Melbourne couple $380k in debt after two builders, Porter Davis and Varaich Homes, collapse

A Melbourne couple has lost close to $400,000 after the builder they hired to finished their home, originally started by Porter Davis, also collapsed.

A Melbourne couple caught up in the collapse of Porter Davis has fallen victim to a second builder’s downfall, leaving them close to $400,000 in debt and an unfinished dream home.

Ajith Suraweera said he and his wife have been left “traumatised” by the string of collapses.

Mr Suraweera first lost $180,000 after major Australian home builder Porter Davis collapsed in March last year.

He was then hit with “another nightmare” after signing with Melbourne-based builder Varaich Homes.

It was placed into administration last month, leaving an estimated 21 incomplete homes across the state.

Devastated clients have sought legal advice with claims the company targeted “vulnerable” individuals, failed to obtain adequate insurance and forced customers to paying large deposits ahead of construction.

Ajith Suraweera said he is owed $380,000 after the collapse of two construction companies. Picture: Supplied

Varaich Homes faced the Supreme Court of Victoria on Wednesday after scaffolding company Star Scaffolds launched legal action to recover a $50,000 debt.

Brick supplier Austral Bricks also attended court to support the action.

Malcolm Howell from insolvency firm Jirsch Sutherland was previously appointed the Varaich Homes liquidator but has withdrawn.

The court is yet to decide on an alternative liquidator.

Mr Suraweera said he was first approached by Varaich Homes, which also traded under the names Harcon Property Group and Varaich Constructions, after asking around for new builders.

“I never intended to go to these guys but then they have promised me to complete the house within six months,” he told the Herald Sun.

Mr Suraweera said Varaich Homes charged him a 15 per cent deposit, saying it would speed up the build.

“They knew I was desperate,” he said.

Mr Suraweera said he signed the contract with Varaich Homes in July last year but construction didn’t start until April.

“I sent hundreds of emails trying to contact these people — they never responded to emails or calls,” he said.

Mr Suraweera said he signed the contract with Varaich Homes in July last year but construction didn’t start until April. Picture: Supplied

After confronting the owners in their office, Mr Suraweera said Varaich Homes finally carried out about $80,000 worth of work.

“They then claimed the lock up stage – so they took 50 per cent of the contract. Then they were uncontactable again,” he said.

Mr Suraweera said he has so far paid Varaich Homes about $288,000 for only $80,000 worth of work.

Together with the Porter Davis collapse he estimates he is $380,000 out of pocket.

“How is it that these people can take money in advance from people and then just disappear?” he said.

“Where is the fairness, where is the law? Where are the governments and other authorities that are meant to be acting?”

Another impacted customer Tony Varghese said the Varaich Homes collapse has left him in “financial turmoil”.

Tony Varghese said the Varaich Homes collapse has left him in “financial turmoil”. Picture: Supplied

Varaich Homes faced the Supreme Court of Victoria after scaffolding company Star Scaffolds launched legal action. Picture: Supplied

Mr Varghese has so far paid $455,000 for his home with Varaich. The company recently “demanded” $125,000 upfront for the fixing stage, but haven’t commenced any works to do with this part of the construction.

“They used the argument that tradespeople would not come to the site unless they received payment in advance,” he said.

“They further claimed that this had become ‘standard practice’ in the industry and threatened to halt all work if the payment wasn’t made.

“After receiving the payment, no work was completed and they stopped responding to communications.”

Mr Varghese said he felt as though there were “no avenues for justice”.

“Many of these so-called liquidated companies have already started new businesses under different names and continue living lavish lifestyles,” he said.

“The cost of completing my home is out of reach for me and after enduring three years of this nightmare, I feel completely powerless. For me, this is a life-altering crisis.”

Kapadia and Gordon Lawyers principal lawyer Raynal Kapadia, who is representing multiple Varaich Homes customers, claimed the company had a “track record” of failing to appropriately take out or maintain insurance on behalf of customers.

Mr Varghese paid $455,000 for his home with Varaich. Picture: Supplied

Mr Kapadia claimed the company also had a history of approaching customers and effectively forcing them to pay in advance prior to completion of the building stage.

“One of the most concerning aspects of this company is that even after customers have paid, the works do not progress and trades are not paid,” he said.

He said this has led to instances where tradies “become furious”, resorting to taking back work they have already done on site.

“This includes everything from brick laying works, to taking away already installed doors and windows,” he said.

The Victorian Managed Insurance Authority said they had, to date, received 16 insurance claims from Varaich Homes customers.

“(Customers) with incomplete or defective builds can lodge a claim with VMIA if they have a Domestic Building Insurance policy issued by VMIA,” a spokesperson said.

“VMIA’s priority is to protect the interests of homeowners and understands the difficult and uncertain situation for customers.”

Varaich Homes, established in 2016, specialised in custom luxury homes, known down rebuilds and multi unit developments.

Varaich Homes was contacted for comment.

Originally published as Melbourne couple $380k in debt after two builders, Porter Davis and Varaich Homes, collapse