QBCC to fund probe into JM Kelly builder collapse

A PUBLIC court examination will be held into the collapse of Rockhampton-based JM Kelly Builders Pty Ltd with witnesses to include company director John Murphy in a bid to obtain information to support potential civil and criminal claims.

Building industry regulator, the QBCC, has announced the $200,000 funding comes after talks with the liquidator PwC and follows what it says have been months of talks.

Liquidator Derrick Vickers of PwC Australia said the examination process may uncover information relevant to ongoing Queensland Police Service investigations following earlier referrals by the liquidator.

"We will be exercising our powers as liquidators to the fullest extent, with an objective to maximise recoveries for the benefits of creditors," Mr Vickers said.

"Conducting a public examination will allow the liquidators to advance our ongoing investigation in relation to the collapse of the company, and to obtain information to pursue civil claims and support criminal claims that may exist," he said.

John Murphy was appointed director of JM Kelly Builders on June 27, 2016. Picture:  Allan Reinikka / The Morning Bulletin
John Murphy was appointed director of JM Kelly Builders on June 27, 2016. Picture: Allan Reinikka / The Morning Bulletin

"As part of the examinations, we will be seeking the approval of the Court to issue summons to individuals to produce materials and answer questions under oath before a magistrate or a Federal Court judge."

The liquidator's report filed with ASIC refers to:
•       Minimum Financial Requirements Reports provided to the QBCC by auditors
•       Insolvent trading
•       Potential shadow or de facto directors of the company
•       Breaches of director duties
•       Voidable transactions, including director-related transactions
•       Significant transactions involving related entities of the JM Kelly Group and their associates
•       Statutory Declarations signed by authorised officers of the company,

Some or all of these issues are likely to be raised during the examination.

QBCC Commissioner Brett Bassett said the Commission had been working with PwC Australia since the liquidation to ensure those affected by the company's collapse were given every chance to get the money they were owed.

"Last year we funded a public examination into the Cullen Group and Queensland One Homes and this is another example of how seriously the QBCC takes its role in providing security of payment for subcontractors," Mr Bassett said.

"In Queensland, the QBCC uses our powers to protect subbies, as well as home and business owners, wherever we can, but in circumstances where a company has gone into liquidation, we will work with partners who can make use of the State and Federal Courts to carry out that action.

The Aldi construction site on Gladstone Road, Rockhampton, following the collapse of J M Kelly. Picture: Chris Ison
The Aldi construction site on Gladstone Road, Rockhampton, following the collapse of J M Kelly. Picture: Chris Ison

"When companies of this size collapse it has a flow-on effect to honest, hard-working tradespeople, which we cannot abide.

"Our statutory mission is to protect our licensees and ensure they get paid and we will use all the tools at our disposal to rid the industry of dangerous and dodgy operators."

The public examination is expected to be completed within six months.

Mr Murphy today declined to comment on the latest development.

But in a wide-ranging response to earlier specific questions put to John Murphy and his father Geoff, Mr Murphy senior said there had been no wrong-doing.

Mr Murphy senior was banned in 2016 by the building regulator for three years from being a person of influence in the construction industry due to his involvement in the JM Kelly Project Builders collapse.

"As someone who has been in the industry all my life and for over 60 years, I find it abhorrent that both the Minister and the QBCC are destroying the construction industry and they need to be held responsible for their actions and the impact their decisions are having on all stakeholders in the industry," he said.

"The present direction of these people will only end in the complete destruction of an important industry.

 "I continue to be extremely proud of the achievements and the excellent reputation of the company and its employees regardless of the deliberate actions of the Minister the QBCC and BAS which did not give the current directors any choice but to appoint an administrator to the group.

"Payments to subcontractors and suppliers were always made in accordance with conditions of contract or with agreed negotiated amendments to terms.

"The actions of QBCC and Building and Asset services in discriminating against JM Kelly Builders and excluding the company from tendering on work drastically reduced cash flow.

"BAS were a main source of contracts for the company over the last 57 years.

''The directors and shareholders of Project Builders undertook to pay all genuine creditors."
Mr Murphy said he was also at odds with findings of JM Kelly Project Builders liquidator FTI that the company had traded insolvent since June 2013, until its liquidation in mid-2016.

He also rejected comments by JM Kelly Builders liquidator PWC that it had been insolvent from at least January 2017.

"PWC have made no proper effort to ascertain the true facts," Mr Murphy said.
"The QBCC however advised Building and Asset Services (BAS) and the Minister to not accept or allow JM Kelly

Builders to tender on any work and furthermore, they bypassed several contracts where it had implied to Builders that the company had been successful.

"BAS and the Minister removed the company from tender lists on contracts valued at well over $90m for building works in CQ even though they were advised that other staff in the company had the ability, qualifications and License to fill the position if John Murphy's license was cancelled.

"The Group went from a turnover of more than a $100m per year to an order book of $13m which starved the company of important cash flow."