Owners of the Elara apartments have revealed they contemplated selling the entire complex to be demolished and rebuilt, such was the scale of alleged defects in the building and their own frustration at roadblocks in securing compensation for an estimated $20 million damage bill.
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The revelation comes as the owners prepare for Federal Court action against the builders' insurance fund, which could end years of legal wrangling and building disputes over the controversial Bruce development.
The Elara owners corporation is suing the Master Builders Fidelity Fund Scheme, seeking remedies for defects to the 120-home complex on Thyne Street, opposite the University of Canberra.
The owners have been forced to pursue compensation through the insurance fund after the project's builder, B&T; Constructions Pty Ltd, was placed in liquidation in July 2017.
Until the firm's collapse, the parties had been involved in Supreme Court proceedings, which began in 2013 amid allegations that poor construction work had resulted in defects in the building's common areas, walls, slabs, beams, balconies and utility services.
Documents filed in the Federal Court, obtained by The Canberra Times, show the latest legal battle will centre on the owners' eligibility to claim compensation from the builders insurance fund, which is capped at $85,000 per apartment.
The fidelity fund was established in 2002 under the Building Act 2004 to provide consumer protection against incomplete construction work. It is a separate legal entity to the Master Builders Association, but the two share offices in Fyshwick.
In a statement of claim, the owners' lawyer, Christopher Kerin, said they become eligible to make claims against the fund following the appointment of liquidators to B&T; Constructions Pty Ltd in July 2017.
At that point, the owners had "exhausted all relevant rights of action and other legal remedies for the recovery of its loss" resulting from the alleged breaches of the statutory warranty, according to the statement of claim.
In response, the lawyers representing the fund, JS O'Connor Harris and Co solicitors, said the owners' right to make a claim for payment had already expired by that point.
The federal court is scheduled to hear the case on December 17 and 18.
David Allen, who bought an Elara apartment in 2012, said a successful claim would bring some closure following years of costly and stressful disputes.
Mr Allen said he had become aware of problems with the building "very soon" after buying it, prompting him to join the complex's executive committee.
Amid stop-start, and ultimately failed, negotiations with B&T; Constructions Pty Ltd and its lawyers, the owners had sought advice from Access Canberra about the feasibility of selling the entire complex to be demolished and redeveloped, he said.
The proposal never eventuated because it was not deemed financially viable, he said.
He still rents out his apartment, but said its value has dropped from $390,000 to $330,000.
"It is just a really dodgy set of circumstances all up," Mr Allen said.
"No one has stepped up, not the ACT government, the bureaucrats, not any of the contractors involved and not the Master Builders. No one has ever said that yes, you have a problem and we can help out.
"There is no real process for anyone trying to make a claim, they are just trying to block you as hard as they can.
"I'm not worried about the reputation of Elara anymore. I'm speaking out because everyone in Canberra needs to know that this is not isolated to one building."
A spokesman for the Master Builders Fidelity Fund said its trustees were compelled to challenge the owner's compensation claim.
"As a result of the rules governing the scheme, the Fidelity Fund can only respond to those claims which fit with this framework, otherwise it is misapplying its funds and breaching the terms of its trust," the spokesman said.
"Unfortunately, the trustees of the fund believe that the present claims are outside the terms of the scheme.”
Master Builders Association of the ACT chief executive Michael Hopkins sympathised with the Elara apartment owners, who he said were the victims of a lax regulatory system that failed to hold the builders accountable for the alleged defects.
"This case demonstrates the lengths that ACT unit owners have to go to in order to get building defects rectified in the ACT," Mr Hopkins said.
"The ACT government has been too slow to act on reforms which have been recommended at federal and ACT government level to address illegal pheonixing, meaning Canberra home owners end up paying the price for defective building work.”
