Developer’s bid to get $40m back for subbies
A BRISBANE developer is suing one of the world's biggest building firms in a bid to recoup about $40 million for subcontractors who are "living from pay cheque to pay cheque".
Brisbane-based Devcorp has lodged a claim in the Federal Court against China Railway Construction Group (CRCG) to recover funds it promised to pay if its Australian building venture was liquidated.
The Chinese group partnered with a Queensland building company in 2016 as part of an ambitious plan to break into the booming apartment market.
But the venture, CRCG-Rimfire, was put into administration last year with CRCG, the world's third-largest construction company, securing a deed of company arrangement.
It agreed to pay unsecured creditors including subbies $8 million, or between 40¢ and 58¢ for every dollar owed.
The collapse left three of Devcorp's major developments, including the Lume at Kangaroo Point and the Lincoln at Greenslopes unfinished.
Devcorp managing director Murray Thornton said bringing in new builders to complete the projects had been costly, but subbies had been the hardest hit.
"They are living from pay cheque to pay cheque," said Mr Thornton, a former carpenter. "They were led to believe that the deed of company arrangement was the fairest outcome but 14 month later they are still waiting to get paid.
"I am a former subbie myself and I really feel for them. A big part of the motivation in launching this case is to help the subbies."
Devcorp is now seeking to set aside the DOCA and put the company into liquidation to ensure subbies claims, along with its own debts of about $17 million, are paid. Under a liquidation, CRCG would be liable to pay out all debts owed to creditors.
That was because of a deed of covenant that it agreed with the Queensland Building and Construction Commission (QBCC) that effectively guaranteed the payment of valid claims up to $1 billion.
A CRCG spokesman said the company had faith in the Australian legal system. "We believe the court will deliver a fair verdict," the spokesman said. The matter has been set down for a hearing in April.