The developer behind a luxury new Canberra apartment complex owes its builder more than $2 million, sparking a dispute which has forced the construction firm to abruptly halt maintenance work for residents in the city tower.
Developer Crafted Capitol Pty Ltd has been ordered to appear in the ACT Supreme Court on Wednesday after failing to repay a debt owed to builder Bloc since August last year.
The prominent building company has told residents in the Capitol Residences that it won't complete any maintenance or minor repair work at the 207-unit London Circuit complex until the dispute is resolved.
Crafted said the dispute, which it hoped could be quickly resolved, centred on contract variations the builder had lodged after construction was complete.
The developer claimed the amount owed was an "interim award" and a final determination would be made through a new dispute resolution process.
The builder has disputed that claim, saying the process was "merely another attempt" by the developer to avoid paying the debt.
In a letter to Capitol residents, seen by The Canberra Times, Bloc director Andrew Redwin said it was with "great reluctance" that the builder had suspended all work on the complex, which marked the first time it had taken such action against a developer in its 16 years in business.
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Mr Redwin said the company, which he said had forged a reputation as one of Canberra's best builders, had not been paid its final amount by the developer and, as a matter of principle, "cannot keep working for nothing at the Capitol Apartments".
Under the ACT's security of payment laws, a person or contractor can apply to an independent adjudicator if they have not been paid in a timely manner. If the independent umpire rules in their favour, the other party has to pay a set amount.
Attached to Mr Redwin's letter was an "adjudication certificate", which showed Crafted was ordered to pay Bloc $2.3 million. The decision was handed down on August 28.
The adjudicator's decisions are enforceable through the courts.
The Canberra Times has seen a letter from Bloc's lawyers to Crafted director Peter Sarris, advising him of a supreme court hearing to enforce the order at 9.30am on Wednesday, February 3.
Crafted's other director is Matt James, who The Canberra Times contacted for comment.
In response, a spokesman for Crafted Capitol Pty provided a statement which suggested the figure in the adjudication certificate did not represent a final determination.
He said the company had started a new dispute resolution process to "bring about an expedient final outcome".
"Crafted Capitol Pty Limited hopes that the process will result in a swift and comprehensive resolution of the parties' dispute," the spokesman said.
In his letter, Mr Redwin told residents that the builder had continued to work "as long as possible at our own cost".
"There are statutory rights and processes available to protect builders from non-payment, and we have reluctantly exercised these rights for the first time in 16 years," he said.
"We apologise for any inconvenience this may cause you."
In a statement to The Canberra Times, Mr Redwin and fellow Bloc director Andrew Mathias said Crafted's actions had left it "significantly" out of pocket but still liable for paying other contractors who worked on the building.
"Bloc constructed a high-quality building for Crafted, including through last summer's bushfires, which Crafted appear not to want to properly pay for," the directors said.
"In over 16 years of operations, Bloc has never been in a situation of a developer refusing to pay for Bloc's work."
The directors said the London Circuit complex was the first and only job it had done for Crafted.
Construction and fit-out of the 14-storey development was completed in April last year, with Capitol welcoming its first residents soon after.
The complex was spruiked as Canberra's first residential development with an in-house concierge service.
The ACT construction union's assistant secretary, Zach Smith, said the Capitol Residences' case showed why the Barr government needed to introduce its proposed property developer licensing scheme.
"Workers, contractors and home buyers should not be left in the lurch when the big end of town fails to pick up their bill," Mr Smith said.
Mr Smith said the unpaid debt to Bloc put in doubt more than $800,000 worth of payments owed to local contractors involved in the project. Those companies employed hundreds of local construction workers, he said.
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