Corbel failure hits apartment owners
Corbel Construction was placed in liquidation this week after losing a gamble over the Parnell Terraces apartments in Auckland.
Corbel was the party that issued adjudication proceedings against the Parnell Terraces body corporate. Corbel directors Mark Wells and Craig Jones had acted on optimistic legal advice.
The body-corporate chairman, Michael Rehm, said Corbel chose voluntary liquidation after losing.
‘‘Corbel was the head contractor engaged to undertake the remedial work on Parnell Terraces,’’ Rehm said.
‘‘They were in default of their contract, were put on notice to rectify their breach and failed to do so. The body corporate resumed possession of the site in early July and is now finally nearing the end of the remediation with a new head contractor.’’
Rehm claimed Corbel had been overpaid in respect of the contract work and owed the body corporate a significant amount.
All claims must now be dealt with by the liquidator, but few assets are likely to be available to sell, judging by other liquidations involving building firms.
A Parnell Terraces apartment owner, Eva Stingl, said she faced a bill of $20,000 next week on top of thousands of dollars more for interior work.
She said the body corporate had been silent about the consequences. ‘‘We have been bleeding and still are.’’
Stingl understood the adjudication was regarding a disputed $120,000, and also believed other parties were implicated in the general mismanagement of the repairs.
The repair bill for the 81-unit leaky apartment building had swelled from an initial $20 million to more than $29m.
A Corbel subcontractor, Richard Bendall of Apolon, was owed $120,000 before Corbel’s collapse because he was working on its leaky building apartment contract in Mt Eden, Auckland.
He had 10 employees and had been providing work for another 15 subcontractors. He had contacted the receivers about completing the project where he had materials and gear on site.
Bendall said it was the second time he had dealt with a failed head contractor this year, and he felt like he had been used as a funder by them.
Problems often arose after cladding was removed and new defects were uncovered. Repairs also had to be carried to modern building codes that might be more stringent and expensive than when the building was originally constructed, he said.
One of the options he was exploring was insurance cover for work under way. Initial costings indicated it would cost about $14,000.
Bendall was worried about whether Corbel had put aside retention payments, to cover any remedial work required. He said harsher penalties were needed for failures to keep retentions in a trust account.
There were other protections in the Construction Contracts Act allowing subcontractors to take out a workman’s lien, a device to protect their position.
But quantity surveyor Lester Bryant said that when subcontractors signed up with a head contractor there was usually a clause requiring the subcontractor to opt out.
Bryant has written a book called Avoid Going Broke in which he interviewed construction business owners about the failure of their businesses. He said the most common failure was the under-pricing of contracts to obtain work, and then expecting to obtain variations to the contracts when additional costs were identified.