Porter Davis collapse leads to Victorian reforms on building industry, Snowdon victims speak out
Nearly 300 families have been left more than $4 million out of pocket after a major builder collapsed, and there’s no chance of recouping their losses.
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Devastated customers of a collapsed building firm are calling out the state government for being “unfair” because other victims of the construction industry crisis have been compensated, but not them.
In March this year, Australia’s 13th largest home builder, Porter Davis Homes, went bust, impacting more than 2000 customers, and owing around $25 million to over 1000 creditors.
It later emerged that 560 of those homeowners had paid a deposit but the construction business had never taken out building insurance, leaving these Porter Davis customers with no automatic payout from the insurer and forcing them to wear the cost.
Yet in an unprecedented step, Premier Daniel Andrews agreed to refund them their lost money in a $15 million government bailout last month.
But another group of unlucky customers who signed contracts with major Melbourne builder Snowdon Developments say the situation uncannily mirrors their own – even though no government help has been offered in their cases.
In July last year, a court ordered Snowdon Developments to go into liquidation, after racking up debts of $27 million. This left 550 homes in limbo, including nearly 300 people who had paid deposits but unbenknownst to them were not covered by insurance.
Raynan Abella, 30, his wife and two kids lost their $11,000 deposit as a result of the Snowdon disaster and were shocked to hear about the government bailout for Porter Davis customers.
“It was very disheartening, we were trying to move on, then we saw that people were getting their deposits refunded and in the same situation as us,” Mr Abella told news.com.au. “Where’s the fairness in that?”
It comes as earlier this week, the Victorian government announced plans to increase enforcement and oversight of the state’s building insurance scheme to make sure deposits cannot be taken illegally the way they were in these cases.
On Tuesday, the office of Premier Daniel Andrews said they would reform the Domestic Building Contracts Act 1995 to “strengthen” domestic building insurance requirements, in the wake of the Porter Davis catastrophe.
The changes are being brought about “after the liquidation of Porter Davis exposed a concerning practice of builders not taking out the required insurance when accepting deposits”, according to the Andrews government.
Regulators will now audit builders specifically to ensure they are taking deposits correctly from customers.
But for Snowdon victims, they say while the tightening of the law is good news, it’s too late to help them.
The liquidator’s investigations found that Snowdon took deposits totalling $4,064,551 from 282 people without insurance, leaving these customers all out of pocket when the company collapsed.
Mr Abella signed a build contract with Snowdon in June 2021 and paid a $11,000 deposit to get building underway, only for the business to shut down forever.
He has since engaged new builders, with his house now at the frame and roof stage. Receiving his $11,000 back would help his financial circumstances considerably, he said.
“We’re still living with in-laws, financially it was tough to lose that deposit,” he explained.
“My wife wasn’t working because the baby was still young at the time.”
He feels Porter Davis victims were treated differently due to a mass protest they staged on the steps of Parliament House calling for government intervention.
“I truly feel like we (Snowdon customers) haven’t got that attention because we weren’t protesting. It’s just very hard,” the young dad added.
Jess Salem, 34, and her 32-year-old sister who is a single mum thought they were making a good financial decision by contracting Snowdon to build their house in 2020.
Instead, they’ve lost their $10,000 down payment and are struggling to pay for basic things, with no hope of pulling together the funds to start the build.
“It’s an empty block, we can’t afford (another builder) with all the price inflation,” Ms Salem told news.com.au.
“We had a perfect package we were going to do. We’ve put our whole life savings into this block.” Then Snowdon collapsed.
“I’m working ridiculous hours just to try and make up. My sister is living with my mum, I’m renting from a family friend,” she added, saying there was no end in sight.
Josh Curmi and his wife Alicia Hele, both 29, are two more Snowdon customers who have been left $11,264 in the red as their deposit is not covered by any insurance either.
Their home is now eight weeks away from completion, even though it should have been finished in 2021. They had to pay an additional $40,000 to another building company to pick up the broken pieces from Snowdon’s collapse.
Speaking of the government bailout, Mr Curmi said: “I think it’s pretty disappointing.
“Why should one builder – because they’re better known – be paid out by the government when everyone else is suffering at the moment?
“If you’re going to give it to one you’ve got to give it everyone.”
Greg*, who preferred to remain anonymous, is in the same boat, with $10,771 owed to him.
“I’m happy for them,” he said about Porter Davis customers. “But the mood generally is ‘what about us’?”
Greg said he would even be open to pulling together a large group of Snowdon customers and marching down to state parliament if it meant getting the compensation everyone desperately needs.
Following the government’s announcement, Snowdon’s appointed liquidator, Shane Deane of Dye & Co, Solvency and Turnaround, contacted the office of the Premier to see if the help would extend to his clients. He is yet to hear back.
Unsecured creditors – like uninsured deposit holders – are not expected to receive any return from the liquidation.
In a statement to news.com.au, a government spokesperson said “We are doing work on what any further changes could look like and we will have more to say in due course”.
In another frustrating development for several homeowners, they claim that another company took their deposit money before it ever reached the accounts of Snowdon.
The company, a developer called Hamilton Property Group, has not to date responded to any requests for a refund from the Snowdon customers known to news.com.au.
The liquidator alleges the company took the funds legally as a commission for introducing clients to Snowdon.
For impacted customers, their only recourse is to recover funds by pursuing the company themselves, news.com.au reported in August last year.
At least a dozen Snowdon would-be homeowners that news.com.au knows of including all four of the above families – Mr Abella, Ms Salem, Mr Curmi and Greg – signed home-and-land packages with Hamilton and Snowdon but now might not recover a cent.
“I was not sleeping for months, trying to deal with the money,” Ms Salem said, adding that her requests for her money to be refunded have been ignored.
Mr Curmi has forked out thousands in legal letters issuing demands for repayment from Hamilton but those too have not elicited a response from the company.
Greg is taking Hamilton Property Group to the Victorian Civil and Administrative Tribunal (VCAT) to get back his funds.
News.com.au contacted Hamilton Property Group for comment.
alex.turner-cohen@news.com.au
Originally published as Porter Davis collapse leads to Victorian reforms on building industry, Snowdon victims speak out
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