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Work & Business Licenses
Consumer & Business Advice
Media releases
3 August 2015

The construction of 98 homes is no longer in limbo after the state’s consumer watchdog stepped in following allegations that a building company had issued false insurance certificates.

Consumer and Business Services (CBS) became aware in February of allegations that building work contractor GNC Homes Pty Ltd had entered into contracts with nearly 200 homeowners without the required protection of Building Indemnity Insurance (BII).

Business Services and Consumers Minister Gail Gago said CBS took action to assign the 98 unfinished building contracts to another licensed builder.

“CBS is working in conjunction with police to investigate the allegations that GNC Homes forged insurance certificates.

“Breaches of insurance requirements are taken very seriously by CBS.

“The situation required urgent intervention as a number of consumers and homes were at risk of suffering significant harm, loss or damage.

“It is a very positive outcome for the consumers that were able to negotiate new contracts with another builder to complete all of the homes,” Ms Gago said.

Building Indemnity Insurance protects the homeowner if work has not been completed in the event the builder dies, disappears or is declared bankrupt.

Under the Building Work Contractors Act, a builder must have a BII policy in place for any domestic building work costing $12,000 or more where council approval is required. Failure to do so attracts a maximum fine of $20,000 and builders may face prosecution and disciplinary action.

It is alleged that GNC Homes had been involved in building more than 200 single-storey homes in South Australia, mainly for interstate investors from Western Australia and Victoria with a small number of South Australian investors.

It is alleged that of the 217 constructions, only 37 legitimate certificates for BII cover were issued.

Following investigations, CBS has been working with GNC Homes and its legal representatives to assign all unfinished building contracts to Metro Property Development Pty Ltd.

Work is underway to finish those homes, with some already completed and handed over to the homeowner.

“This has been a great example of cross-jurisdictional, joint-agency collaboration to achieve an outcome for the consumers involved.

“CBS has worked closely with South Australian Police, state Consumer Protection regulators in WA and Victoria, the Australian Securities & Investments Commission and the builders throughout the process.

“Our priority is guaranteeing all consumers are appropriately safeguarded and licensed operators are not able to get away with dodgy practices,” Ms Gago said.

GNC Homes Pty Ltd, and its sole director, may face prosecution and/or disciplinary action in relation to the alleged conduct.

If anyone has any concerns about their certificate of building indemnity insurance provided by a licensed builder and in particular GNC Homes Pty Ltd, they should contact CBS on 131 882.