First-time Hunter home owners lose $16K deposits to Privium collapse, along with their hopes

They are told they must now join a long line of unsecured creditors chasing cash back from the collapsed building empire.

In the months leading up to director Robert Harder's decision to place the company and related entities into voluntary administration on November 17, people looking to build new homes in the Hunter Valley signed contracts and paid deposits of up to $16,000.

It was only after the announcement that they discovered mandatory insurance, which should have been attached to their contracts, wasn't. Such was the case for Dean Keymel, who was set to build his dream home at Cameron Park.

"I was told the contract is just a standard building contract, no need for a solicitor to look over it," he said. He handed over $14,000. In his contract it says no money is to be paid unless or until warranty insurance was issued. Mr Keymel said he didn't find that out until three weeks before the company went into administration.

"Solicitors have said there's not a chance without insurance," Mr Keynel said. "Housing prices have gone up to $100,000 over what I originally was going to pay for my dream home with Privium. I'm not even sure I'll be able to afford that. So now I'm stuck with a vacant block of land and no house."

Harry and Mona Bansal, who live in Sydney, were also hoping to build their dream home in the Hunter. They bought a house and land package at Cliftleigh, and signed contracts in June and July.

"I would say, if not 100 per cent then 95 per cent of people in that estate have signed up and paid the money and haven't been given any insurance," he said. "We have no way of getting our money back."

Mr Bansal said he had since been to icare, which manages NSW's home building compensation scheme, the NSW Department of Fair Trading, where he made an official complaint, the administrators, FTI Consulting, and back again.

"They said they cannot do anything to get you your money back because the company has gone into administration," he said. He has since received forms from FTI Consulting to become an unsecured creditor.

"We are joining the thousands of people who have lined up outside the door of Privium," Mr Bansal said. "The only reason I am doing this is, knowing full well I am not going to see that money again, I am still going to do my duty - there are gaps and loopholes in that law that people have the opportunity to misuse and abuse - so that it doesn't happen to some poor bugger like me next time."

His and other complaints have been pouring into the department of Fair Trading which has has received 64 complaints and inquiries about Privium since November 1. It is now conducting a number of investigations, including into 11 cases where no mandatory insurance was purchased.

"Fair Trading's role at this stage relates to conducting an investigation into potential breaches of the Home Building Act 1989 (the HBA) and associated fair trading legislation related to the company's obligations to provide insurance under the Home Building Compensation Fund (HBCF)," a spokesperson said.

Under the act, the maximum penalties for corporations are fines of up $110,000; and $22,000 for an individual, per offence. Some offences carry prison terms where the offender has two more convictions for the same offence.

Licence holders may have their license suspended or cancelled, or be disqualified from holding a licence, and/or be disqualified from being a director of a company.

None of those measures will bring back clients' money, and that's just not good enough, says 24-year-old Jarrod Sansom, who together with his partner, Katie Smee, shelled out $16,088 as a deposit for a house which exists on paper only.

"As a full-time student I can't afford to lose that money," he said. "The loan that my partner and I secured will no longer cover the cost because the price of building has gone up and because we've lost that $16,000, if we wanted to try and build with another company we can't afford the loan and we can't afford a new build any more."

Others in a similar boat, but with insurance, are already in the process of getting their money back, he said. "It's awful ... it's just so much money. And now, through no fault of our own, it's gone."

The couple is now waiting on advice from their conveyancer as to whether they can pull out of their contract with Privium, and are being told they have to 'wait and see'.

"They are tying to work out if legally we're allowed to get back on track with a new builder," Mr Sansom said. "That's absurd. We are technically still locked in and bound to them .. so we are waiting on FTI Consulting to decide what the future of this company will be before we can move on. I'm very, very angry. We've just started a business, and this has taken over our lives."

Mr Sansom is being urged to vote with other unsecured creditors - mainly subcontractors, to oust the administrators appointed by Mr Harder and vote for the appointment of independent administrators.

Leading the charge, John Goddard of Subbies Unite.

"I think there are a lot of deposits paid without the insurance in all states from what I am seeing," he said.

"We can remove the current administrator before they bleed the company dry of all assets. They are charging $1.25 million, at circa $800 per hour, which is obscene.

"It's a lot of hard work to change a liquidator but we are in for the fight if that's what creditors want."

FTI Consulting said it was not in a position to comment until after the first creditor's meeting being held on November 29. Mr Harder could not be reached.

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