Flexible Homes directors Pavreet Singh, MD Touhidul Islam Sunny hit with massive fine by tribunal for ‘misleading’ conduct

The former directors of a now-insolvent builder misled homeowners by entering into contracts promising to be the builder of the project when they were actually contracted to other builders, a tribunal has been told. Pavreet Singh and MD Touhidul Islam Sunny were the directors of Perth-based builder Flexible Homes Pty Ltd before it entered liquidation in June 2023, impacting some 19 West Australian homeowners. The pair have now been fined $50,000 by the State Administrative Tribunal, which found the now-insolvent builder engaged in conduct that was misleading during three building projects in Shelley, Piara Waters and The Vines. According to an agreed statement of facts following mediation in August, Singh and Sunny were both directors of Flexible Homes between 2021 and 2022 when it represented to clients that it would be the builder of their houses. In reality, the company intended for a third-party builder to be engaged for this work. The tribunal was told Flexible Homes entered into preliminary work contracts that stated or implied it would be the builder for the resulting projects when they were actually contracted to other builders. “Flexible Homes also processed the applications for building permits and home indemnity insurance (HII) on behalf of these third-party builders,” WA’s Department of Mines, Industry Regulation and Safety said in a statement. The company issued invoices and received payments for the building work, as well as carrying out all customer contact and administration during the projects. One Shelley homeowner who needed her home demolished and renovated had to wait eight months due to an “undue delay” from the company’s conduct. This person then signed a contract with a third-party builder on the recommendation of Flexible Homes – only to be told months later this business could not obtain the required HII, according to the agreed statement of facts. “Flexible Homes arranged for a second builder to be contracted, but another month passed before it was revealed this builder also lacked HII access,” the department’s statement continues. “The client’s final contract with a third builder was not signed until August 2021.” Flexible Homes also made contract variations involving demands for extra funds – making clients believe this was “arbitrary” by not explicitly explaining the reasons or that the source of the request was a third-party builder. Two price increases were also made without written justification or verification and the same Shelley homeowner was asked for a progress payment when the corresponding work had not even started. The tribunal was told Singh also signed a building contract on behalf of a third-party builder that had not given him authority to enter into any contracts on its behalf. In addition, the tribunal found Flexible Homes had failed to comply with a building remedy order after a neighbour’s house was damaged. The tribunal ordered Singh and Sunny to pay $25,000 each for the company’s conduct. Building Commissioner Saj Abdoolakhan said the significant fine against the directors was a clear message that improper conduct had no place in the building industry. “Homeowners rightly expect builders to act with integrity when they enter into contracts for what is usually the biggest purchase of their life,” Mr Abdoolakhan said. “Building contract laws protect consumers and ultimately help to ensure our buildings are safe and compliant. “Attempts to mislead and sidestep these rules are unacceptable.”