Building Defect

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<p>Researchers from UNSW Sydney’s City Futures Research Centre and the University of Technology Sydney (UTS) have, in partnership with the Strata Community Association (NSW) have developed the 'Strata Rectification Guide.</p>

<p>The <a href="https://cityfutures.be.unsw.edu.au/research/projects/defect-rectification/">online tool provides helpful information</a> for property owners and strata managers to navigate the process of identifying, documenting, reporting and rectifying building defects in strata schemes.</p>

<p>While the NSW Government has introduced a suite of reforms to the multi-billion-dollar apartment building sector in the aftermath of Opal Tower, the guide complements these changes by focusing on consumers already in buildings impacted by defects.</p>

<figure><p><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/strata.png" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="283" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/strata.png?itok=1AETkuUy" width="580"></a></p>
</figure><p>Strata Community Association (NSW) President Chris Duggan believes this guide could be a ‘game changer’.</p>

<p>“With the state’s reforms and the Building Commissioner reshaping construction quality, this guide complements the retrospective effort of the strata industry in educating managers and assists consumers to deal with the practical realities of defects,” he said.</p>

<p>Martin Loosemore, Professor of Construction Management at UTS, noted defects in apartment buildings have been a concern in NSW for many years and more will be affected in the future.</p>

<p>“Parts of the industry have been worried about building defects for some time before Opal Tower put it on the political map,” Prof. Loosemore said.</p>

<p>Though the particular focus of the guide is defects in common property such as hallways and courtyards, it also covers all levels of defects and their severity.</p>

<p>While the guide is most useful for current and potential strata apartment owners, renters could also find the guide beneficial for clarifying rights and responsibilities.</p>
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Researchers from UNSW and UTS have developed the ‘Strata Defects Rectification Guide’ in partnership with Strata Community Association (NSW).

urban.com.au

 New apartment defect rectification guide released for NSW strata owners and managers

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<p>Things are going from bad to worse for the 132 owners in the defective Mascot Towers complex in Sydney.</p>
<p>Residents were <a href="https://www.urban.com.au/news/99854-mascot-towers-residents-await-causes-of-cracking" target="_blank">evacuated in June</a> after cracking in its beams forced them out.</p>
<p>Now there are more cracks appearing, and the already noted cracks are getting wider.</p>
<p>Urgent repairs are now required to avoid a structural failure.</p>
<p>Owners and residents were updated by a structural engineer commissioned by law firm Mills Oakley yesterday. </p>
<p>They raised a significant concern toward  an increased cracking in the basement footing slab which supports the towers.</p>
<p>“(We) have been advised that remediation of the bearing capacity of the soil underneath the slab is now required on an urgent basis so as to avoid a structural failure in the north eastern tower one corner,” the advice reads.</p>
<p>Cracks currently range between 0.2 and 0.5 millimetres.</p>
<p>“It is our current view that once the cracking reaches 0.8mm the structure would be deemed unsafe,” the structural engineer warned.</p>
<p>Sky News advised residents are not expected to return this year. </p>
<p><iframe src="https://www.youtube.com/embed/NzTplQHydSU" frameborder="0" width="360" height="315"></iframe><br>Source: Sky News.</p>
<p>Earlier in the year it was suggested the neighbouring Peak Towers apartment block, developed by Aland, had affected Mascot Towers, a sentiment which engineering consultants agreed with.</p>
<p>Aland <a href="https://www.urban.com.au/news/100080-not-us-says-aland-as-mascot-towers-crack-concerns-investigated-in-2011" target="_blank">rubbished the claims in June</a> and reportedly denied lawyers representing the Mascot owners corporation <a href="https://www.urban.com.au/news/103132-aland-deny-mascot-towers-culpability-but-refuse-access-to-neighbours" target="_blank">entry to the building</a>.</p>
<p>Residents told how the basement carpark was flooded during the Peak Towers excavation.</p>
<p>The Mascot Tower was developed by the Elias family to a design by architect Krikis Tayler.</p>
<p>In the 2006 off the plan marketing prices started at $340,000 for a 72 sqm one-bed unit, from $450,000 for a 97sqm two-bed unit with two car spaces, and from $800,000 for 139sqm and three beds, also with two car spaces.</p>
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jrobinson-rf4aSBido9

Mascot Towers cracks get bigger, with structural failure now feared

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<p>A lucky absentee apartment owner in the Opal Tower at Sydney Olympic Park has been able to escape the building cracking turmoil with a profit.</p>
<p>His damaged 10th floor apartment — possibly the worst affected within the 392 apartment high-rise — has been sold for $950,000.</p>
<p>But it appears to be a one-off sale as it has been bought by the besieged builder of the tower, Icon Co (NSW) Pty Ltd, whose solicitor declined to comment on the reasons behind its purchase.</p>
<p>The bullish $950,000 sale price of apartment 1005 was $158,000 more than the $742,000 off the plan price paid in 2014.</p>
<p>It was located on the 10th floor which saw severe cracking which prompted the evacuation of the entire building last Christmas Eve.</p>
<p>There were images soon after showing the damage outside the 1005 door.</p>
<p>The now sold two bedroom, two bathroom 86 sqm apartment had been a $600 a week rental before the cracks.</p>
<p>The vendor was Quan Zhou whose sales legal paperwork was lodged by China-based, Chengdu-headquartered Tahota Law Firm which has a liaison office in Sydney.</p>
<p>The Telegraph was not able to contact their Sydney solicitor, Yijing Hua.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/1/Opal%20Tower.jpg" alt=""></p>
<p>Minter Ellison lawyer Susan Bellamy signed the acquisition paperwork for Icon but declined to comment when asked if further acquisitions are being sought or offered to other owners.</p>
<p>The building’s last sale was a few weeks before the evacuation last December.</p>
<p>By next week just 12 apartments will remain unable to be occupied.</p>
<p>Without confirmation from Icon, it is speculated the purchase was because the builder required ongoing access, and would eventually need to substantially reconfigure the apartment space.</p>
<p>Sydney property consultant Edwin Almeida said it would be mistake if the intention of the sale was to reset valuations.</p>
<p>“Valuers won’t put their names or professional indemnity insurance or certificates on the line,” he said.</p>
<p>Residents and agents contacted by The Daily Telegraph don’t hold out much hope that the profitable sale of 1005 will be replicated should others wish to sell.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/1/Opal%20Tower%20apartment%202.jpg" alt=""></p>
<p>“You’d think once other owners have heard of the sale, there’ll be a massive queue to sell to the builder,’ one observer said.</p>
<p>The Sydney Olympic Park development, which was completed in August last year, saw sales range from $505,000 up to $2.498 million for the 35 floor penthouse.</p>
<p>The building was very popular with investor buyers of Asian origin, many of whom bought off the plan in 2014 and 2015.</p>
<p>It was in 2014 when the developer Ecove entered into the Opal project agreement with the Sydney Olympic Park Authority (SOPA).</p>
<p>Last week owners of units lodged a class-action lawsuit in the NSW Supreme Court against SOPA which owned the land on which the complex was built.</p>
<p>The action was filed in the NSW Supreme Court on Friday led by owner Terry Williamson.</p>
<p>Lawyers for the owners have filed documents claiming the building was not designed and constructed with due care and skill, and was not reasonably fit for occupation.</p>
<p>Premier Gladys Berejiklian defended the right of owners to sue her government agency.</p>
<p>“I don’t blame anybody for taking legal action to defend their own rights,” Ms Berejiklian said.</p>
<p>Premier Gladys Berejiklian noted it was “an unfortunate set of circumstances.”</p>
<p>“We inherited the system we have today and we’re aiming to fix it by the end of the year through legislation.”</p>
<p>Ms Berejiklian said the government will be announcing a new building commissioner “imminently” to oversee the problem-plagued construction industry.</p>
<p><span>Icon has recently agreed to pay $1.7 million of the tower's $2 million insurance premium, saving owners from a potential second evacuation from the defective building.</span></p>
<p><span>This article was first published in the Daily Telegraph.</span></p>
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j.ballantyne1990-6AQqhLzZaK

Opal Tower builder Icon buys 10th floor apartment

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<div class="column"><strong>EXPERT OBSERVATION</strong></div>
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<div class="column">On 15 January 2015, the Home Building Amendment Act 2014 changed the terminology and definitions from structural to “major” and from minor to “in any other case” i.e. non-major.</div>
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<div class="column">These amendments apply retrospectively to residential building work commenced or completed prior to the commencement of the amendment except in relation to a dispute in which proceedings had already commenced prior to the operation of the amendment or in relation to contracts entered into prior to 1 February 2012.</div>
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<br>Two recent NSW Civil and Administrative Tribunal Appeal Panel decisions have considered the definition of major defect and how to establish whether a defect meets this definition, providing useful guidance on this topic.</div>
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<div class="column">The definition of a major defect is substantially different from the old definition of a structural defect.<br><p>A major defect is defined as a defect in a “major element” of a building. This involves defects to the following parts of the building that are defined as a major element:</p>
<ul>
<li>a) An internal or external load bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams); or</li>
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<li>b) A fire safety system; or</li>
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<li>c) Waterproofing; or</li>
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<li>d) Any other element that is prescribed by the regulations as a major element of a building.</li>
</ul>
<p>In addition to affecting a “major element” of the building, a “major defect” must have the following consequences (emphasis added):</p>
<ul>
<li>a)  The inability to inhabit or use the building (or part of the building) for its intended purpose; or</li>
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<li>b)  The destruction of the building or part of the building; or</li>
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<li>c)  A threat of collapse of the building or part of the building.</li>
</ul>
<p>A defect may also be a major defect if:</p>
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<li>a) It is a defect of a kind that is prescribed by the regulations as a major defect; or</li>
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<li>b) If it involves the use of a building product within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act.</li>
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<p>What defects are included in categories of major defects will depend upon the meaning of the words“destruction”, “the inability to inhabit or use the building”, or “threat of collapse”.</p>
<p>It is possible that the meaning of “major defect” will be considered to only include defects that have significant consequences. If so then the limitation period will be reduced to two years for some defects that previously would have had a six-year warranty because they will be regarded as non- major.</p>
<p>Whilst there is very little judicial consideration of the meaning of major defect by the Courts in NSW, the definition has been considered recently in two cases this year by the Appeal Panel of the NSW Civil and Administrative Tribunal in relation to the question of jurisdiction. In other words, if a defect is not a major defect and more than two years have passed since completion of the building, then the claim is out of time and the Tribunal does not have jurisdiction.</p>
<p>In Vella v Mir [2019] NSWCATAP 28 the Appeal Panel set out the sequence of analysis to decide whether a claim for a major defect was made within time as follows:</p>
<ul>
<li>a)  when the statutory warranty period starts;</li>
</ul>
<ul>
<li>b)  whether s.18E(2) applies if the statutory warranty has already been enforced;</li>
</ul>
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<li>c)  whether each of the defects is a major element in a building;</li>
</ul>
<ul>
<li>d)  whether each of the defects in a major element is a major defect;</li>
</ul>
<ul>
<li>e)  whether the application has been made within time by reference to the statutory warranty period.</li>
</ul>
<p>In Ashton v Stevenson [2019] NSWCATAP the Appeal Panel applied the decision of Vella and also found that the following must be established for a defect to be a major defect:</p>
<ul>
<li>a)  The first step in the analysis is that the defect must be part of a “major element” of a building.</li>
</ul>
<ul>
<li>b)  Inclusion in the definition of major element does not mean that the defect will be a “major defect”.</li>
</ul>
<ul>
<li>c)  The extent to which a defect impacts on the habitability or the integrity of the building needs to be proved by the party alleging a major defect (referring to Panchal v Jones t/as Oz Style Homes [2018] NSWCATD 238).</li>
</ul>
<ul>
<li>d)  The consequences of the defect must be shown to have, or probably have, a proven consequence for the habitation, or use, of the building or to the integrity of the building.</li>
</ul>
<ul>
<li>e)  Section 18E(4)(a)(i) requires that there must be a proven, or probable, inability to inhabit, or use the building.</li>
</ul>
<ul>
<li>f)  Section 18E(4)(a)(ii) and (iii) are at the more serious end of consequences or impact on a building. The reference to destruction does not mean minor process of deterioration, but evidence of a real possibility of destruction, not merely incidental damage or superficial deterioration.</li>
</ul>
<ul>
<li>g)  These are matters for evidence as to the actual impact which must involve more than a speculative or pessimistic assessment of possibilities in order to prove that the defect will have, or probably have, the prescribed consequences.</li>
</ul>
<ul>
<li>h)  The evidence must establish that the consequences are imminent or probable.</li>
</ul>
<ul>
<li>i)  Whilst expert evidence may assist in this analysis, such evidence is not determinative of the issue and must rise above speculation and suggestions as to possibilities.</li>
</ul>
<ul>
<li>j)  Evidence from the occupants of users of the building (as opposed to expert evidence) would be necessary to establish the claim.</li>
</ul>
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<p><span>In summary, a 'major defect; will have to overcome the criteria that the defect renders a building (or </span><span>part of it) uninhabitable or incapable of use, destroys the building (or part of it) or imposes a threat of collapse of the building (or part of it). These criteria all involve a significant degree of seriousness.</span></p>
<p>Additionally, establishing whether a defect is a major defect is not simply a matter for expert opinion and will require evidence from occupants of the building to establish the seriousness of the defect, particularly in relation to the ability to use the building or a part of it for its intended purpose.</p>
<p>Unless a defect can be proven to be a major defect, an owners corporation will be out of time to claim for some very significant and costly defects if proceedings are commenced outside of the 2- year limitation period for minor defects.</p>
<p>The owners corporation has a strict obligation to maintain and repair the common property pursuant to section 106 of the Strata Schemes Management Act 2015. This includes taking action to address all defects at the property for which the builder and the developer are responsible. Failure to do so may leave the owners corporation open to action by any interested person, such as a lot owner.</p>
<p>It is therefore important to take steps to review the building for defects after the first 12 months from the date of issue of an occupation certificate and obtain legal advice on pursuing the builder and developer well before the 2 year limitation period expiry.</p>
<p><em>Helen Amanatiadis is a strata lawyer from JS Muellers &amp; Co Lawyers<span style="font-size: 1em; font-weight: bold;"> </span></em></p>
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