07/09/2020 - 15:42

Pindan scores legal win

07/09/2020 - 15:42

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One of WA’s largest construction groups has avoided a dispute over allegedly defective building work after arguing the work was undertaken by an entity in liquidation.

Pindan scores legal win

One of Western Australia’s largest construction groups has avoided a dispute over allegedly defective building work after arguing the work was undertaken by an entity in liquidation.

The legal action was initiated last year by the owners of Richmond Quarter apartment building in East Fremantle.

They lodged a complaint against Pindan Contracting Pty Ltd with the state government’s Building Commission, specifying 35 issues.

When the matter was referred to the State Administrative Tribunal for assessment, Pindan Contracting argued that the work was undertaken by an entity known as “Pindan Pty Ltd as The Trustee for Chamois Unit Trust trading as Pindan Constructions”.

The tribunal agreed with this contention and therefore dismissed the application as misconceived.

The ruling leaves few options for the property owners especially after two restructures of the broader Pindan group.

The responsible entity is now known as ACN 009 009 072 Pty Ltd.

It was placed in administration on November 14 last year and has subsequently been placed in liquidation.

It was placed in administration 10 days after the building complaint was lodged and five weeks after Singapore-based Oxley Holdings acquired ownership of Pindan Group Pty Ltd.

Pindan Pty Ltd (aka ACN 009 009 072 Pty Ltd) had been the peak company in the broader Pindan group, which was established by George Allingame and David Pringle in 1977.

The structure changed in 2016 when Pindan Group became the peak company, with Oxley Holdings and Pindan Pty Ltd as major shareholders.

Business News understands that when Oxley acquired full ownership of Pindan Group in 2019, Pindan Pty Ltd was excluded.

Pindan Group is ranked as WA’s second largest construction group, according to Business News' Data & Insights (based on the value of work underway).

Notably, there are four Pindan Group entities that are registered building contractors in WA, one of which is Pindan Constructions Pty Ltd.

This entity has no connection to ACN 009 009 072 Pty Ltd, which traded for many years as Pindan Construction.

In a statement to Business News, Pindan Group emphasised that the building contract for Richmond Quarter was not with Pindan Contracting Pty Ltd or any other subsidiary.

“The applicant was made aware before commencing proceedings that this entity was not a party to nor named on the building contract,” Pindan Group said.

“The contract was with the entity ACN 009 009 072 Pty Ltd and any further action in this matter would need to be with this entity.

Pindan Group Pty Ltd has no ownership, control or management of the operations of this entity whatsoever.”

The Building Commission – which is now known as Building & Energy, a division of the Department of Mines Industry Regulation and Safety – said that in normal circumstances, the apartment owners would be entitled to lodge another building services complaint.

“However, as the responsible company is in liquidation, it cannot be the subject of a building services complaint,” Building & Energy said.

Moreover, Pindan Group has asserted that the applicants should not be allowed to lodge a new complaint against another entity.

“The opportunity to initiate an application against a respondent builder who is no longer available cannot be remedied by an applicant choosing to lodge a complaint against a different builder,” Pindan Contracting told the SAT.

This point was not tested in the SAT hearing.

Building and Energy said it did not consider a situation like this to be commonplace.

“The vast majority of building permits are correctly issued to the registered builder who will carry out the work and therefore be responsible for it under the Building Act 2011,” it said.

“Similarly, Building and Energy receives very few building complaints where the builder identified on the building permit is not considered to be the responsible party.”

Building and Energy said it regularly reminds people entering into contracts to ensure the correct entity is named on the building contract.

It noted that Pindan Constructions Pty Ltd has been a registered building contractor since August 2016 and has no connection with the trading name previously used by Pindan Pty Ltd.

Building & Energy added that trading names are not captured as part of the registered building contractor entity.

Pindan Constructions Pty Ltd is a registered building contractor and remains registered with ASIC and therefore is able to enter into building contracts,” it stated.

Another option for the apartment owners would be to lodge a claim with the liquidator, Worrells Solvency & Forensic Accountants partner Mervyn Kitay.

However, he is already dealing with multiple claims against ACN 009 009 072 Pty Ltd.

Most notably, the company was guarantor for a $27 million loan taken out by Pindan Capital Two Rocks to develop land at Two Rocks.

The secured lender was P&N Bank, which applied for the appointment of a liquidator through its subsidiary P&N Landreach.

Pindan Capital Two Rocks is also in receivership.

KordaMentha partner John Bumbak said the sale process over the Two Rocks assets was continuing.

“There is no time pressure to sell and until we do, we can’t quantify the shortfall of any guarantee from other Pindan entities,” he said.

A further option for the apartment owners, who were represented by Atkinson Legal, would be to appeal the SAT decision.

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