NSW apartment owners could face bills for millions of dollars if the government launches a task force to identify buildings with potentially fatal aluminium cladding.
But NSW high-rise builders responsible for installing the same materials that caused the rapid spread of the Grenfell Tower fire could walk away without it costing them a cent, under current building defect laws.
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While the world reels at images of the Grenfell Tower tragedy and the growing numbers of those who didn’t survive, the NSW Government is rumoured to be setting up a Task Force to identify buildings at risk from cheap cladding of the type used on the Grenfell Towers.
Innovation and Better Regulation Minister Matt Kean – who has responsibility for the state’s strata schemes – has declined to comment but he is understood to be horrified by the knowledge that hundreds if not thousands of tower blocks could have the same aluminium cladding believed to have caused the rapid spread of the London fire.
Insiders say that after the balcony fire in the Lacrosse building in Melbourne’s Docklands in 2014, which was spread rapidly to other floors by inflammable cladding, NSW policymakers had wanted to be part of a national approach to potentially dangerous building products, something the states had been working on together for several years.
But Mr Kean is said to be determined to push ahead with measures to make sure that NSW, the state with most high-rises, doesn’t become the first to suffer a disaster on the scale of the London fire.
The package currently being discussed in Cabinet is believed to include special powers to prevent the continued sale and use of unsafe building products, including dangerous cladding.
And it could also require owners corporations (body corporates) to immediately repair buildings identified as having fire safety risks.
This latter proposal has raised concerns among strata owners that, under current building defect regulations, replacing dangerous cladding could easily cost individuals an average of $50,000 each, based on $15 million bills for repair and replacement in the 312-unit Lacrosse building.
Not only that, under strata building defect laws, most of the builders and developers who cut corners by using the cheaper, potentially deadly cladding, will be obliged to pay nothing.
This puts the government in an invidious position, say observers, where they clearly want to move quickly to protect lives but to do so under current regulations would penalise the potential victims.
“It is essential that at-risk buildings are identified,” said Karen Stiles, Executive Officer of the Owners Corporation Network – Australia’s peak body for apartment owners. “But it’s unconscionable to expect innocent owners to foot the bill for remediation while the culprits get off scot free.”
That said, the OCN is supporting the government’s general thrust towards tighter regulation of the building sector.
“OCN strongly supports the NSW government’s undertaking to expedite the urgently needed and industry supported fire safety and certification reforms recommended by the 2015 Lambert Review,” added Ms Stiles. “Without severe consequences for perpetrators, these life-threatening shortcuts will continue to be taken.”
Currently, due to the way building defect claims are structured, even owners of relatively new buildings in NSW could be forced to pay for any safety upgrade.
Under strata law, the cladding would currently be categorised as a ‘non-major’ defect, meaning owners only have two years from the building’s completion in which to claim the costs of its replacement. Otherwise they must, by law, repair the defects and do so at their own expense.
A major defect, which has a six-year claims window, must by definition render the building or part of it uninhabitable. However, even the Lacrosse building has been ruled safe for occupation by Melbourne’s city council.
Leading strata lawyer Stephen Goddard says the ultimate issue is public confidence in the apartment sector to provide safe and secure housing without owners constantly having to make good the shortcomings of builders, developers and public policy.
And, he adds, at the heart of the problem is a lack of a legally enforceable regime of responsibility for shoddy work.
Goddard cited a High Court ruling last year that, because of a legal technicality, developers and builders owed no duty of care to the owners of apartments in a building in Chatswood that had millions of dollars worth of defects.
“The absence of a “duty of care” only threatens public confidence in strata living,” Mr Goddard told Domain. “Where does that leave public policy for housing our growing population?”
Meanwhile, academics have warned that the problem is likely to get worse before it gets better, with unsafe cladding pouring into the country, despite requests to the federal government from industry bodies to ban it.
“Evidence suggests that increasing amounts of non-conforming building products are entering the Australian market, making it harder to ensure occupant safety,” says Dr Darryl O’Brien, head of Central Queensland University’s Built Environment courses.
“Reliable data quantifying the extent of non-compliant products in the Australian construction sector is not yet available. However, anecdotal evidence suggests that the presence of non-conforming building products is an emerging hazard,” Dr O’Brien said in a statement issued today.
“For example, the Australian Industry Group in 2013 found that 92 percent of companies surveyed had reported non-conforming products in their market sector.”