13 Nov 2018

Ebert subcontractors to be paid at least 75% of money they're owed

1:47 pm on 13 November 2018

The majority of subcontractors owed money by the failed Ebert Construction will be paid at least 75 percent of what they're owed in retention funds.

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Workers were locked out of a Ebert Construction site when it went into receivership. Photo: RNZ

A judgement by Justice Peter Churchman, provided to RNZ, said Ebert's retention fund of $3.7 million, was insufficient to pay 152 subcontractors all of the $9.3m they're owed.

That's because Ebert "simply defaulted on all of its legal obligations," when putting some money from contracts aside, Justice Churchman said.

Ebert was the first construction firm to fail since a law enacted in April required companies to put funds in a trust account, to be paid as a security if it failed.

The receivers of Ebert Construction, John Fisk, Lara Bennett and Richard Longman of PricewaterhouseCoopers (PwC), had to apply to the High Court in Auckland to be made receivers of the retention fund, to be allowed to distribute funds to subcontractors.

They were successful. However, the court ruled only 131 out of 150 subcontractors' claims for money from the retention account, were sound.

Ms Bennett said the 131 could be refunded up to $2m from the fund before Christmas.

However, the remaining 21 subcontractors could not claim any money from the fund, because Ebert failed to record their contracts accurately in its computer system.

Justice Churchman said they were an "unfortunate consequence" of Ebert's "own error".

A sub-contractor owed $500,000 by Ebert, raised concerns over the PwC receivers eating into the remaining funds last week.

The Rotorua-based engineering company Taslo, owned by a husband and wife, told the court it wanted receiver fees to be capped at $150,000.

Justice Churchman did not agree with that, but required receivers to apply to court to have their fees approved before they are paid.

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