CAL requires accredited contractors to pay their accounts “as and when due” and to deal “honestly and fairly” with those they do business with.
Failing to meet these criteria can lead to a cancellation or downgrading of accreditation.
However, CAL cannot act in these matters unless we can obtain accurate information about the contractor’s activities. In this, we rely on clients, sub contractors and suppliers to keep us informed.
Contractor 1 was well established in the industry before CAL was created. He had held accreditation for three years before two sub contractors approached us with complaints of overdue invoices totalling approx. $40,000.
When CAL initiated our review process, the contractor asked a number of his sub contractors and suppliers to lobby us on his behalf, citing the length of time they had known him and how highly he was regarded by them.
However, the group started talking amongst themselves and quickly came to realise that the contractor had been effectively “robbing Peter to pay Paul” for a long time and that he was in debt to all of them.
The number of complaints to CAL increased to 11, with the debts claimed climbing to over $450,000.
This contractor’s accreditation was cancelled.
Contractor 2 was an established builder specialising in remote community work. He commenced a project over 500 km from the nearest major centre, only to have his major supplier withdraw from the project at an early stage.
After a delay in arranging a new supplier, his apprentice suffered an injury which kept him off work for 10 weeks. Due to the remoteness of the site, it proved difficult to find alternative labour and the project ran well over time.
The client chose to apply liquidated damages, leaving the contractor with insufficient funds to pay his current accounts.
He negotiated a plan with his creditors that would allow him to pay his debts plus interest while working as a sub contractor. CAL agreed to allow him limited accreditation as a sub contractor and monitored his performance over the following eighteen months.
At the end of this period, he had no outstanding creditors and his circumstances allowed us to reinstate full accreditation.
Contractor 3 was a family business employing a family member who had a history of past bankruptcy. His history was disclosed at the time the contractor sought accreditation along with confirmation that he was not involved in any decision making role in the company.
After several years, the company went into voluntary liquidation without warning. It was found by the liquidator to be carrying over $2 Million in unfunded debt and that the former bankrupt had been the shadow director.
Reviewing the case, after the event, it became obvious that the contractor had misrepresented itself to CAL on a continuous basis. It had succeeded by relying on its sub contractors and suppliers seeing him as “a good bloke” and that “it’s not cool to dob a mate in”.
This attitude allowed the contractor to book up significant debt without any of the credit reporting agencies, or CAL, becoming aware. Each creditor thought they had a secure payment plan for their unpaid debts – until the contractor left town and the liquidator stepped in.
The only glimmer of a positive outcome in this case is that four creditors who did come forward to CAL in the weeks prior to the collapse received approx. 80% of the money owed to them once we had initiated our complaints process. Those processes were continuing when the contractor left town.
As a result of this experience, the contractor’s modus operandii became clear and CAL both advised the interstate licensing authorities of this and strengthened our Bankruptcy Declaration requirements.
Contractor 3 was an embarrassment for CAL in our early days but led to a very positive outcome.
The contractor was awarded his first accreditation on the back of a national credit database check that showed he had an exemplary credit history. Over the next 12 months, CAL received occasional criticism for awarding the accreditation as the contractor was regarded as a serial poor payer. Unfortunately, this was presented as gossip and CAL was not presented with an opportunity to initiate an immediate review. (We need someone to come forward with a written complaint).
In processing his annual renewal, we received a report from the national credit database that indicated a long history of defaults. It turned out that there were two contractors with the same name and we had obtained a report on the wrong one the previous year.
The contractor was mainly engaged in remote area work and had an attitude of not worrying about his accounts until he got back to town.
His accreditation was cancelled because of his credit history.
The contractor accepted the challenge and restructured his operation to introduce administrative support to manage his affairs.
After six months, he had no debts and was paying his accounts within terms.
CAL reinstated his accreditation, initially under tight monitoring arrangements. It has been a pleasure to watch his company grow over the past 20 years, with no more unsatisfied creditors.
Not everything that CAL does leads to the contractor being sanctioned.
Contractor 3 was the subject of a severely adverse performance report from a client, suggesting that he provided a substandard product, using material that was not fit for purpose. The report raised sufficient concern to trigger an immediate review.
In keeping with our processes, the contractor was advised of the report and invited to respond.
He provided comprehensive documentation and photographs which clearly demonstrated that the client had directed him to use the materials after he had first raised concerns about their suitability, that the work site was well maintained throughout the project and that the completed project achieved a satisfactory standard.
The report was therefore dismissed and the accreditation continued.
(CAL later learned that there had been issues with the after hours behaviour of his team on site and that the client thought the best way of “getting back” was to manufacture the adverse report but not mention the behaviour. The client learned the lesson about being honest in their reporting and the contractor learned a lesson about managing his team when we went back to him on the behaviour issues.)