Case Study: Residential Apartment Developer

26th June 2017


The Company a developer of large residential apartment blocks engaged a builder to build a multi storey level apartment block (200+ apartments). Practical completion was provided in 2007.

In 2012 the builder (not related / arm’s length) had received and was responding a defects claim from the relevant Owners Corporation, and later in 2012 it went into liquidation. The Owners Corporation’s initial claim of circa $40k made on the builder, had by 2017 grown to $10+ mil, and by which time it had been made on the Developer.

The claim was at no stage admitted and at all times categorically denied by the Developer.

The Developer’s funder determined it could not continue funding the Developer’s litigation. Consequently the Developer’s Board determined the Developer was likely to become insolvent and appointed Alan Hayes as Administrator.

Our initial work included

  1. An immediate review of the Developer’s financial circumstances
  2. Investigation of creditors’ claims
  3. Review of the Owners Corporation’s claim
  4. Meeting with litigating parties (Owners Corporation and Developer) and consider the merits of each parties’ position

Our work revealed the following issues prevailing

  1. Circa $1,000,000 in legal fees expended by the Developer
  2. The Developer had ceased further development work
  3. Experts engaged by both parties and the respective reports prepared
  4. A method (amongst the many available) of rehabilitation could not be agreed
  5. Hearing in Supreme Court about to commence

Hayes Advisory philosophy is to provide solutions to benefit all stakeholders, accordingly we:

  1. Encouraged and participated in dialogue between the parties’ advisors to allow the fluent flow of information
  2. Explained the Voluntary Administration process, its objective and how all stakeholders may benefit by their faithful participation in it
  3. Encouraged the parties to allow the Voluntary Administration process to operate and thereby achieve its objective “to provide for the business, property and affairs of an insolvent company to be administered in a way that:

a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or
b) if it not possible for the company or its business to continue in existence – results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.”

and with the assistance of each parties’ principal advisors, mediate a resolution to the litigation


  1. The litigation was withdrawn, a payment in full and final satisfaction (although substantially less than that claimed) was paid to the Owners Corporation to undertake the rectification work

  The Company’s funding was restored and its creditors paid 100c : $1.00

  1. Consequently, the Developer was once again solvent and returned to the Board’s control by creditors’ resolution that the Administration of the Company should end.

The costs of further litigation (money, time, energy, management’s focus and apartment owners’ stress etc) were avoided, the two litigating parties achieved a definite outcome, acceptable to each, quicker and at far less cost than would have been achieved by continuing the Supreme Court Litigation.

Team Leaders     Alan Hayes and Matthew Nguyen

Year                         2017

Period                     2 Months

Hayes Advisory
Level 3 / 84 Pitt Street
Sydney 2000

(02) 8270 9300