It seemed like a good idea at the time; have an acquaintance hold deposits as a stakeholder for later onward payment to a builder. Now both builder Munesh Chand and property owner Mavis Wolfgramm are having trouble extracting their money from stakeholder Chandar Prakash in payment for building work completed.
The High Court was told Mr Prakash assisted Ms Wolfgramm following a fire at an Auckland home in Mt Roskill owned by her company Wolfgramm Contracting Ltd. He drafted plans for renovations and arranged with Mr Chand’s United Builders Ltd to do the job. United Builders quoted $529,000 in May 2022 for the work. Ms Wolfgramm was unwilling to pay upfront a requested deposit of $211,600. She asked Mr Prakash to act as ‘middleman.’
Evidence was given that Mr Prakash then offered an alternative payment schedule to Ms Wolfgramm with the initial deposit being only $69,000 on a full contract price of $529,000. She paid the $69,000 deposit to his company: MKOD Developments Ltd. At the same time, Mr Prakash confirmed a payment schedule with United Builders which specified a higher contract price payable: $667,000.
Three months on, United Builders complained its invoices were not being paid, with only $40,000 received to date. Ms Wolgramm said she had paid $219,000 across to Mr Prakash’s MKOD Developments. There was $179,000 unaccounted for that should have been passed on to United Builders, she said.
Mr Prakash said payments were held back because of concerns about quality of the work done and a need to get Council signoffs.
Learning that Mr Prakash had been convicted of GST offences for a failure to pay some $170,000 to Inland Revenue and that he was in that habit of travelling overseas to Fiji, the two asked the High Court to put MKOD Developments into liquidation immediately to preserve what assets it holds. Associate judge Gardiner refused. A formal court hearing is necessary to establish exactly what were the terms on which MKOD held funds as stakeholder. The fact that there is no written agreement between United Builders and MKOD or Wolfgramm Contracting and that their respective payment schedules do not reconcile means all sides need to be heard in court, she said.
United Builders Ltd v. MKOD Developments Ltd – High Court (16.09.22)
22.163