'I feel cheated': NT Government aware of building's flaws but didn't tell owners


August 08, 2019 07:04:31

A Darwin man says he feels “cheated” after purchasing a unit in a residential tower, unaware that a Northern Territory Government department had already privately concluded it was structurally non-compliant.

Key points:

  • An NT Government-commissioned report concluded nine buildings were non-compliant more than a year before the issue was publicly disclosed
  • At least five units were purchased by unwitting buyers during that time
  • The repair bill in one of the buildings is likely to exceed $1.5 million

Richard Sager is one of at least five buyers who purchased units during the 15 months it took for the Department of Infrastructure, Planning and Logistics [DIPL] to publicly disclose its concerns, the ABC can reveal.

In July last year, when Mr Sager paid $350,000 for a unit in the 12-storey Catalyst building on the edge of the Darwin CBD, he thought he had secured the perfect place.

“It was handy to where I work, and it looked like a really quite modern and exciting place to live,” he said.

Nine months after moving — in April this year — Mr Sager received a notice from DIPL explaining that it had been investigating the work of a structural engineer, John Scott of JWS Consulting, for the past two years.

It had concluded that nine buildings across Darwin and Palmerston — all designed and certified by Mr Scott — did not meet the National Construction Code.

About 200 affected unit owners, including those in the Catalyst building, were ordered to independently assess and rectify the situation at their own cost.

Through no fault of their own, they had suddenly become caught up in a compliance issue affecting multi-storey residential buildings across the country, such as Opal Tower and Mascot Towers in Sydney.

Last week, it was revealed that owners of units in Opal Tower are seeking millions of dollars in compensation from the NSW Government in a class-action lawsuit.

‘I feel cheated’

Mr Sager put the timing of his purchase down to bad luck.

But a ministerial briefing obtained by the ABC through the Freedom of Information Act has raised questions about whether DIPL should have informed owners — and prospective buyers like Mr Sager — sooner than it did.

The briefing showed DIPL received a “final assessment report” in January 2018 “concluding that all nine buildings were non-compliant with the NCC [National Construction Code]”.

That was 15 months before DIPL publicly disclosed the issue, and six months before Mr Sager purchased his unit.

“[I feel] cheated, a loss of confidence in the system,” Mr Sager said.

“Why was I allowed to buy a property where the Government knew?

Repairs could cost owners $1.5 million

The issue in all nine buildings related to concrete structures known as transfer slabs, which spread a building’s weight onto support columns.

If they are not designed correctly, there is a risk of “punching shear failure”, where the columns punch through the slab, compromising the structural integrity of the building.

The engineer in question was referred to the Building Practitioners Board, which will hold an inquiry into alleged professional misconduct on August 19.

Mr Sager still doesn’t know how much money he will have to contribute towards his body corporate’s efforts to fix the issue.

But owners in another affected building, at 10 Duke Street in Stuart Park, have been told it could cost them more than $1.5 million to undertake extensive rectification works.

“When you purchase a new property in Australia you kind of expect that everything will be fine, that there are standards in place and quality is assured, then this happens,” said one owner, who asked to remain anonymous.

“It’s a complete disaster.”

Land title records show one of the units in that building — a luxury penthouse — was purchased for $1 million just two weeks before DIPL publicly disclosed the structural issue.

The ABC is aware of at least three other units in affected buildings that were purchased in the 15 months after DIPL received the “final assessment report”.

“We’ve got many examples in other states where properties are just losing millions of dollars, so this should have been managed a lot better than what it currently has been,” Mr Sager said.

Owners may not have bought apartments if aware of the problem

While the Building Act does not require DIPL to inform prospective buyers during its investigations, there should have been greater transparency, said Trevor Tschirpig, NT president the Australian Institute of Conveyancers.

“That is concerning because those people will now have to contribute to the cost to rectify the building, whereas maybe their offer would have been different if they knew it was one of the affected buildings,” he said.

DIPL said it could not have informed building owners any sooner.

Timeline of non-compliance:

  • May 2017 — A ministerial briefing reveals that DIPL’s initial investigation was triggered by an alleged “punching shear failure” during the construction of a building in Rapid Creek
  • The building was later rectified to meet the National Construction Code
  • October 2017 — DIPL engages an independent consultant to assess the structural integrity of nine other buildings linked to the structural engineer John Scott
  • January 2018 — consultants “provided the final assessment report to this Department concluding that all nine buildings were non-compliant with the NCC [National Construction Code]”
  • 2018 — consultants and DIPL “worked with Mr Scott on reaching an agreement on the level of compliance with the NCC”
  • February 2019 — individual building reports, including rectification recommendations, are completed
  • April 2019 — unit owners were finally informed of the problem

“The time taken to bring the matter to the attention of the building owners was necessary to ensure the technical aspects of the allegations were determined, so that they can be relied upon in issuing the Building Notices to owners and referring the practitioner to the Building Practitioners Board,” it said.

Despite the non-compliance finding, DIPL said the buildings were never deemed unsafe.

Infrastructure Minister Eva Lawler would not say if prospective buyers should have been informed sooner, but she questioned the length of her department’s investigation.

“Yes, those timeframes concern me,” Ms Lawler said.

“I did raise that, and have asked for a review of those processes around those timeframes, but the department has assured me they followed very clearly the right processes.”

Since issuing building notices in April, anyone currently considering the purchase of a unit can find out if it is in one of the affected buildings, DIPL said.

“A prospective purchaser or agent can undertake a review of the building file, with the owner’s consent, to identify any contraventions or current enforcement action in progress under the Building Act,” it said.

Addresses of buildings redacted by Government

While the ministerial briefing provides a basic timeline, a more extensive chronology of events has been redacted from the FOI documents because DIPL believed they could prejudice the upcoming inquiry into Mr Scott’s work.

The addresses of the nine buildings have also been blacked out in the documents because DIPL said disclosure could reduce the value of the buildings and have a negative impact on the wider NT economy.

The documents do, however, reveal the suburbs where each of the buildings is located, including Darwin, Stuart Park (two buildings), Parap (two buildings), Coconut Grove, Millner, Johnston, and Rosebery.

Since April, three of the buildings have been rectified and work is underway on two others, DIPL said.

But four buildings still require permanent engineering solutions, the cost of which is largely unknown.

Ms Lawler said residents would need to temporarily move out of at least one of the buildings, the address of which has not been disclosed.

“[It] requires some more substantial work that will require people to be vacated while they do some of that work,” Ms Lawler said.

While the costs will initially be borne by the owners of affected buildings, some body corporates are engaging lawyers in the hope they can recoup expenses in the future.









First posted

August 08, 2019 07:03:27

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