PAYMENT DISPUTE HIGHLIGHTS CONCERNS
The scope of responsibilities of statutory bodies has been brought into question following a dispute where a contractor failed to pay sub-contractors while still receiving payments from VicRoads.
Between February and October 2001 CMPA member Allstone Quarries Pty Ltd, near Bendigo, delivered crushed rock to contractor Roads ‘R’ Us Pty Ltd for shoulder work and culverts on the Calder Highway. The contractor had successfully won a VicRoads contract.
Roads ‘R’ Us company director, Roger Burns, contacted Allstone Quarries for supply on a sub-contract basis after VicRoads had provided a list of quarry materials suppliers at a VicRoads tender meeting. Allstone Quarries manager, Tim Bird, said he was prepared to deal with Roads ‘R’ Us as they held VicRoads pre-qualification requirements at the time.
During the supply of materials payments began to slow but Mr Bird said he did not see any reason for concern until the final material had been delivered. By this stage payments had all but ceased with Allstone Quarries still owed a substantial amount by November 2001.
According to Mr Bird, Roads ‘R’ Us informed Allstone Quarries that the company was unable to pay, “because he in turn was not getting paid by VicRoads”. Allstone Quarries immediately contacted the local VicRoads manager and was informed that VicRoads “had written to Roads ‘R’ Us Pty Ltd asking them to clarify the issue of outstanding invoices related to the above contract”.
Mr Bird said VicRoads later withdrew from this position and in a letter dated 31 January 2002 said “any issues regarding outstanding payments to the sub-contractor are matters for resolution between the sub-contractor and the contractor”.
However, in spite of this assertion, VicRoads did ask Roger Burns to sign a Statutory Declaration in which he stated that he had paid his sub-contractors what was owed. “Sadly”, Mr Bird said, “VicRoads did not bother to check with us or any other sub-contractors to verify the truthfulness of the Statutory Declaration.”
Roads ‘R’ Us went into administration in March 2002. “Many contractors shared our difficult situation of being owed substantial amounts of money and being offered little hope of being paid,” Mr Bird said.
“We were frustrated with the knowledge that we had given VicRoads sufficient information from early November 2001 to ensure that no more money was paid to Roads ‘R’ Us unless it was passed on to the sub-contractors to whom much of it was owed.”
Mr Bird had contacted VicRoads on many occasions but was unable to get a satisfactory response until August 2002 when the matter was addressed to the chief executive officer, David Anderson who has arranged for the matter to be investigated.
Allstone Quarries have also brought the matter to the attention of the State Ombudsman.
“It has been a long and frustrating saga and it is a pity that with some willingness to communicate with the sub-contractors and the will to look into matters brought to their attention, VicRoads could have ensured these problems need never had occurred”, Mr Bird commented.
Results of the investigations by VicRoads and dealings with the state ombudsman will be updated in forthcoming issues.
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