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HomeIssue 10Carey Builders, Frampton New Homes scheme: systemic failure

Carey Builders, Frampton New Homes scheme: systemic failure

Chronology of a local disaster
On December 10, 2001 Randal Carey, a builder with a long record in construction in remote areas of the Northern Territory and Queensland, was declared bankrupt. It was the start of an unravelling that led to his conviction of nine counts of deception in the Alice Springs Supreme Court last Tuesday.
He remains an undischarged bankrupt to this day. The Trustee in bankruptcy is still waiting for a statement of affairs from him. One document received was written in pencil – not an acceptable form. The bankruptcy will not begin to run its course until a statement of affairs is provided. This situation has been let slide for almost 12 years.
Above: Among the victims, Trent and Amanda Abbott and their family in March, 2010. The court heard last Tuesday that they paid over $260,000 to Carey Builders for works valued by a quantity surveyor at around $150,000. They had to raise an extra $210,000 (on top of their original loan of $400,000) to have the house completed. They are now in the process of selling the house as they are unable to service its substantial mortgage. 
On August 23, 2006 a company called Carey Builders Pty Ltd was registered in Queensland. Its sole director and shareholder was Bronwyn Carey, wife of Randal Carey for 37 years. Mr Carey was never a director nor a shareholder.
On November 4, 2006, Mr Carey applied for registration as a building practitioner in the Northern Territory. One of the requirements for such registration is that the applicant be a “fit and proper person”. One of the questions on the form asked him whether he had been declared a bankrupt or entered into an agreement with creditors in the last five years. He answered “no”.
On December 15, 2006 the Building Practitioners Board granted Randal Carey personal registration in the category of “building contractor, residential”, with registration number 20153CR. The registration would expire after two years.
In 2007 Mr Carey came to Alice Springs  to build the L’il Antz Childcare Centre and its owners’ home. That was a $2.7m contract. Mr Carey had previously undertaken large contracts and at the peak of his career, when he was a “relatively wealthy man”, he’d had 27 employees.
The L’il Antz contract was completed, said Mr Carey’s lawyer, Peter Maley. But a dispute over variations towards the end left Mr Carey out of pocket to the tune of $149,000.
It was around this time, said Mr Maley, that Mr Carey met representatives of Framptons First National, David Forrest and Jeff Hardyman.
In the latter half of 2008, Framptons First National marketed a New Homes scheme. Contracts for construction were to be put out to tender to a panel of builders. Clients would then choose their preferred builder. Framptons thereafter would monitor progress from beginning to end for quality assurance.
From September 2008 to March 2009 contracts were signed by home-owners and clients of the Frampton New Homes scheme. In each case the contracts named Carey Builders as the builder but bore Randal Carey’s personal registration number, 20153CR.
“Whether independent legal advice was sought [by the home-owners], I don’t know,” said Mr Maley. If it was given, it should be “carefully looked at”, because “a number of contractual safeguards” were not in the these contracts.
All clients were told by employees of Framptons that Mr Carey / Carey Builders had provided the only or the best or the cheapest quote. That “comes as no surprise”, Mr Maley told the court last Tuesday, as there was “a deal” between Mr Carey and Framptons to pay them what was effectively a “secret commission” – $8800 or 2.5% of the contract price – in return for them introducing him to the home-owners.
Six houses would be completed by Mr Carey, but in nine cases the home-owners would go on to suffer “drastic and serious consequences”, as Mr Maley put it, ending up with incomplete houses, significant financial losses, not to mention the emotional stress of it all. However, his client’s role needed to be understood in the context of “systemic failure”, said Mr Maley.
Randal Carey signed the contracts purportedly on behalf of Carey Builders as the constructing party. Under the Territory Building Act a building contract must be entered into by the registered building contractor before building work is commenced. A company may register as a  building contractor providing that directors are “fit and proper persons” and that at least one is a registered building contractor. Carey Builders has never applied for nor been registered as a building practitioner in the Northern Territory or elsewhere.
Above: Premises of the agents, Framptons First National, on the corner of Stott Terrace and Hartley Street.
On October 22, 2008, the Building Practitioners Board wrote to Mr Carey, reminding him of the approaching expiry date of his registration. If his renewal application was not finalised by then, his registration would lapse. It was the start of a drawn-out correspondence.
On December 1, 2008 Mr Carey applied for renewal of his registration. Summer rolled on and more home-owners signed up.
On January 28, 2009 the board told him that his application had been deferred because they had received information that he was bankrupt. The board requested a detailed response by February 27, 2009, outlining his current financial status. None was forthcoming.
On March 26, 2009 the board wrote again, reminding Mr Carey that his registration had expired, that he was unable to provide certification services and that his details had been removed from public listings of registered building practitioners.
Victims of Count 6 had made their first payment the day before, on March 25. Victims of Count 9 made their first payment, two days later, on March 28.
On June 12, 2009 the board sent a letter and an email to Mr Carey. He was again told his registration had expired and that he could not complete building work in the Northern Territory. A new deadline for response was set: July 1, 2009.
On June 29 Mr Carey replied, restating his wish to have his registration renewed and informing the board that, in the absence of a registration number issued to him,  arrangements had been made with another builder to use his registration number.  Mr Carey also noted the board’s warning against completing work, saying “I am not doing so”.
The next day, June 30, the board responded, again asking for information on his financial status by July 7.
On July 5 Mr Carey replied that he would be more than happy to provide further information.
Apparently he did not do so, as on July 20, 2009 the board wrote asking for an explanation of the delay.  Information had been asked for in late January and was still not to hand. A final deadline for compliance was set: July 31.
The deadline went by, but a few days later, on August 3, Mr Carey wrote that he had been declared bankrupt on November 28, 2000 (a different date to the one given in court last Tuesday), as a result of debts accumulated on a building project – his client had run out of money.  He believed the period of his bankruptcy was three years (when in fact, it had not even started) and he believed he had given honest answers when he applied to be registered as a builder.
On August 19, 2009 Mr Carey (pictured at right) was finally advised that the board had refused his application as he did not satisfy the requirements of a “fit and proper person” due to his bankruptcy.
Meanwhile, in early 2009 Mr Carey had spoken to William Cantwell, the principal of Territory Building Certifiers (TBC), an entity authorised to issue building permits and other approvals. Mr Carey told Mr Cantwell that his registration had expired. Mr Cantwell advised him to stop work immediately until his registration was renewed or another builder could take over. He explained that an incoming builder would need to enter into new contracts with the homeowners and fresh building permits would need to be issued.
Mr Carey faxed to TBC documents purporting to be evidence of new contracts entered into by various homeowners and Damien Golding, a registered builder in Darwin. Building permits were then issued in Damien Golding’s name.
At all material times none of the homeowners were aware that Mr Carey’s registration had expired; none was informed of any proposal of Damien Golding’s involvement; none had been introduced to him or otherwise knew of him.
Had he disclosed his status to Framptons when he became unregistered, Justice Jenny Blokland wanted to know. “Immediately”, was Mr Maley’s answer. “He treated them as his bosses.”
Subsequent to December 15, 2008, when his registration had expired, Mr Carey either commenced or continued building works under contracts with the eight out of his nine victims (couples, some with dependent children). In the ninth case, no work was done but a deposit was paid that has never been refunded.
With homes at various stages of completion, Mr Carey presented tax invoices to the victims. They were on the letterhead of Carey Builders Pty Ltd, which also bore Mr Carey’s personal registration number.  In each case he deceived his victims by falsely representing that either himself or Carey Builders was a registered building practitioner and as such was legally entitled to perform building work under the building contract and to demand payment.
In each case had the victims known that either Carey Builders or Randal Carey was not registered, they would not have paid the invoices nor permitted building works to progress.
Once word did get out, as it inevitably would, credit ceased and payments stopped. Carey Builders went into liquidation on March 15, 2010.
Mr Maley told the court that Framptons received “the lion’s share” of the first progress payments by homeowners , under their “secret commission” deal with Mr Carey. He said there is “independent documentary evidence” of the payment of an estimated $100,000 by Mr Carey to Framptons. “As you can imagine that put even more strain on his cash flow,” he told the court.
Mr Maley said this is the conduct about which Mr Carey proposed to give a detailed record of interview and statement to the Crown. He said disclosures had been made to a previous prosecutor by a representative of Framptons about these payments. This had led to discussions between his office and the prosecutor and an invitation to Mr Carey to cooperate with a further investigation.
He asked for credit for his client on account of this cooperation and also for his guilty plea made shortly after his indictment on April 29, 2013. But, countered prosecutor Stephen Robson, the plea was effectively “on the doorstep” of the court, with his trial scheduled to start on May 13. It had saved the time and expense of a trial but credit should be at the lower end.
At right: Victims Christopher and Rebecca Axe in September, 2010. They were lucky to have a qualified builder in the family who, after Carey Builders collapsed, completed their home for little or no pay over several weeks. Alice locals including suppliers and tradies chipped in, with discounts or donations.
Mr Robson also said that Mr Carey could have pleaded much earlier to the nine counts of deception, which were always the “primary offences”, carrying  a maximum term of imprisonment of 14 years. The other charges that were dropped were relatively minor, carrying a maximum term of three years and the burden of proof would have been on the Crown to prove them, as it would have been also in relation to any disputed facts.
Mr Maley said there was no need for personal deterrence in the case of his “genuinely remorseful” client who has no relevant prior convictions and is unlikely to come before the court again. The need for general deterrence could be met through a suspended sentence. This is not “a soft option”, he argued, it’s still “a proper term of imprisonment”.
This isn’t a court of “retributional revenge”, said Mr Maley. Locking a person up is done to protect the community, the break the cycle of offending: this isn’t a consideration for Mr Carey, he argued.
Justice Blokland asked Mr Robson to address her on a “rising of the court disposition”, whereby a partially suspended sentenced would be imposed, with Mr Carey deemed to have already served the partial term “upon the rising of the court”. When Mr Maley was making his submissions, he said Mr Carey had been in custody for five hours to date. Since then his client has remained in custody after being remanded before lunch on Tuesday.
Mr Robson said a “rising of the court disposition” would be “inadequate” but that much might depend on orders for compensation made by the court, an option Justice Blokland was keen to explore. Her decision will be made on Tuesday, May 21.

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