Victorian government compensates Porter Davis collapse victims

Last month, one of Australia’s largest home building companies, Porter Davis Homes Group (PDH Group), announced it had gone into liquidation and ceased work on all current builds.

The group, which operated multiple companies in Victoria and Queensland, had more than 2,000 projects in its pipeline at the time of liquidation.

According to the Andrews government, more than 500 families have so far discovered that their deposits have been lost due to the failure of the company to take out Domestic Building Insurance (DBI) on their behalf, despite being obliged to do so and accepting deposits for projects that had not started at the time the company entered liquidation.

Given the number of residents left in the lurch from the collapse, the Victorian state government has now announced that it will provide compensation payments for Porter Davis customers who had signed their contracts and paid their deposits but have now found they do not have DBI cover. 

Affected customers will be able to access one-off relief scheme by registering for compensation through a dedicated website. Customers who are impacted but do not have DBI cover “will now be treated as if they had the cover Porter Davis had been obliged to take out on their behalf,” the state government said.

Eligible refunds will be paid up to the legal maximum deposit payment under the Domestic Building Contracts Act (5 per cent).

The Department of Government Services in Victoria said it 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 DBI.

A spokesperson for the Victorian government has said that authorities are now 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”.

The Victorian Building Authority is also reportedly investigating Porter Davis Homes for potential breaches of the law.

Victoria Premier Daniel Andrews commented: “This one-off scheme is about making sure that hard-earned money of Porter Davis customers is refunded as quickly as possible and we’ll keep investigating the actions of Porter Davis to ensure this can’t happen again.”

Assistant Treasurer Danny Pearson added: “Hundreds of Victorians who paid a deposit in good faith to their builder have faced the prospect of losing their money cold, through no fault of their own — that’s why we’re stepping in to help.”

What about QLD customers?

While the initiative is exclusive to the Victorian state government, impacted Queensland home buyers may be covered by the state’s Home Warranty Scheme (QWHS), which applies to residential construction work.

The not-for-profit Queensland Home Warranty Scheme is funded through premium payments paid by the contractor to insure residential construction work for fixed-price and cost-plus residential contract.

The insurance covers the home owner for loss if something goes wrong during the building process. 

In 2021-22, for example, there were $36 million in QHWS claims approved to help owners complete their homes, fix defective work or deal with subsidence-related issues.      

The Queensland Building and Construction Commission (QBCC) administers the scheme according to the terms and conditions set by state government legislation.

a QBCC spokesperson told The Adviser: "The QHWS is Australia’s most accessible home warranty scheme and can help eligible owners complete their homes or rectify defective building work.    

 "Where a homeowner has signed a fixed price contract with Porter Davis for the construction of a home and paid a deposit, but work has not started on site, the Queensland Home Warranty Scheme, administered by the Queensland Building and Construction Commission, will refund the deposit to the homeowner. 

"However, any money paid before a building contract is signed cannot be recovered under the Queensland Home Warranty Scheme. 

"The QBCC will continue to work with the liquidator of Porter Davis Homes, Grant Thornton Australia regarding next steps for assisting home owners," they said.

Every QHWS claim is unique and approval times for claims will vary, depending on a range of factors, the spokesperson added. For example, simpler claims can be processed quickly (e.g. deposit refunds where no work has started).

The QBCC warned that home owners should ensure they don’t undertake repairs to reportedly defective work, as this could affect their eligibility for a defective work claim.  

[Related: Home building giant Porter Davis collapses]