Building industry brawl breaks out over major Perth apartment development

A dispute has erupted over a $140 million apartment development, Shenton Quarter, in Perth's affluent western suburbs, pitting the developer against one of Australia's biggest builders and causing more financial pain for off-the-plan buyers of the apartments.

Cracks in concrete floor of Shenton Quarter site
Construction union CFMEU supplied media with images it says reveals the poor state of the Shenton Quarter build. (Image source: CFMEU)

A major industry war of words has broken out in the Western Australian building industry over an embattled residential complex development, the Shenton Quarter, in Perth’s affluent inner western suburbs.

The nearly finished Shenton Quarter, in Shenton Park, has had a troubled journey towards completion, with the builder, construction giant BGC closing the site a month ago only for developer Iris-PW to announce it had retaken possession and appointed Gowdie Management Group to complete the nine-storey apartment complex.

The moves have sparked a tit-for-tat public relations brawl that may ultimately materialise in legal or contractual disputes between the developer and builder, with hapless off-the-plan buyers caught in the crossfire.

BGC’s initial decision to close the site was said by the builder to be based on engineering and design issues that had led to the building having structural issues, such as major cracks on the concrete floors.

The developer disputed those claims and on Monday (27 November) replaced the builder with Gowdie, only for BGC to respond by claiming that independent reports detailing deficiencies and necessary rectifications at the apartment site had not been satisfactorily resolved.

Engineering data and requests for the matter to be resolved through mutual discussions had also been repeatedly dismissed, BGC said.

Once BGC had gone public with its side of the story Iris-PW went on the offensive, lambasting BGC over its workmanship, only for BGC to argue the developer’s site engineers, not under the management of BGC, had caused similar issues on other projects.

A statement from Iris-PW said, “The project engineers undertook a comprehensive review of the items raised in the reports and found these either involved errors, or had made incorrect assumptions in their calculations.”

“Despite this, Iris-PW facilitated discussions between the project engineers and BGC’s engineers, in line with its commitment to the health and safety of the workforce and the future users of the building.

“The reports prepared by BGC’s engineers also failed to take into account any of the outcomes actually found on site.

“In addition to re-examining and confirming project designs, the project engineers exhaustively investigated the site evidence – and in all cases found workmanship that did not follow the prescribed design.

“They provided a comprehensive explanation on the issues observed and provided solutions for required remediation works.

“All of these works have been completed and confirmed, with the exception of one small area which was not completed before BGC left the site.”

BGC hits back

BGC insisted it remained concerned with the project’s engineering and structural adequacy.

“Despite two independent engineering reports highlighting these deficiencies and the necessary rectification requirements, these issues remain unresolved to BGC’s satisfaction,” the statement said.

“BGC’s request for engineering data and subsequent discussion between the parties’ engineering experts to resolve these matters was repeatedly dismissed.”

“BGC will not continue to construct a building with known deficiencies and management remained concerned the issues raised would need to be addressed to ensure the safety of the building’s occupants.

“BGC is aware of similar issues by the same engineer and engineering firm which are currently subject to legal actions following building structural deficiencies,” it said.

BGC Housing Group, Australias fourth largest builder, is also embroiled in a class action lawsuit brought by thousands of customers angry at building delays and additional project costs. Iris Residential (formerly TRG Properties) is a private apartment developer with involvement in property development in Perth and Melbourne.

Three weeks of enquiries from API Magazine to multiple WA government departments, including Housing, Premier and Cabinet, and Commerce, about the state of the WA building industry and other more specific matters around builders not mentioned in this article, have so far gone unanswered beyond a promise to reply “asap”.

A Shenton Quarter Facebook page post congratulates Development WA for winning the Urban Renewal award at the UDIA WA 2023 Awards for Excellence for Montario Quarter, of which it says Shenton Quarter is set to become an integral part.

Shenton Quarter customers left helpless

Customers, meanwhile, who have paid hundreds of thousands of dollars in deposits for apartments within the $140 million complex, are still living in hope the faults first revealed by the construction union CFMEU can be overcome.

Some are already being hit with stamp duty bills for the unfinished homes they signed onto as early as 2019.

Speaking on ABC’s 7:30, single mother Bethany Evans said she was $100,000 out of pocket with no way of exiting her contract.

Now looking for her fourth rental property since signing onto the apartment, she said she had lost confidence in the quality of the build she would eventually have to live in.

“I don’t feel confident about going through with the purchase (and) I will need to see some really strong validation that there are no structural concerns.”

Iris-PW’s assertion that “the project is 95 per cent complete, has been comprehensively monitored … and assessed throughout the build process, and is on track for certification on completion” were of little comfort to buyers still having to find somewhere to live as they wait in vain for their new home to be built.

“If the builder should go under, there is no protection on a building like this,” Ms Evans said.

“I am not sure I can afford that.”

WA Commerce Minister Sue Ellery told the same program that apartment buyers had a number of protections available to them, such as “general remedies under the Australian Consumer Law”.

“Recent changes to the WA strata laws have also made it easier for owners corporations to directly sue builders for negligent and defective building works.”

Article Q&A

Is the Shenton Quarter apartment development in Perth near completion?

Shenton Quarter developer Iris-PW asserts that the project is 95 per cent complete but a major row between it and dismissed builder BGC has slowed the completion process amid claims of faulty workmanship from both sides.

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