Bob Day departs as home-building dreams turn to nightmare

More than 200 families have been stranded with unfinished houses following the collapse of Bob Day’s business empire.

Shane Summerhayes with wife Amber and Samarah, 5. Picture: Hollie Adams

More than 200 families across Australia have been stranded with unfinished houses following the collapse of Family First senator Bob Day’s business empire, personal fortune and political career.

Amid his shock announcement yesterday that he would resign from parliament, Senator Day blamed his decision to plunge Home Australia, the house builder he has owned for 20 years, into liquidation on the alleged failure of a would-be Filipino investor to come through with the cash ­needed to save the business.

As The Australian has reported, in recent weeks Home Australia has been under severe financial strain, angering homebuyers left with unfinished houses and contractors left with unpaid bills.

The company had been struggling since at least 2013, when its auditors flagged that it might not be a going concern and it breached loan conditions on $24.5 million owed to National Australia Bank.

Senator Day said he was ­“incredibly sorry for the pain, stress and suffering I know this will cause”. The collapse would have “serious implications for me and my family”, he said, adding he would lose his own home because he had personally guaranteed company debts, which “greatly exceed our assets”.

“As for my role as a senator, I will, of course, resign.” He did not say if he planned to declare ­bankruptcy.

Home Australia’s liquidators, Matt Caddy and Barry Kogan of McGrathNicol, said the company “has ceased the construction of all homes”. There were 207 homes unfinished when Senator Day pulled the plug yesterday, under construction by Home subsidiaries in South Australia, Western Australia, Queensland, Victoria and NSW. The liquidators said they would immediately talk to insurers seeking to have the houses finished by other builders.

The liquidators are also required to investigate the conduct of the company, which may include querying why in 2013 it paid Senator Day and business partner John Smith a $2.6m dividend and pumped more than $380,000 into Family First, despite its parlous financial state.

Small business owner Shane Summerhayes said he progressed from frustration to anger and then “delusion” in 2015 as he battled with Home’s NSW subsidiary, Huxley Homes, to resume work on his home on Sydney’s northern beaches. Newly remarried, Mr Summerhayes had made a home big enough for his growing family his priority, but plans went awry when Huxley workers downed tools and disappeared about seven months into construction.

Mr Summerhayes had signed a $495,000 contract for the home in early 2014, with work beginning in that June. “I had com­plained around November that the work was very slow, but it got to January 2015 and they just stopped work for three months,” he said.

By April, the house’s wooden frame had rotted in parts after being left exposed to the elements. He is now more than $280,000 out of pocket as a result of defects and shoddy workmanship. “I thought ‘You’ve got a senator ­involved, and this has got to be a trustworthy guy, it’s got to be a ­decent business’, but then you start looking through it and you see what his finances are doing and he’s still taking out money to prop up his Family First thing. It’s just ludicrous.”

Customers in NSW, where there are 56 unfinished houses, and South Australia, where there are 48, will be looking to insurer QBE to fulfil their claims under state schemes. Home’s 57 Victorian customers can also claim against the state government scheme.

The NSW minister responsible for fair trading, Victor Dominello, said customers should lodge a claim against Huxley under the state’s Home Building Compensation Fund. “We have worked very hard behind the scenes to hold Huxley Homes to account,” Mr Dominello said.

Senator Day said he made two big mistakes: buying Huxley in 2003 and “going into politics without putting in place a proper management structure for the business”. He said he would be “working closely with the liquidator and offering a proposal to enable me to find a way to pay back every debt fully, no matter how long it takes”.

He said Goshen Capital Resources, a Filipino company that had promised to buy 75 per cent of Home, provided him with a fraudulent document “as evidence of its ability to complete the deal”. The document, shown by Senator Day, is a letter purporting to be from HSBC’s Manila branch and claiming $US20m ($26.3m) was transferred to Goshen’s Melbourne account on August 1. The Australian has been unable to substantiate Senator Day’s claim. People associated with Goshen could not be reached by telephone, and did not respond to emails nor a message left with their Melbourne-based accountant.

However, the language used in the letter is not typical of HSBC correspondence and the Manila phone number given in the letter as a bank officer’s direct line did not connect when The Australian called yesterday.