Source: DOMINION POST
Napier: A construction company in the gun over the NZ$10 million leaky Hawke’s Bay Regional Council building is building a multimillion-dollar resort in Fiji.
Napier-based Herbert Construction is fighting off an application for liquidation in New Zealand, but in Fiji it has just announced it will be the official builder of the Peppers Naisoso Island Resort.
Director Malcolm Herbert is in Fiji and has been quoted in a newspaper as saying he was proud to be involved in a development “of immense importance to the national interest of Fiji”.
The three-storey council offices in Napier have been shrouded in scaffolding and workers since remedial work began in March which will not be finished until next year.
When Herbert Construction finished the building in 2006, it was hailed for its eco-friendly construction, with natural shade, light and ventilation.
Defects and legal action
Defects were noticed soon after it opened.
The council began legal action to seek reparations costs from Herbert Construction in April last year.
This year, the council found out the cost of repairing the building had more than doubled – to $2.2m – and its legal advice suggested it could recover 70 per cent of that through the court process.
The legal action is ongoing, with Herbert Construction taking action against sub-contractors who worked on the building.
Liquidation possibilities over allegation
Adding to the construction company’s woes is an application to the High Court by Strata Engineers to put it into liquidation over an alleged unpaid debt of NZ$33,935.75.
Strata filed an affidavit with the court claiming it was owed the sum for engineering work carried out on another Napier building in 2011 and 2012.
In November, Herbert Construction applied for the statutory demand for payment to be set aside.
The application was dismissed on May 9 and the company was given a week to make payment.
“The defendant company failed to make the payment on the statutory demand of $33,935.75, or costs of $12,415.30 awarded by the court,” Strata’s affidavit said.
Herbert Construction was unable to pay its debts and “in the circumstances it is just and equitable that the defendant should be liquidated”.
Counterclaim
Mr Herbert said his company had issued a counterclaim against Strata in relation to another contract, and had offered to hold the unpaid moneys in a trust account until the arbitration was determined but Strata had refused.
Mr Herbert said he was planning to put a compromise to creditors, and was committed to paying them.
But the compromise was complicated by the regional council claims.
Strata’s case is due to be heard in the High Court later this month.