Source : BUSINESS NEWS
The state government has moved to curb “phoenixing” by banning building companies that have been linked to financial mismanagement, in light of a recent tribunal decision.
The Building Services Board will exclude contractors if there is clear evidence an officer has been involved in a previously insolvent construction business that failed to be reasonably managed, as announced on Tuesday.
“Exclusion can be at registration, renewal or when an insolvency event occurs,” industry regulator Building and Energy said in a statement.
It comes after the Building Services Board refused Perth Building Group’s application to register as a contractor, after finding the director was linked to a failed company.
Perth Building Group (PBG) is owned by Brian McGillivray and Chris Tsoutsoulis, with both listed as directors, according to ASIC.
The Building Services Board found Mr McGillivray was a director of Start Right Homes (SRH), a company that went into liquidation in 2024 and left several homeowners with unfinished projects and financial losses.
The State Administrative Tribunal upheld the board’s decision in April.
Last month, the board’s refusal of PBG’s registration application was formalised.
PBG is ineligible for a contractor registration until April 2027, being three years after Start Right Homes was placed in insolvency.
In its decision, the SAT was not satisfied that Mr McGillivray as the sole director of SRH took reasonable steps to avoid the circumstances that led to the company’s insolvency.
“The failure of SRH entailed significant unpaid debts and a number of customers of the company left with unfinished homes and/or claims for defective building work,” the tribunal’s decision read.
“In light of the tribunal’s concerns, as addressed above, in relation to Mr McGillivray’s management of SRH, we consider that his directorship in PBG is a factor that properly warrants PBG being declared a temporarily excluded contractor.”
Building Commissioner Phil Payne said company officers had a clear responsibility to properly manage the financial affairs of their building businesses.
“Failure to do so can follow them well beyond the company that fails,” he said.
“These laws make clear that officers involved in the poor management and financial failure of one construction company cannot set up or help run another – sometimes called ‘phoenixing’ – without taking sufficient steps to ensure the competent and proficient management of the new enterprise.
“The board can, and will, use its exclusion powers wherever the evidence supports it.”
Mr Payne said a business could not take on large building projects or get home indemnity insurance without registration.
“Exclusion can apply when the board assesses a new application or a renewal, or at any point during registration, and it can be permanent where there are repeated insolvency events,” he said.
