Developer brothers leave trail of angry owners

By TONY WALL

Dozens of new-home owners are fighting through the courts against two high-flying developers who have used a string of shelf companies to put up terraced housing across Auckland.

Tension is growing between property magnates Roderick and Gregory Nielsen and people who have bought homes at some of their developments and claim they are substandard or incomplete.

The brothers set up shelf companies for each development, later liquidating them to avoid personal liability - a common building industry practice that has come under increasing fire since the leaky building crisis.

Last night, a group of about 40 owners of homes in the new Ellerslie Oaks complex met to discuss what action to take over alleged incomplete work. The company that developed the site, Mays Road (Ellerslie), was one of four Nielsen brothers companies put into voluntary liquidation last week.

Owners of homes in the leaking Greenwich Park development in Grafton have named the brothers and their core company, Castlerock Property Holdings, in their $3.5 million legal action - the biggest known leaking building lawsuit.

The Weekend Herald has also spoken to subcontractors who say they are owed money by the pair. An earthmoving firm, Rixon Contracting, and a timber framing company, Far North Property Developments, have sought $260,000 between them.

Another business claims to have gone bust largely because the brothers did not pay a bill. Some contractors say they have settled for much-reduced sums after giving up hope of getting any money from the shell companies involved.

The Nielsen brothers are listed as directors of at least 33 companies, 15 of which have either been put into liquidation or struck off the company register.

Yesterday, Rod Nielsen said he was upset at the allegations being made against him and asked: "Is this shoot-the-developer season?"

He added: "We do not have one single creditor - every person who has done work for us has received payment to their satisfaction."

He said he was proud of his developments. A contractor had been employed to complete "minor" works at Ellerslie Oaks involving "security gates, a little bit of wrought iron and five carports". The work would begin soon.

He described Greenwich Park as a "beautiful development, well done" and said any "ongoing matters" were between the owners and the construction company, which is also being sued.

Mr Nielsen acknowledged that one contractor had taken him to court, but the matter was contested.

"If we are proved to be wrong, we will pay them any money outstanding - if they are wrong they are up for a massive claim against them."

The Nielsen brothers developed the leaking, 85-unit Greenwich Park complex using the shelf company Burton Terraces, which has now been struck off, but the owners' lawsuit is targeting their core company, Castlerock.

Lawyer Paul Grimshaw said he believed there was scope under the

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Body1: Fair Trading Act to "lift the corporate veil" and sue directors of "shell" companies - so long as there was still a core company that was viable to sue.

He believed developers had a duty to ensure that proper care and skill were used in the building of houses, and that could not be avoided by delegation to independent contractors.

Rod and Greg Nielsen have been prominent on the Auckland property scene for several years and their 10 Auckland developments range from top-of-the-line terraced homes to cheaper apartments. They are known for their love of luxury cars.

Rod Nielsen, 34, lives in a $725,000 home in Parnell and drives a Ferrari, and his partner, Julie Going, who markets his homes, drives a new Range Rover worth $175,000. Brother Greg also lives in Parnell and has a Mercedes four-wheel-drive.

One of the pair's most recently completed projects is Greenlane Mews on Great South Rd, developed under the name Greenlane Trust.

Using the name 35 Ayr St, they paid $3.5 million for the old Grammar Carlton Rugby Club property in Parnell, which they plan to develop. They also have development plans in Queenstown.

A representative of owners of homes in the Ellerslie Oaks complex, who asked not to be named, said: "We didn't get what we paid for."

Security gates were not installed, courtyard fences were not finished, some appliances were not installed and remedial work was not finished.

Roy Willcox, owner of an apartment in Dryden Terraces developed by the same company, said owners were upset about deficiencies at the complex.

These included malfunctioning security gates, substandard drives that had developed potholes and drainage problems.

"They didn't stand by their workmanship at all. The developers didn't want to know - as soon as they got their money they were gone. We couldn't get them to come back and address the problems in any shape or form - consequently, our body corporate fees have been paying for their cock-ups," Mr Willcox said.

Subcontractors have told the Weekend Herald that a lot of work has not been finished because they were paid late or not at all.

One, Gus Benzie of fencing company Legend Balustrades, said the company was forced into liquidation largely because a Nielsen brothers company owed him money.

He was still owed $10,300 but had written it off as he could not afford to pursue it through the courts. "I was a mug to deal with them."

Hills Flooring managing director Willie Hill said he would never work for the Nielsen brothers again after taking a "$50,000 bath" over unpaid bills.

A spokesman for the Companies Office said it was not illegal to set up shelf companies to limit personal liability. "The whole nature of a limited liability company is to ultimately restrict your responsibility for debt."

But he said action could be taken against company directors who had had more than two failed, including liquidated, companies within five years, where the failure could be shown to be their fault.

The Building Subcontractors Federation wants the Government to tighten company law to crack down on developers "hiding" behind shelf companies.


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