Porter Davis customers get thrown $15m lifeline

The Victorian government package will provide some relief to buyers that were left without insurance cover in the home builder’s collapse.

Porter Davis customer Kate Saha with her unfinished house. Picture: Mark Wilson

Porter Davis customers who had paid deposits to the home builder but were not covered by insurance when the Melbourne-based builder collapsed will be partly covered by a $15m support package unveiled by the Andrews government.

The home company collapsed last month despite the founder pouring in more than $20m in loans, and unsecured creditors are still in the firing line.

Porter Davis collapsed in March.

A report filed by liquidators Grant Thornton revealed that about $32.94m was owed to CBA. Creditors could be owed as much as $100m.

An estimated 560 families lost deposits as Porter Davis collapsed as it had failed to take out insurance cover to protect them. They can apply for a compensation payment from the Victorian government.

Porter Davis, which was the 12th largest residential builder in Australia, collapsed at the end of March, leaving 1500 unfinished homes in Victoria and a further 200 in Queensland.

The package applies to customers who were left without insurance coverage but had signed contracts and paid deposits, where Porter Davis did not take out domestic building insurance, in breach of its obligations.

The one-off relief scheme means compensation will be paid, with a website to be established within the next 48 hours to allow customers to register. Customers without domestic building insurance cover will now be treated as if they had the cover Porter Davis was obliged to take out on their behalf.

Victorian authorities are now investigating the actions of Porter Davis leading up to its demise, to determine exactly what happened and guide potential future reforms to protect consumers.

The Victorian government is looking at what rules could be strengthened to prevent buyers being hit in future.

“This one-off scheme is about making sure that hard-earned money of Porter Davis customers is refunded as quickly as possible and we’ll keep investigating the actions of Porter Davis to ensure this can’t happen again,” Victorian Premier Daniel Andrews said.

Homes that are already under construction will not be affected, with separate moves to refer customers with incomplete properties to a new panel of builders.

Mr Andrews told the media the situation was heartbreaking and acknowledged that it had taken time to thrash out the package.

“But getting it right is more important than doing it fast,” he said.

A report filed by Grant Thornton this week listed 10 secured creditors, including Chesapeake Holdings, run by Porter Davis founder Anthony Roberts and linked to his thoroughbred breeding business.

It is understood more than $20m is owed to Chesapeake.