Builder ordered to repay developer $512,000 in Auckland townhouse construction dispute
A dispute over a $1.3 million construction contract to build three new Auckland townhouses has resulted in the builder having to repay more than half a million dollars to the developer.
The Building Disputes Tribunal has ruled builder must repay the landowner or developer $512,000 for poor work and many breaches of contract occurred at the site.
Townhouse developer Struqta Properties contracted Papakura’s Speedy Construction to build the new places at 217 St George St, Papatoetoe.
The parties signed a fixed contract price of $1.33m for three two-level townhouses.
But disagreements resulted in the developer bringing a damages claim against the builder for costs to fix defective work, damages for delays at the site, additional costs to complete the townhouses and payment for adjudication and legal fees.
Speedy was found to have invalidly stopped work, abandoned the site, invoiced progress payments before it had finished work, failed to have appropriate insurance, failed to provide all the documents, failed to build the places in accordance with the plans and specifications.
The outcome is that the builder must repay the developer $512,543.08, according to the decision issued by adjudicator Mark Colthart on February 9.
Struqta had claimed $1.02m damages from Speedy but only won only around half that amount.
The developer alleged Speedy had breached the contract and was liable to refund it for works paid and not yet completed because the townhouse work was defective.
Struqta claimed various breaches of contract by the builder and required it to return to the site to fix what was wrong. An attempt was made to resolve matters including payment of sums for the builder to return to the townhouses to fix issues.
But Speedy took the position it had not breached the contract and it was not liable for delays due to funding not being available to the developer to pay it.
The builder also attributed delays to pedestrian crossing issues that impeded access, variations to the cladding on the top levels, a bricklayer subcontractor abandoning the site, electrical contractors engaged by the developer taking three months to complete their work and lack of payment by the developer.
But the developer defended itself on every point raised by the builder.
Struqta said there was no redesign: it was just the parties agreeing to the scope of work before the contract was entered into.
Struqta also denied it was ever informed about a pedestrian crossing obstructing access to the site till well after the works were due to start. Then, it said, the crossing did not obstruct the builder in any case.
Nor did the bricklayer abandon its portion of the works. Instead, it was unable to start its work due to the builder not removing the scaffolding, the developer said.
Nor did the electrical work take three months to finish.
“Any difficulties in carrying out the electrical work was due to delays by Speedy including the unfinished roof and cladding work,” the decision said of the developer’s argument on this point.
The developer cited significant delays with the work on the site and questioned the builder’s solvency. It presented a letter that said Speedy was having financial difficulties and could not pay the invoices it had been issued with. The adjudicator said another ground for cancellation of the contract by Struqta was Speedy’s insolvency.
The developer says it would now incur costs to fix the defects and finish the townhouses.
Those places were intended to be rented for around $865/week each but the developer said the builder’s delay in finishing the places had cost it dearly. It assessed delay damages to be around $134,000.
The builder had failed to carry out the works in a proper and competent manner, failed to keep fully insured, failed to deliver all the documents necessary, had issued invoices before it had completed work, invalidly suspended the works and abandoned the works and contract, the tribunal decided.
The Companies Office lists Speedy as overdue in its obligation to file an annual return. If that is not filed immediately, it will initiate action to remove Speedy from the register, it says.
Ajitash Krishan Kumar of Papakura is listed as Speedy’s sole director and sole shareholder.
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