Former directors of a now-insolvent builder deceived owners by signing contracts promising to be the builder on the project when they were actually contracted to other builders, a court has been told.
Pavreet Singh and MD Touhidul Islam Sunny were directors of Perth-based builder Flexible Homes Pty Ltd before it went into liquidation in June 2023, affecting 19 Western Australian homeowners.
The couple have now been fined $50,000 by the State Administrative Tribunal, which found the now-insolvent builder engaged in misleading conduct during three construction projects in Shelley, Piara Waters and The Vines.
According to a statement of facts agreed upon after mediation in August, Singh and Sunny were directors of Flexible Homes between 2021 and 2022 when they told clients that they would be the builder of their homes.
In reality, the company intended to hire an outside builder for this job.
The court was told that Flexible Homes entered into preliminary employment contracts which stated or implied that it would be the builder of the resulting projects when in fact they were contracted out to other builders.
“Flexible Homes also processed applications for building permits and housing indemnity insurance (HII) on behalf of these third-party builders,” the WA Department of Mines, Industrial Regulation and Safety said in a statement.
The company issued invoices and received payments for construction works, as well as carrying out all client contact and administration during the projects.
A court has been told directors of Flexible Homes Pty Ltd in Perth engaged in misleading conduct by promising customers they would build their homes, which they then contracted with other builders.
A Shelley homeowner who needed her home demolished and renovated had to wait eight months due to “undue delay” by the company’s conduct.
This person then signed a contract with a third-party builder on the recommendation of Flexible Homes, but was told months later that this company could not obtain the required HII, according to the agreed statement of facts.
“Flexible Homes arranged for a second builder to be hired, but it took another month before it was revealed that this builder also lacked HII access,” the department’s statement continued.
“The client’s final contract with a third-party builder was not signed until August 2021.”
Flexible Homes also made contract variations involving demands for additional funds, leading clients to believe this was “arbitrary” by not explicitly explaining the reasons or that the source of the request was a third-party builder.
Two price increases were also made without justification or written verification and the owner of Shelley himself was asked for an advance payment when the corresponding works had not even begun.
The court was told that Singh also signed a construction contract on behalf of a third-party builder who had not given him authority to enter into any contract on his behalf.
Additionally, the court found that Flexible Homes had failed to comply with a construction repair order after a neighbor’s home was damaged.
The court also found that Flexible Homes failed to comply with a repair order after a neighbor’s home was damaged.
The court ordered Singh and Sunny to pay $25,000 each for the company’s conduct.
Construction Commissioner Saj Abdoolakhan said the significant fine imposed on directors was a clear message that inappropriate conduct had no place in the construction industry.
“Homeowners rightly expect builders to act with integrity when entering into contracts for what is often the largest purchase of their lives,” Mr Abdoolakhan said.
‘Construction contract laws protect consumers and ultimately help ensure our buildings are safe and compliant.
“Attempts to deceive and circumvent these rules are unacceptable.”
Abdoolakhan said consumers should be wary of misleading documents when purchasing a home.
‘I encourage consumers to carefully review all contracts and related documents to ensure that the construction contractor listed on the documentation is the builder they know and are dealing with directly.
‘You have the right to access all documents, including home insurance certificates and building permits. You should raise any concerns with the builder, but if you still feel uncomfortable or suspicious, please contact Building and Energy.’