Porter Davis

How far will the govt go in terms of asking or providing the support to such fallouts? I guess it might set a wrong precedence! Time will tell.

Is it a house of cards senario? The question we were discussing at work was who is next! And that is a scary one! The trust is eroding from the sector but how is that going to work going forward. Cannot trust a big name, cannot trust a small name, where do you go!

That is the scary bit, we have tough time explaining to clients why we are expensive while next door crazy builder beats our quote by 30k ish for example, we just let it go, we will not operate below our risk margin. Some clients understand or have had bad experiences so have a better view, but some don't. If people want to fall for that match the price tactic then so be it! As someone said the other day there is more protection for buying a toaster than a home! Go figure. If the legislation was strong we will see most prices even out as the build cost varies but only so much the rest is operating margin! But I am a newbie here so I am also learning the ropes!

Metricon will be hard as I think everyone is watching it including the govt! they are almost in the too big to fail basket, but who know!

Well as of today, this might change.
https://www.news.com.au/finance/busines ... d50bffab46

Be interesting to see how that particular point plays out - my understanding was the builders could not demand the deposit until they obtain insurance: https://www.consumer.vic.gov.au/housing ... lding-work

It does, but I think it comes from this: https://www.vba.vic.gov.au/__data/asset ... -Order.pdf

I know my Master Builders Victoria contract covers this in clause 5 as well.

Really sorry to hear you have been caught up in all of this. I've been through this before but from the perspective of taking over builds as I've done it quite a few times, and you've probably answered your own question. In short you're most likely wasting your time. Secured creditors will get some level of payment but will be cents in the dollar (not many cents in the dollar), and unsecured creditors will get nothing. You would be an unsecured creditor. In the unlikely case (basically 0% chance) they had so many assets to cover all secured creditors in full, they could then look at paying out unsecured creditors. In your case as an unsecured creditor, it still wouldn't be a guarantee as they would end up waiting on your DBI claim (and others who try to do the same thing) to come through to see if that covered your creditors claim. If it did, you'd get nothing, if it didn't and assuming there was money after paying the secured creditors, you could get some cents in the dollar. In any case, if you decide to do this, I don't believe you have to lodge your proof of debt straight away. I'm quite sure it'll become quite clear over the next couple of weeks how much cash the liquidators will have managed to generate and then you can decide whether you spend your time doing this.



Re the deposits issue being discussed, both MBAV and HIA standard contracts state something along the lines of a deposit only payable by the owner on the latter of contract execution and issuance by the builder of insurance. This is not to say contracts can't be amended, and I wouldn't know if PD had amendments to these clauses. I don't believe the Act states specific timings on when DBI is to be provided other than before building work commences, and this just gets covered off during building permit application. I find it crazy to read/hear that they take so long to get building permits after contract signing but I don't build a heap of domestic as I'm also commercial, so maybe that's what these volume guys do? But assuming the standard HIA or MBAV clauses, there's obviously a breach.

The harsh truth however is that even if there is a breach, it's irrelevant as the company no longer exists, so there is no entity anymore to make a claim against. Owners in future should probably get some level of legal advice when signing and at payment stages. If they had in this case, they may have not paid the deposit with the knowledge that the payment triggers had not yet occurred (again assuming standard form HIA/MBAV).

We've just signed a contract with a competitor of Porter Davis and they immediately invoiced us for the deposit without DBI/VMIA in place.

The way they explained it is because the VMIA/DBI only lasts 12 months, they leave it til after the building permit is issued to lodge to ensure it covers the length of the build. Makes sense from their perspective, but given the current environment this needs to be altered in the legislation (is it legislation?) to ensure builders can't take deposits and use them as working capital on whatever they please.

I haven't paid the deposit and said i want the insurance prior to paying the deposit incase something like Porter Davis occurs.

That's good to hear. It sounds like you're in a better position than most, as it seems like they pushed a lot of their customers to pay for stages that weren't complete.

If you're confident that you are ahead and have more work complete than you have paid for, you're potentially in a good situation and could start talking to other builders. If you're ahead, you might be some chance of actually getting your home completed for the same money as your original contract sum, and just remember, if you did manage to do this, the VMIA won't be paying you out as you would not have any loss. So in your situation, you should definitely have a VMIA claim in as they will run an assessment process and get quotes from builders in their approved register, however you should concurrently run your own process too as it might all work out and you don't have to wait on the VMIA. Sounds like you’re doing all of this anyway. The VMIA will take a long time. It'll take longer than what most PD customers expect.

In relation to big or small builders, franchise builders, volume etc etc, I don’t think there’s a right or wrong answer. Some are good, some are bad in all realms. I guess it’s ultimately meeting them all to see who you think is most trustworthy, but also has the availability, capability, and meets your budget etc – all things you’re probably already looking for, but easier said than done.