Two Victorian men who allegedly distributed builders’ warranty insurance for projects valued at more than $100 million have been committed to stand trial in the Victorian County Court.

Builders’ warranty insurance has long been an issue of contention between the insurance industry and builders. Tensions have eased in recent months, but this case is likely to put the industry back in the spotlight.

Melbourne-based builders’ warranty brokers Anthony Scott and James Scott appeared before the Melbourne Magistrates Court on charges relating to Homesafe Equities and the cover they allegedly distributed between June 2003 and February 2004.

Homesafe Equities issued insurance certificates in relation to 792 projects in Victoria.

The Australian Securities and Investments Commission alleges that, unknown to the builders who obtained the certificates, there was no pool of money set aside in what Homesafe Equities called a “captive pool” to pay any claims. Contrary to what was claimed, full reinsurance was not in place, either.

Anthony Scott pleaded not guilty to 15 charges, including providing services without a licence, making misleading statements in relation to financial products and engaging in dishonest conduct.

James Scott has reserved his plea in relation to 231 similar offences. Both have been bailed to appear before the County Court on August 1. The Commonwealth Director of Public Prosecutions is prosecuting the matter.