Former South Australian politician Ian McLachlan sues developer and builder over $3m East Tce apartment delay

A former defence minister is angry with the time taken to build his $3m city apartment - and now wants a staggering discount.

250 East Terrace apartments. Supplied to The Advertiser Real Estate Magazine by Harcourts Brock Estates.

Former federal defence minister Ian McLachlan has launched legal action over a delayed multimillion-dollar apartment in a city building a Supreme Court judge described as a “disaster”.

The political and sports heavyweight is seeking $650,000 in damages from the firms behind the 250 East Tce development accusing them of failing to meet an agreed construction deadline for a $3.01m apartment, according to a statement of claim.

But developer 250 East Pty Ltd and builder Pajo Projects have denied any wrongdoing, in part accused Mr McLachlan of contributing to the delays and counterclaimed for $180,000.

In his Supreme Court claim for breach of contract, Mr McLachlan – a former SACA president – signed a contract for the apartment on March 18, 2016, and provided a bank guarantee of $155,000.

He claims that under the contract 250 East Pty Ltd was to finish his apartment in the 14-unit project by December 31, 2017. He alleges that Pajo Projects was later appointed as a co-developer and co-owner of the project with final completion of the project extended to September 30, 2018.

Ian McLachlan is suing the joint venture of 250 East Tce.

Joe Sommariva is director of builder Pajo Projects

The Supreme Court heard on Wednesday that central to the dispute is a supposed contract variation between Mr McLachlan, 250 East’s director Robert O’Neill and Pajo Project’s Joe Sommariva on July 3, 2018.

Mr McLachlan asserts in his claim that under the terms of the agreement, which was “partly oral”, that if the apartment was not ready by the September deadline he would be given an 8 per cent per annum discount on the original $3m bill until the project was completed.

According to his claim certificate of occupancy was issued 862 days later on February 8, 2021 “such as to make the purchase price $2,441,316.”

Mr McLachlan, who is suing for breach of contract and misleading and deceptive conduct, has placed caveats on the property preventing the joint venture partners from selling or leasing the property.

The 250 East Terrace apartment project is a high-end project featuring just 14 apartments overlooking Victoria Park. Picture: Giuseppe Tauriello

In his claim his lawyers argue Mr McLachlan is incurring costs associated with an office in the city and marketing costs for the sale of his Walkerville property.

In the companies’ defence they argue the July letter was a “letter of comfort” and that it did not override the terms of the original contract.

“While the respondents were not prepared to vary the contract they were prepared to agree to a separate and independent letter of comfort,” their defence says.

They argue that Mr McLachlan had been kept “appraised” of delays and that he had caused them “loss and damages”..

“The non-sale of the apartments is costing the respondents the sum of $754.52 per day (in excess of $22,000 a month) in holding costs,” the defence says.

Last September Mr Sommariva told The Advertiser the building would be completed “within months” after more than two years of delays.

A subcontractor, backed by staff and he construction union, picketed outside the 250 East Tce project in 2019 claiming his company was owed $180,000.

The project was also the site of a protest in October 2019 over a pay dispute with a subcontractor.

Supreme Court Judge Graham Dart directed parties on Wednesday to attempt private mediation but earlier said that there will “invariably” be a trial.

“Whether there is a valid notice to complete turns on what the letter of July 3 means … if Mr McLachlan is wrong … he was always obliged to pay the full $3m,” he said.

“I know from my knowledge of this building that it has been a disaster at one level because it has taken years (to complete).”