Christmas – but no new home
The Quinn family is about to spend its third Christmas waiting for a new house which shows no sign of being completed by builders.
Dan Quinn said there may be more than 20 clients whose houses were under construction when building firm Mass Construction NZ went into liquidation in August. Mass held the Platinum Homes franchise for the greater Wellington region, and the master franchisee promised to do what it could to finish the house.
But Quinn, who is also a builder, says his family of eight from Upper Hutt have been waiting for two years in a damp house for their new home. He says some of his children have been getting sick, but no work has been done on the site since February.
‘‘We paid our deposit in December 2017; this is going to be our third Christmas with this weight over our heads, We have six kids living in a very cramped run-down house.’’
Mass left behind more than 60 unsecured creditors claiming $3.5 million in debt and, according to Quinn’s information, more than 20 homeowners may have unfinished homes.
The homes are covered by a Homefirst Builders Guarantee, which safeguards their deposit and guarantees completion.
However, the contracts were backed by an insurance company which has also gone into liquidation. Platinum paid $200,000 to provide 200 of its customers with replacement insurance.
But the new insurance policy has different conditions, which Quinn says covers the base amount but only 15 per cent of any additional costs.
With building costs on the rise, ‘‘everyone’s in a hard place,’’ he said, and they could not resort to the Consumer Guarantees Act because Mass has liquidated.
Costs differed, but Quinn says he had heard of another Mass customer facing a deficit of $55,000.
‘‘If we are asked to pay for costs on top, we won’t be able to afford it.’’
Quinn acknowledged Platinum Homes was not obliged to ride to the rescue but he felt that they were ethically obliged to step in. He and a group of other affected home owners are planning to meet with the company.
The case highlights the difficulty of determining who is accountable when construction company licence holders of big franchise names collapse.
Tom Bennett, a partner with law firm Buddle Findlay, says a master franchise does not legally have to stand behind the companies it allowed to use its brand, unless the contract between them states otherwise.
According to its liquidator, Mass Construction ran into troubles because it had supported a related company in the South
Island. Its director Jason Strange also held the South Island Platinum Homes franchise licence until it was hit by cash flow problems in 2016.
Platinum Homes’ head office suspended Strange’s South Island licence but allowed him to continue running the lower North Island franchise until the company went into liquidation.
Alarm bells started going off for Mass Construction clients in February, when they began to note long delay times.
Strange attributed them to weather, issues with suppliers and getting sub-contractors to sites.
But when Mass failed in August, Platinum Home’s chief executive Dave Andrew said that it had been brought to his attention that Strange’s Wellington and Kapiti Coast operation had been breaching ‘‘policies and procedures’’.
He said Platinum had ‘‘worked very closely with him to try and resolve the issues he was facing’’ but it was left with no choice but to terminate Strange’s licence.
Asked for an update about Mass’ lower North Island customers, Andrew declined to comment. He could not confirm the number of houses still unfinished.
Stuff has made extensive efforts to contact Strange.
Some of Strange’s clients in Christchurch are still feeling the effects of the demise of his South Island business.
One, who asked to remain anonymous, said it took him 31⁄2 years to get his house completed.
He was still getting defects fixed through insurance but had been able to move into his home at the end of last year.
‘‘Every step of the way was an absolute fight to the death for everything,’’ he said.
The arrival of Andrew at Platinum had resulted in greater progress, however.
A builder review website was approached last year by Strange’s lawyers demanding that critical comments be removed.
Mass’ liquidator David Ruscoe, of Grant Thornton, said Strange’s North Island company had collapsed because of the support it gave Mass Construction South.
In a compromise deal with creditors in 2016, the northern business agreed to wait for its debt from Mass South so creditors could be paid and homes completed.
But the lack of repayments from Mass South created a knockon effect for Mass Construction’s cashflow, delaying payments to subcontractors and suppliers, delaying home completions and increasing costs.
‘‘The shareholders invested further funds in the business and with the support of the master franchisee in an attempt to turn the business around.
‘‘Unfortunately, the loss from Mass South and the unprofitable builds was too great, and the shareholders resolved to appoint liquidators.’’