration), which was seeking A$35,000 ($38,500) in unpaid fees.

The Weekend Herald understands creditors are owed at least $150,000 each on the two developments which Taradale leaves behind with no building work yet begun - the 46-unit Dakota Hamilton in the city (now selling through another company) and the giant 276-unit Sherwood Park near the university.

The combined effect of the leaky building crisis and the guaranteed rentals debacle has forced Manning to cut back heavily. In January he cancelled his $12 million Orchard development at Botany Downs, citing leak risks.

He has also dropped developments planned across the North Island, from Whitianga and Tauranga to an 180-unit site on the shores of Lake Taupo.

The company's 74-unit Strata development on the North Shore - "luxury living at an affordable price" - was due to start late last year and be finished by September.

Today the Browns Bay site lies overgrown, with signs such as "unit 74" and "clubhouse gym" poking up through the long grass.

Taradale has written to creditors, asking for more time to pay its debts and promising to raise the money by selling land.

However, some have lost patience. Building consultant Nigel Fletcher was hired by Manning last year to report on Taradale's leaky building problems. Fletcher accused Taradale in his report last November of not taking responsibility for the problem, not doing enough to protect home owners and not being serious about assessing the extent of the problems. It concluded that the company's management of the problem was "nothing short of abysmal".

When Manning responded by not paying Fletcher's $18,000 fee, Fletcher took Taradale Management to court. A hearing is due on May 1.

Engineering consultants Sinclair Knight Merz (SKM), which did urban design work for another stalled Taradale project on the North Shore, has joined the claim in pursuit of an $11,000 debt which stretches back over nine months. The Weekend Herald understands several other companies have much larger claims against Taradale.

However, most firms will go to great lengths to avoid legal action against creditors in case it causes a chain reaction through the industry - like the collapse of North Shore builder Akita last year.

For Manning, the cutbacks are getting more personal. He is closing Taradale's Hamilton and Wellington offices. Just before Christmas he made 12 staff redundant in front of all their colleagues.

The Metropolis apartment is gone, replaced by more modest rented accommodation and he ditched his beloved Eden Park box two months ago. As he stressed to the Weekend Herald this week, for a dedicated rugby lover that was quite a sacrifice.

"I personally have not been in that box for five months."

Megan McCormick is not impressed - and says she won't be until she sees Manning or anyone else associated with the Sacramento disaster take some responsibility for their actions.

"Nobody's prepared to say 'We screwed up and we will fix it for you'.

"It's always somebody else's fault and that's what I find really hard to take."