Record-setting ban leaves sour taste for builder’s creditors

This would have to be right down the extreme end of misconduct.

The multi-million dollar debt trail left by the failure of a Waikato building company has led to the director being handed a recordbreaking nine-year prohibition on running another company.

However, those affected by the collapse say a ban for life would be more appropriate.

Richard Zongyan Lee, director of Starplus Homes Ltd, has been barred from directing or managing another company until 2024, after his business collapsed owing $35 million – $18m to unsecured creditors.

Lee could not be contacted for comment.

Gordon Irving, senior communications adviser to the Ministry of Business, Innovation and Employment, says the record ban could be imposed thanks to a law change last year increasing the maximum term of prohibition from five to 10 years, along with ‘‘the registrar’s view of the extent of mismanagement’’.

Toby Braun, director of Hamilton law firm Whitfield Braun, which specialises in litigation and construction law, says the prohibition imposed shows just how significant that mismanagement was.

‘‘When any new law comes into being, typically the regulatory bodies tread a little bit carefully initially.

‘‘So if you’ve got a new law that imposes a maximum term of 10 years, to impose nine years suggests that this was viewed particularly seriously,’’ he says.

‘‘This would have to be right down the extreme end of misconduct on the part of a company director for such a significant period of suspension to be imposed.’’

The ban would effectively ‘‘rule [Lee] out of doing any substantial business in New Zealand for probably the next 10 to 15 years’’.

However, those owed money by Starplus Homes say the prohibition doesn’t feel like justice.

Ace Concrete Cutting owner Glenn Joyes says nine years probably isn’t long enough for the

Toby Braun Lawyer

amount of money Lee cost small business owners. Joyes says he wasn’t too badly hit – he was owed only a few hundred dollars – but knew plenty of people left ‘‘bleeding’’ by the company collapse.

‘‘I’d like to see more . . . he owed a lot of money.’’

His words were echoed by other small business owners, unwilling to have their names published in association with Starplus Homes, who say they barely made it through after the collapse cost them thousands.

Managing director of Mitre 10 Mega Hamilton, Terry Wilson, says he believes a lifetime ban from company directorship is the only appropriate punishment for Lee.

‘‘While I don’t believe Richard Lee ever intended for his company to end up the way it has he was clearly not able to run a business of that size,’’ he says.

Mitre 10 Hamilton was able to recover much of the $1.1m it was owed by Starplus Homes.

‘‘We were very lucky and got almost everything that was owed to us back because we had very good equitable mortgage securities, so we were very happy with that outcome.’’

Starplus Homes was one of the biggest building companies in the Waikato at the time of its collapse in 2013.

The company was also placed into receivership in 2013, and Lee was made bankrupt the following year.

The liquidation continues, with about 200 creditors – many of them small businesses – still owed money.

A precedent-setting court battle may be brewing between the liquidator on behalf of Starplus and Inland Revenue, as the two dispute who owes whom money.