Horror $9m early Christmas present for 33 apartment owners

Just 13 days before Christmas, 33 Melbourne apartment owners had their world turned upside down from a single email.

EXCLUSIVE

Just 13 days before Christmas, 33 Melbourne apartment owners had their world turned upside down from a single email.

Their local council, Frankston City Council, issued them with an emergency works order as their homes posed a “danger to life arising out of the condition of building”.

Combustible cladding had been installed, the residents learned, leaving them at risk of a deadly inferno if so much as the lighting of a cigarette or a barbecue went wrong. But that wasn’t all.

In parliamentary minutes, local politician Chris Crewther has since detailed that there were “many defects” at the Frankston South site including “multiple balcony collapses, significant cracking, water leaks that had rotted out carpets and wall linings to the extent that mushrooms and black mould began growing at an alarming rate, a collapsing underground carpark and more”.

An independent building report obtained by news.com.au estimated that it would cost in the vicinity of $9 million to fix all this, including $7.2 million on the cladding alone.

Much of that has come out of the owners’ own pockets, leaving some of them financially ruined.

“This is not a case simply about combustible cladding and building defects,” Kerry Ould, 58, who resides at the block, told news.com.au.

“This is a case of hardworking Victorians not getting what they paid for and now having to live in unsafe homes.”

In response, the sole director of the building company behind the debacle, Emad Farag of 4S Constructions Pty Ltd, told news.com.au “I have never intentionally or knowingly done the wrong thing to gain a financial advantage and I hold myself to a very high standard of morals and ethics.”

Mushrooms growing at one of the units.

The apartment block has a number of defects.

Residents had feared there was a problem with their apartments for some time and first raised the issue with the state regulator, the Victorian Building Authority (VBA), in 2015, but were initially “rebuffed”, according to Ms Ould.

Three years later, though, the VBA came back with a vengeance and issued the emergency works order.

That fateful day was six years ago, in 2018, when the residents learned the extent of their building’s problems.

“It cost us $150,000 at Christmas to get some of those orders fixed,” Ms Ould recalled.

The VBA had to employ a 24-hour fire warden so that residents could stay in their homes rather than being left with nowhere to go, while the urgent fire safety issues were fixed.

Mr Farag was immediately suspended by the VBA for his work at the apartments back in 2019 and his building licence was cancelled.

He tried to appeal this decision in 2021, but was rejected.

“There is no further enforcement action that can be taken by the Authority,” the VBA told news.com.au.

Emad Farag has had his building licence cancelled.

Kerry Ould has been living a nightmare.

Residents have since spent more than $300,000 on independent building reports trying to determine all the issues in their apartments.

Cladding Safety Victoria (CSV), a government body established to fix cladding issues, is working on their site.

The government body has identified eight buildings as “high-risk” where Mr Farag was listed as the builder and are eligible for funding for cladding removal and replacement under the government scheme.

News.com.au understands that the amount of damage Mr Farag’s company 4S Construction did with cladding across the eight apartments will cost between $10 to $20 million of taxpayer money to fix.

CSV agreed to contribute $1.2 million for the removal of the hazardous cladding at the Frankston South property.

Even so, residents at the Frankston South block have been left staring down the barrel of financial ruin.

“While we welcome the CSV initiative, I’ve got an unsellable apartment,” Ms Ould lamented.

She bought the property for $360,000 in 2017 but says it is now “worth nothing”.

That’s because the building’s owners corporation have taken out a $2.4 million loan to address other issues at the site but this comes with a hefty interest rate.

Each owner is paying around $70,000 over the next five years but “including interest it comes up to about $110,000,” Ms Ould claims.

As an example, Ms Ould’s strata fees are currently around $11,000 a year.

On top of that, residents are currently $40,000 in arrears, behind in strata payments, because they simply can’t afford them.

“We’ve got pensioners in there, they can’t afford the loan repayments, we’ve had one go bankrupt, it’s a nightmare,” Ms Ould said.

“It’s almost like five years of your life has been screwed over.”

And the double whammy, she added, is that when one resident goes bankrupt “I have to carry part of their portion” of the loan.

The site has been in a constant state of being repaired.

The defect bill is as high as $9 million, according to an independent report.

The woes of the residents at the Frankston South building have been brought back into the spotlight last month after Mr Farag landed in court again.

At the end of March, the 64-year-old builder pleaded guilty to three offences carried out by a different company of his, E & M Farag Pty Ltd, of which he is also the sole director.

Mr Farag and E & M Farag Pty Ltd were convicted and fined for failing to comply with building orders and to provide reports on essential safety measures over a period of three years.

The matter related to City Edge hotel, which was owned by the company, but failed to comply with orders from Greater Dandenong Council demanding an occupancy permit.

Mr Farag didn’t obtain the compliance certificate until June 2022, which the judge of the case said was an “excessive” delay.

“The fine was due to administrative error of not providing a response to their order within the time allocated,” Mr Farag said.

He was called a repeat offender during last month’s case.

Indeed, the builder has previously been in hot water, fronting multiple court cases dating back to 1998, which is coincidentally the year he started 4S Constructions.

“You are correct in saying that I have had one other previous judgment against me,” he told news.com.au.

“In a career spanning over 30 years you would be remiss to think that any builder hasn’t made mistakes along the way.

“Unfortunately, due to previous staff and subcontractors I learnt some lessons the hard way which led to these infringements.”

Ms Ould is furious by this answer. “This is far from the case of ‘oops, sometimes we all make mistakes’,” she said.

Emad Farag was fined for other breaches last month.

Residents say they have been financially ruined.

Another resident at the apartment, Johnathan*, who wished to remain anonymous, has been stuck with a defective balcony for years.

“We keep the rent really low, because the balcony collapsed,” he told news.com.au. “It’s visibly collapsed. Pretty much if you took the support out, that whole corner has dropped.”

A defect report found that several balconies needed to be retiled as they were insufficiently waterproofed.

In response, Mr Farag said “All the waterproofing was done and certified by a reputable waterproofing company for all balconies and wet areas. We have construction photos to prove.”

When news.com.au asked him to supply these photographs, he did not respond.

“Cladding, we have admitted that one of the buildings had been overlooked by us and the building surveyor and we have offered to change the cladding for that whole building,” Mr Farag added in his earlier response.

He blamed residents for the defects in their apartment block remaining unresolved, as he said he offered to fix them but was denied entry.

At the time, his builder’s licence was suspended and residents wanted him nowhere near their site, fearing more damage would follow, Ms Ould said.

The Frankston South block is in the process of taking legal action against Mr Farag and his company, 4S Constructions.

The apartment block has been mentioned in parliament.

Chris Crewther, the member for Mornington, has been advocating for residents at the apartment block for years.

“I have been fighting for the residents (at this location) for many years,” he told news.com.au. ‘They need justice.”

In parliament earlier this year, Mr Crewther brought up the plight of the Frankston South residents.

“I started helping these residents when I was the MP for Dunkley in late 2018, early 2019, and continued even when I was not an MP, and then again since I became the MP for Mornington in 2022,” he said.

“While the building and homeowners do not fall within my electorate, I am compelled upon humanitarian grounds to assist in one of the worst injustices I have seen.

“I hope dodgy builders are properly dealt with so that they won’t be able to hurt anymore people. The financial and emotional pain people go through when they have a defective home with no recourse is destroying,” Mr Crewther added.

Mr Farag rejected claims he was a “dodgy builder”.

“It wouldn’t be fair a comment,” Mr Farag said.

“That politician wouldn’t even know anything about me, the projects I have done or the work that I have been doing in the community for the last 35 years.”

Last year, news.com.au reported on a similar case in the Melbourne suburb of West Footscray where 77 residents have been lumped with a $4.5 million bill.

Many of them are financially ruined as a result.

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Originally published as Horror $9m early Christmas present for 33 apartment owners