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MDC risks losing $267k in liquidation

Masterton District Council [MDC] appears unlikely to recover hundreds of thousands of dollars lost in a construction company collapse.

Payments of more than $267,000 made by MDC to Podular Housing Systems Limited to build the council’s youth hub next to the revamped skatepark site are unlikely to be recoverable in any form after a High Court decision earlier this month.

The company – which made architecturally designed modular buildings called ‘pods’ for residential occupation and operated out of Hamilton and Christchurch premises – went into liquidation late last year, with estimated liabilities of about $5.3 million.

Corin Haines, MDC manager of community facilities and activities, confirmed the council’s current view.

“Our lawyers are monitoring the situation with the liquidator, but our understanding is that it is extremely unlikely we will be able to recover any money through the liquidation,” he said.

Following an application to the Auckland High Court by the company’s liquidators, Justice Jagose directed last month that creditors with partly completed pods had a successful claim, under the Companies Act, over the partially constructed structures to the extent they had paid for them.

“I direct each relevant respondent has an equitable lien, over the partly-constructed pod relating to their respective contract for its construction and installation, to the extent of the purchase moneys [including deposit] paid by them,” Jagose decided.

An MDC spokesperson said the council did not have a partly built pod to attach such a claim to.

“Our understanding is that a quantity surveyor working on behalf of the liquidator has determined there is no pod, incomplete or otherwise, related to the MDC contract. The council’s lawyer will continue to monitor the situation,” they said.

MDC was one of 25 respondents to last month’s High Court proceeding.

At the time of the application, there were 13 pods under construction in the Hamilton facility and three pods in Christchurch, for which customers had made staged part-payments.

The council reported in December 2022 that the company contracted to build the youth hub had been put into liquidation. MDC submitted an unsecured creditor claim ahead of a
creditors meeting that month.

At the time, a council spokesperson said the company’s failure was disappointing for ratepayers and skatepark users, who were looking forward to the hub opening.

“We will start work exploring new options to deliver the youth hub facility but will need to follow the liquidation process to understand what [if any] of the money paid to Podular can be recouped. We are also working to understand what state of completion our building is in as to whether we can, as part of the process, secure this.”

MDC paid Podular $267, 661.00; a deposit, and a further payment on filing the building consent.

The liquidators were appointed in December last year. They said the company was “clearly insolvent”, with an estimated deficit at that stage approaching $5.3 million. The liquidators allege more than two million dollars taken as deposits from customers did not appear to have been spent for the purposes for which they were paid.

Inland Revenue and the company’s employees have statutory preferential claims.

– NZLDR

Public Interest Journalism funded through NZOnAir

3 COMMENTS

  1. Who pays a deposit on a promise the C E O should go this is incompetence of the highest level I have built many building and never handed over money like that free with rate payer money come on CEO go

  2. Another unnecesary burden for rates payer , foolish move by council out sourcing this job !Does Council have some sort of insurance protection against this failure ?

  3. Plenty of local Wairarapa builders could have undertaken this project. Typical council blundering of out sourcing work, now tax payers will pick up the loss…..???

Comments are closed.

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