Liquidated project management company offered worthless building guarantee

Barry Jones stands in front of his half finished house after project manager Encell Group Ltd went into liquidation.
MYLES HUME/FAIRFAX NZ

Barry Jones stands in front of his half finished house after project manager Encell Group Ltd went into liquidation.

A Canterbury man's dream of a luxury barn-style home has been shattered after the company supposed to build it went into liquidation, leaving him $225,000 out of pocket. 

Barry Jones thought Encell Group Ltd could build his dream home in Rolleston, south of Christchurch, but the project management company was now in liquidation.

Days after Encell Group went bust, Jones found out the company, directed and owned by UK national Paul Encell, had never registered with the Master Builder scheme that would have provided some financial protection when the project fell through.

Encell Group sole director Paul Encell has had his company liquidated, owing creditors hundreds of thousands.
SUPPLIED

Encell Group sole director Paul Encell has had his company liquidated, owing creditors hundreds of thousands.

Jones said he had almost paid for the entire build, but all he got was a concrete pad and frames. He believed he was about $225,000 out of pocket.

"I would have never started this project if I couldn't have afforded it, and now I'm robbing Peter to pay Paul and I'm dead scared I'm not going to be able to pay people.

"I paid the money to pull up the drive, push the button and drive into my completely finished home."

Encell Group was put into liquidation by the High Court on October 29 on an application by building supply company Carters.

Eight days before the company was liquidated, Encell set up two other companies: Hungerford Homes Ltd and Creative Homes Ltd.

For a company that had taken on only two projects, Encell Group had "a disturbing level" of affected creditors lining up, appointed Ernst & Young liquidator Rhys Cain said.

Cain said the company's debt was into the hundreds of thousands, but more details would be available in his December 2 report. 

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For Jones, the build was meant to be simple and stress-free: pay Encell Group $321,000 to manage the build of his new home with its own contractors.

After meeting at a pub in Rolleston, Encell presented Jones a competitive quote with the security of a 10-year Master Builder guarantee mentioned on the front page of the contract, Jones said. 

"I always thought to myself, I'm going out on a limb here, but I always know there's [the guarantee] there if it all turns to shit."

"[Encell's] a very, very good salesman, smooth tongue, very smooth, you think this guys knows his stuff, he knows what he's talking about."
 
After the build started in April cracks appeared in the company's credibility, Jones said, but he was in too deep to stop after paying almost all of the invoiced amount early in the building process to get the project moving.

By the time frames and trusses were erected, Jones said materials stopped showing up for the builders and Encell became difficult to contact. Representatives from Mitre 10 turned up on site to repossess loose timber.

Jones confronted Encell about his concerns, but he assured them everything was under control, Jones said.

Master Builders then confirmed Encell Group was never registered, making it impossible to offer its guarantee scheme.

On September 28, an email from Paul Encell said he was pulling out of the project, turning Jones' dream home into a nightmare.

"I have decided to get out of the project there are too many conflicts of interest and confusion ... I will get back to you on the refunds," the email said.

In a follow up email on October 22, Encell claimed he had refinanced the company and wanted to discuss Jones' refund, believing it was about $66,000.

Based on the invoice, Jones said the house, as it stood, accounted for about $84,500 of the $310,000 he had paid Encell Group. The balance, and the amount Encell Group owed him after cancelling the contract, was about $225,000, he said.

Encell could not be reached for comment. His partner kicked him out of her Hungerford Dr home in Rolleston on Sunday, and he did not respond to emailed questions from Stuff. Encell had been in communication with the liquidator but was yet to provide "any meaningful assistance".

Jones hoped to have the key to his new home three months ago. Today, on top of renting a house, he had re-mortgaged just to nail on a roof to shield the timber framing from the elements. 

Companies were helping Jones manage the build himself by offering materials at cost and the builders had even reduced their labour rate as they raced to get the roof on.

Extras like the spa pool, polished concrete floor and $30,000 kitchen were on the scrap heap. Jones did not know when he would have the cash to finish the house.

The outlook was not as bleak for McLenaghan Contracting Ltd, but writing off an $18,830 invoice for Encell Group was a blow.

Owner Andy McLenaghan confronted Encell at his home and through phone calls about the invoice for excavation work and slab preparation at Jones' home.

"At the end of the day if they've got nothing you don't get anything.

"Basically we have written it off. For companies like ours if you go down any other course it costs you money for the same result."

Registered Master Builders chief executive David Kelly said it was "a great shame" what happened to Jones, but there was little the organisation could do.

He said homeowners could expect standardised contracts, independent letters and comprehensive information from Master Builders if they were signed up to a 10-year guarantee. 

A spokesman for Carters said the company was not prepared to comment "as we are still pursuing various other options for recovery".

Mitre 10 Mega in Hornby did not wish to comment.

 

 - Stuff

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