Mehreen Faruqi (NSW, Australian Greens) Share this | Hansard source

by leave—I move Greens amendments on sheet 8840 together:

(1) Clause 2, page 2 (table item 3), omit "and 4", substitute ", 4 and 5".

(2) Page 40 (after line 12), at the end of the Bill, add:

Schedule 5—Other provisions relating to directors

Corporations Act 2001

1 After section 184

Insert:

184A Duties in relation to building products

(1) A director or other officer of a corporation commits an offence if:

(a) the director or officer has a duty under this section; and

(b) the director or officer fails to comply with the duty.

(2) A director or officer of a corporation that designs, manufactures, imports, supplies or installs external wall cladding products has a duty under this section to take all reasonable steps:

(a) to acquire, and keep up to date, knowledge of matters about the safe use of external wall cladding products; and

(b) to gain an understanding of:

  (i) the nature of the corporation's business activities relating to external wall cladding products; and

  (ii) safety risks and non-compliance risks associated with external wall cladding products; and

(c) to ensure the corporation has, and uses, appropriate resources to remove or minimise the risks mentioned in paragraph (b) (ii); and

(d) to ensure the corporation has, and implements, appropriate processes:

  (i) to remove or minimise the risks mentioned in paragraph (b) (ii); and

  (ii) for receiving, considering, and responding in a timely way to, information about the risks mentioned in paragraph (b) (ii) and any incidents arising from the risks; and

(e) to verify the resources and processes mentioned in paragraphs (c) and (d) are being provided, used and implemented.

2 Section 185 (heading)

Omit "184", substitute "184A".

3 Section 185

Omit "184", substitute "184A".

4 Section 186 (heading)

Omit "184", substitute "184A".

5 Section 186

Omit "184", substitute "184A".

6 Subsection 200E(4)

Omit "or 184", substitute ", 184 or 184A".

7 After section206EAB

Insert:

206EAC Court power of disqualification—involvement in certain creditor -defeating dispositions

(1) On application by ASIC, the Court may disqualify a person from managing corporations for up to 20 years if:

(a) the person is a director of a company; and

(b) there is:

  (i) a creditor-defeating disposition of property of the company; or

  (ii) a disposition of property (whether before or after the commencement of this subsection) of the company that would have been a creditor-defeating disposition if the amendments made by the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 had been in force at the time the disposition was made; and

(c) the company, at any time (whether before or after the commencement of this subsection):

  (i) designs, imports, supplies or installs an external wall cladding product for a particular use; and

  (ii) the external wall cladding product is a non-conforming building product for that use; and

(d) the Court is satisfied that the disqualification is justified.

(2) For the purposes of subparagraph (1) (c) (ii), a building product is a non-conforming building product for a particular use if one or more of the following apply:

(a) the product is not safe for the use;

(b) the product does not comply with the National Construction Code (as in force or existing from time to time);

(c) the product does not perform, or is not capable of performing, for the use to the standard it is represented to perform by the company.

(3) In determining whether the disqualification is justified, the Court may have regard to:

(a) the person's conduct in relation to the management, business or property of any corporation; and

(b) any other matters that the Court considers appropriate.

8 Sec tions 230 and 260E

Omit "and 184", substitute ", 184 and 184A".

9 Subsections 420A(2) and 442CB(3)

Omit "or 184", substitute ", 184 or 184A".

10 Paragraph 579(2 ) ( a)

Omit "or 184", substitute ", 184 or 184A".

11 Paragraph 1274AA(1 ) ( a)

After "206EAB,", insert "206EAC,".

12 After paragraph 1274AA(2 ) ( aba)

Insert:

(abc) every court order referred to in section 206EAC; and

13 Schedule 3 to the Act (after the table item dealing with subsection 184(3))

Insert:

As already indicated by my colleague Senator Whish-Wilson, the Greens do support this bill, but we also realise that what this bill does not do is specifically crack down, and crack down hard enough, on building companies who are phoenixing to avoid paying their debts and avoid taking responsibility. Builders who declare bankruptcy to avoid sanctions for their shoddy works are constantly resurfacing as new businesses in the building industry. We know that phoenixing is rife in the building industry, and a huge part of that could actually be linked to the cladding crisis.

Everyone in this chamber is well aware of the fire in the Lacrosse building in Melbourne, which was directly linked to the external building's flammable cladding. The Melbourne Metropolitan Fire Brigade concluded in their investigation of the Lacrosse fire that the rapid vertical spread of the fire was directly associated with the external cladding. This is a terrible issue on its own, and it's actually made much worse and is further exacerbated by the issue of phoenixing in some of the cases.

One of the most egregious examples of phoenixing being a huge issue in the building industry is happening in Victoria with the Hickory Group. Twenty-five properties built by this group have been identified by the state-wide cladding audit as having non-compliant cladding. At least 17 of the company's non-compliant buildings, some of which have hundreds of apartments, have been rated at high risk or extreme risk of fire. As of September 2019, Mr Michael Argyrou has been a director and/or secretary of 40 companies which are now deregistered. Two more companies of which he was director are in administration and three are in the process of being struck off after the company sought voluntary deregistration. Mr George Argyrou, the company's joint managing director, is a former director and/or secretary of 27 deregistered companies.

These amendments effectively do two things. Firstly, they create a duty for directors and officers of corporations that design, manufacture, import, supply or install external cladding products to take every single reasonable step that they can to keep up to date with cladding products, to understand what the safety risks are, and to take appropriate actions and steps to minimise and remove these risks. This will help stop the dodgy directors of these dodgy companies. Secondly, and this is the most powerful part of these amendments, these amendments give the courts the power to disqualify a person from managing corporations for up to 20 years if (1) they were a director; (2) they engage or engaged in phoenix activity, and that uses the current framework of the act as it exists; and (3) the company at any time designed, imported, supplied or installed wall cladding products that were nonconforming according to the National Construction Code. Lastly, these amendments require that the court is satisfied that the disqualification is justified with regard to the person's conduct and any other matters the court considers appropriate.

I'll say in conclusion that it is really important that companies who have installed flammable, non-compliant cladding must be brought to justice. These dodgy companies cannot be allowed to get away, and the courts as well as ASIC should pursue them relentlessly. Of course, this issue of cladding, which has hurt so many people, needs to be addressed by a whole-of-government response to this crisis. I knew that New South Wales and Queensland have already called on the federal government to take more responsibility and to act on this issue. But I think today we have an opportunity to make a real change on this issue. This is exactly what these amendments do. I urge my colleagues to support these amendments.