What would the project specs have to do with hard drives crashing or personal health issues?
I'm confused... Are you trying to blame the victim? The guys should be able to (1) keep deposits and (2) lie about why they are doing so if they simply can't complete the project?
As you suggest - it was a project based on a pre-built script. The very first emails between them and I included all the details, access to server / script and all they needed to see if they could do it, and make a bid.
The exact same thing is going on right now with a design project:
https://gfy.com/showthread.php?t=1081453
Guy was paid, started off good, sent a decent draft, got broken hard drive, had "health issues", refund requested, stops answering email.
Its the nature of the beast these days - very hard to hire good people, here in the USA or outside.