Double blow for shattered Varaich Home customers left with nothing
Customers of bust Melbourne building firm Varaich Homes are now considering legal action against a bayside luxury builder after discovering their contracts listed another construction company.
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Customers of a collapsed Melbourne building firm have been left without a home and locked in a legal stand off with a prominent luxury builder after discovering their contracts listed another construction company.
Angry Varaich Homes customers are now considering legal action against an up-market builder known for the construction of luxury houses in Melbourne’s bayside suburbs, claiming it has engaged in the practice known as licence lending.
Melbourne builder Varaich collapsed into administration last month, leaving an estimated 21 incomplete homes across the state.
Devastated clients have complained the company failed to obtain adequate insurance and required customers to pay large deposits ahead of construction.
It can now be revealed Varaich signed contracts under different building licences, including with up-market bayside builder Faridkot.
Customers claim Faridkot engaged in licence lending where a construction firm allows its licence to be used by another builder.
The Herald Sun has viewed building contracts provided to Varaich customers in which Faridkot is listed as the builder.
Contract holders say Faridkot is now demanding as much as $200,000 to complete their builds due to rising material and labour costs.
Faridkot trades as Harcon Projects, best known for the construction of high end homes in Melbourne’s southeast including the sprawling five bedroom, seven bathroom and eight car space Brighton property dubbed The Wave House.
It has also previously traded under the business name Build Workx.
Australian Business Register details shows Varaich director Jaspreet Singh Varaich has also operated the Build Workx business.
Varaich customers, some who are more than $100,000 in debt, are now considering legal action against Faridkot after realising the builder was on their contracts.
One customer told the Herald Sun it appeared the lending of building licences had been done to avoid potential consequences.
“(Faridkot) is now asking us to pay additional amounts on top of our existing contracts from $20,000 to $200,000,” he said.
The Herald Sun has seen correspondence between Faridkot and clients asking for additional funds, attributing it to a rising “cost of materials and labour”.
One Varaich customer, who had Faridkot listed on their contract, said he has paid nearly $400,000 of a $570,000 contract for his home in Doncaster East.
“(Varaich) told us this (Faridkot) is our new company, a parent company, and not to worry about it, that everything will be the same,” he said.
The customer said they are unsure whether they can seek compensation under Victoria’s state-backed building compensation scheme because Faridkot – which has not collapsed – was listed as the builder.
“That’s when we reached out to (Faridkot) to ask them to finish the work. They said yes but said it would cost an extra $20,000,” he said.
The customer said he had just paid Varaich for the lock up stage of his home – when windows, doors and external cladding are constructed – right before it collapsed but no work had been completed.
An inspection of the Doncaster East property completed in July prior to the lock up stage found 38 defects including issues with the roof cover, brickwork, downpipes, stormwater drainage and gutter.
“I just got a quote from another builder – they quoted me around $300,000 to finish the project,” he said.
Kapadia and Gordon Lawyers principal lawyer Raynal Kapadia, who is representing multiple Varaich customers, said he has three clients who have Faridkot on their contract.
“We are aware of at least three instances where this has occurred and there may be more,” Mr Kapadia said.
“If a customer’s contract does state Faridkot Pty Ltd as the builder, they may have the right to continue to enforce the building contract against them to have their home finished.”
Licence lending has come under increased focus from the Victorian Building Authority in recent years which has noted a “concerning increase”.
“The VBA has seen an increase in complaints where it appears that the builder nominated on a building permit did not arrange, carry out or manage the building work authorised by that permit,” their website states.
“The builder nominated on a building permit is responsible for any building defects and compliance with enforcement actions instituted by the relevant building surveyor.
“They may also be liable for potential action at the Victorian Civil and Administrative Tribunal should a dispute remain unresolved.”
Director of Faridkot, Pankaj Goyal, better known as Harry, is also listed as the director of a financial company called LoansDirect.
Mr Varaich is listed as the director of two other construction businesses, Sumer Developments and Varaich Developments, both established in 2021, as well as Maan Investment Group, started in August this year.
He was also the former director of Varaich Tilling, which traded from 2014 to 2019.
Mr Goyal and Mr Varaich were contacted for comment.
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