A former Modco Residential director has acknowledged and deeply regretted the stress caused to the collapsed builder's customers, a tribunal decision shows.
A former Modco Residential director has acknowledged and deeply regretted the stress caused to the collapsed builder's customers, a tribunal decision shows.
The Building Services Board took Modco Residential and Damien Clancy, formerly the company’s sole director, to the State Administrative Tribunal over disputes at building sites in Maida Vale and Hammond Park.
In a decision published today, SAT member Nicola Findson ordered Modco Residential be reprimanded and fined Mr Clancy $10,000, to be paid to the Building Commissioner.
The decision covers allegations brought by homeowners of the two building sites, which the parties have settled after mediation earlier this year.
According to the SAT decision, Modco Residential allegedly raised contract prices in 2022 without demonstrating to the homeowners the justification for the increases of more than $50,000 each.
Modco Residential allegedly misrepresented to the homeowners that the stage of construction had been completed and that payment was due, the decision shows.
In her decision, Member Findson found that Modco Residential faced unprecedented challenges of cost increases and acted on legal advice on how to manage its operations.
“While it is now apparent that certain aspects of the First Respondent’s [Modco’s] approach were non-compliant with regulatory expectations, at the time the First Respondent believed it was acting in good faith in difficult circumstances.
“The Second Respondent [Mr Clancy] concedes that, with the benefit of hindsight, alternative approaches could have been explored.
“The stress and inconvenience caused to its customers is acknowledged and deeply regretted.
“It was never the intention of either of the respondents to cause undue hardship or delay in completing customer homes.”
Modco Residential entered voluntary administration in mid-2023, after facing legal challenges from unpaid creditors and bids to wind-up the company.
The Osborne Park-based residential builder was founded by Cynthia Lu and Yusuf Khan.
Mr Khan’s involvement in the company has been referenced in the SAT decision, with Mr Clancy claiming he had a significant role in the management of Modco Residential.
“Unknown to [Mr Clancy], the ability of [Modco Residential] to properly carry out its building services was impacted by Mr Khan siphoning money from the business and using company credit cards for his own personal use,” the decision read.
“The Second Respondent has voluntarily participated and co-operated in this proceeding. He does, however, consider that he has borne a disproportionate burden of responsibility, with Mr Khan, the principal decision maker, so far managing to avoid scrutiny.”
Mr Clancy has suffered significant financial loss, including his house, and has been forced into bankruptcy, according to the decision.
“The consequences of the difficulties experienced by the First Respondent have been severe for the Second Respondent and will take him time to recover from,” the decision read.
“This, in addition to the fine imposed in these proceedings, in his view represents a substantial penalty and underscores the personal and professional devastation he has experienced.”
