Pensioner James Bidwell* decided to invest his savings in a conservatory and bifold doors at his home in Sevenoaks, Kent. Sussex Double Glazing submitted a tempting estimate via a job quote website and its director, Luke Tester, visited Bidwell’s house to assess the job in February 2017.
The quote was £21,760 and Bidwell was asked to pay £6,435.50 by bank transfer as a deposit. That was the last he saw of Tester. “By April I had heard nothing and started chasing,” he says. “If Luke responded to my messages it was with lies about progress. After 20 emails and over two months since I paid the deposit, I advised that I was cancelling the contract and demanded my deposit back. He said I didn’t have a leg to stand on.”
Ten months previously another reader, Leanne Fisher* from Seaford, East Sussex, had contacted the Observer after transferring £2,388 to a company called IEO Home Improvements. This, too, was a deposit for a conservatory and, again, the work was never started. IEO’s website had promised that deposits were guaranteed by the Independent Warranty Association, but since IEO had failed to pay the premiums to cover the protection, the guarantee was invalidated. The director of IEO was Luke Tester.
Fisher and Bidwell’s ordeals expose a problem with trading law. A director can close down an insolvent company with no personal liability for unpaid debts, then start afresh with a new company doing the same business under a different name.
The rules are to allow a second chance for the majority of failed businesses which are not guilty of misconduct. However, they allow incompetent or unscrupulous traders to duck their debts and mask their past by repeatedly reinventing themselves until enough complaints lead to official disqualification as director.
Tester, 40, has registered seven home improvement companies in 11 years. Fisher discovered that he had applied to have IEO struck off the Companies House register three days before she paid the deposit in December 2015.
A month later – and just days after a voluntary liquidator was appointed – he set up L&J Home Improvements. Nine days after that, he registered Warmseal Windows.
In March 2017, a month after pocketing Bidwell’s money, Tester applied to strike Sussex Double Glazing off the register. He was finally disqualified by Companies House for seven years last June because of his conduct as director of IEO, which left over 30 customers out of pocket, including two whose conservatories had been built so badly they were unsafe. Undeterred, he then set up as a sole trader under the name South East Trading.
Les Clark of Rochester, Kent found the company via a job quote website when looking for a builder to replace his conservatory roof. Tester quoted £2,100 and asked for a 50% deposit by bank transfer.
“To my shame and embarrassment I believed his talk and paid a deposit of £1,050 to his bank account last June,” he says. “To date he has avoided doing any work and the more I have read about him, it is obvious that he has no intention of actually doing it. I have sent a notice of intended legal action but hold no hope that I will get my money back.”
Tester blames domestic problems and the Observer for his career history. He says he was obliged to wind up Sussex Double Glazing and go solo after being disqualified as director last June. “My business would have thrived if there wasn’t such a witch hunt on social media and in the press, of which the Observer column, Your Problems, was a contributing factor,” he says. “Everyone deserves a chance to rebuild and, although IEO suffered cash-flow problems because of poor subcontracting choices by myself and my business partner, a lot of the problems were beyond my control. People were reading one-sided reports on Google and cancelling contracts based on past problems, not on anything I had done wrong.”
He points out that he has offered a repayment plan to Bidwell and Clark. Bidwell confirms that he was offered a four-year repayment deal last April, but, after three instalments, the payments ceased in October.
He invited Tester to lay the foundations of the conservatory in lieu of repayment but Tester declined. Clark agreed to accept repayment instalments over six months and received the first £90 this week after pressure from the Observer. Tester claims a marriage breakdown left him unable to keep up promised repayments and that he is now homeless. He insists he intends to settle his debts.
Citizens Advice says it receives over 3,000 calls a month about substandard builders. In the last 12 months it handled 43,877 complaints, making it the second biggest issue in its inbox – 7,000 inquiries were from customers who had paid for work which never materialised or was left unfinished.
Protections are minimal to those who fall victim to cowboy operators. Deposits paid by bank transfer are not recoverable under the Consumer Credit Act like credit card payments and court action is unlikely to be successful if the company goes into liquidation, or if a sole trader lacks sufficient assets.
Builder Harvey Ellingham was prompted to set up an insurance-backed scheme, Home Improvements Guarantee at www.higlite.co.uk, to safeguard customer deposits after his parents lost £23,000 to an unscrupulous operator.
“The builder had asked for a 70% deposit before starting work on a bedroom extension, then he disappeared after completing two thirds of the job very inadequately,” he says.
“I realised that people who are spending life-changing sums on their biggest asset, their home, should not be relying on a guarantee from a builder they’ve only met once or twice unless it’s insurance backed.”
Vetted builders can participate in the scheme, which has been approved by the Trading Standards Buy With Confidence initiative and the Property Redress Scheme, by paying in 1% of the contract value.
Deposits of up to 25% of the job can be insured – even before monies are paid to the contractor – so that if the business fails or the work is substandard or incomplete, the job will be completed by another vetted contractor. The insurance covers the work for up to 10 years after completion.
According to Ellingham, legislation is needed. “In the US, Canada and Australia all building contractors have to be licensed and that should be happening here,” he says.
The government considered introducing licensing as part of its industrial strategy for construction in 2013 but nothing has so far come of it.
Victims of malpractice can report a trader to their local trading standards and officers can prosecute businesses found to be acting fraudulently. West Sussex Trading Standards confirms it is aware of Tester but declines to comment on whether it is taking action.
Directors who have been involved in a series of failed companies can be disqualified by The Insolvency Service if malpractice is discovered. In the past, there was nothing to stop them setting up a new limited company with a relative as director and continue as before. But new rules, introduced last year, oblige companies to register people with no official role but who have significant control over the business. They are not allowed to take the helm on behalf of a disqualified director and it’s a criminal offence to help someone contravene a disqualification order.
Tester, meanwhile, tells the Observer he plans to complete existing orders placed with his latest venture, South East Glazing, then cease to trade. Two days later, he says lessons have been learned but negative publicity may cause him difficulties which may adversely affect future clients, suggesting he sees an ongoing career ahead, after all.
This article was amended on 25 April 2018 to remove an incorrect statement about the Home Improvements Guarantee
* Names have been changed