There’s been plenty written about Probuild since it went bust.
Their demise was especially satisfying for me, for reasons that will become obvious in this article. I feel for the subcontractors who are out of pocket, but at the same time the departure of Probuild from the construction landscape is a good thing.
While there is nothing wrong with payment disputes per se, and each party’s ability to make its case, this shows what happens when the original dispute is replaced by bloody-minded vengeance.
In 2016 Shade Systems contacted me about money owed at the completion of its work for Probuild on a development in Chatswood. We calculated a claimed amount of $324,334.00 (inc. GST). The matter went to adjudication after Probuild scheduled -$1,329,888.00. In a 40-page decision, the adjudicator determined that Shade Systems was owed $277,755.00. The Act allows 5 business days for that payment to be made. That was due for payment on 1st March 2016.
Probuild didn’t pay and instead challenged the validity of the determination in the NSW Supreme Court. In June 2016, amazingly, the Court decided the determination was void and quashed it. The Court decided that if an adjudicator makes “an error on the face of the record”, then the determination is void. This was outside all prior approaches to the Act taken by the Courts who do not ‘re-decide’ determinations and if the adjudicator has made an error within jurisdiction then it is not for the Courts to intervene. This made no sense to me. More importantly, it made no sense to one of the best-known barristers in Security of Payment; Michael Christie SC.
He offered to challenge this decision on a no win no fee basis. In December 2016 the full bench of the NSW Supreme Court upheld the appeal with costs with a 5-0 win. That is, all five judges rejected Probuild’s arguments. The previous judgement was swept aside, and the adjudicated amount was again payable to Shade Systems.
But Probuild wasn’t having it and sought leave to appeal the decision in the High Court.
At this point, we have learned that in the years 2018-2022 Probuild was only surviving due to the financial support provided by its South African parent WBHO. Over four years it had sent $183 million to Probuild to keep it going. And it did keep going on almost no margin. I saw a news report saying that it’s profit for 2021 was only $4 million.
It begs the question as to why it chose to throw so much money at avoiding payment. Even at the point at which it became clear it was spending more than it owed, Probuild just kept spending.
It paid the adjudicated amount plus interest into Court; an amount now at $314,504.71. In May 2017 the High Court allowed Probuild to appeal the decision of the NSW Court of Appeal, but was so dubious as to Probuild’s case, that it ordered that Probuild undertake to pay Shade System’s costs of the High Court Appeal whether it won or lost. That is just unheard of! You’d think that after this decision Probuild would reconsider what it was doing. But no.
While this was going on, Probuild started a new case in the NSW Supreme Court suing Shade Systems for $2.3 million in liquidated damages. They were also contesting the costs order that followed the loss in the NSW Court of Appeal. That means more hearings and more money.
In February 2018 the High Court dismissed Probuild’s appeal. Probuild was now liable for costs in the NSW Supreme Court, and the High Court. But it just kept spending. The day after the High Court loss it appealed the decision on costs as well as demanding a stay on release of the adjudicated amount. Two weeks later both of those were also dismissed.
Finally on 6th March 2018, just over two years after the original determination, the adjudicated amount was released.
But there was still payment of Shade Systems legal costs. In May 2018 the court’s review panel assessed Shade System’s legal costs at $260,428.13. Shade System’s went to register that in the court District Court of NSW. However, at that point Shade System’s was at its breaking point and was wound up in May 2018.
Probuild should have simply paid what it owed; $277,000.00. This was nothing more than the louvre work it had contracted for. In fact, from the papers I saw, during the actual works Probuild had never paid more than 40% of the claimed amount in any month. They only paid in full once; when Shade Systems said it could not go on with the work anymore.
Now the news reports tell us that while all this was going on Probuild was operating on less than 1% net profit and even then, required cash injections from WBHO. It just seems to me that the shareholders had their funds wasted by nothing more than a face-saving exercise. Unable to cope with its loss in the adjudication, Probuild set out to destroy Shade Systems at all costs, quite literally.
In his later judgment on costs, Judge Hammerschlag sets out a detailed history of this matter in; A. Atkins & G.T. Connellan & J. Cooper & L. Gardner & S.C. Harris & M.J. Huckerby & M.J. Lee & P. McCarthy trading as Moray & Agnew (Newcastle) ABN 35 262 692 173) v Shade Systems Pty Limited (in Liquidation) (ACN 134 134 400)  NSWSC 1186.
He notes at  that “…Probuild has throughout made every attempt to avoid meeting its obligations…” and by contesting the costs order had “…acted contrary to the spirit of the undertaking it gave to the High Court.”
For a company that wasn’t making much money, this is one hell of a legal bill; look at it!
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  NSWSC 770
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2)  NSWCA 379
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 3)  NSWCA 382
Probuild Construction (Aust) Pty Ltd v Shade Systems Pty Ltd (No 2)  NSWSC 878
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  HCATrans 112
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd  NSWCA 33
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2)  NSWCA 34
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 4)  NSWCA 52
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  NSWSC 540
I’m no authority on Court costs, but I don’t think you need to be one to see that there must be over a million dollars in legal fees here. Maybe double that. Given what we know about Probuild now, it just amazes me that it could make such irresponsible decisions on litigation and shareholder’s money. It is unclear whether WBHO were aware of this saga but no doubt it would be unimpressed.
All that emerges from the ruins is a small subcontractor who employed 30 people is now gone. The owner’s retirement nest egg and property are also gone.
They did not deserve to go.
But Probuild sure did.