OSTWALD: Insider says ruling unlikely to benefit contractors
PACIFIC Highway contractors owed $7.5 million after the collapse of a Queensland based construction firm will not benefit from a Supreme Court finding handed down last week.
The judge found construction company Seymour Whyte should pay the collapsed company Ostwald Brothers more than $5 million for work carried out on the highway, despite Ostwald Brothers going into liquidation the day before the payment was due.
This news briefly raised hopes of the Wave 5 group of local contractors that some of this money could come to them.
But according to an anonymous leak from the contractors' Committee of Inspection - a group of Ostwald Brothers creditors formed to oversee the liquidation process - the court case was flawed from the start.
An anonymous member of the committee said the liquidator, Price Waterhouse Coopers, had botched the case.
He said the claim by the Ostwald Brothers against Seymour Whyte was subject to set-offs, which meant any money available to creditors could be offset by claims from Seymour White.
"It was likely these set-offs would actually be larger than the $5 million claim and another $6 million claim waiting in the wings once we saw how this claim ran," said the anonymous source.
"But it begs the question why the liquidator ran the case in the first place," he said.
"Did PWC do an assessment of the likelihood there would be a claim by Seymour Whyte against Ostwald Brothers?
"If the answer's yes, why did they bother?"
He said PWC had not disclosed the potential of the set-offs to the inspection committee, which meant all the case had achieved was to line the pockets of lawyers.
A spokeswoman for PWC said the company was happy with the court's ruling.
"It is pleasing that the decision by the administrators (now liquidators) to pursue an adjudication on the Seymour Whyte claim has been vindicated by the Supreme Court. His Honour determined the adjudication application was made in time, and accordingly the adjudication determination in the amount of more than $5m is valid," she said.
"The liquidators will take such further action available to them to seek to enforce the adjudication application as soon as possible. However, pursuant to the orders of the Court, the judgement is currently stayed pending Seymour Whyte seeking to pursue any alleged set-off it may have against the Company under 553C of the Corporations Act. Seymour Whyte also has the ability to appeal the decision."
She said as a result of this outcome the liquidators are also considering other potential claims that may be pursued against Seymour Whyte.