SUBBIES DESPAIR: The old Nambour Sugar Mill site where the Coles supermarket was built. Subcontractors who worked on the site were burned by the collapse of Walton Construction.
SUBBIES DESPAIR: The old Nambour Sugar Mill site where the Coles supermarket was built. Subcontractors who worked on the site were burned by the collapse of Walton Construction. Warren Lynam

Walton: Subbies question $400,000 payout to Coles

SUBCONTRACTORS burned by the Walton Construction Queensland collapse want to know why more than $400,000 was wiped off the amount owed for "incomplete works" on the Nambour Coles project, months after Coles' representatives had signed off on the work and released Walton from a half million dollar performance bond.

When Walton went into external administration on October 3, 2013, it left debts of more than $70 million across Australia, including more than $29 million to Queensland sub-contractors. Those that had worked on the Nambour Coles projects were out of pocket $2.9 million.


Seven working days before Walton Queensland closed its doors a project superintendent for Savills Queensland, acting on behalf of Coles, signed off on practical completion of the project.

The action triggered three days later the release of a $518,000 National Australia Bank-backed performance bond that had been secured against the personal assets of Walton's sole director, Craig Walton.

A further bond of the same amount was retained to cover defect liabilities on the project that may have emerged in the following 12 months.

However in December 2013 the then liquidator Lawler Draper Dillon, now part of PKF Australia, reduced the amount Coles owed on the project by $407,850.93, representing what was described in email exchanges with Coles as works left incomplete on the project.

There was no consultation with the committee representing unsecured creditors.

The Subcontractors Alliance wants to know how this was allowed to occur after Coles had signed off on the project, and released the bond meant to cover work that the contractor may fail to do under the contract.

The move reduced the pool of funds available to be distributed to unsecured creditors and also shut off any chance subbies may have had under the Subcontractors' Charges Act to access the performance bond to cover work they had done and materials they had supplied.

A number of subcontractors lost their homes and businesses because of the Walton collapse.

Coles yesterday said Savills, as the contract superintendent, issued the notice of Practical Completion "in accordance with the process set out in the construction contract".

"Coles paid for the work completed by the contractor. Coles did not negotiate a reduction in the contract price," a representative said.

PKF Australia was removed as liquidator last year on appeal to the Federal Court by the Australian Investments and Security Commission (ASIC) for perceived bias.

The accountancy firm had received more than $700,000 in fees during 2012 and 2013 from the Mawson Group, business advisors to Walton.

Mawson Group directors became shareholders of companies set up to take over Walton contracts.

The Subcontractors' Alliance, which now has members across Queensland, was formed after the Walton collapse to lobby for security of payment for subbies who employ 85% of workers in the construction industry.

Spokesman Les Williams said the group wanted full transparency about the then liquidator's decision to reduce the contract price payable by Coles.

He said practical completion meant exactly that, and if it hadn't been achieved the performance bond should not have been released.

The project's original contract price of $21,402,833.58 was reduced by $407,850.93 to $20,994,982.65.

Earlier payments by Coles to the builder had amounted to $20,421,595.88 which then left $573,386.77 outstanding.

Lawyers for Coles have refused to release the breakdown of another $430,000 the supermarket giant claimed from the project's $518,000 defect liability bond.

Only $88,000 from that bond ultimately found its way to the pool of money available for distribution to unsecured creditors.

"The defects were rectified in accordance with the contract and Coles was reimbursed for those costs," the Coles representative said.

"The balance of the security bond remaining after Coles was reimbursed for the cost of rectifying the defects was paid into Court."

PKF Australia charged nearly $1m for work it did on the liquidation up to its dismissal by the Federal Court.

New liquidator Grant Thorton has had to delay until October a Public Examination into the Walton collapse while it tries to gain access to a series of documents, not collected by PKF, that are critical to a full understanding of what occurred.

Craig Walton, executives of the Mawson Group and former Walton employees are among those expected to be subpoenaed to give evidence under oath to the proceedings in Melbourne.

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