Hundreds of residents left homeless after a storm ripped off the roof of their Lidcombe apartment block have suffered another blow, with their insurer rejecting their multi-million dollar claim.
Insurance giant AIG has denied payouts to repair the building - developed by controversial Auburn councillor Ronney Oueik - because its expert found it did not comply with the Building Code of Australia.
Structural engineer Roderick Broune concluded the roof was riddled with defects and that, had it met basic standards, it would have withstood the violent weather on Saturday, January 30.
"The roof contained latent structural defects, that were due to poor design and/or workmanship during the initial construction ... and if the roof had not contained these structural defects then no loss and damage would have occurred during the storm," AIG said in a letter.
In the wake of the storm, there was outrage over the fact Auburn Council had decided to approve Cr Oueik's bid to modify the roof before construction began in 2008.
But Fairfax Media can reveal the entire building was approved and certified by Auburn Council itself.
A council spokesman said it strongly denied Cr Oueik exerted any improper influence over the certification process.
"[We] can confirm at the time of certification the council engaged a very experienced independent consultant to undertake the inspections and peer review concerning the Occupation Certificate," he said.
"Council is currently undertaking its own independent investigations into the cause of the damage and addressing the comments as raised by AIG, with the Owners Corporation."
The apartment block on 14-22 Water Street, Lidcombe, was constructed by BBC Development, whose sole director is Cr Oueik.
He and his fellow councillors, including another developer, Salim Mehajer, were suspended ahead of an inquiry examining "planning and development matters [that] may have inappropriately benefited a number of councillors".
It was earlier revealed the strata agency managing the Lidcombe building until the day before the storm was Combined Real Estate, which is co-directed by Cr Oueik's council ally and mayor Le Lam.
During an extraordinary general meeting of tenants and owners on Thursday night, they were told AIG had again denied their claim to cover the repair, loss of rent and emergency accommodation costs after they disputed the initial rejection.
There were young families, including women close to giving birth, in the crowd of distressed residents, who are mostly living with friends and family and in "shoeboxes".
"We thought we'd be able to go back in in a few weeks, but now we don't know how long this will go on for. We're living in a black hole," said an owner of one of the 53 units who asked not to be named.
"I'm losing $550 every week in lost rent while paying the Commonwealth Bank $2044 every month in interest only mortgage repayments. Plus I'm also paying the council and water rates and strata levies."
At the meeting, the owners agreed to raise $200,000 in special levies to hold onto their lawyers and continue pursuing money from AIG, Auburn Council, and BBC Developments.
They also agreed to seek a $2.4 million strata loan to start repairing the building themselves. The hole in the roof has not been covered and the building is deteriorating.
"We are facing financial hardship from all angles and may end up not being able to afford to chase anyone whilst our building continues to suffer further damage with each rainfall," the owner said.
The council is pursuing legal action against Cr Oueik who it claims made millions building and selling apartments that allegedly breached development approval.
Fairfax Media has attempted to reach Cr Ouiek several times but could not obtain a response.
