Hundreds of Sydney apartment owners are facing an uncertain future after the collapse of a company linked to the builder of the Opal Tower, with allegations that it collectively owes them $30 million to repair seven defective builds across the city.
The revelations come as another high-profile construction group, Ganellen, placed one of its companies into administration last week, midway through a court battle over defects and only days after it was fined over the worksite death of a young apprentice.
The cases raise fresh questions about what is being done to address an “epidemic” in NSW of building companies being wound up during defects battles, leaving devastated apartment owners with nobody to sue.
Icon Construction Australia (NSW) Pty Ltd was placed into voluntary administration in November.
Administrator’s documents name it as a “related entity” to Icon Co (NSW) Pty Ltd, the company that built Sydney’s cracked Opal Tower.
At a recent creditors’ meeting it was revealed that the former of the companies is being chased over alleged defects in apartments it built at Rosebery, Waterloo, Hurstville, Bondi, Lane Cove, Greenwich and Five Dock.
The most substantial of those is a $20 million claim from the owners of the Otto apartments at Rosebery.
The building made headlines last year when it was revealed that owners had been told it was unsafe to have more than three people standing on their balconies. Icon is pursuing legal action against the sub-contractor that installed the balustrades.
The total sum claimed by the seven owners' corporations is $30 million.
Icon Construction has rejected that estimate, arguing that the cost of repairing the defects would amount to only $2.3 million.
Administrator Ben Verney noted the “substantial disagreement” between the parties in a December report.
He said further detailed investigations would be necessary to resolve the issue and suggested apartment owners may be able to claim under their insurance policies.
Mr Verney said the company’s last project was completed in 2017 and put its demise down to costs of managing defects claims since.
“Given it was no longer in receipt of income from its usual source, being construction projects, the company was reliant on funding provided by related parties,” he wrote.
“Given the increasing volume of alleged warranty and defects claims, the appetite for continuing to provide funds had diminished, and eventually ceased altogether.”
Mr Verney said the company did not have any physical assets and its value was likely to be at a $1 million deficit before any defects claims were paid.
An Icon spokesperson said its track record demonstrated it was committed to working proactively to expedite any defects works in a safe and co-operative manner.
“Icon is committed to working constructively with all stakeholders on its projects in the interests of residents and owners,” he said.
“While there is no legal obligation, we continue to work with the Otto Owners’ Corporation and other stakeholders and are confident we can resolve the issue.”
An apartment owner in one of the buildings, who spoke on the condition of anonymity, said she feared her strata scheme would now be saddled with a repair bill exceeding $1 million.
“It seems a bit ridiculous that the government has weakened legislation around building warranty periods and defects and now is doing nothing to prevent large companies reneging on their responsibilities to owners,” she said.
The Ganellen construction group was founded in 1998 by building magnate-turned-television star Peter Maneas.
One of its entities traded for 22 years as Ganellen Pty Ltd before it changed its name to GDC Group in May and was placed into voluntary administration last week.
“All projects associated with this entity have been completed, occupied and in use for over two years, and all employees and contractors connected to this entity have been paid in full,” a Ganellen spokesman said.
“It has no impact on any project currently under construction.”
However, administrator’s documents reveal GDC Group has current court action against it that has now been left in limbo.
David Oliver was stunned when his lawyers informed him the company was being wound up, three days before Christmas.
Mr Oliver is a member of an owners' corporation that has been pursuing GDC Group through the courts since 2017 for over a million dollars’ worth of alleged defects in a North Shore apartment block.
“We were meant to be heading to a settlement conference with them in February,” he said.
It is likely that the compensation claim will now be directed to the developer, Defence Housing Australia, which subcontracted Ganellen to build the block.
“Now they’re left holding the baby – which is effectively the public purse,” Mr Oliver said.
“We’re lucky Defence Housing isn’t going anywhere.”
Mr Oliver said the court proceedings had been prolonged by Ganellen’s “continual challenging of [expert] reports.”
Earlier this month, another arm of the Ganellen Group was fined over the death of apprentice formworker Christopher Cassaniti in a scaffolding collapse.
GN Residential Construction Pty Ltd was ordered to pay $900,000 as part of a scathing court verdict.
Carrie Fellner is an investigative reporter for The Sydney Morning Herald.
Nigel Gladstone is an investigative journalist at The Sydney Morning Herald.