Developer GDI Group accused of misleading GCB Constructions over finance for Drift Main Beach job

A Gold Coast development company was accused of “misleading or deceptive conduct” in its dealings with struggling builder GCB Constructions. Read what the court documents said

A Gold Coast development company has been accused of “misleading or deceptive conduct” in its dealings with struggling builder GCB Constructions.

In court documents for a now-discontinued case, GCB claims developer GDI Group gave a misleading impression of how it planned to pay for the $75m Drift project at Main Beach.

Four companies related to GDI, developer of 27-storey Drift, launched the Brisbane Supreme Court action against GCB Constructions in May.

GDI claimed the building company breached its contract by failing to lodge security bonds worth more than $3.7m.

Meanwhile, GCB alleges the developer owes it more than $3.8m in progress payments.

A photo of the Drift Main beach site, taken on May 21, which shows the gate had been removed and replaced with temporary fencing.

GCB went into voluntary administration on July 24, a day after the QBCC cancelled its licence over a failure to pay debts.

The Supreme Court matter has been discontinued, however GCB’s administrator has indicated the company would look to pursue new action if it could obtain funding.

In its court submission, GCB claimed GDI director Dean Gallagher had said he would personally be contributing $7.5m to the project.

The submission said Mr Gallagher also told GCB it would only be given the go-ahead to start work once the project had achieved “financial close”, implying that they could proceed once finance had been obtained.

According to the court documents, Mr Gallagher also told GCB managing director Trent Clark the balance of funding for the project would be provided by financier Qualitas.

On that basis, GCB claims, it agreed to defer its entitlements to progress payments and to provide the bank guarantees, via a number of amendment deeds to the original contract.

“If it were not for those representations, GCB would not have continued with the project,” the submission said.

Dean Gallagher of GDI Group.

Trent Clark, managing director of GCB Constructions

GCB claimed Mr Gallagher’s assurances about how Drift would be funded were “misleading or deceptive because they were either untrue ... or because (the developer) lacked a reasonable basis for making them”.

According to the court submission, once the project was under way in February this year, Mr Gallagher told Mr Clark that he had not contributed any of his own money to the project.

In May 2023, a representative of Qualitas told Mr Clark they wouldn’t be funding the project because the developer “never signed our senior loan documents all the way back in December”.

Qualitas was not a party to the court case and has denied it was ever the project’s financier.

Site of the Drift project at Main Beach, which was stripped of GCB Constructions equipment and branding.

GCB’s submission drew attention to amendments Mr Gallagher had made to his earlier affidavits to the court, “clarifying” that Qualitas was a “preferred financier”, not a confirmed financier as first submitted.

The builder claimed GDI had “failed to act reasonably” when it took the project out of GCB’s hands, given the builder had provided one of the two bank guarantees and had demonstrated bank approval of the second.

According to the court documents, when it informed GDI it would be able to provide the bank guarantee, GCB also asserted its entitlement to a $3.8m payment for work it had already performed.

“By taking the work out of GCB’s hands, (the developer) purported to avoid the obligation … to pay GCB a significant amount of money,” the court submission said.

The Hughes Ave site before GCB left it, May 8, 2023. Picture, John Gass

GCB had been seeking the matter be set to trial so it could demonstrate the developer was misleading and unreasonable and have the amendments to the contract set aside.

Responding to GCB’s submission, the GDI companies said their initial claim, which sought orders to take possession of the Drift site, no longer applied as GCB had since terminated the contract.

The developer’s submission said if GCB wanted to advance claims it had been misleading or unreasonable it should lodge a court application of its own.

Drift Residence, Main Beach

Judge Glenn Martin agreed, discontinuing the matter and ordering GCB to pay its costs.

The action over Drift began as GCB was already in court with developers of two of its other projects, including Marine Quarter Southport and Ascot Aurora in Brisbane.

The Marine Quarter matter was subsequently settled out of court.

Poly Group has lodged a defence and counterclaim in the Ascot case, and both parties have been given until mid October to disclose their evidence.