Sub contractors demand protection

LOSING OUT: Sub contractors are sick of being left empty handed on major projects.
LOSING OUT: Sub contractors are sick of being left empty handed on major projects. Craig Warhurst

ANGRY sub contractors fed up with mounting losses to principal contractors who fail to pay then close up shop, are planning a campaign to demand political parties develop policies to protect them.

Sub contractors at the Gympie building project tenanted by Bunnings are the latest to be hit following the collapse of the Gold Coast-based Sovereign Energy.

Bebrok Excavation and Precision Directional Drilling are owed more than $200,000 for work done for the company doing the electrical sub-contracting for principal contractor De Luca Constructions. The businesses have no issue with De Luca.

They say it has acted properly in retaining money in trust due to be paid Sovereign, after they issued claims under the Sub Contractors Charges Act.

The latest losses have increased anger among sub contractors whose terms of trade underwrite the construction industry.

A meeting is expected to be held early next month on the Sunshine Coast, the first in a series to be rolled out across South East Queensland to address deepening concerns at the lack of political action to enhance their security of payments.

It will be driven by the Walton Sub Contractors Alliance formed after the Walton Group went into liquidation last year owing more than $90 million.

David McCarthy of Precision Directional Drilling said he may be forced to close his business within a week after being left chasing $120,000 from Sovereign Energy.

He is angry he has to spend money to get paid and that existing laws don't allow the principal contractor to simply pay him for work done and materials supplied.

"The law assumes I have the money and the time to pursue this through the system," Mr McCarthy said.

Bebrok principal Mike Bebbington, whose company was also affected by the fall out from that collapse, said with margins as tight as they were, the company couldn't continue to take the hits it had experienced in the past five years. Reform was needed, he said.

After forming in 2006, the company wrote off $48,000 the past financial year, $30,000 in 2011-12, $53,000 in 2010-11 and $112,000 in 2009-10 .

"It also affects how much we put back into the community," Mr Bebbington said.

The company sponsors the Falcons, Crushers and Gympie rugby league clubs, NYU, Woombye Snakes, Bli Bli, Noosa and Gympie soccer clubs, Coolum Juniors and Caloundra and Landsborough Juniors AFL clubs. It also supports Women in Building, Wishlist House, Alex Surf Club, Kunda Park Pony Club and Nambour Swimming Club as well as some schools, bowls clubs and other organisations.

Mr Bebbington said the company held directors' guarantees over Sovereign Energy principals and had rejected a 75 cents in the dollar offer that had been made.

Sovereign Energy managing director Simon Lush failed to return phone calls last week, nor respond to emailed questions.

On Tuesday he sent an email to Gympie Landscape Supplies which had been chasing payment of its account.

"We have been advised that we are moving towards voluntary administration and the bank has frozen our account. I am so very sorry, it wasn't part of our plan," the email said.

Sunshine Coast lawyer Adrian Hawkes said the company had previously been in liquidation in 2001 only to re-emerge as Sovereign Energy Pty Ltd as trustee for the Sovereign Energy Trust with two separate ABN numbers.

He said the days of head contractors leaving sub contractors to bear the cost of their poor management or tenders had to end.

Mr Hawkes has asked any unpaid subbies on the Bunnings job to contact him immediately.

Gympie Times

Topics:  business contractors

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