New Porter Davis customers left uninsured as liquidator digs through the rubble

Liquidators of collapsed construction firm Porter Davis have warned that some new customers could lose thousands of dollars from deposits because they were not insured, as the first meeting called by the administrators was swamped with questions from affected customers.

Hundreds of Porter Davis customers joined an online meeting on Tuesday, organised by liquidators Grant Thornton. Interest in the webinar from customers affected by the company’s collapse was so high that many callers were denied access.

The liquidators said at the meeting that newer clients of Porter Davis may have been uninsured, with many potentially having lost their entire deposit because the company did not take out insurance for new builds until planning permits were obtained, sometimes weeks or months after customers had signed a contract.

“There are a number of customers who have fallen into that gap between paying a deposit and work not yet starting on their site because they’re waiting for permits, who may not have insurance cover,” Grant Thornton liquidator Said Jahani said.

Porter Davis, the country’s 12th largest home builder, left 1700 homes unfinished in Victoria and Queensland when it collapsed last Friday, abruptly halting work on all sites as liquidators laid off employees and began investigating the financial cause of its sudden implosion.

Richard Williams, a Porter Davis customer, paid a 5 per cent deposit of $40,000 and signed a new home contract in February after being reassured by Porter Davis staff that he was covered for domestic building insurance.

Porter Davis customers are in limbo after the builder went into liquidation last week.Credit: Joe Armao

Williams said he was shown a certificate of currency for construction and liability that he was told covered him and his partner for domestic building insurance.

“That was false. They blatantly lied to us. We lose everything. We won’t get any money back,” Williams said. “Because there was so much paperwork at the time I didn’t twig.”

The liquidators said they are working with state insurer’s home warranty schemes to get solutions for customers as quickly as possible, urging affected homeowners to check and file insurance claims through the Victorian Managed Insurance Authority or the Queensland Building and Construction Commission.

“That [claims] process can take several months,” Jahani said.

The 500 homeowners able to dial in or connect to the online meeting Tuesday were told by Jahani that there is “strong interest” from other building companies willing to take over Porter Davis’ home building contracts.

“Given the size and scale and complexity of this liquidation, you will need to bear with us, and you will need to be patient because we don’t have all the answers for you quite yet,” Jahani told the home builder’s customers.

“By the same token, I also want to say how incredibly frustrating it must be for customers. We do understand how emotionally charged and how difficult it is for a lot of you to be facing this situation where your builder has gone into liquidation, and you’re in a position where you don’t know what to do.”

“They blatantly lied to us. We lose everything. We won’t get any money back.”

Porter Davis customer Richard Williams

Porter Davis’ unfinished homes are at various stages of completion, with some customers just having signed contracts and others nearing lock-up, but about 240 houses are almost ready to be handed over to their owners.

“We’re also looking at a number of builds which are in final stages of completion, to see whether there is an efficient and effective way to get those customers into their houses as quickly as possible,” Jahani added.

He warned that Porter Davis’ size and complexity meant the liquidation process could take several years to complete.

Jahani said there was strong interest from a number of potential buyers and reputable builders in taking over parts of Porter Davis, including customer contracts. “We expect that within the next week, we’ll be in the position to provide some clarity to customers around the outcome of that sales process,” he said.

The liquidators are also investigating whether Porter Davis’ directors can be held personally liable for incurring debts when the company was insolvent, a fact that is not yet determined.

They said the reasons behind Porter Davis’ collapse were “well-documented industry issues” including rising input prices, rising cost of trades and the lack of availability of trades against a backdrop of fixed-price contracts signed months or years earlier.

The liquidators confirmed that some contractors, suppliers and other parties had been getting unauthorised access to construction sites.

“They’ve been doing this without our permission and against our advice,” Jahani said. “We understand that the access has meant that in some cases, equipment or fitting has been removed. I will say to [these people] that you’re not damaging Porter Davis, you’re actually damaging the customers here. There is criminal liability for unauthorised access.”

Grant Thornton said it will give an initial report to creditors and further details of its nationwide investigation on or around April 18.

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