‘Extreme’: Porter Davis customer deposits ‘lost’ after collapsed building firm left them uninsured

Porter Davis customers may have lost their deposits after an “extreme” bungle by the collapsed firm, liquidators have sensationally revealed.

A number of Porter Davis customers could be left with nothing because the collapsed building company did not purchase insurance even after they paid their deposits, liquidators have sensationally revealed.

Said Jahani from Grant Thornton made the bombshell admission during an online webinar for affected customers on Tuesday morning, which was overloaded as more than 1000 people tried to watch.

Hundreds of customers have already lodged claims with the Victorian Managed Insurance Authority (VMIA) or the Queensland Building and Construction Commission (QBCC), but Mr Jahani said a number had been told by the VMIA or QBCC that their property was not covered by domestic building insurance.

“What we have become aware of is that there was usually a timing lag or timing gap between the deposit being paid by a customer and a contract being signed, through to the permit then being obtained to allow work to commence,” he said.

“Now that gap between deposit being paid and permit or DA for the works to be obtained could sometimes be weeks, it could sometimes be months.

“And the practice of Porter Davis was that once the permit had been obtained so that work could then begin, at that point the insurance policy would be purchased. So there are a number of customers who have fallen into that gap between paying deposit and work not yet starting on their site because they’re awaiting a permit who may not have insurance cover.

Said Jahani from liquidators Grant Thornton. Picture: Supplied

“We are in consultation with the VMIA around what the consequences for customers who fall into that gap may mean, and it’s extreme — it means you do not have any insurance cover, and it means the deposit you’ve paid has been lost.

“However as I have said, we are trying to work with the VMIA and QBCC to see whether there is an alternative solution.”

Mr Jahani added that customers still waiting to start construction could not get their deposits refunded as the money had been spent.

“Generally speaking if you’ve paid the deposit directly to the company, unfortunately those funds have been absorbed into the working capital and been used by the business and there’s no ability to get that deposit back, regardless of whether or not the house or construction has started,” he said.

It wasn’t immediately clear how many customers had uninsured deposits.

“We are still looking into these numbers as part of the liquidation process,” a Grant Thornton spokeswoman told news.com.au after the meeting.

Earlier on Tuesday, Porter Davis customers — including one family whose home burnt down yesterday — fumed after being unable to access the session.

Grant Thornton held the online forum to answer questions at 10am on Tuesday — but both the Microsoft Teams meeting and phone dial-in provided to customers and media outlets were quickly overloaded, leaving many unable to watch or listen.

“What a joke. Trying to get in now,” one person wrote on Twitter.

“Me too. Webinar is full. S**tshow,” another said.

A spokeswoman for Grant Thornton told news.com.au, “We understand the customer webinar scheduled for 10am this morning reached capacity and that some customers were unable to join the session.”

She added the recording had now been uploaded and was available for customers and stakeholders to view on the website.

According to The Age, one of the customers unable to get into the meeting was the owner of a Clyde North property that caught fire on Monday.

Police said on Tuesday they were investigating a suspicious fire at the under-construction Porter Davis home, after firefighters were called to the property on Monday afternoon.

Photos from the scene showed the two-storey home still partially ablaze with most of the roof and upper floor torched.

The Porter Davis home in Clyde North. Picture: Supplied

It comes after a series of incidents of looting and vandalism targeting Porter Davis homes in the wake of the building firm’s sudden collapse on Friday.

Some owners have accused disgruntled tradies angry about the company’s collapse of damaging their properties.

“Emergency services responded to a fire at a property in Clyde North on Monday 3 April about 4.30pm,” Victoria Police said in a statement.

“The building on Adante Court was not occupied at the time and no one was injured. Investigations are ongoing into the cause of the fire, which is being treated as suspicious at this stage.”

Police have asked anyone with information to contact Crime Stoppers on 1800 333 000.

The devastated homeowner told The Age they had been due to move in next month.

“When we arrived, the firefighters were there … we could only see smoke and that the roof was collapsed,” the mother of three told the newspaper. “I didn’t even want to look.”

The family are now left paying off two mortgages. “Every moment, we are crying,” she said. “We are absolutely frozen, we don’t know what to do.”

Porter Davis was placed into liquidation on Friday, with construction immediately halted on more than 1500 homes in Victoria and a further 200 in Queensland.

Another 779 contracts had been signed but construction not yet commenced.

The Melbourne-based company, which employs 470 people, joins dozens of Australian building firms to go under in the past 18 months as soaring costs wipe out razor-thin margins.

Addressing the meeting on Tuesday morning, Mr Jahani told customers the liquidators were still determining whether Porter Davis’ existing insurance would cover theft or damage.

“Obviously we are well aware of the media reports and have seen some of the damage that unfortunately people have taken action into their own hands which obviously we are vehemently opposed to,” Mr Jahani said.

Police are treating the fire as suspicious. Picture: Supplied

“At this point in time the company itself, Porter Davis Homes, does have insurance. We will need to investigate whether that insurance would respond to any vandalism or damage to your property. As you would probably appreciate, like most insurance policies there will be limits, there will be excesses, so we are investigating whether or not there is an ability for any claims to be made against the insurance policy of Porter Davis.”

Mr Jahani issued a stern warning to tradies that they would be reported to police for “illegally” accessing sites without explicit permission.

“We understand the access has meant that in some cases properties have been vandalised, equipment or fittings have been removed, and if there are any suppliers or contractors on this call I would just say to you you’re not damaging Porter Davis, you’re actually damaging the customers here,” he said.

“They are quite frankly the victims of this liquidation and you are quite frankly, by your callous actions, not helping anyone. We have issued several notices to suppliers and contractors putting them on notice that there is criminal liability for unauthorised site access.

“Unauthorised access is by its nature a trespass and may give rise to other criminal offences including offences associated with breaking and entering, and police will be contacted if a crime is committed at a site. This may give rise to personal criminal responsibility for subcontractors, their employees and their offices.”

For customers who had successfully lodged with the VMIA or QBCC, Mr Jahani warned that the time frame for processing those claims, from assessment to tendering for replacement builders and awarding contracts, could often take “several months”.

He said Grant Thornton was still trying to work out a solution, particularly for those homes that were very close to completion.

“I would look to be patient for another week to see whether or not we can find a holistic solution through the sale process we are running which may allow you still to claim through the insurance policy but may also give you a more expedited or solution for your home,” he said.

A Berwick home was allegedly vandalised. Picture: Herald Sun

Doors and walls were scratched with a knife. Picture: Herald Sun

According to the Herald Sun, a number of under-construction homes with Porter Davis signage were targeted by heartless looters across Melbourne over the weekend, with clients reporting ripped fixtures, shattered windows, smashed cabinetry and stolen furniture.

On Monday, a Melbourne woman told the Herald Sun around $50,000 worth of damage had been done to her Berwick build after sink and bathroom taps were intentionally left running, flooding the property with 7cm of water.

All of the doors and walls were also scratched with a knife. The woman, who did not wish to be named, told the newspaper she believed the damage was caused by subcontractors working on the home.

“I’m completely devastated and shocked,” she told the newspaper.

“We worked so hard and put a lot of money into this house to only hope we could bring our new baby home this week. What they have done has not affected Porter Davis at all but unfortunately only us as now the damages are more than what we had remaining on the house.”

One Porter Davis customer told ABC Radio on Monday she and her husband had spent the weekend staking out their property to make sure nothing happened to it.

The woman name Kayla told ABC 774 Melbourne host Ali Moore they had already paid $800,000 to Porter Davis and were just four weeks away from moving in when the company collapsed.

“The worry and stress since Friday – we’ve been going to the site three, four times a day, making sure that no one’s going on site, no one’s trying to get in, because we’ve been reading in the papers that people have been breaking in and stealing stuff,” she said.

“We’re just so worried. We can’t even get in because the house is locked. We were told that we can’t get keys, we were told that we can’t enter on site, and so we go there just watching a house that’s just sitting there.”

In its statement on Friday, Grant Thornton stressed that the liquidators would “not be trading the PDH Group companies and works on current builds will cease immediately”.

“However, the liquidators are working urgently to determine if a solution can be found to support customers and some employees, including by engaging with key stakeholders and potential interested parties who may be willing to take over the current customer contracts,” it said.

Grant Thornton will provide another update on the sale process next week. An initial report to creditors is expected by April 18.

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Originally published as ‘Extreme’: Porter Davis customer deposits ‘lost’ after collapsed building firm left them uninsured