NSW transport company Kalae collapses, as safety fine and tax dispute weigh heavily

New South Wales freight company Kalae has collapsed, after being slapped with a $290,000 safety fine and amid employee complaints of underpayment by the company’s owner, trucking giant Bob Ruttley.

In April, Kalae – the Ruttley company in whose name the vehicles were registered – received a $290,000 fine after a Roads and Traffic Authority of New South Wales investigation found it had breached weight requirements 82 times and dimension requirements twice over an eight-month period.

It also received a 12-month supervisory order, in what was the largest penalty ever given in the NSW under chain of responsibility heavy vehicle legislation.

BRI Ferrier principal Peter Krejci, who specialises in SMEs, was appointed late last week and said he’d been informed by management that the company hasn’t traded for at least 12 months.

Stressing it was early days, Krejci said there would be investigations into whether the collapse was related to the fine earlier this year and the reports of underpayments.

Questioned on why the company had gone into administration now, Krejci said the company was insolvent. He said he was not sure what would happen to the rest of the business.

A meeting of creditors will be held on July 27.

According to the Roads and Traffic Authority of New South Wales, Kalae has a fleet of about 160 heavy vehicles which moves freight in Queensland, New South Wales and Victoria. It was registered with the Australian Securities and Investments Commission in 1993.

The Sydney Morning Herald on July 16 reported that up to 100 employees of Ruttley’s Freightlines business might have underpaid, including drivers, administration staff and senior managers.

The report says while Ruttley’s rags to riches story earned him plenty of fans, millions of dollars in company and payroll tax are unpaid by Ruttley Freightlines.

But Ruttley told the paper the super dispute was related to a conflict with the Tax Office over fuel tax credit, and that negative publicity could put his company out of business. This follows the collapse of six Ruttley companies between February and August last year, the report says, with a combined deficiency of $49 million.

IBISWorld senior analyst Ian MacGowan told SmartCompany that 160 heavy vehicles would make Kalae a significant and established player.

MacGowan says small- and medium-sized businesses might be feeling the pinch as they struggle to pass on price increases in what is a very competitive market.

“And operating and maintaining a fleet of 160 vehicles can be expensive,” MacGowan says.

For the road freight industry, MacGowan says the average operator spends about 27% of revenue on fuel, and another 20% on other vehicle expenses – leaving not much fat after these costs are taken out.