Subbies put hope in Walton federal court hearing
MORE than two years after the collapse of Walton Construction (Qld) Pty Ltd and Walton Construction Pty Ltd the events that precipitated losses of more than $80 million are set to be examined in a federal court.
The Walton failure left more than 1300 subcontractors unpaid, including those who worked on the Nambour Coles project, which was completed just before the company closed its doors on October 3, 2013, only to re-open the next day, re-badged as Peloton Builders.
The $2.9 million lost by Sunshine Coast subcontractors triggered the destruction of young landscaper Beau Hartshorn's business, costing his home and the jobs of 10 workers.
It also left Coolum civil contractor W. K. Civil out of pocket $800,000, spurring one of its two partners Les Williams to drive the formation of the Subcontractors Alliance which has attracted support from trade small businesses from Adelaide to Townsville pushing for improved security of payment.
Queensland's 85,000 subcontractors employ 250,000 workers. However, because of their weak position on the contractual chain as unsecured creditors they remain vulnerable to the fortunes of the construction companies who engage them.
Mr Williams' advocacy and the support of Nicklin Independent Peter Wellington have seen the Queensland Government, through the Queensland Building and Construction Commission, contributes nearly $400,000 towards the cost of three days of public hearings in the Federal Court of Australia in Melbourne, starting Monday.
Further funding for the hearing, which examine key players in the Walton collapse under oath, is also being provided by the Australian Securities and Investment Commission.
Forensic examination of the Walton collapse is seen as potentially shining a spotlight on broader construction industry issues that lead to an estimated $3.2 billion in insolvencies annually.
In total, seven people will be probed about a series of events dating back to mid 2012 that preceded the company going into administration and then liquidation after key assets had been on-sold to two phoenix companies, Peloton and Lewton Asset Services.
This is the second public examination into the matter. The first was conducted in 2014 by Walton's original liquidator Lawler Draper Dillon, who was subsequently dismissed on appeal by ASIC to the full bench of the Federal Court for apparent bias.
The allegation arose from $750,000 worth of work referred to the liquidator in 2012 and 2013 by Walton business advisors the Mawson Group whose associated companies took over the builder's assets.
Melissa Chalker, Walton's former chief financial officer, will give evidence first on Monday followed by Walton sole director Craig Walton.
The second day of the hearing will feature former Walton auditor Anthony Barnett, who resigned five months after the company went broke, and Mawson director Pat McCurry.
On the third day, Geoff Green, head of National Australia Bank's Strategic Business Services in Melbourne, former member of the Walton advisory board Norman Metz and Philip Spry of Mawson will give evidence. In a wide-ranging interview with the Sunshine Coast Daily, Mr Green admitted a series of mistakes relating to the bank's handling of the Walton account.
Les Williams will attend the hearing and said he wanted to see a vigorous examination of whether there had been collusion between parties to gain an advantage over unsecured creditors.
"There is a perception that this is what has occurred," he said. "Creditors have a right to understand the full details of arrangements leading into, and after the collapse. There was a convergence of events - it is difficult to dismiss as coincidence."
Mr Williams said creditors would like to gain a fuller understanding of an internal Walton restructure in mid 2012 and the nature of the NAB's involvement in events since May, 2012.
"We'd also like to know how NAB's failure to register its securities over Walton Qld affected its recovery of its $20 million in exposure to the company," he said.
"We want to know when those securities were recovered, how that was effected and from who."
The opening day of the three-day hearing will set the tone for how much of that information is likely to be revealed.
Mr Williams said the key to the puzzle may be just how much control Craig Walton exerted over his business from May, 2012