Homeowner fights to get Master Builders to honour guarantee
Friday, 12 February 2021
When the company Mark Gumbrell hired to build his new home went bust in June, the Auckland man was worried but assumed he could rely on its Master Builder backing to keep the project on track.
Gumbrell’s worry turned to anger, however, when he discovered that Sika Homes had failed to arrange the Master Builders' guarantee which would have covered the extra cost he faced to get his home completed.
Master Builders is a private industry marketing and support association for builders, and its guarantee is designed to promote public confidence in its member building companies, including protecting them in case their builder goes bust before completing their homes.
”I agreed to Sika building my home as they were a Master Builder and would provide a Master Builder Guarantee, which they confirmed they would both orally and via email, but when they went into liquidation, I had no such guarantee,” Gumbrell said.
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Documents provided to Gumbrell by Sika Homes appear to confirm that, with one reading: “Once the build contract is signed by both parties, we will issue you with a deposit notice and then send off for your Master Builders 10 year Guarantee before the build commences.”
Gumbrell appealed to Master Builders to honour the guarantee, which he had paid Sika $1350 for.
“They told me they would honour it if I could show I had paid for it to Sika, but later told me they would not, although they had previously stated to the press that they would always honour guarantees, if the owner could show they had paid for it,” he said.
After being contacted by Stuff, Master Builders denied Gumbrell's claim had been turned down, and it promised to contact Gumbrell to re-start the claims process.
“Master Builders remain open to continuing to talk and to finding a resolution,” it said.
“Master Builders believes there may be grounds for a claim, but require further information in order to make a decision,” it said.
“This is not a straightforward situation.”
The media statement Gumbrell referred to was made 2016, in which Master Builders told TVNZ that its practice was to honour the guarantee, if a homeowner could show they had paid for it, even if one of its member builders had failed to apply for it.
The interview happened after a couple’s builder went bust, and they discovered their builder had not applied for the guarantee.
In earlier email correspondence, Master Builders told Gumbrell that the contract he signed with Sika warned him that he had to contact Master Builders within 14 days of signing a contract with his builder, if he hadn't heard from Master Builders.
Gumbrell had not done that, it said, but he had initialled the page of the Master Builders’ contract that contained the 14-day clause.
Gumbrell estimated that by the time Sika failed he had paid for about $200,000 of building work that had not been completed.
He hired a new builder, which had nearly completed the work, but he had spent so much, he did not now expect to ever live in it, and planned to sell it.
Gumbrell said work started on the home in Wai O Taiki Bay in Auckland’s eastern suburbs in October 2019, but progressed slowly, and by the time Auckland went into Covid-19 lockdown in April, construction was behind schedule.
Gumbrell has been in contact with his local National Party MP Simon O’Connor in a bid to get MPs to revisit the idea of requiring guarantees in law on every new build as a means of protecting the public.
Liquidators Steven Khov and Kieran Jones said they had been advised Sika Homes' failed because excessive labour costs and other project cost overruns eroded profit and margins resulting in an unsustainable business model.
Attempts were made to contact Adam O’Gram, the sole director of Sika Homes. O’Gram was bankrupted on February 3.