Ebert director builds mansion
A director of failed Ebert Construction was building a multi-million dollar mansion in an exclusive seaside enclave while his company teetered on the brink of collapse.
Ebert managing director Kelvin Hale contracted the company to build his new home in the Lower Hutt suburb of Eastbourne, though a subcontractor said he could not recall ever seeing any Ebert staff on site.
Ebert Construction was put into receivership on Tuesday, with receiver John Fisk estimating the company owed $40 million.
Fisk confirmed that Ebert Construction was contracted to build the home by Hale’s family trust.
Stuff has not been able to contact Hale for comment.
The owner of bricklaying company Able Mason, Gary Bouzaid, said he was paid by Ebert Construction for the work he did on the Lowry Bay house – listed as Hale’s home address at the Companies Office.
An invoice seen by Stuff showed that Bouzaid’s work at 51 Walter Rd was addressed to Ebert Construction. ‘‘All I know is the cheques were coming out of Ebert’s to pay [the subcontractors].’’
Bouzaid said he had not seen much sign of Ebert on the site and had initially thought his contract was with Hale.
A winding driveway leads to the massive secluded three-storey house on a bush clad hillside, with walls of glass overlooking Wellington Harbour.
Bouzaid said the Walter Rd property was ‘‘the best house you’ve ever seen in your life’’. Construction began in 2015.
The house’s plans included five bedrooms, a study, four bathrooms, an elevator, extensive decking and a six-car garage.
Lowry Bay’s median house price is $1.08m, according Homes.co.nz.
Bouzaid said he was owed about $18,000 by Ebert for work he did on the new Indian High Commission.
Hale bought a neighbouring property in 2014 for $1.45m, according to QV.
Neighbours said the house on the property was demolished last week to make way for a swimming pool.
During a visit to the residence, it appeared work was ongoing, with PVC tubing and several large bags containing demolished material near the work site.
The properties are owned by Kelvin Hale’s wife, Bronwyn Hale, and Wellington lawyer Donald Forsyth, according to Terranet. Resource consent documents name KE Hale Family Trust as owners. Forsyth, who is a trustee of the KE Hale Family Trust, said the house was built by an independent builder with some subcontracting ‘‘done by or through Ebert Construction’’. All work on the house had been invoiced to the trust and paid in full.
The two properties had a combined rateable value of $5.9m in July.
A resource consent application granted in 2015 estimated the new house would cost $3.08m. Ebert has been working on 15 projects around the country, including the Indian High Commission, the Union Green apartment development in Auckland, a Middlemore Hospital unit and a new commercial building in Carterton.
There may be more casualties as the under-pressure New Zealand construction industry battles to keep up with demand.
High-profile failures this year have drawn attention to the ‘‘razorthin margins’’ that construction companies face, and the difficulty they have in making projects pay.
When Ebert Construction went into receivership this week, almost 100 staff were left in the lurch and purchasers of off-the-plan apartment developments, such as Union Green in Auckland, faced being left out of pocket.
But there are warnings of more pain to come.
The Ministry of Business, Innovation and Employment’s National
Construction Pipeline Report for 2018 shows significant levels of building work on the horizon.
Dwelling consents are forecast to exceed all previous records, reaching 43,000 a year in 2023, an increase of 39 per cent from last year.
Non-residential building work, which is 22 per cent of the country’s construction work by value, is forecast to continue at much the same rate as at present through to 2020, with a peak in activity next year.
Professor John Tookey, who heads AUT University’s school of engineering, computer and mathematical science, said the pressure being put on the industry would cause tension.
‘‘The big problem is that we as a society are expecting industry to step up and expand the capacity of the housing sector, in particular, in order to deliver our social and societal need. Practically, collapse occurs when a company becomes over-extended and takes on more than it can cover. So stepping up capacity will inevitably drive further insolvencies.’’
There was probably enough capacity to deliver the commercial projects required, he said, but not for housing.
‘‘The margins are not that great in housing and the orders come in randomly with no consistency.’’
He said the Government could help with the way it managed KiwiBuild, the project to build 100,000 houses in the next 10 years.
It could start putting in significant orders for KiwiBuild to create a pipeline of work, he said.
‘‘Everyone wants to see KiwiBuild succeed, but we are not seeing that necessarily happening at the moment ... If a housing company goes belly-up in the middle of KiwiBuild because it’s run out of money, what happens then?’’
NZStrong head Chris Hunter, a former Hawkins chief executive, said it was a very tough time to be in the market. Hawkins was sold to Downer, and the division to manage legacy projects, Orange-H, went into receivership in May. ‘‘It’s the most dangerous part of the cycle.’’
Input costs were rising and could not necessarily be controlled, and contracts had risks that could not be managed by contractors. There was also pressure from a lack of labour.
Hunter said there were no toptier building companies left that were owned in New Zealand.
‘‘Who at the top end of town is there to build these projects? That will present future challenges.’’
But economist Shamubeel Eaqub was less concerned about the impact of business failures on the sector’s ability to deliver.
‘‘The people haven’t gone away, only the structure. You shouldn’t think because a company fails all the IP [intellectual property] and stuff is gone,’’ Eaqub said.
‘‘If anything, that’s what was needed because they had got into contracts they couldn’t manage … Construction companies are at the bleeding edge of any cycle. At some point they do start to fail.’’