Flat Chat Wrap #31 – Tip of the defects iceberg and why it’s such a massive problem


In this week’s episode of the Flat Chat Wrap we look at the revelation that the Opal and Mascot towers “disasters” are just the tip of a very large apartment block defects  iceberg.

Jimmy Thomson and Sue Williams have been writing about apartment block defects – and other, happier apartment-related issues – for more than 15 years.

In this episode of the Flat Chat Wrap, Sue recalls the time more than a decade ago that a feature on defects almost cost her job, when a property writer with a close personal relationship with a developer, saw her expose on apartment block defects and called her friend.

The developer called the editor and threatened to pull all their advertising if the story went ahead. The editor caved in.  Sue offered her resignation but it was turned down (although she is now a freelance working mostly for other publications).

That’s just part of the reason that the whole grubby business of building defects, government lack of interest (to the point almost of collusion) and corporate cover-ups have led to the point we are at now where ordinary people don’t know for sure whether or not their apartment is going to have serious building problems at some point.

This episode looks at two of the root causes of the problem – phoenixing and lack of “duty of care” and how they can, together, leave apartment owners with little or no consumer protection.

Phoenixing is when a development company builds an apartment block and then goes into liquidation when the claims for defect rectification come in. However, a similar company with similar or identical directors can then rise from the ashes of the previous entity and do the same thing over and over again.

“Duty of care” or the lack of it relates to a legal precedent established last year that said builders only have a responsibility to apartment block developers, not to the people who bought the apartments.

One of the legal arguments was that they couldn’t have contract responsibility to the apartment owners through their owners’ corporation (body corporate) since that body didn’t exist when the contracts were signed.

So you can see, remove the developer (who has gone into voluntary liquidation), and the apartment owner is left high and dry.

NSW is planning to create the position of Building Commissioner to deal with these and other problems, including the certification of engineers and developers. We’ll be watching with interest to see how that pans out.

On a happier note, Sue has also been looking at the winners of the NSW Architecture Awards and some of the innovative designs that caught the judges’ eyes.


SMH feature on defects

Sue Williams on Architecture awards

Flat Chat Website

Jimmy Thomson’s website

Sue Williams website

Jimmy’s Australian Financial Review columns

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