The failure of a large construction company has resulted in the unfinished construction of 550 homes and a debt of about $30 million, with numerous clients saying they cannot access their deposits even though construction has not yet begun.
The Victorian Supreme Court ordered the liquidation of Snowdon Developments last month, leaving 52 employees unemployed and 262 creditors owed $28,6million.
Liquidators have informed Australians who deposited tens of thousands of dollars for building that they cannot locate any trace of their money.
The same liquidators now allege that Hamilton Property Group, the company that hired Snowden to construct their clients’ homes, collected the deposits as commission fees but never passed them to Snowdon, which has since failed.
Last month, liquidators made the claims at a creditors’ conference, when client Josh Curmi stated a Hamilton employee told him they had his $11,000 deposit.
Last year, he and his wife Alicia purchased a home-and-land package from the company, and Snowdon was hired to construct their $225,000 Melbourne home.
The couple begged Hamilton to return their deposit because construction never commenced.
Mr. Curmi recently issued Hamilton a seven-day deadline to return their debt; however, they did not meet the date and have not answered.
Another consumer reported receiving a receipt for their $10,000 deposit that said the funds were held in trust by Hamilton Property Group.
Greg, a 46-year-old father of one, found out at the meeting that Hamilton might be holding onto his money and described the ordeal as “awful.”
“I was stunned. It was a momentous mic drop,’ he told News of the encounter.
I received the sense that (Snowdon) owned this money.
After spending about $11,000 on his $400,000 dream home and signing a land-and-build package through Hamilton last year with Snowden as the builder, he demanded his money returned over a month ago but has yet to receive an answer.
Despite a receipt indicating that his money had been “kept by HPG” since April 2021, Hamilton denied holding his money.
Greg questioned how Hamilton was able to attract customers to Snowdon despite the company’s imminent demise.
He has filed a complaint with the Victorian Civil and Administrative Tribunal.
In June of last year, Raynan Abella, 30, and his wife placed a $11,000 deposit to Hamilton, with Snowden contracted by the company to complete the construction.
The couple claims that Hamilton failed to disclose that the previous owner defaulted on the property and left them to pay the costs.
‘I received a recision notice, a legal notification stating that we were had to pay the $11,000 in costs incurred by the prior employee,’ he explained.
I stated that was unjust. It should be up to Hamilton to accept responsibility for this, not us.’
They ultimately reached an agreement with Hamilton to ‘cover’ their five percent investment in exchange for $11,000, which Mr. Raynan is now seeking back due to Snowdown’s failure.
The pair has now been forced to spend $4,000 on legal action against Hamilton, but the corporation has not responded.
Another individual named Shiju paid $22,500 to Hamilton, who hired Snowden to construct his home last August.
A year later, the plot of land where his dream home was intended to be is vacant.
Unfortunately, we are not particularly affluent. Everything is difficult; we lost a year’s worth of rent. We planned to move into our new home, but mortgage rates and construction costs are increasing,’ he said.
“My wife was 70 percent enthusiastic about the concept of building a house, but I was only 30 percent, thus we had disagreements. This is one of the saddest experiences I’ve ever had. The liquidator in charge of Snowdon from Dye and Co Solvency, Shane Deane, revealed his doubts about Hamilton in a letter to the residents.
It appeared that deposits paid to introducers (Hamilton) were retained by the introducer and billed to the builder as a commission, he stated in a letter.
‘Homeowners who paid a non-insured deposit should seek their own legal counsel regarding the deposit’s recoverability.
If there is a recoverable action and it was a business arrangement, we will evaluate its commerciality.
According to a report by News, the firm denied possessing the clients’ funds.
Many are ineligible for insurance benefits since construction on the blocks never began and Snowdon lacked domestic building insurance, which would have partially covered losses through the state insurer.
The liquidators believe Hamilton is withholding the deposits and has never forwarded them to Snowdon.
They are advising Australians to pursue Haailton for the return of their money, with several filing formal letters for refunds.
The Daily Mail Australia has reached out to Hamilton Property Group for comment about the allegations.
In April, fifteen creditors sued Snowden for the $2.5 million they were due in an effort to dissolve the company on the grounds of insolvency.
The court heard that the three-month delay in reaching a judgement had put several creditors in jeopardy of financial collapse.
Others stated that they were not eligible for the $15,000-$25,000 Homebuilder grant from the previous administration because construction had not begun in time.
Danny Didone of Wyndham Law Offices told the court, “We assert that extreme delay has harmed supporting creditors.”
Snowdon should have realized this corporation should have been dissolved many months before this action began, not three months later.
The court heard that three former Snowdon clients are due more than $1 million each, while the Australian Tax Office is demanding $4 million in unpaid taxes.
The court was informed that 252 customers had paid a deposit, but no work was ever performed, while 268 clients had construction underway at the time of the Snowdon disaster.
After over 18 months of construction, only the concrete slab and a wooden frame remain for Mira Vose and her husband Anthony.
Also included among the debtors are contractors, such as Michael Hassan’s MD Demolitions, which is seeking $103,000 for unpaid services performed six months ago.
He explained, “There was no money coming into the account to feed the family or pay the staff.”
“It’s sad, I’ve went to the office and told them, ‘I’m destitute, I need the money,'” she said.
If I did not have financial support, the bank would have repossessed my home by now.
It was the most recent construction company to fail during the pandemic, when many companies struggled to recruit personnel and encountered difficulties finding and paying for materials owing to a global scarcity.
Matthew Mackey, the executive director of engineering behemoth Arcadis, stated that until the government becomes more involved, the residential construction business will collapse.
“There must be more collaboration at all levels in order for it to advance. We will not be discussing builders going out of business, but rather a complete absence of employment,’ he told Daily Mail Australia.
Combining to ruin the profitability of firms were spiraling material costs, clogged supply chains, escalating fuel and vehicle prices, trouble locating personnel, and exorbitant pay.
Some in-demand tradesmen and professionals were headhunted by rivals for double their former salaries, driving up staffing expenses.
Covid shutdowns and then La Nina deluges halted work on construction sites in the eastern portion of the United States for weeks.
Now, businesses across the nation are locked into fixed cost contracts that are costing them a fortune.
The larger corporations with sales teams that booked record quantities of business at pricing they cannot sustain have been hit the hardest, since growing costs have destroyed their earnings.
Smaller businesses have also been affected, but they are better protected because they have committed to fewer employment and are therefore more likely to be able to absorb their losses.
Others are renegotiating the pricing of contracts before to beginning work to account for the economy’s shift, and offering consumers their deposits back if they decide not to proceed.
Some unscrupulous builders begin projects at the agreed-upon price, only to stop halfway through and demand ransom to finish the job.