Out-of-pocket subbies focus of legislation

By ANNE GIBSON

Steve Healy and Marty Collins are thoroughly brassed off.

For two years, they have been waiting to be paid for work their firms did on Princes Wharf.

Healy runs D.L. Good Plumbers in Henderson, employing 16 people. Collins runs T.S. Bishop Electrical at Penrose, employing 40 people.

They worked on various apartment and retail blocks on the wharf which were finished long ago.

Healy is owed $67,000, an account he says is not subject to dispute but simply unpaid.

Collins lost $45,000 on Shed 24 on Princes Wharf when the ill-fated Goodall ABL went under, owing 400 subbies and suppliers $20 million. He is owed at least $25,000 for electrical work on Sheds 19 and 20.

"This is just sucking the construction industry to death," says Collins, who was last year forced to write off $100,000 in bad debts.

He and Healy have a list of 38 other subbies who are owed money from Princes Wharf work. Painters, tilers, engineers, carpet layers, alarm fitters and steel workers are all out of pocket.

They were all contracted as subbies for the head contractor, Onehunga's Hartner Construction.

But Hartner's finance director, Mike McQuarrie, says he cannot pay the likes of Healy, Collins and others because the developer has not paid him.

He is citing the "pay if and when paid" clause, a controversial and much-criticised aspect of the industry.

The Princes Wharf developer is former sparkie David Henderson and his Kitchener Group. He says he will not pay Hartner until a dispute over the building is sorted out.

But he adds that although he cannot know the exact details of every subbie who worked on Princes Wharf, folk like Collins and Healy should technically have been paid because he has handed the money across to Hartner. "There's no arbitration on Shed 20 because we paid the final account to Hartner. So this is a good example of where Hartner has a difference between its subcontractor and us."

However, there is a dispute about most of the other sheds, particularly 19. Sitting at the very top of the pile is Queen St lawyer Derek Firth, whose job it is to arbitrate between everyone in the coming weeks.

But all this could be about to change.

Associate Commerce Minister Laila Harre is promoting the Construction Contractors Protection Bill, which she hopes will become law this year.

It might have saved some of the unlucky 13 building companies which have failed in the past year.

The legislation proposes to outlaw the "pay if and when paid" clause in building contracts.

It also proposes to set up a fast-track disputes resolution process, so rows such as the one Healy and Collins are involved in do not drag on for two years.

Even more controversially, it aims to reintroduce the security interest or lien aspect of protection, ditched in 1986. This means a lien or claim can be slapped on a property's title by a disgruntled subbie to ensure it cannot be sold before the bill is settled.

This will apply only after adjudication to make sure the power cannot be used spuriously.

The law change for subbies is just part of a much wider insolvency review by the Economic Development Ministry.

It will target delinquent companies and unscrupulous practices including phoenix companies, voidable transactions, priority debts and bankruptcy administration.

None of this will bail out Healy and Collins right now. But the law change could see the cobbers better off in future.

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