Flexible Homes directors’ dodgy acts before building business collapsed

The former directors of a now insolvent builder deceived homeowners by entering into contracts promising to be the builders of the project when they were in fact contracted to other builders, a tribunal has been told.

Pavreet Singh and MD Touhidul Islam Sunny were the directors of Perth-based builder Flexible Homes Pty Ltd before it went into administration in June 2023, impacting 19 Western Australian homeowners.

The pair have now been fined $50,000 by the State Administrative Tribunal, which ruled that the now insolvent builder was guilty of misleading conduct on three construction projects in Shelley, Piara Waters and The Vines.

According to an agreed statement of facts after mediation in August, Singh and Sunny were both directors of Flexible Homes between 2021 and 2022, when the company told customers it would be the builder of their homes.

In reality, the intention was for the company to engage an external builder for this work.

The tribunal was told that Flexible Homes had entered into preliminary works contracts which stated or implied that it would be the builder for the resulting projects, when in fact they had been subcontracted to other builders.

“Flexible Homes also processed applications for building permits and home damage insurance (HII) on behalf of these third party builders,” WA’s Department of Mines, Industry Regulation and Safety said in a statement.

The company issued invoices and received payments for the construction work and also took care of all customer contact and administration during the projects.

A Shelley homeowner who needed her home demolished and renovated was forced to wait eight months due to an “unnecessary delay” caused by the company’s behavior.

This individual then signed a contract with a third-party builder at the recommendation of Flexible Homes, only to be told months later that this company could not obtain the required HII according to the agreed statement of facts.

“Flexible Homes secured a second builder, but another month passed before it was announced that this builder also did not have HII access,” the department’s statement continued.

‘The client’s final contract with a third builder was not signed until August 2021.’

Flexible Homes also created contract variations asking for additional money, leading customers 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 implemented without written justification or verification, and the same Shelley homeowner was asked for an advance payment when the relevant work had not even begun.

The tribunal was told that Singh also signed a construction contract on behalf of a third party builder who had not given him the authority to enter into contracts on his behalf.

In addition, the tribunal found that Flexible Homes had failed to comply with a building regulation after a neighbour’s house was damaged.

The tribunal also found that Flexible Homes failed to comply with a repairs order after a neighbour’s house was damaged

The tribunal ordered Singh and Sunny to pay $25,000 each for the company’s conduct.

Construction Commissioner Saj Abdoolakhan said the significant fine against the directors sent a clear message that inappropriate behavior has no place in the construction industry.

“Homeowners rightly expect builders to act with integrity when contracting for what is typically the largest purchase of their lives,” Abdoolakhan said.

“Construction contract laws protect consumers and ultimately help ensure our buildings are safe and compliant.

“Attempts to mislead and circumvent these rules are unacceptable.”

Ms Abdoolakhan said consumers should be wary of misleading documents when buying a home.

‘I encourage consumers to thoroughly review all contracts and related documents to ensure that the contractor listed on the paperwork 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 can raise any concerns with the builder, but if you still feel uncomfortable or suspicious, please contact Construction and Energy.’