RESIDENTS of a luxury apartment block on Thomson St, Tweed Heads, have taken a major developer to the Federal Court over the "disgraceful" handling of a faulty development.

Silverstone apartments were dream homes for residents who purchased the units in November 2009, at a cost of up to $900,000 each, until a run of serious building defects emerged.

All 27 unit owners have joined together against Australian Stock Exchange-listed developer Villa World, who they claim is liable for corrosion, rust, water leaks, cracked tiles, flaking paint, rotting timber and unsafe stairs in the block.

So far, legal proceedings over liability for the defects have dragged on for two years, costing owners almost a million dollars in legal fees.

Body corporate chair Linda Carr labelled the treatment of residents during this time as "disgraceful".

She said that during this period, residents had died, got divorced, gone bankrupt, left the building due to respiratory problems and, most recently, a woman learned she had heart problems caused by stress.

However, Villa World managing director Craig Treasure said significant effort was made to rectify problems with residents before they went to court.

He acknowledged there were problems with the block but said Villa World would continue to deny direct liability for the damages, joining with insurer Allianz and the apartment's architect to fight the allegations.

The lawyer representing the unit owners, Jeff Garrett from Attwood Marshall, said a major point of contention between the parties would be the use of a pre-fabricated walls, alleged to enable moisture to fester into mould, raising health concerns.

Villa World has made cross-claims against AFS Walling Solutions, its installer and structural engineer for potential damages.

A court hearing is scheduled for December 23 on the matter, with a possible mediation hearing early next year. Residents have yet to specify any claim amount in the proceedings, but quotes in excess of $14.5million have been provided for remediation works.