GCB Constructions is being sued in Supreme Court by Marine Quarter Southport over twin tower project
A half-built $97m apartment project has “run into major problems”, and the tower’s builder is being sued by its developer. Here’s why:
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
A large Gold Coast construction company, currently working on three major apartment developments, is being sued by the developer of its largest project, which court documents said had “run into major problems”.
GCB Constructions is being pursued in the Supreme Court by company Marine Quarter Southport, which is developing the $97m twin-tower project of the same name.
While work is well under way on the first stage of the Marine Quarter development, next to the Broadwater Tourist Park at Southport, the companies are at a stalemate over when the second stage should commence.
Court documents said construction of stage one was due for completion in May this year.
While the builder said there was an agreement to complete the project sequentially, the developer said it had full discretion over when building should start.
In its submission to the Supreme Court of Queensland, the developer said it
gave notice for GCB to begin stage two in May 2022.
GCB asked the developer to delay its notice until March 2023 – a plea which was denied, according to the court documents.
According to the developer’s submission, GCB then refused to commence, claiming the notice to start on the second building should not have been issued until the first part of the project was complete.
In response, GCB’s submission said the “complex construction project” had “run into major problems”.
It said the request to commence stage two while stage one was still under way “creates enormous practical and logistical difficulties” due to site constraints.
Work on stage one had begun on August 31, 2020, the builder said, and Marine Quarter directed it to stop work from October 2, 2020 until February 2021.
GCB said the pause had impacted the commencement of stage two and that it had lodged claims to extend the completion time for stage one and recoup costs “caused by the suspension”.
Both claims were rejected by the project’s superintendent, Avanti Group, which also rejected claims for an extension of time and cost if the builder was compelled to commence stage two.
The developer has argued there was no suspension, saying in its submission that work did not commence under the contract as it had not obtained finance until February 2021.
In its submission, Marine Quarter said failure to resolve the dispute quickly would risk its financing arrangements and commitments to buyers in the development.
Court documents said the developer had obtained finance for stage two that had to be repaid by March 2024 and had entered into 44 contracts of sale for the second stage, with an anticipated completion date of December 2024.
GCB said Marine Quarter was “the architect of its own alleged detriment”.
The builder said it would be exposed to “substantial prejudice” including financial loss if it was required to construct stages one and two at the same time.
A second dispute between the parties is also under way, with GCB claiming the pricing for the construction of the second building has been incorrectly calculated.
The original contract price for the second stage was $52m, but the contract allowed for variations to be calculated in line with increased costs.
Financial status for 12 of Qld’s biggest builders under microscope
GCB claims the building price was miscalculated at $55.12m by the project’s superintendent and did not take into account the “significant” cost increase that would result if the two stages were built concurrently.
The developer claims the builder has not paid the security for the second stage as required under the contract.
The case continues in the Supreme Court, and GCB this week lodged a defence and counterclaim, which was yet to be made public on Friday.
GCB is also working on GDI Group’s 30-floor Drift Residences at Main Beach and Rayjon Group’s $45m Vantage Burleigh.
In its most recently-lodged financial reports, for FY2021-22, GCB made $938,755 net profit from revenue of $92.04m. Its FY21 net profit was $1.1m from $67.4m revenue.
The company had gross assets of $25.3m and liabilities of $18.3m, including trade debts of more than $10.7m.
Cashflow would have been in negative territory for the year, had the builder not had access to cash from financing activities, including a share issue, bank loan and other drawdowns. It had $87,947 cash or equivalents at the end of June.
The company is registered as G C B Constructions and solely directed by Trent Clark.
Marine Quarter Southport is directed by Victorians Ben Thomas and Stuart Biggs, who is director of development company Buildcap.
The plan: How Coast will become Australia’s ‘sporting epicentre’
The Gold Coast’s tourism boss says the city has the potential to become the “epicentre” of sports in the South Pacific region and reveals how.
ASIC’s failure is it has become too big to regulate
The nation’s powerful corporate cop is doing too much, and most of it is small fry.