A Canberra developer has paid $2.8 million to settle a legal dispute over the construction of a Braddon apartment complex.
The payout – which is understood to include $1.4 million to fix waterproofing defects, structural-steel corrosion and de-bonded masonry; as well as interest and legal costs – ends more than a decade long battle between builder Michael Koundouris and the owners corporation of the Lagani Apartments.
It is the second defect-related legal stoush Mr Koundouris has settled this year, after an agreement last month to fix issues at the 32-apartment Manhattan building in Turner.
Dr Lewis Rushbrook, who has chaired the Lagani owners' committee for more than a decade, said the impact on residents had been "horrendous" with their "quality of life shot to pieces".
"Living with full-on water damage, frustration with the developer, anxiety about what to do, where to get advice and how to fund repairs, and then the daunting, alien avenue for 10 little 'nobodies' of taking legal action against a well-known Canberra developer," Dr Rushbrook said.
Mr Koundouris was contacted for comment, but did not respond to questions.
The sales brochure, from 2000, hailed the complex as a "magnificent new living style" and said the name Lagani meant "Place of Rest".
"Lagani now raises [the old-fashioned] standards [of quality and workmanship] to new heights" the brochure reads.
"If you’re going to live in one of Canberra’s finest locations, be comfortable doing it.
"There’s really only one word to describe Lagani and that’s luxurious."
However, the new occupants said life in Lagani was anything but an indulgence or luxury.
The complex was deemed ready to occupy on December 20, 2000, and the owners moved in early in 2001.
A number of issues soon appeared, which Mr Koundouris investigated.
He conducted repairs on the building between 2001 and 2009, however the owners alleged the repair work had been inadequate and the defects persisted.
Pictures taken by occupants of the damage show flaking paint and mould from water damage, and cracked masonry and render.
The owners corporation successfully sued the developer for damages for breach of warranties in the ACT Supreme Court.
A list of alleged defects included corrosion of structural steel frame, cracks and de-bonding in the masonry and render, cracks in fibre-cement, inadequate stormwater pipework, waterproofing failures on balconies, in bathrooms, and on the roof.
The statutory warranty period for the building work in the ACT is five years, however, the parties disputed when that period began.
Justice David Mossop found in favour of the owners corporation and ordered Mr Koundouris pay $328,153.
That figure was tripled to more than $1 million by the ACT Court of Appeal on appeal in 2017.
Mr Koundouris then applied to the High Court for leave to appeal against that decision, but the application was rejected in February. The dispute resolved in March.
Dr Rushbrook said the settlement meant, for the first time in Lagani's 17-year life, the owner’s committee could now attend to ordinary business.
"It's still hard to believe that, within months of opening, this boutique, multiple award-winning, executive complex, began experiencing major and persisting problems, 'systemically defective' in the words of the High Court," Dr Rushbrook said.
"No owners or [owners corporation] should ever have to go through this."