Midwater Main Beach: Payment dispute between owner, builder reaches Court of Appeal

A multimillion dollar dispute between the owner of a 40-storey apartment development and the head contractor, whose contract was purportedly terminated, has flared up again. Here’s the latest.

The owner of a $100m, 40-storey apartment development at Main Beach bedevilled by a costly dispute with the builder is appealing a recent decision that could have forced to hand over more than $12 million.

The relationship between York Property, the Heran Group subsidiary developing Main Beach’s 119-unit Midwater tower, and head contractor Tomkins soured last August, with police sensationally called to the site on September 3 to defuse tensions.

York Property purportedly terminated the contract for reasons including an allegedly defective facade. Tomkins disputes the termination and denies the work was defective.

Originally slated for completion in November, York Property is now unable to advise when the building will be finished, leading to anxiety among buyers that their contracts will be cancelled in order to resell the units at 2025 prices.

Sarah Wallace (centre) and other buyers in the Midwater Main Beach project out the front of the building. They are unhappy with how the development has progressed. Picture Glenn Hampson

York Property previously told this masthead works were now progressing well since related entity Heran Construction was appointed to bring the tower home.

In dispute is $12,736,532.22 worth of progress payments Tomkins says it is owed.

Last month, Supreme Court Justice Rebecca Treston found an adjudication under the Building Industry Fairness (Security of Payment) Act 2017 (i.e. the BIF Act), which ruled Tomkins was owed $16,825,279.17, was invalid because adjudicator Chris Lenz had included $3.7m worth of unfixed materials in the sum not being pursued by Tomkins at that stage.

Builders collecting tools and equipment, being watched by security, and leaving the Midwater building site at Main Beach. Picture: Glenn Hampson

However, in its appeal to the Court of Appeal, York Property argues it should not be liable to pay the readjusted adjudication amount of $12.7m until completion of the work, when the figure may be confirmed or adjusted again, under the terms of its now-terminated contract with Tomkins.

According to Justice Peter Flanagan, in his decision of March 25 preventing payment to Tomkins pending the hearing of the appeal, York Property’s position is that, since the work was taken out of Tomkins’ hands after the issuance of a show-cause notice, the money would be due and payable after adjustments were made following completion of the works, as stipulated under the contract.

Midwater Main Beach. Picture Glenn Hampson

For its part, Tomkins argues York Property has attempted to unlawfully ‘contract out’ the provisions of the BIF Act, and that, notwithstanding the work being taken out of its hands, it is still entitled to progress payments for work done up to that point.

Justice Treston originally sided with Tomkins and the adjudicator, finding the payment claim had been made prior to the contract’s suspension, and so should be paid out of the $25m escrow account set aside by York Property.

Justice Peter Flanagan. Picture: Philip Norrish

Tomkins conceded York Property’s appeal was arguable, but submitted it should still be paid the $12.7m while the appeal is heard.

However, Justice Flanagan disagreed, extending the injunction against payment until the appeal is heard on a date to be fixed, likely in May.

Originally published as Midwater Main Beach: Payment dispute between owner, builder reaches Court of Appeal