Ebert subbies left out

Twenty-one Ebert Construction subcontractors have been locked out of claiming any money back from the company.

In the High Court at Wellington, Justice Peter Churchman ruled that the firm’s $3.69 million retentions fund would only be divided among 131 of Ebert’s 152 subcontractors who should have had money put aside under a recent law change.

He said there was a ‘‘significant shortfall’’ in how much was available, given the $9.3m subcontractors were owed overall.

The 21 subcontractors who signed contracts with the company after a law change in April last year did not have their retentions put into the fund, causing a shortfall of nearly $1m in the $3.69m fund. Changes to the Construction Contracts Act mean construction contractors are required to keep retention payments in a trust for subcontractors.

Held in trust, the payments are considered the legal property of the subcontractor and in the event the company collapses, they are not able to be distributed to secured creditors. But because the legislation defined ‘‘retention money’’ as the amount withheld, any subcontractor who did not have money put into Ebert’s fund won’t be able to claim anything.

Justice Churchman said it was an ‘‘unfortunate consequence’’ of the act.

Some subcontractors will be denied a total of $170,000 because of a ‘‘data entry error’’ when Ebert processed their contracts – instead filing them as ones signed before the law change. Justice Churchman said Ebert ‘‘failed’’ to put aside these retentions ‘‘because of its own error’’.