Accountability for defective building works in Sydney
This week’s Four Corners report leaves no doubt that the legacy of Australia’s 20 years of building boom is a high rise residential sector in crisis.
Strata schemes and lot owners are grappling not only with the inflammable cladding debacle but with widespread and systemic building defects, often to the structure of buildings or to their waterproofing or fire safety systems.
According to the ABS, since 2000 to date, 667,394 apartments have been built in Australia. NSW has 259,580 of those units.
A Deakin and Griffith universities study found that 97% of apartments built between 2003 and 2017 contained at least one defect, with waterproofing being the most common defect, followed by fire safety systems.
The Challenges
The challenges faced by OCs and measures mooted by the Government are discussed in my March newsletter. The OCs problems can be summarised thus.
- OCs come into existence after the construction of the strata block and do not rely on anyone during the construction process.
- The OC is not a party to the building contract so cannot sue the Builder directly for breach of the s18B warranties.
- Relief is potentially available—ss18C and 18D extend the reach of the statutory warranties to the Builder and Developer.
- Recovery is often thwarted by insolvency or complicated contracting chains with related entities.
- The statutory Home Building Compensation Fund insurance does not apply to the majority of residential developments.
- The two-year non-major defect limitation period is far too short for many OCs to identify defects.
- Uncertainty around the classification of defects places more pressure on the identification process.
- Building standards have dropped due to an absence of accountability, cost-cutting and pointless certification processes.
The Solutions?
There are simply not enough engineers and other building professionals to sign off each and every step in the construction process. Responsibility has to be sheeted home to those that profit from the projects.
¨ Mandatory insurance—HBCF insurance or other.
¨ The HBCF multi-storey exemption must be repealed with immediate effect.
¨ If no insurance, then perhaps the directors of the developer/builder should accept personal liability?
¨ A 2 year limitation period is unworkable. One 6 year period, if not 10 years, should apply.
Download the September 2019 Newsletter »
Are you having problems with your developer or builder and defective building work?
Clare Peacock is an experienced construction lawyer working on Sydney’s Northern Beaches. Clare provides practical, cost-effective building approval advice to property owners, builders and strata managers. Services include residential building disputes, body corporate issues and strata building problems.