Senator Bob Day defends Huxley Homes record as customers demand action

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Unhappy customers have spoken of defective work, inordinately long delays to complete houses and a failure to fix faults — but the politician behind Huxley Homes says the company's "future is bright."

The Family First senator who says he wants to help clean up the construction industry – the trigger issue for this week’s double-dissolution election – is in strife with customers of his own home-building empire.

Senator Bob Day will be fighting for his political life in Saturday’s election in a tight race with the Nick Xenaphon Team and the Greens in South Australia, but he faces another challenge two days earlier in NSW: a delegation of unhappy clients will meet the state Fair Trading Minister, Victor Dominello, on Thursday to request that he suspend the licence of Huxley Homes, the Sydney arm of Senator Day’s five-state home-building group.

A procession of more than 20 Huxley Homes customers has complained to Fair Trading or the NSW Civil and Administrative Tribunal about defective work, inordinately long delays to complete houses, failure to fix faults or to appear at NCAT hearings, and failure to meet the tribunal’s deadlines to finish homes. Huxley Homes has been fined $27,000 in the first quarter of 2016 for failure to meet completion orders. 

Senator Day, a former national president of the Housing Industry Association, blames former managers at Huxley Homes for its troubles. But he claimed this week that his new management had fixed each problem and “our one and only objective is to build a good house no matter how many mistakes are made along the way.”

He told SBS in an emailed response: “Of the 20 or so clients who were not happy, all but two have been completed.”

“That’s clearly not the case,” replies Dr Melinda Bunt, a Sydney general practitioner whose home is far from ready for occupation, although Senator Day told SBS it was scheduled for handover in just two weeks, on July 11. Dr Bunt and husband Stuart are 103 weeks “into” their 40-week contracted build.

“It’s frustrating,” Dr Bunt said as she and her husband gave SBS a tour of the building site at Mona Vale, “to see Bob Day campaign at the moment with the mantra, ‘For every family a job and a house’, when so many people in NSW building with Huxley Homes still don’t have a home finished. We don’t feel like he’s putting our family first.”

SBS understands five customers are yet to occupy their homes and has spoken to three of them. The network of unhappy customers says more than 20 – of whom SBS has interviewed six – are in their homes but awaiting the completion of works or rectifications, including ripping up bathrooms and replacing floors damaged by rain because homes went without roofs for as long as six months.

Dr Bunt said: “We’ve been advised directly by management at Huxley Homes that there’s a cash-flow issue. So it’s galling for us to see Senator Bob Day bankrolling his campaign – and we’re still in a house that’s unfinished.”

Electoral Commission records show the senator has provided Family First with political donations and loans worth more than $2 million over the past five years.

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At the same time, trade contractors who work for Huxley and its sister company in Queensland, Newstart Homes, say they have waited as long as six months to get paid, and they fear Huxley Homes’ finances are tenuous.

What records are available from the Australian Securities and Investments Commission do not give them or customers comfort.

The last financial statement to ASIC from Huxley’s parent company, Home Australia, is for the year ending June 2012. It includes a warning from its independent auditor that the company’s liabilities exceeded its assets by $29,931,123. The auditor also dismissed the directors’ goodwill valuation of $10,065,887 for Huxley Homes. He said it should instead be written down to zero, given the outlook for the next five years.

These conditions, the auditor said, “indicate the existence of material uncertainty which may cast significant doubt on the consolidated entity’s ability to continue as a going concern and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.”

The independent auditor made the same warning for Home Australia’s subsidiary in South Australia, Homestead Pty Ltd, for the year ending June 30, 2013, for various reasons – including that Home Australia was in breach of its bank covenants. The last available statement to ASIC for Huxley Homes is 2006.

“For the first time in my life, I’ve had to borrow from my parents. And I’ve almost bankrupted my own business, just to keep it all ticking over.”

Asked if the companies were meeting their reporting obligations, Senator Day said: “The company always complies with its ASIC obligations.”

He said he resigned as a director of Huxley Homes following his election to the Senate in 2013, but resumed his directorship in 2015 “following the unexpected departure due to family health reasons of a former director.

“Huxley Homes problems are all fairly recent and the fault of previous management,” he said.

“The appointment of new management in 2015 has addressed each of Huxley Homes problems and its future is bright as befitting one of NSW’s most reputable brands. That track record speaks for itself.”

Shane Summerhayes keeps a very different record of his experience with Huxley Homes.

“We signed a contract in February 2013 for a 40-week build and now we’re at week 102 – and we’re still not in the house,” the father-of-three says as he and wife Amber pore over their financial records at their Narrabeen home.

“From my original $540,000 contract with Huxley Homes, I calculate I’m $225,000 out of pocket so far. That includes legal fees. I’m coming up to my fifth hearing at NCAT. I’m up to my fourth building inspection report – another $20,000 or so to confirm defects. The last report found 97 of those. There’s also almost $2,000 a week, which I didn’t budget for, to keep  living in my unit. So I have to sustain mortgages on both properties. There’s also the six-month overseas contract I had to turn down because I couldn’t possibly leave the country while all this was happening.

“For the first time in my life, I’ve had to borrow from my parents. And I’ve almost bankrupted my own business, just to keep it all ticking over.”

Mr Summerhayes will be among the customers scheduled to meet the Fair Trading Minister, Mr Dominello, on Thursday. It is the same day that he is supposed to occupy his home – but only if Huxley meets the latest deadline imposed by NCAT.

“It’s just not going to happen,” Mr Summerhayes said as he guided SBS through the to-do list at the property. The power wasn’t yet connected. The tilers and painters were yet to come. “Of the list of 97 defects, we’ve still got 50 or so to be fixed, some minor, some major, such as the steel frames holding up the house not being treated, so they’ve rusted. They have to jack up the house to fix it. In February, NCAT gave Huxley a deadline for May 5. That didn’t happen either.”

The delegation hopes Mr Dominello will agree to suspend Huxley Homes’ licence because they believe it would provide a trigger to seek home warranty insurance – what they see as their best hope of completing their houses.

“I just don’t want this to happen to anyone else,” Mr Summerhayes said, but he had been told Huxley was still signing up customers.

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Senator Day said in his emailed response: “It is true that a number of homes took longer to build than either the customers or the company would have liked however the company’s one and only objective is to build a good house, no matter how long it takes.”

He said the delay in payment of “certain contractors and the problems associated with construction are not unrelated.

Challenged on his figure of only two homes yet to be completed, Senator Day said three customers named by SBS as waiting to occupy their homes had been “the subject of much discussion on many, many occasions by the company’s CEO Johan Wiggett who … is away on leave this week. He would be able to report his ongoing discussions with these clients over many months in an attempt to address their concerns. As I’m sure you understand, it is not in Huxley Homes’ interest to have unhappy clients.”

Told that SBS had spoken to six more unhappy clients who are in their homes, but who are awaiting major works, Senator Day said: “I am reliably advised there are no other clients whose contracts are outside the contract time frames.”

He said: “If homes take longer than the contract period there are clear compensation provisions to deal with that.”

At $25 a day in compensation, says Shane Summerhayes, that amounts to about $7500 off his lost $225,000.

Senator Day added: “Clients who take it upon themselves to move into their homes before completion make things very difficult to resolve.”

“It is true that a number of homes took longer to build than either the customers or the company would have liked however the company’s one and only objective is to build a good house, no matter how long it takes.”

Lara and Hugh Perrett say they had no choice but to move in when their home was “85 per cent done” last November. They had been living with their three young children and dog at Lara’s parents home, along with her brother and sister.

“It was impossible,” she said. “It was seven or eight months after the completion date for our own home. But when we moved in, Huxley expected the full and final payment.”

The couple refused, given there was much work still to do.

“They demanded we give back the keys,” she said. “But my husband is, well, large. He’s a former rugby player.”

In fact, he's a former Waratah.

“They left without the keys.”

They are still awaiting completion. “A laundry and two bathrooms have to be ripped up and redone. And the whole of upstairs needs to be ripped up because the plyboard flooring is bowed. It was exposed to rain because they didn’t get the roof on in time. They told us the roofing guy had a broken finger.”

The trigger for Saturday’s double-dissolution election was the Coalition Government’s failure to win Senate support to re-establish the Australian Building and Construction Commission, a body which had focused on union corruption until it was abolished by Labor when it held government. Senator Day and other crossbenchers – Dio Wang, David Leyonhjelm and Nick Xenaphon – voted with the Government.

Senator Day joined Family First after he failed to gain preselection for the Liberal Party in the by-election for the South Australian seat of Mayo in 2008. He became Family First’s main financial lifeline, via both loans and donations. By 2012-13, Family First had accrued $1.4 million in debts to B&B Day Pty Ltd.

By 2013-14, that debt was gone, although Family First only disclosed $1.1 million in payments. However, it did declare a $484,000 donation from B&B Day that year.

In 2012-13 there was another payment from B&B Day for $381,775 but it is not specified in Electoral Commission disclosures whether this was a donation  or “other receipt”.  

SBS asked Senator Day if his company had forgiven Family First a debt of about $300,000 and, if so, did the party declare it as a donation or gift-in-kind?

Senator Day said he and the party “have complied with all disclosure obligations. 

“As for the suggestion there is any connection with the Family First Party and the company, again this is totally false,” Senator Day said.

Last month, the High Court threw out Senator Day’s challenge to the Government’s new Senate voting law, which targets the kind of preference deals that allowed him to be elected in 2013 with 3.8 per cent of the primary vote. He will learn his fate on Saturday.

Huxley Homes customers are less certain about when they will learn theirs.

Dr Bunt said the Huxley site manager's reaction to the July 11 deadline was: "That would be a miracle."

Have you got a story you'd like SBS to investigate? Email Rick.Feneley@sbs.com.au.

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