Hotel Australasia owners fail in civil case launched over claims of unfinished work

The new owners of a heritage-listed hotel on the NSW Far South Coast failed in their attempt to sue the previous owners after claiming the building’s renovations weren’t completed as agreed, leaving them almost $180,000 out of pocket.

Originally built in 1904, the Hotel Australasia in Eden reopened in late 2022 after a restoration.

Eden Australasia Pty Ltd bought the hotel in March 2022 for $1.65 million, but just two months later alleged the previous owners, Karneil Pty Ltd, breached their contract by failing or neglecting to complete the agreed works.

While Eden Australasia launched a civil case against Karneil in the NSW District Court over the allegations, their claim was dismissed on Thursday (29 August).

The new owner had claimed Karneil didn’t complete works on the hotel’s veranda, facade and roof, which meant it had to pay for the works itself. It sought about $178,000 in damages, plus costs.

Karneil denied the allegations, arguing it completed the works in compliance with the contract.

Judge Susanne Cole said the relationship between Eden Australasia’s senior consultant John Palasty and Karneil co-director Neil Rankin deteriorated after the settlement of the contract in March 2022, “largely over the difference of views as to what work Karneil was liable to perform and pay for under the contract”.

She said that April, Mr Palasty emailed Mr Rankin, “effectively severing the relationship”.

Judge Cole said she determined that Karneil’s obligations were confined to certain works specified in clauses of the contract.

She said on the basis of Mr Rankin’s evidence, which was supported by photographic evidence, Karneil had completed the work as specified by the settlement day.

“Eden [Australasia] argued that, even if Karneil had performed the works, if it had failed to pay for materials or failed to pay sub-contractors, and if Eden had suffered loss as a result of that failure, then Karneil would be in breach of the contract,” Judge Cole said.

“Eden has failed to prove on the balance of probabilities that it has paid any amount that Karneil ought to have paid in relation to the performance of the work required under clause 53.1 of the contract.”

She said Eden Australasia, which bore the onus of proof, had failed in its claim and dismissed it.

Bega Valley Shire Council sold the Hotel Australasia to Karneil for $150,000 in May 2020.

Council’s manager, property and legal, Rickee Marshall, told Region that the price helped shape a new future for Eden through rescuing an iconic local landmark that continues to bring investment and new opportunities to the town.