The Australian construction sector is grappling with new challenges as yet another home builder collapses under $20 million financial strain.

This has left a wide-reaching impact, raising concerns among homeowners and investors across the country.

Such events only serve to underscore the ongoing instability that continues to affect the industry.

Stokes Wheeler, once synonymous with quality construction on the Gold Coast, found itself in dire straits.

It owed up to $1.66 million to its staff and over $13.5 million to unsecured creditors.

Australian home builder Stokes Wheeler has been liquidated, with nearly $20 million owed to staff and creditors. Credit: Depositphotos

Secured creditors, including Westpac, were owed an additional $3.2 million. The Courier-Mail reported that the sheer magnitude of this debt means that those unsecured creditors are unlikely to see any of their money returned.

The company's downfall has left several major projects in limbo, including Elevaire, a 40-apartment building at Palm Beach, the Bounce Hostel in Surfers Paradise, a medical centre in Pimpama, and an aged care facility in Sunnybank.

The cessation of these projects will affect future residents and businesses and have a ripple effect on the local economy and job market.

Administrators Roland Robson and Bill Cotter from Robson Cotter Insolvency Group uncovered that six project trust accounts lacked funds.

A retention account, which was supposed to help repay Stokes Wheeler's debts, faced a shortfall of $2.7 million and has since been frozen by the Queensland Building and Construction Commission.

The company's directors, Damien Stokes and John Wheeler, had attempted to stave off liquidation by drafting a deed of company arrangement.

However, their efforts were in vain as creditors voted for the company's dissolution.

Further investigations by the administrators revealed that the company had been under financial pressure for five years, taking on multiple projects that resulted in losses.

There is suspicion that the company may have continued to trade while insolvent, although no action has been taken against the company or any associated individuals.

For the Australian seniors who might be considering downsizing or investing in property, or even those with ongoing construction projects, the collapse of Stokes Wheeler is a stark reminder of the volatility in the construction industry.

It's essential to conduct thorough research and due diligence when selecting a builder or investing in construction projects.

Look for signs of financial stability and a solid track record, and ensure that any deposits or progress payments are protected.

Moreover, this incident highlights the importance of regulatory oversight and the need for stronger measures to protect consumers and employees from the fallout of such collapses.

The Queensland Building and Construction Commission's role in freezing accounts is a step in the right direction.

Still, more proactive measures may be necessary to prevent such situations from arising in the first place.

As the dust settles, developers of the affected projects are now scrambling to find new builders to complete the work.

Meanwhile, the fate of the properties owned by Stokes Wheeler and its directors, which were used to secure the debts, hangs in the balance.

The collapse of Stokes Wheeler is a sobering reminder that the construction industry can be fraught with risk.

For our readers, it's a call to be vigilant and informed.

If you're currently engaged with a builder or planning a construction project, it's wise to monitor their financial health and seek legal advice to ensure the security of your investments.

Key Takeaways

• Australian home builder Stokes Wheeler has collapsed, entering liquidation with debts close to $20 million owed to staff and creditors.
• Unsecured creditors are unlikely to recover their funds after the collapse, with the company leaving several major building projects in limbo.
• Administrators have reported that less than 10 per cent of over $5.3 million claimed to be owed to Stokes Wheeler is 'realisable'.
• Creditors voted for liquidation, rejecting a deed of company arrangement that aimed to avoid the dissolution amid indications that the company may have traded while insolvent.

Have you or someone you know been affected by a building company's collapse? What measures should be in place to protect consumers in these situations? Your insights could be invaluable to fellow readers navigating similar challenges.

 

[Rain72]

The building industry is in a shocking mess due to the negligence of ASIC and building regulators nationwide, and the abuse of power by the criminal elements in the Union. The laws need to be changed, and those laws that do exist to protect consumers need to be enforced, without favour.

ASIC is reported to have identified over 900 building companies that traded in solvent, yet it did nothing. No penalties imposed. Why?

QBCC has a long record of corruption and dismal failures. Yet the state government will not act to reform it. Why? Non-completion insurance claims and defect claims are being wrongfully dismissed. Notices of Offence are being dismissed, despite them indicating very serious dishonesty and even outright fraud and extortion. Builders are being allowed to continue to trade, taking money illegally from clients either via overcharges or unlawful advance charges. Builders are getting away with appallingly shoddy work, leaving clients with major defects that often can never be rectified and if they can, impose costs in the countless thousands. Naturally, builders who take advance money unlawfully end up in major trouble, because they are allowed to trade when they know full well they have inadequate liquidity to complete works they take on.

Victoria recently undertook major reform of its regulation system. Sceptics say it will achieve nothing. It is too little, too late, and ignores major issues that need to be addressed.

We have a housing crisis, yet people who can afford and are willing to invest to have a home built cannot get what they pay for due to dishonest builders and failed regulators. Years ago, you hired a builder and he built you a house. Today, you have to buy non-completion insurance costing thousands, then engage a lawyer to check the contract and then oversee to ensure compliance (Potentially $5000 if all goes well and hundreds of thousands if it doesn't!). Although you have to pay a certifier to ensure council compliance ($3000 and upwards), you also have to engage an independent inspector to check that the builder is building to specifications and standards (potentially $10,000+). You have to then pay the builder, in many cases, $1500 per visit to allow that inspector on site. adding at least another $9000 to the cost of the build simply because the builder can't be trusted and the regulators don't do their job!

Most contracts force consumers to pay well over 60% of the cost of the completed home before it is even to lock up stage, and there is nothing to effectively prevent the builder using that money to start other projects and then leaving your project incomplete because he can't raise funds to finish all the jobs he took on, knowing full well he had insufficient resources.

If the builder fails his obligations, you likely have to go to court, costing over $100,000 plus another $100,000 in delay costs for the 2 to 6 years it takes to settle the dispute. If the regulator refuses insurance or a defect claim, you face costs of potentially $1 million or more plus 2 to 6 years delayed completion (costing hundreds of thousands extra due to inflation and deterioration of the part-build) to ask a court to review a wrongful decision. And the review may well result in another wrongful decision, but with a different reason stated.

This mess is down to failed regulators, ASIC failures, a bullying union, and the refusal of state governments to step in to compel regulators to do their job. And the entire nation is suffering, except the dishonest builders and tradies who are partying on money they don't earn and shouldn't have.

 

[IAN3005]

The building industry is in a shocking mess due to the negligence of ASIC and building regulators nationwide, and the abuse of power by the criminal elements in the Union. The laws need to be changed, and those laws that do exist to protect consumers need to be enforced, without favour.

ASIC is reported to have identified over 900 building companies that traded in solvent, yet it did nothing. No penalties imposed. Why?

QBCC has a long record of corruption and dismal failures. Yet the state government will not act to reform it. Why? Non-completion insurance claims and defect claims are being wrongfully dismissed. Notices of Offence are being dismissed, despite them indicating very serious dishonesty and even outright fraud and extortion. Builders are being allowed to continue to trade, taking money illegally from clients either via overcharges or unlawful advance charges. Builders are getting away with appallingly shoddy work, leaving clients with major defects that often can never be rectified and if they can, impose costs in the countless thousands. Naturally, builders who take advance money unlawfully end up in major trouble, because they are allowed to trade when they know full well they have inadequate liquidity to complete works they take on.

Victoria recently undertook major reform of its regulation system. Sceptics say it will achieve nothing. It is too little, too late, and ignores major issues that need to be addressed.

We have a housing crisis, yet people who can afford and are willing to invest to have a home built cannot get what they pay for due to dishonest builders and failed regulators. Years ago, you hired a builder and he built you a house. Today, you have to buy non-completion insurance costing thousands, then engage a lawyer to check the contract and then oversee to ensure compliance (Potentially $5000 if all goes well and hundreds of thousands if it doesn't!). Although you have to pay a certifier to ensure council compliance ($3000 and upwards), you also have to engage an independent inspector to check that the builder is building to specifications and standards (potentially $10,000+). You have to then pay the builder, in many cases, $1500 per visit to allow that inspector on site. adding at least another $9000 to the cost of the build simply because the builder can't be trusted and the regulators don't do their job!

Most contracts force consumers to pay well over 60% of the cost of the completed home before it is even to lock up stage, and there is nothing to effectively prevent the builder using that money to start other projects and then leaving your project incomplete because he can't raise funds to finish all the jobs he took on, knowing full well he had insufficient resources.

If the builder fails his obligations, you likely have to go to court, costing over $100,000 plus another $100,000 in delay costs for the 2 to 6 years it takes to settle the dispute. If the regulator refuses insurance or a defect claim, you face costs of potentially $1 million or more plus 2 to 6 years delayed completion (costing hundreds of thousands extra due to inflation and deterioration of the part-build) to ask a court to review a wrongful decision. And the review may well result in another wrongful decision, but with a different reason stated.

This mess is down to failed regulators, ASIC failures, a bullying union, and the refusal of state governments to step in to compel regulators to do their job. And the entire nation is suffering, except the dishonest builders and tradies who are partying on money they don't earn and shouldn't have.

You scratch my back and I'll scratch yours.

 

[Vespa Girl]

The building industry is in a shocking mess due to the negligence of ASIC and building regulators nationwide, and the abuse of power by the criminal elements in the Union. The laws need to be changed, and those laws that do exist to protect consumers need to be enforced, without favour.

ASIC is reported to have identified over 900 building companies that traded in solvent, yet it did nothing. No penalties imposed. Why?

QBCC has a long record of corruption and dismal failures. Yet the state government will not act to reform it. Why? Non-completion insurance claims and defect claims are being wrongfully dismissed. Notices of Offence are being dismissed, despite them indicating very serious dishonesty and even outright fraud and extortion. Builders are being allowed to continue to trade, taking money illegally from clients either via overcharges or unlawful advance charges. Builders are getting away with appallingly shoddy work, leaving clients with major defects that often can never be rectified and if they can, impose costs in the countless thousands. Naturally, builders who take advance money unlawfully end up in major trouble, because they are allowed to trade when they know full well they have inadequate liquidity to complete works they take on.

Victoria recently undertook major reform of its regulation system. Sceptics say it will achieve nothing. It is too little, too late, and ignores major issues that need to be addressed.

We have a housing crisis, yet people who can afford and are willing to invest to have a home built cannot get what they pay for due to dishonest builders and failed regulators. Years ago, you hired a builder and he built you a house. Today, you have to buy non-completion insurance costing thousands, then engage a lawyer to check the contract and then oversee to ensure compliance (Potentially $5000 if all goes well and hundreds of thousands if it doesn't!). Although you have to pay a certifier to ensure council compliance ($3000 and upwards), you also have to engage an independent inspector to check that the builder is building to specifications and standards (potentially $10,000+). You have to then pay the builder, in many cases, $1500 per visit to allow that inspector on site. adding at least another $9000 to the cost of the build simply because the builder can't be trusted and the regulators don't do their job!

Most contracts force consumers to pay well over 60% of the cost of the completed home before it is even to lock up stage, and there is nothing to effectively prevent the builder using that money to start other projects and then leaving your project incomplete because he can't raise funds to finish all the jobs he took on, knowing full well he had insufficient resources.

If the builder fails his obligations, you likely have to go to court, costing over $100,000 plus another $100,000 in delay costs for the 2 to 6 years it takes to settle the dispute. If the regulator refuses insurance or a defect claim, you face costs of potentially $1 million or more plus 2 to 6 years delayed completion (costing hundreds of thousands extra due to inflation and deterioration of the part-build) to ask a court to review a wrongful decision. And the review may well result in another wrongful decision, but with a different reason stated.

This mess is down to failed regulators, ASIC failures, a bullying union, and the refusal of state governments to step in to compel regulators to do their job. And the entire nation is suffering, except the dishonest builders and tradies who are partying on money they don't earn and shouldn't have.

Thank you for your comprehensive information. There doesn't seem to be any accountability in today's society. Our honesty has been compromised. Governments are not helping and are part of the problem.

 

[novezar]

All I can say, is, what a whole bloody mess this saga is.
How many 'subbies' have been doomed with this mob who'll just about go broke for sure ?
It looks as though the unsecured creditors have lost the lot.
It begs the "?", how many are there ?
It very much looks that the 'Heads" of the company were taking money under false pretences.
If this is true, no doubt, should be convicted in court, & jailed for 15-20 years.
Their "whole" possessions including houses, cars, jewellery & bank accounts forfeited to the crown to help pay off the debts which they willingly incurred knowing well what they were doing in hoodwinking all concerned.
Part of the ever growing scum of the earth.

 

[relljube]

All I can say, is, what a whole bloody mess this saga is.
How many 'subbies' have been doomed with this mob who'll just about go broke for sure ?
It looks as though the unsecured creditors have lost the lot.
It begs the "?", how many are there ?
It very much looks that the 'Heads" of the company were taking money under false pretences.
If this is true, no doubt, should be convicted in court, & jailed for 15-20 years.
Their "whole" possessions including houses, cars, jewellery & bank accounts forfeited to the crown to help pay off the debts which they willingly incurred knowing well what they were doing in hoodwinking all concerned.
Part of the ever growing scum of the earth.

No doubt the assets are held in family names (wives, kids, etc) so there is no risk of forfeiture as a result of overcommitment etc. The liquidator will take his share, then the tax dept then the secured creditors will take what is left but probably not covered all the debts, followed by the staff (good luck) and finally unsecured creditors - subbies etc (who by now would be broke themselves).
The company directors will turn around next week and start another company and the merry-go-round starts again and again. But they will still be driving around in the humungous "utes" (American big arsed pickups)!

 

[novezar]

Hi relljube,
No doubt you could be 100% right where the principals of the business have everything in their wives, &, or childrens' names in some sort of confluted trust fund.
They more than likely don't have a damned cent in their own names so they have themselves protected.
Like all sleezebags, as you mention, when everything "Cools" down, they'll turn around & restart another scam business to suck customers in.
They should be absolutely barred from engaging in reopening a business until their debts are repaid to all concerned, or, partake in any sort of partnership as a director or otherwise.
Better still, have the mongrels barred for life.
They knew what was happening well before hand.