Buyers should have been told of building flaws: NT Chief Minister


August 09, 2019 10:56:22

Prospective buyers of units in nine buildings in the Northern Territory found to be in breach of the National Construction Code should have been told of the structural issues, Chief Minister Michael Gunner has said.

Key points:

  • Michael Gunner says unit owners should have been told sooner about structural concerns
  • The author of a 2015 review into the NT’s building industry said issues were “foreseeable”
  • A recommendation to include high-rise buildings in a warranty scheme were rejected

A ministerial briefing obtained by the ABC through the Freedom of Information Act shows the Department of Infrastructure, Planning and Logistics [DIPL] received a report in January 2018 “concluding that all nine buildings were non-compliant”.

But it took another 15 months before the issue was publicly disclosed, when DIPL sent notices ordering unit owners to rectify concrete transfer slabs that did not meet national standards.

The ABC has revealed at least five apartments, in Darwin and Palmerston, were sold to unwitting buyers during that 15-month period, including a penthouse suite that was purchased for $1 million just two weeks before DIPL revealed the issue in April this year.

Unit owners in that building are now facing a rectification bill of more than $1.5 million.

“We are concerned about the time it took for people to know the transparency,” Mr Gunner said.

“There should have been, in our opinion, greater transparency around this.”

Mr Gunner said Infrastructure Minister Eva Lawler had directed her department to undertake an immediate review.

“[To find out] what happened and how we can do better in going forward so that people have got certainty and security,” Mr Gunner said.

Unit owners might not be eligible for compensation

A Darwin lawyer in the construction sector said unit owners caught up in the building breaches had “limited legal avenues” to seek compensation.

“It’s a very challenging situation [unit owners] are in,” Cris Cureton said.

In 2015, Mr Cureton headed a review — commissioned by the former Country Liberals government — of the NT building industry’s regulatory framework.

Mr Cureton, who is representing some of the affected parties in the non-compliance issue, said the problems now emerging were “foreseeable” but that his recommendations to improve protections for unit owners were never implemented.

One potential option is for unit owners is to seek compensation through the Northern Territory’s warranty scheme for residential buildings, known as the Fidelity Fund.

To access the fund, a trigger event needs to occur, such as when a builder dies, disappears or becomes insolvent.

None of the triggers have occurred to date but could do so before the six-year limitation on claims for the Fidelity Fund passes.

However, the fund only applies to buildings up to three storeys high, which would exclude at least four of the nine non-compliant buildings because they are too tall.

Mr Cureton’s 2015 review recommended the fund be expanded to high-rise buildings.

“It was foreseeable, which is why the report made the recommendations in the first place: that body corporates, particularly of high-rise constructions … were in a very difficult legal position if there was a defective building that they had to address,” Mr Cureton said.

“And these recommendations would have assisted to try and provide alternative avenues of funds if things happened that have subsequently transpired.”

The Fidelity Fund is administered by the Master Builders Association NT, which said Mr Cureton’s 2015 recommendations were impractical.

“Right across the country we’ve seen investigations into high-rise developments, and they have never been able to land on a solution which is cost-effective,” the association’s executive director David Malone said.

“We think that the best way to deal with this is to actually have the right order and compliance regime in place.”

Building certification has ‘let people down around the country’

DIPL said the transfer slabs were all designed and certified by the same structural engineer, John Scott of JWS Consulting.

DIPL has referred Mr Scott to the Building Practitioners Board, which will hold an inquiry into alleged professional misconduct later this month.

The chairman of a company that owns one of the affected buildings in Palmerston said the non-compliance issue highlighted broader problems affecting the national construction industry.

“What’s clear is the engineering and the building certification has let people down around the country,” said Allan McGill, who chairs affordable rental company Venture Housing.

“Most people have had confidence and faith in the process to ensure their buildings are structurally sound.

“But it seems to be we’ve been let down a bit nationally on that.”

Government considering mandatory building reviews

Ms Lawler acknowledged that regulatory oversight of builders and engineers had been weakened over recent decades.

“We’d gone from an industry that was regulated quite highly through government (certifiers), and then over time there was less regulation and more self-regulation,” Ms Lawler said.

“And so, we’ve seen the building industry regulating their own work through independent certifiers.”

Ms Lawler said the NT Government was considering recommendations made in a national review into the building industry last year, including mandatory independent reviews of structural designs.

No timeline, however, has been set for implementing any changes.







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