Dubious loan, ‘bully boy’ tactics as costs blow out on Sydney Fish Market

Construction giant Multiplex bullied a key subcontractor on the new Sydney Fish Market into signing a dubious loan agreement to ensure that his company finished the job before falling into administration due to extraordinary cost over-runs on the project.

Sharvain Facades, which designed and manufactured the scaled roof, went into administration two weeks after the roof was finished in March, its costs on the project having blown out by $32 million.

Multiplex faces battles on several fronts over the construction of the new Sydney Fish Market.Credit: Sitthixay Ditthavong

Its collapse followed dozens of client-requested changes to the scope of the project, and two years of delays due to COVID-19 and wet weather, during which time the cost of materials and labour skyrocketed.

The Herald can reveal that Multiplex is also embroiled in legal proceedings with the engineering company that made the watertight structure known as a cofferdam that enabled the market to be built over Blackwattle Bay, an operation described as “a feat of engineering on steroids”.

Engineering firm J Steel is suing Multiplex in the NSW Supreme Court for refusing to pay it, withholding $11 million worth of payments under security and taking work out of its hands. Multiplex has counterclaimed that the work was non-compliant and deficient.

The payment controversies that have been aired in court represent a fraction of the cost disputes between Multiplex and subcontractors involved on the Sydney Fish Market, and raise questions over whether the building can be completed within its $836 million budget.

A legal stoush is brewing over the watertight structure known as a cofferdam that allowed the foundations of the new market to be laid.Credit: Brook Mitchell

The Minns government, which inherited the project after the budget had already been increased by $500 million, is determined not to spend a dollar more. Infrastructure NSW said it had funded all approved variations and the project remained on budget.

“Multiplex entered into a fixed-price contract in 2020 with the NSW government on the new Sydney Fish Market project, and as such are expected to deliver within the agreed terms,” a spokesman said.

“Multiplex holds responsibility for engagement and management with subcontractors.”

But subcontractors claim they are paying the price for changes and delays not of their making. None would comment publicly as they feared commercial repercussions.

Documents tendered in the Federal Court show that Sharvain agreed to design and construct the roof for $41 million in May 2021 with an expected completion date in 2023.

But after being held up by setbacks elsewhere on the project, construction did not begin until April 2024. By October last year Sharvain had already spent $58 million and estimated the total cost would hit $73 million.

It was still being asked to alter aspects of what it had agreed to deliver, due to continuous revisions of the building, which the current tenants have claimed is not fit for purpose.

However, instead of renegotiating the contract, Multiplex and Sharvain signed a new “deed of agreement” with a new completion date set for June 2025 and $4.3 million added for cost variations.

The agreement also set up a $16 million “loan” from Multiplex to Sharvain, with two $5 million portions of the debt forgiven when Sharvain met specific building milestones.

This arrangement still left Sharvain short on its claimed costs, $6 million of which were portrayed under the deed of agreement as the remainder of its debt to Multiplex.

Sharvain is now being pursued by angry creditors under the false impression that the firm was the beneficiary of Multiplex’s generosity.

An independent party who was familiar with the deed but not authorised to speak publicly said the agreement was a “disgrace”.

“[Multiplex] used bully boy tactics to reclassify a genuine income payment as a loan. It should have been reported by [Sharvain’s managing director] Boris Kostura to the authorities, but he was desperate to get paid,” the person said.

Categorising the $16 million as a loan means it would probably be reported against a general ledger in Multiplex’s financial statements rather than specific to the Sydney Fish Market, concealing the extent of cost overruns on the project.

Multiplex recorded a net after-tax loss of $219.5 million last calendar year, which it largely attributed to losses incurred on the Queens Wharf casino complex in Brisbane.

Multiplex declined to answer specific questions. A spokeswoman said: “We gave Sharvain a loan in good faith in an attempt to assist them out of a difficult financial position and keep the new Sydney Fish Market project on track.”

Kostura declined to comment.

He has previously told the Herald that he agreed to it reluctantly because he did not want to hold up the project, and now regretted it.

“Our intention was not to be a roadblock, but rather to be part of the solution,” he said in March.

Multiplex said at the time that it was seeking an urgent meeting with NSW Treasurer Daniel Mookhey to seek financial support for its subcontractors. The treasurer’s office said it had yet to be approached.

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