Fears Victorian construction company Snowdon Developments may collapse next

Customers and creditors are worried another construction firm is about to collapse, leaving them millions out of pocket.

EXCLUSIVE

Customers and creditors are concerned a Victorian construction company might be about to collapse after it racked up millions in debt and building works have stalled for months.

Snowdon Developments Pty Ltd has 15 creditors chasing it for debts totalling $2.5 million who are demanding the Supreme Court of Victoria impose a winding up order to force the company to go into liquidation “on the grounds of insolvency”.

One of the creditors is the Office of State Revenue for $262,000 and the largest amount owed is for a roofing company waiting on a $936,000 payment.

Legal action was first taken against the construction company on April 1 and the next court appearance is on July 13.

Several Snowdon customers are demanding answers after their phone calls have gone unanswered, they were left waiting at mediation meetings and their plots of land remain empty years after signing the building contract.

One Melbourne customer, Saurabh Mittal, claims he could be financially ruined because of the company’s long delays. He’s missed out on a government grant as construction hasn’t started and has also has been paying both mortgage and rent with no end in sight.

“They have screwed me in all ways, I am crying day and night,” Mr Mittal, 40, told news.com.au.

It comes as Australia’s building industry is in crisis, with about a dozen companies collapsing so far this year amid rising costs for construction materials and the ongoing supply chain crisis, putting many out of business.

Snowdon’s slogan is that it will ‘build your dream’ but some say the experience has been more like a nightmare.

Saurabh Mittal, 40, says if the Snowdon Developments keeps delaying building his home he will be destitute.

Mr Mittal saved hard for six years working in customer service jobs for below average wages and finally thought he’d have the chance to own a home. In October 2020, he signed a home and land package in Tarneit, western Melbourne, from a developer called VestBuild.

The land was settled in May 2021 and the developer opted to go with Snowdon as their builder.

The Aussie citizen paid a $11,000 deposit for a $222,000 single-storey house meant to be built by November this year.

In January, Mr Mittal’s building permit came through.

“Every week I went (to the site) with excitement. They cleaned the plot, they put some outline in the block,” he said.

Then, nothing.

According to the contract he signed with Snowdon, the base should have been completed in April and the frame by May. However, the site remains empty.

To make matters worse, Mr Mittal is now no longer eligible for the $25,000 HomeBuilder government grant he planned to use to pay for part of the project.

To be eligible for the grant, building had to begin on his site within 18 months of entering into the HomeBuilder contract, which would have been the end of May at the latest.

He factored the $25,000 grant into his property purchase and without it, he is unsure if he will be able to cough up the funds to complete the build.

“For years and years I saved this money and now I am at a big zero,” Mr Mittal said.

The fencing they put around Mr Mittal’s block have fallen down after months of inaction even though the slab and frame should have been built by now.

Mr Mittal was told Snowdon were ‘unable to complete’ his build although they still have his deposit and he’s unsure if the contract is broken.

Mr Mittal was frantically calling his developer and builder before the May 30 deadline knowing his HomeBuilder grant would soon expire if construction hadn’t started.

He says he was passed around “like a football” between VestBuild and Snowdon, with each laying blame on the other.

His emails and phone calls to Snowdon went mostly unanswered while VestBuild said it was an issue for Snowdon to deal with.

Whenever he did manage to get through to Snowdon, they said VestBuild had instructed them not to speak to clients and that he should take it up with the developer.

It was at this point he wondered if Snowdon was in strife and contacted Domestic Building Dispute Resolution Victoria (DBDRV) for help.

A representative arranged for a mediation meeting between him and the owner of Snowdon, Chris Sandner.

However, last Tuesday at 10am, Mr Sandner never showed up and left Mr Mittal waiting.

Later that day his developer told him that “Snowdon is unable to complete the job” but no further details were given. The new build will cost an additional $25,000.

“I don’t know where to go. What does that mean? Have they cancelled my contract? If they go bankrupt, will I get nothing? If Snowdon doesn’t have my deposit money, then who does?” Mr Mittal said.

Mr Mittal considered hiring a lawyer but their hourly rates were too much for him. He also said he can’t afford to take the Victorian Civil and Administrative Tribunal as it costs several hundred dollars – money he doesn’t have.

When contacted, VestBuild hung up on news.com.au then had their receptionist inform us that they would not be providing a comment.

Mr Mittal’s empty plot of land. Both the developer and builder will not tell him what is going on, he claims.

Mr Mittal has been paying months of extra energy and water bills on the construction site with no idea when it will be completed.

It’s not just Mr Mittal; other Snowdon customers have voiced concern as their building sites languish half-finished, or not touched at all.

Ben Kucenko, 36, and his fiancee Steph, 32, bought land at Thornhill Park in Melbourne in October 2020 and signed a build contract with Snowdon.

They’ve forked out $12,000 in a deposit, with the total build meant to cost $244,000.

“About two months ago we were contacted by our buyer’s agent stating that they (had) lost confidence in the builder,” Mr Kucenko told news.com.au.

The couple decided they wanted to end the contract but they were dismayed to find radio silence from Snowdon.

“It feels like we’re a hostage,” he added.

“We’re just sitting on this land. We’re happy to mutually end the contract and move on but Snowdon were ignoring our phone calls, we can’t actually do anything.”

With their frustrations mounting, the pair marched into Snowdon’s office in Keilor Park but staff refused to speak to them.

“I asked to speak to someone, they pulled up my contract, they said they had been advised by VestBuild not to engage with clients,” he explained.

“We have spent $4000 to $5000 in legal fees and we are still not getting any response even after a few letters from our lawyers.”

Ben Kucenko’s empty lot.

Mr Kucenko says he and his partner are being ‘held hostage’ by Snowdon.

Then there’s Josh Curmi and his wife, aged 29, who also missed out on a government grant and are still sitting on an empty plot of land thanks to Snowdon.

The couple have so far shelled out $10,500 in a deposit for a three-bedroom house in Tarneit.

They’re worried what will happen to their cash if Snowdon goes into liquidation.

“$10,500 is a big chunk of money and we’re going to lose the $15,000 government grant, so it’s a big chunk of money to lose,” Mr Curmi told news.com.au.

“Covid has been blamed for a lot of things, their whole office has had Covid five times even though they’ve been working from home,” he added sarcastically.

Mr Curmi has connections in the construction industry which is where he first grew concerned about Snowdon.

“I know some people in the building industry who are owed money from Snowdon,” he said. 

Josh Curmi’s empty lot.

Mr Curmi started to hear whispers from people in the construction industry that Snowdon were not paying their debts.

School teachers Mira Vose and Rebecca Cook are arguably in a worse situation because their houses are both partially built, making it harder to start from scratch with another builder.

Primary schoolteacher Ms Vose and her husband Antony, both aged 40, have spent more than $30,000 on progress payments so far with Snowdon.

Their land was titled in September 2020 and building was meant to commence in March 2021 but it wasn’t until June that the slab was put in.

Then, nine months later, in March this year, the frame finally went up.

“It’s either they (Snowdon) go broke or they build the house, the more they delay the more they bleed, and the more we bleed,” she told news.com.au. “We’re paying two mortgages.”

She said a dominant feature of the whole process was being asked for payment before Snowdon had begun building which made her worried they had solvency problems.

Mira Vose is worried what will happen to her money and her half-finished house (pictured) if Snowdon collapses.

Rebecca Cook has spent $44,000 and also paid Snowdon an additional $10,000 through a government grant.

Ms Cook, a high school science teacher, is facing similar issues after buying her plot of land in May 2020.

The 26-year-old has spent $44,000 so far and was meant to move into her new home in March. However, only the slab and frame have been completed and she is still living with her parents.

“I want them to finish my house,” she told news.com.au. “The prices are skyrocketing, I don’t have the funds to fork out another $50,000 for a build.”

Ms Cook is fed up with the many “excuses” Snowdon has given her for the delays.

“There’s always an excuse, every time there’s a natural disaster they’re piggybacking off that,” she said.

“They told me last year that my timber was ordered in September, they said it’s stuck at the waterfront, the waterfront doesn't have enough space to store all that timber.”

Ms Cook’s partly built home.

Casabene Plumbing hired lawyers several months ago after Snowdon did not pay $38,000 owed to them.

The plumbers began winding up proceedings against Snowdon and although the construction company swiftly paid the debt, by then 14 other creditors had joined the case.

Court documents show East West Roofing applied to appear in the hearing because they are owed $936,192, while Home & Industrial Soil Test Pty Ltd wants $685,255 to be paid back.

The Office of State Revenue is owed $262,444.54, Tamar Cabinets wants $174,348 and MD Demolitions claims it is entitled to $103,096.

Other creditors include Just Metal Roofing, Dahlsens Building Centres, Waco Kwikform Limited, Top Cat Installations, Mitek Australia, Bingo Waste Services, Aria First Homes and On Trax Earth Moving with their money owed ranging from $24,00 to as much as $91,000.

Two individuals are also owed $11,511.83 who joined the case.

When added up, out of those creditors, Snowdon owes more than $2.5 million.

However, it’s understood some of the money Snowdon owes creditors has already been paid off after they were taken to court, including to the State Revenue Office and Casabene Plumbing.

The building firm claims other expenses can be paid after July 4 once they have sold a property.

However, the fact Snowdon has to sell an asset to pay back debts is cause for concern, according to an industry expert.

Association of Professional Builders (APB) co-founder Russ Stephens told news.com.au: “It simply shows they don’t have sufficient working capital in the building company to continue its operations.”

If the court does order Snowdon to wind up its operations, Brendan Copeland, of Hogan Sprowles, has consented to be the liquidator.

Snowdon did not respond to news.com.au’s repeated requests for comment.

Another Snowdon home that has stalled.

Yet another delayed Snowdon home.

The construction industry has been badly hit by collapses this year.

Two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, have already gone into liquidation this year.

Smaller operators like Hotondo Homes Hobart and Perth firms Home Innovation Builders and New Sensation Homes, as well as Sydney-based firm Next have also collapsed.

At the end of last month, two firms from Queensland collapsed just days apart, Pivotal Homes and Solido Builders.

An industry insider told news.com.au earlier this year that half of Australia’s building companies are on the brink of collapse as they trade insolvent, and it could see thousands of people’s homes impacted in the coming months.

There are between 10,000 to 12,000 residential building companies in Australia undertaking new homes or large renovation projects, a figure estimated by APB.

In a statement to news.com.au, Consumer Affairs Victoria said it wouldn’t comment on individual cases but that delays to construction was a concern.

“A builder or building company cannot accept payment for building works if they do not intend to complete the work in a reasonable amount of time. Consumer Affairs Victoria takes this conduct seriously and will investigate where needed,” it said.

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