Work on a near-complete 39-storey Gold Coast project has stalled after a payment dispute, highlighting the major challenges of builder-developer relationships in a high-cost environment.
Tomkins Industrial and Commercial Builders has stopped work on the site, as reported in other media yesterday, claiming that it was owed a significant amount relating to Heran Group’s Midwater Main Beach tower project.
In a statement, Tomkins told The Urban Developer that it terminated its contract with Heran Group earlier this week, and that “despite many attempts and goodwill from Tomkins to resolve the issues, the Heran Group has failed to meet their obligations under the contract”.
A case was lodged with the Supreme Court of Brisbane last week by the Heran Group-owned York Property Holdings, the proponent of the development, against Tomkins, although a directions hearing scheduled for September 12 had not been assigned so the status of the court case remains unclear.
The dispute has been ongoing since late August when Tomkins first suspended construction work on Midwater.
Director Mike Tomkins said he was “acting now to safeguard the sustainability of Tomkins’ extensive portfolio of projects, as well as their reputation, their people, clients and subcontractors”.
“No builder can afford not be paid, and I am not prepared to continue to carry the costs of this developer,” he said.
York listed its first case against Tomkins in the Supreme Court in August, but those proceedings were discontinued before it reached the courtroom.
The developer and builder were unable to come to an agreement, and trouble resurfaced in early September, with Tomkins claiming that the Heran Group locked the gates to the Midwater site on September 3 while workers were on site, which resulted in the police being called to the Main Beach project.
“This created a workplace health and safety risk for our workers on site,” Tomkins said.
“It is understood Heran Group locked the access gates to the site in an effort to prevent subcontractors from removing their tools, which would allow them to work on other sites.”
Both York and Heran Group were contacted for comment, but did not respond.
York submitted plans for Midwater in 2016, originally as a 47-level apartment building for the site at 3496 Main Beach Parade.
These were approved in 2020 and the project has been under construction since 2021.
The latest update on the project’s construction from July reported that the builders had already finished up to level 33, glazing installation had completed on level 26, and the lift core had progressed through to level 37.
The payment dispute may impact buyers who are facing sunset clauses if delays in construction continue, which will allow York to exit contracts with buyers of the fully-sold-out Midwater project.
Archived web pages show that Midwater apartment prices were selling in 2020 from $859,900 for a two-bedroom apartment.
According to RealEstate.com.au, the median price for a two-bedroom unit in Main Beach is now $1.25 million.
Construction costs have been at the forefront of developers’ minds after the 30 per cent bump during Covid.
While Altus Group’s latest report suggests that cost escalations will ease in the coming years given declines in certain materials such as steel and timber, concerns over wage bills are still causing anxiety.
Construction wages increased by 0.8 per cent over the most recent full quarter and 3.9 per cent over the year, marginally surpassing the overall average.
Midwater Main Beach is not the only Gold Coast project facing payment strife. Draycon’s Chevron Island boutique apartment project has also stalled amid cash flow problems.
