Porter Davis Collapse: What are my rights?
Recently, one of Australia’s largest home builders Porter Davis Homes has voluntarily entered administration, affecting over 1700 properties across Australia. It is important for parties (particularly owners) to understand their rights in these situations, especially if considering terminating their existing contracts.
Should I Terminate my Contract?
An owner’s first instinct may be to terminate the contract as a result of the builder becoming insolvent.
However, the right to terminate the contract is not automatically available to you as an owner, even if a contract expressly says it is.
As of 1st of July 2018, legislative reforms to the Corporations Act 2001 (Cth) (the “Act”) meant that insolvency of a party could no longer be relied upon as the sole reason for terminating a contact. The Act will override any contract provisions.
As an owner, you may have separate grounds available to you in order to terminate a contract. These can include defective building works, failure to finish by completion date or refusal to complete the building works.
Owners should take steps to reduce damage by protecting their property (e.g. with temporary protection for the frame) and ensuring their property is secure.
Insurance Claims
A registered domestic builder is required to carry Domestic Building Insurance (“DBI”) for all building contracts worth more than $16,000 (including labour and material costs) in value. DBI will cover costs up to $300,000 to fix structural defects for six years, non-structural defects for two years and you can claim up to 20% of the contract sum for any additional costs to complete.
You can only bring a claim against this insurance if the builder becomes insolvent.
As an owner, it is important to await the insurer’s decision in response to a builder entering administration. In some cases, an insurer may engage another builder to complete any building works.
An Owner should obtain legal advice to ensure termination is an available option and that it is undertaken correctly.
Our Services
Our team at Oldham Construction Lawyers are highly skilled in preparing and advising on insurance claims.
Your building contract matter will be handled by our Director, Daniel Oldham and his dedicated team, who will strive to resolve any issues in the most cost effective and efficient manner.
To understand what you’re entitled to claim, and for assistance submitting a comprehensive and successful claim, please contact our office on (03) 9640 0002, or via email info@oclawyers.com.au