Sydney building company Jada Group collapses owing $2.4m
One family has been left in a nightmare situation with no house and face having to fork out an extra $800,000 just to see their dream home built.
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A Sydney family face never being able to build their dream home after their builder collapsed in March owing millions and the cost of their home’s construction jumped to $1.9 million, a whopping $800,000 more than the original quote.
The 10-year-old building company called Jada Group went under with $2.4 million in outstanding debt to 45 creditors, a report from Mac Insolvency lodged with ASIC in June showed.
One family who were building with the company have been left in tears.
The Garozzos, who have a four-year-old son together and a daughter from her husband’s previous relationship, had been squeezed into a two-bedroom apartment in Sydney.
But wanting to expand their family, they purchased a block of land in North Kellyville to build their forever home three years ago.
They signed up to build with Jada Group in November 2020 for a four-bedroom, two-storey home, which was to include a swimming pool.
The 38-year-old and her 41-year-old husband had poured $50,000 into architect’s designs and were excited to build their new home.
Then began a horror two years for the family who claim they have been left in “limbo” and don’t know if they will ever recover the money they paid to the builder.
“We still don’t even have a slab on our property and our builder has gone into liquidation. We put down a $150,000 deposit … and we can’t move forward,” Mrs Garozzo told news.com.au.
“We are concerned with the cost of products skyrocketing in that time and now with the anticipated property price drops of about $400,000, that if we do build and overcapitalise, we will then owe more money than property is worth.”
Even then the family don’t know if they will be able to even build their dream home as they face being unable to finance it as the build cost jumped by a staggering $800,000.
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No 40th birthday celebrations
Mrs Garozzo said they had expected to move into the home by March 2021 in time to celebrate her husband’s 40th birthday.
But by April 2021, the Garozzos had resorted to installing cameras on their site to monitor it, she said.
She claimed disputes over tradies not being paid by the Jada Group meant no work was done between July and mid November on their site, before contractors returned briefly.
But since 20 December 2021 the site has sat untouched.
Seeking answers, they kept calling the company and last spoke to them in February, before ultimately being ignored and, according to Ms Garozzo.
Bombshell letter
Then a bombshell letter dropped in March this year that Jada Group had gone into liquidation leaving the couple shocked and “grieving” as their “savings, family home and financial stability” had been “stolen”, Mrs Garozzo said.
“We had ostrich syndrome and didn’t want to acknowledge what was happening … but there’s frustration and anger and sadness and guilt … and then it caused marital strain as we couldn't agree on what cause of action to take,” she said.
“It had a ripple effect into every aspect of our life, it was pervasive and we couldn’t escape from it and now it’s ongoing.”
What went wrong for the company
The report from Mac Insolvency lodged with ASIC revealed the outstanding $2.4 million debt of Jada Group includes $265,000 owed to the Australian Taxation Office as well as thousands owed to a number of tradies and material suppliers, while its business account with CBA was overdrawn by $1062.
Among the creditors are a stone supplier which is owed $21,000, a roofing company that is waiting for a $22,000 invoice to be paid, while bricklayers are owed $17,000, according to the liquidator’s report,
Apart from the Garozzo family’s build, there was another residential project in the inner west Sydney suburb of Erskineville that was also impacted, the report added.
“The director has outlined that the business failed as a result of ‘defect claims received on its
construction of residential dwellings, as well as the high cost of materials’,” the report added.
It also identified a number of director offences based on its preliminary investigation that they are considering reporting to ASIC including failure to use care and diligence, failure to maintain adequate books and records and incurring liabilities while insolvent.
The report also noted from the books and records received to date that it was the liquidators “opinion that the company had been insolvent since at least 30 June, 2019”.
But Mrs Garozzo is scathing of the insolvency process, particularly as the couple wanted to pursue the company’s owner personally for their losses, only to be told the administrators had no money to fund such action.
Instead, they were asked if they wanted to fork out their own money to pursue him legally.
“I lost my s**t. I was crying and saying to the liquidators, if he had the money he wouldn’t have gone insolvent. This is a ludicrous system where the creditors are screwed.,” she said.
“There are 45 creditors he owes and we are the biggest and there is no money left.”
Facing an unrealistic mortgage of $2.2 million
The mum-of-two said they had made a claim on home warranty insurance, but it wasn’t going to be enough to build their house.
“We are now at mercy of the home warranty people, who have accepted liability, but you can only claim 20 per cent of the contract amount, which is roughly $200,000,” she explained.
“We have paid $200,000 worth of expenses already and we don’t quite understand but they have put the process out to tender whereby other builders are coming in with quotes at $1.9 million.
“We can’t even afford to get finance. That would mean a mortgage of $2.2 million when you include what still owe on the land … Obviously it’s caused a lot of distress, the whole process is completely unregulated and the people that get screwed over are the creditors.”
The family aren’t sure what the future now holds for them as they continue to rent, including having to move recently as their landlord sold up.
“We should have been in position with significant equity in our home and now we are in the predicament where we can’t even afford to build. It’s taken away all hopes and aspirations and dreams,” she said.
“Everything we have sacrificed and worked hard for … has gone.
“With the uncertainly, additional costs and being in limbo, we can’t even think about having another child, but we are getting older. I’m approaching 39 and don't want to have kids at 40 or 41. Fortunately we have other kids, but our picture perfect life, that got destroyed.”
‘Too many victims’ of building crisis
Mrs Garozzo is calling for better regulation of the building industry and for directors to be held accountable.
“I’m a director of a company and I’m liable. I will accept if something is wrong and I can identify if the company is going downhill and would never take someone’s money if that was the case …” she said.
“I work in the criminal justice system and have clients in jail for stealing or defrauding for less money than we have lost.
“I don’t understand it. It irritates me, all because its so unregulated and these people are hiding behind a banner of the company that gives them some level of protection, but why?”
She added there are “too many victims” piling up as a result of building collapses and a serious review of the industry is needed to introduce better laws.
“For this to keep going on, there needs to be some action to prevent these people. I understand the government has taken steps to stop phoenixing and tried to stop people closing a business down and opening another one under a new name, but this is destroying people’s livelihoods and there is no accountability,” she said.
“Sleepless nights, weight loss, heightened anxiety are only a few of many things that have become normality now all because of one the lack of regulations around builders being held accountable.”
Australia’s construction industry has been plunged into crisis this year plagued by a spate of collapses this year.
Rising costs, disrupted supply chains and periodic lockdowns have created a profitless boom, with many construction companies committed to projects that are no longer financially viable thanks to major price increases for building materials, according to experts.
Originally published as Sydney building company Jada Group collapses owing $2.4m
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