Government provides customer compensation following builder collapse
The recent liquidation of prominent Victorian builder Porter Davis has left thousands of consumers in the lurch, with the Andrews government intervening to ensure customers receive remuneration.
Last month, the building company collapsed, citing increased costs, supply delays, labour shortages, and dropping new home demand, leaving 2,500 clients in the lurch.
Following this news, the Victorian government announced “compensation payments for Porter Davis customers who signed their contracts and paid deposits, but where Porter Davis did not take out Domestic Building Insurance (DBI), in breach of their obligations.”
According to the government, over 500 families discovered their deposits had been lost due to the company’s failure to take out insurance on their behalf, and as a result, they’ve enacted a one-off relief scheme to ensure compensation is paid to victims.
An Andrews government statement explained, “Customers without domestic building insurance cover will now be treated as if they had the cover Porter Davis had been obliged to take out on their behalf.”
“Authorities are investigating the actions of Porter Davis leading up to the company’s collapse to establish exactly what happened and guide potential future reforms to protect consumers.”
Such reforms were floated earlier this week during a crisis meeting between state Treasurer Tim Pallas and four Victorian building sector lobby organisations, which included a potential overhaul of the state’s planning and building contract laws.
Premier Daniel Andrews explained the scheme is “about making sure that hard-earned money of Porter Davis customers is refunded as quickly as possible,” adding his government pledge to “keep investigating the actions of Porter Davis to ensure this can’t happen again.”
While Assistant Treasurer Danny Pearson said government intervention will assist “hundreds of Victorians who paid a deposit in good faith to their builder [and] have faced the prospect of losing their money cold, through no fault of their own.”
The government’s investigation has been supported by information provided by liquidators, Grant Thornton partners, which revealed 560 customers have been afflicted by Porter Davis’ failure to take out mandatory building insurance, despite “accepting deposits for projects that had not started at the time the company entered liquidation.”
Refunds will be paid up to the legal maximum deposit payment of 5 per cent under the Domestic Building Contracts Act.
The Department of Government Services will work with the Victorian Managed Insurance Authority to verify and approve claims and deliver compensation for deposits as soon as possible. These claims will be processed as if these customers had domestic building insurance.
The Victorian Building Authority is also investigating Porter Davis Homes for potential breaches of the law.
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