The developers of Newcastle's first five-star hotel are embroiled in a legal dispute with the state's mine subsidence authority over grouting work under the building.
City of Newcastle sold the council "roundhouse" building in King Street to Syrian billionaire Ghassan Aboud's Crystalbrook Collection hotel business for $16.5 million a year ago. It granted development approval in August for the building's transformation into a nine-storey luxury hotel called Kingsley.
Council staff moved out of the landmark Brutalist structure in early October, and Mr Aboud said at the time that he hoped to open the hotel in early 2021.
The Newcastle Herald has been told that Subsidence Advisory NSW has ordered the developer to grout old mine workings under the building, and the company has taken the matter to court.
The case is listed for a directions hearing in the Land and Environment Court on February 28 as an appeal against a Department of Finance secretary decision made under the Coal Mine Subsidence Compensation Act 2017.
Crystalbrook declined to comment beyond saying it had been granted a construction certificate for the $24 million conversion. It would not say whether the legal case was holding up work.
SA NSW would not comment about the legal dispute, but a spokesperson said it could place "conditions on proposed building or alteration works in a Mine Subsidence District to help prevent damage and ensure the safety of the community".
"For large and complex proposals, such as multi-storey redevelopments, applicants may be required to undertake grouting works as part of conditions of approval," the spokesperson said.
"These conditions protect structures from damage, ensuring they remain safe, serviceable and repairable should subsidence occur."
The spokesperson said grouting of sites under multi-storey developments in Newcastle's CBD was common and recent examples included Newcastle Court House, the NeW Space university campus and Iris Capital's David Jones hotel conversion in the Hunter Street mall.
Grouting involves pumping concrete into old mine workings so they don't collapse or subside.
A statement of environmental effects lodged with Crystalbrook's development application last year said the detailed design of the project would have "appropriate regard to SA NSW approval requirements".
"Accordingly, mine subsidence matters have been adequately considered and the risks can be appropriately managed," it said.
In a letter to City of Newcastle and project engineers Northrop in May last year, SA NSW said the authority's records showed the former council administration building was underlain by abandoned workings in the Borehole seam and within the angle of influence of the Yard seam.
Ms Fityus required the developer to complete a desktop geotechnical study of the site.
The Kingsley includes 130 wedge-shaped rooms and a six-metre glass addition housing a restaurant and pool.