Two separate Signature Homes Otago franchise holders have been placed in liquidation in the past four years - raising serious concerns for the home buyers and subcontractors involved.
Last week, liquidators of the most recent Otago franchise holder, Murwil Construction Ltd, estimated more than 160 mainly Otago businesses could have little or no claim on the $1.3 million which may be owed to secured and unsecured creditors, saying a dividend was "unlikely" for the latter group.
The extensive list of creditors includes builders and contractors, designers, scaffolders, joinery shops, a florist, moteliers and cleaners.
According to the liquidators, Signature Home's southern franchise has had a bad run, or "mixed history", with two separate liquidations of the franchise holder in four years.
In both instances, they were initially estimated to owe creditors more than $1 million in unpaid debts.
One asset for sale is Signature Home's display home in St James Pl, Fairfield.
But a number of creditors have "priority claims" on the home, which has a rateable value of $535,000, liquidators said.
Dunedin Signature Homes' buyer Alan Heathman says he was owed almost $63,000 above the $426,000 cost of his Dunedin home.
Jane Pauley, of Cromwell, says she had estimated losses of a six-figure sum above the cost of her $607,000 home, constructed over more than five years by eight different builders.
Contractors who worked on a Southland family's $650,000 home, which is yet to be completed, were owed $140,000.
Murwil Construction Ltd's managing director Murray Wilson placed the company in voluntary liquidation at the end of July, having taken over the Otago Signature Homes franchise in 2007.
Previous franchise holder, Mosgiel builder Peter Abernethy's company, Brycar Holdings Ltd, was placed in liquidation, reportedly with debts of $1 million, about four years ago.
Just after placing his company in liquidation, Mr Wilson said in an interview with the Otago Daily Times that a $160,000 debt owed by a Southland client was enough to affect cashflows and force his hand in placing Murwil in liquidation.
He also cautioned that a domino effect could follow, with other businesses owed money being placed in receivership or liquidation.
When contacted this week about the claims of Mr Heathman, Mrs Pauley and the Southland family, Mr Wilson declined to go into detail, not wanting to "rake over the coals" or be part of "a trial by media".
He said the issue with Mr Heathman had been "around the traps" in various negotiations, and Mrs Pauley's issues, which he had inherited, were with the earlier franchise holder.
However, he did comment on the time taken to complete Mrs Pauley's house.
"Yes, correct; it [building] took too much time."
While he wanted to discuss the issues raised by the Southland family, he declined to do so as they were "in litigation".
The Southland family, who asked not to be identified, said in an interview their single-storey five-bedroom home was about 70% complete.
"I know of five subcontractors wanting [a total] $140,000 to be paid," the man said.
He said earlier forward payments made to Signature should have since been passed on to the subcontractors, who had since asked him to pay, including the roofer who completed work almost three months ago.
He said that had Signature not pulled off the site, a payment of $80,000 would have been forthcoming a week later, then another for $60,000 a fortnight later, followed by a finishing-up payment of $20,000.
Mr Heathman, of Dunedin, had a contract with Signature Homes to build a three-bedroom two-storey family home in Highgrove Estate in Dunedin, with the contract signed in August 2006, but its 26-week finish date was subsequently extended three times.
The Heathman family moved in on October 2007.
The Dunedin City Council code of compliance was not able to be issued until April 2008.
The initial building cost was $395,000, with approved variations of $31,000 bumping the total to an agreed, and paid for, $426,200.
However, Mr Heathman said he should be repaid almost $63,000 for a combination of owed credits, compensation, remedial work and legal costs incurred.
Among the credits Mr Heathman said he was owed, having paid for the items in question already, were $9500 for a kitchen, $8900 for bathroom fittings, $4000 for increased power cable costs and two overcharges, of more than $5000 and $6000, in interest on funds held for 22 months.
Mr Heathman in November last year paid $1485 to commission an independent building surveyor's report on his Highgrove property - a year after he moved in.
The 30-page Construction Issues Report and appendix was done by Ken Buswell, registered building surveyor and certified weather-tightness assessor, who drew up a list of 27 remedial problems linked to "sub-standard workmanship issues".
While all issues were non-structural, he said there remained a long list of relatively minor issues from brick pointing, cracked tiles and wall board, stains and damage to woodwork - most of which Mr Heathman said were still outstanding.
Mr Buswell's report alleged six breaches of the Signature Homes contract, including the contract completion date, financial compensation for being unable to take possession, and price clauses covering acceptance of cost over-runs.
"`From discussion with the owners and perusal of the contract documents there are several areas in this [Signature Homes] contract that have been breached, resulting in a loss to the owners," Mr Buswell said.
On the question of cost over-runs, Mr Buswell said the Heathmans advised him they were not given the opportunity to accept or decline cost overruns, which included earthworks, drainage, scaffolding and structural steel/engineering which was "in complete disregard to Signature's widely advertised `No hidden extras guarantee'..."
"They [the Heathmans] were issued with invoices for the cost over-runs, non-existent items and services a year after occupying the property," Mr Buswell's report said.
Mrs Pauley said she went through the first liquidation of the Otago Signature Homes franchise, held by Brycar Holdings Ltd, initially signing up for her home in February 2004, but its completion was not signed off until last month.
She said her estimated losses were mainly on credits due on items paid for in forward payments, which then had to be repurchased, including some of the roofing, fireplace and fittings, cladding and two kitchens.
"Every one of the eight builders [involved] promised to finish our home."
She said the financial loss was not her biggest concern, but the fact that separate Otago franchises had gone into liquidation, which meant "contractors and clients had little protection".
"This [multiple liquidations of franchises] should not happen to the public of New Zealand; it's morally wrong," Ms Pauley said, citing reports of other Signature Homes franchise failures.
The collapse of Wellington's Signature Homes franchise had cost the parent company "hundreds of thousands" to fix, and creditors owed more than $1 million were unlikely to get their money, after franchisee Pinehill Project Management was put into receivership in May.
Mrs Pauley believed more pressure needed to be placed on the big brand companies to monitor their franchisees, and all client money should be placed in a trust account to be used only for that property.
"This system will protect the clients in the event of a liquidation process. Suppliers and contractors also need added protection while trading with building companies," she said.
The chief executive of the Signature Homes parent company, Phillip Howe, has made an undertaking that Signature will take over and complete, under guarantee, the 10 homes under construction in Otago and Southland.
This week, he said Signature was awaiting the release of building agreements by the liquidators so Signature could formally take over the agreements, and he hoped negotiations and work could resume in less than a month.
Among the 10 outstanding contracts are Mr Heathman's and the Southland family.
Mr Howe declined to comment on the respective criticisms, saying only negotiations were "ongoing".
Correspondence released to the ODT by Mr Heathman included Signature's lawyers telling him in May last year the parent company was not a party to or accepting any liability under the agreement with Murwil or Signature Homes Otago Ltd, and "if any action is commenced it [the parent company] will vigourously defend this".
In July, the parent company emailed Mr Heathman, saying "Murwil's performance was not to the standard desired" and a "revised and final offer" of $8000 compensation was to be made by Mr Wilson.
The email recommended Mr Heathman accept the $8000 as a "fair and reasonable offer".
The managing director of the parent Signature Homes, Gavin Hunt, also told Mr Heathman in the email his "position on this matter [was] unreasonable and unbalanced" and should he not accept the offer, to seek a remedy from "other avenues".
