Served with breach notices ... Meriton.

Served with breach notices ... Meriton. Photo: Brendan Esposito

THE building developer Meriton stands to lose a caretaker contract at World Square worth more than $2 million a year after a dramatic falling out with tenants.

The owners' corporation of the World Tower residential apartments at World Square has accused the builder of breach of contract over building defects and maintenance issues worth more than $1 million.

A Fairfax Media investigation has discovered the owners' corporation has served Meriton, its building caretaker, with at least 15 official breach notices and formal complaints in the past two years.

Some of the breaches include fire safety defects and Meriton's failure to provide security swipe card details amid concerns over overcrowding in the building.

Meriton awarded itself the building management contract for World Tower after it completed the development in 2004.

In July last year, the owners' corporation voted at its annual meeting to terminate its caretaker contract.

While Meriton refuses to acknowledge the termination, saying all three owners' corporations must agree to terminate, Meriton's position as caretaker may still be on shaky ground when a second strata puts the contract out to tender when it expires next year.

''Like all contractors, when our current building management contract ends, in the next 12 months, it is normal procedure to review the contract - considering many factors such as service levels, experience etc,'' a strata spokesman said.

It means that for the first time since 2004 Meriton may face competition for its caretaker contract to the World Tower, worth $2.13 million a year.

The residential strata's documents show after the owners' corporation's first annual meeting in 2004, Meriton used its proxies to pass a resolution forcing the residential strata to engage it as caretaker.

According to NSW strata laws, any existing caretaker before the first meeting lapses unless the corporation votes to renew its contract for 10 years.

''The appointment of Meriton as caretaker is not in breach of strata laws. But there is a loophole in the law which allows an abuse of proxies for self-interest ahead of the scheme,'' said the chairman of the Owners Corporation Network, Stephen Goddard.

''This loophole also allows the builder to be caretaker in circumstances where there are unaddressed defects in the constructed building.''

Residential strata documents show many essential fire safety systems have been found to be faulty. The City of Sydney council also confirmed its inspections last year revealed a range of maintenance issues, including fire safety defects.. Other defects include water leaks in apartments and corrosion in common areas of the building.

Meriton denies all allegations.

Meriton and the owners' corporation are embroiled in three Supreme Court cases.