Builder liquidating instead of honoring builder's warranty

Discussion in 'Legal Issues' started by tierrorize, 5th May, 2021.

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  1. tierrorize

    tierrorize New Member

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    17th Dec, 2020
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    Melbourne
    Feeling pretty lost right now so I'm looking for some advice on what to do from here.

    I live in a relatively new (5-ish year old) apartment in a low-rise building in Victoria. Have had repeated waterproofing issues in the showers of both bathrooms from the start. I initially contacted the owner's corp manager who told me to deal with the builder directly. At the time, being completely unfamiliar with anything to do with buildings, I trusted the builder when they just caulked the grout lines to fix the issue. Which seemed to work for a few years, until the middle of 2019 when mushrooms started sprouting from the carpet adjacent to one of the bathrooms.

    Contacted the builder again who at refused to acknowledge the problem. Then after I got a building inspector to assess and confirm the leak, the builder sent their own leak inspector who also agreed that the waterproofing was defective.

    The builder then stopped replying to emails for months (despite presumably receiving their inspectors report confirming the defects) until the matter went through the DBDRV waitlist (mandatory before a matter can be sent to VCAT), and they continued to drag out proceedings until late 2020, after the second covid lockdown. Reaching out to the VBA during this period was completely useless and Consumer Affairs wasn't responding due to Covid.

    The builder finally agreed at the DBDRV conciliation to repair the defects but cited delays with getting things done because of covid restrictions at the time. Fast forward to early 2021, the builder finally assigns a subcontractor to assess the site and make plans to demolish and rebuild the bathrooms.

    They were meant to start next week. But today I get an email from a liquidator informing me the builder has gone into liquidation.

    Now, the builder is a large company, as they have several multi-million dollar projects under their belt, and they've just completed a project worth $1b just a month or two ago. I can't help but suspect that the timing of this liquidation is awfully convenient in light of that fact. Obviously they aren't liquidating because of me, but I assume they have other much larger debts that phoenixing would get rid of.

    I honestly can't believe how many hoops people have to jump through to hold builders responsible for anything. If anything, they just buy time for the builders to do dodgy crap like this.

    My questions are: aside from trying to trigger Domestic Building Insurance, is there anything else that I can try at this point? Or am I realistically better off just biting the bullet and fixing the issues myself? How common is the practice of phoenixing in 2021, and how likely does it sound in this case?
     
  2. Joynz

    Joynz Well-Known Member

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    Melbourne
    Are you definitely covered by DBI? I.e. is there a certificate of insurance from the builder?

    Also how many bathrooms are affected? Just yours or other apartments too?

    I would contact the insurer for advice. And don’t fix it yourself until you understand the implications of doing so from a claims perspective. Stripping out and redoing a bathroom isn’t cheap!

    PS - your location status currently says Sydney rather than Victoria. So if this thread goes for a few pages, new replies will tend to assume that is where the apt is and give you advice based on NSW practice not VIC’s.
     
    Last edited: 5th May, 2021
  3. tierrorize

    tierrorize New Member

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    17th Dec, 2020
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    Location:
    Melbourne
    No, it's one of the things I need to look into (I'm aware that it's not mandatory for apartments over 3 storeys - another thing I've learnt during this ordeal). Hopefully the OC manager knows more.

    Just mine afaik from asking neighbours.

    And thanks for the heads up about my location.
     
  4. Tools

    Tools Well-Known Member

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    Who is the builder?

    Tools
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Dont assume its pheonixing. If you have such an allegation raise it with Fair Trading but I believe its just conjecture. A builder wont choose to liquidate as a way to avoid a warranty. They do this as the business is not financially sustainable. It is incapable of paying its debts.

    Once a liquidator is appointed they are the Director and may address a warranty claim and may may request a creditors claim. In time the state building agency may recognise the company as unable to meet its warranty claims and the insurance scheme will then step in. If there are unsold units the liquidator may use sales to raise proceeds to then meet warranty claims too.

    The strata likely has the warranty issue to pursue, not individual owners. The liquidator may reject a invalid claim and if the strat doesnt make a claim there may be no recourse.

    There are many threads here from very patient but frustrated people who in time have the warranty honoured through the insurer. Legal advice on these issues is best obtained esp concerning strata v owner claims. A claim must occur prior to the insurance expiry. It may then sit there a while.
     
  6. tierrorize

    tierrorize New Member

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    Location:
    Melbourne
    @Tools
    Sorry, but I'd rather refrain from naming names right now.

    @Paul@PFI
    I take your point about making assumptions. Certainly they wouldn't file for bankruptcy over one unit's warranty. Whether or not they're phoenixing though, their conduct has been abhorrent. And as food for thought, they voluntarily applied to ASIC to deregister themselves two years ago. They took down their original website last year. They then set up an identical website under a very similar company name, finish at least one major project, then almost all their directors resign within a matter of 2 months before bankruptcy is declared.

    I'm no accountant nor am I a lawyer, but even if it's not phoenixing per se, it's obvious they saw the writing on the wall for months if not years, all while stringing along a small fry like myself literally until the last second. What's the odds of everyone on the board getting a nice payout or severance package just before they bailed?

    That aside, can you elaborate on the strata having to make the claim vs individual owners, if the issue is limited to my unit (as opposed to a common area)?

    I'd love it if I had the insurance to fall back onto (by insurance, you mean DBI, right?). However the building is higher than 3 storeys, and in Victoria "DBI is not required for multi-storey residential buildings containing more than three storeys of accommodation" (quote taken from VBA.gov.au). I've checked and no insurance has been lodged with the VMIA.
     
  7. The Y-man

    The Y-man Moderator Staff Member

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    You OC would have taken out building insurance for the whole thing - not just for common areas.
    Contact them about claiming on the building insurance.

    The Y-man
     
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