A building firm with a dream of getting semi-retired tradies back working has now been placed into liquidation – and customers say the dream has turned into a nightmare
Peter and Halina Cannon's baby son was just three weeks old, when the builder doing some routine exterior painting managed to blast fragments of toxic lead paint through the family home.
Their son is now six months old, and their daughter two years old. They have spent the past five months living in a small motel unit while the building firm's insurance pays to remediate their hazardous villa.
"The cleanup is a massive job," Peter Cannon says. "The remediation work will cost at least $100,000 for soil, and just cleaning inside the house. That doesn't count our possessions. We've lost all the curtains. We've lost all our clothes."
Now, GA Construction Group – a company established in 2009 and initially named after Australia's well-known Grey Army – has been put into liquidation. The Cannons are among 17 external creditors listed in liquidator Hamish Pryde's first report, but there are more to come. Newsroom has spoken with staff, suppliers and customers who say they were left out of pocket by the firm's collapse.
Manawatū-based GA Construction is just the latest of more than 100 building firms put into liquidation this year. Some blame Covid, some blame the supply chain crisis, some blame the soaring prices of building supplies; others blame the seeming inability of building firms to plan for boom/bust cycles.
The company's owners, Feilding couple Klayne and Donna Leitch, have already spun off a new company that reverts to their original brand, The Grey Army, and is listed on the trademarks register as owner of the logo.
Creditors aren't happy about it – but Pryde's first report accepts GA Construction was just one more victim of the pandemic. "The business contracted older tradesmen to undertake maintenance work and small renovation projects," he says. "As time progressed this business model proved to be difficult to grow."
“The client base was typically older clients who thought that the tradesmen would be retired gentleman who would charge out the time a $10 per hour. The reality was that they were active tradespeople in business and market rates applied.” – Hamish Pryde, liquidator
The couple's business appears to have been inspired by Australia's Grey Army, but to have no connection to that company. The Australian company touts its handymen as highly skilled, mature, reliable, insured and police checked, offering “good old fashioned values and integrity”. It has franchises across Australia.
In 2014, Grey Army NZ announced in local media that it, too, was launching a "good old-fashioned values" franchise model. "The Grey Army brings mature tradespeople together to work under one banner," the company said.
But it proved unable to replicate that model. According to Pryde's report: "The client base was typically older clients who thought that the tradesmen would be retired gentleman who would charge out their time at $10 per hour. The reality was that they were active tradespeople in business and market rates applied."
The vision of older tradies, targeting an older market, fell by the wayside. "The decision was made to grow the business in which it was decided they would need to move away from the Grey Army brand name and pitch for bigger projects," Pryde reports.
The company needed management skills, so director Klayne Leitch hired two staff to assist with the administration and project management. But the company didn't have enough additional turnover required to cover the new overheads. And instead of using subcontractors, the company employed tradies on staff.
"The director advises it was a challenge to keep them productive, efficient and supervise quality of work," Pryde says. "There were cost overruns and ever-increasing snag lists adversely affected profitability."
Former staff and customers disagree with that assessment: in their opinion, there was no quality supervision. The workers were left to it; when customers complained to management about the work, they were told to go talk to the tradie on the job.
The liquidator's report says Covid-19 had a negative impact on the business, with many of the target customers either undertaking the work themselves or deciding against undertaking renovations.
Three substantial projects couldn't proceed. Two clients said their funding was revoked by their banks. "This is a sign of the recent tightening of bank lending criteria," the reports says. "Ultimately a number of issues cumulated into a distressed business. The director undertook advice and has made the decision to stop trading."
Those few assets the company still has are secured by the bank and another creditor, leaving an estimated $118,701 shortfall for staff, trade creditors and Klayne and Donna Leitch themselves, who say they advanced their company $13,700.
When Newsroom approached Klayne and Donna Leitch for comment last night, Donna Leitch hung up the phone. "We're not answering any of your questions," she said.
The couple did not reply to written questions, including the extent to which the pandemic and the supply chain problems were to blame for GA going under, and the extent to which quoting or workmanship played a part.
It never showers, but it pours
The company's empty coffers are grim news for customers like the Cunninghams. When the retired couple moved into a 1910 villa in the Palmerston North suburb of Highbury, they quickly knew they would need to renovate.
"Katie's in a wheelchair, so while the doors are nice and wide, the bathroom was useless," says Rob Cunningham. "And so we were actually going off to the local swimming pools so that she could have a shower."
GA Construction estimated $80,000 to $100,000 to build a new wet-room, a sunroom and a carport, though Cunningham says there was no contract. The couple got an architect to draw up plans, got building consent last year, and GA's builder and sub-contractors began work – but the money was quickly sucked up with little to show.
The builder John Bower, in frustration, quit. It seemed the company has quoted unrealistically low and, furthermore, the builder was paid only half the rate they charged him out at. "And then they got quoted another $80,000 to finish the job off," Bower says, "so I reckon they were just getting ripped off."
Several months after he quit, when his restraint of trade ended, he returned and completed the work for the Cunninghams.
Bower wants greater accountability for what he views as the company's poor or incomplete work; he introduced Newsroom to four unhappy renovation customers, one of whom had unsuccessfully taken GA Construction to the Disputes Tribunal. "Before the company went into liquidation, most of those clients were hoping to get jobs completed. Most of them came to the realisation this wasn't going to happen and now, since the liquidation, there's not much chance of anything."
One couple, Sumi and Hahn Almquist, were dismayed at discovering work done that they didn't want, and said they'd never sought. They brought in experienced construction dispute resolution professional Phil Round to advocate for them, but to no avail. "They kept on adding extras on, and finding extra work to do, and putting exorbitant prices on it," says Round.
Newsroom has also talked with three former staff. "I think the sales pitch is very convincing, but there's no backing it up with the workmanship," says one former worker. "And," says a second ex-worker. "there are other people who have been affected."
The Cunninghams would just like to move on. "For us, we're getting on with life," Rob Cunningham says. "As for the company, I'd like to see it gone. And more importantly, I'd like to see them never being in a position to run a company again."
Months of misery
At the Palmerston North motel, Peter Cannon remains angry.
He says it was only because he and his wife raised the alarm that anything was done about the toxic lead paint.
"You can replace the things, but the scary stuff is the impact it could have had on our kids."
