The government in New South Wales is helping owners corporations to rectify defects on recently built apartment complexes as the state continues its efforts to improve the quality and safety of its buildings.

In an interview with Sourceable, Yolande Nyss, Program Manager at the NSW Department of Customer Service, encouraged owners corporations to use the free government assistance which is available through Project Intervene to rectify any serious defects which are present on common property within their complexes.

The call comes as the deadline to register for the scheme has been extended from June 30 until November 30.

(Water ingress in the basement discovered during one of the early inspection through Project Intervene. Image supplied)

Part of the Government’s efforts to improve building quality and safety throughout NSW, Project Intervene aims to use new investigative and enforcement powers which have been given to the Department of Customer Service to force builders and developers to rectify serious defects on common property that may impact the quality and safety of recently constructed apartment buildings (Class 2 buildings under the NCC). The powers have been given to the Department under the Design and Building Practitioners Act 2020 (D&BP Act) and in particular the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (RAB Act).

The project aims to deliver a mechanism through which serious defects can be resolved without needing to go through litigation.

It also aims to provide assurances about the quality and adequacy of any rectification that is undertaken.

To be eligible for the program, a building must:

• ideally, be less than six years old and certainly no more than ten years old (see below)
• have an active developer or builder (i.e. not insolvent) against whom action may be taken; and
• be impacted by serious defects regarding common property that are related to one or more of five building elements which are identified by the RAB Act (fire safety, waterproofing, structure, building enclosure and building services).

Whilst the RAB Act provides the Department of Customer Service (through NSW Fair Trading) with investigative and enforcement powers in respect of buildings which are up to ten years old, the program is aimed primarily at buildings which are within six years of the issuing of the occupancy certificate.

The primary reason for this is that buildings of this age are still within the statutory warranty period in which the developer or builder is required to guarantee the quality of the materials and workmanship and the suitability of the dwelling for occupation.

Such buildings are also likely to have been delivered by a developer who remains active in the industry and is not insolvent.

Buildings which fall between the six- and ten-year age range are considered on a case-by-case basis.

Meanwhile, the restriction of the program to serious defects in one of the five building elements in the common property of a building (which is the definition under the RAB Act) reflects not only that the program is using the powers under the Act but also a desire to focus rectification efforts on areas which are most important in terms of the building quality and safety.

(Cracking in concrete discovered during an inspection. Image supplied)

The program follows a staged process as follows:

• Owners corporations may register their building for the program (developers can and builders can also nominate buildings for program inclusion).
• An inspection is arranged. Under Project Intervene, building inspections are carried out by expert consultants, who document any serious defects in a draft report that will be shared with the department initially. The department then share the draft report with the developer for feedback.
• The Department of Customer Service may issue a draft Building Work Rectification Order to the developer and will attempt to negotiate with the developer to enter into the process of finalising a binding undertaking with regard to rectification work. Where the developer agrees to this, an undertaking manager is appointed to work with the developer to finalise the list of serious defects in consultation with the owners corporation. (Where the developer does not agree to enter an undertaking, the Department of Customer Service may issue a final building work rectification order which must be complied with.)
• Once the list of serious defects and remediation is agreed, the developer offers a binding undertaking to the Department, which is then put to the owners corporation for their agreement.
• Before any rectification work can commence, the developer must appoint practitioners who are registered to prepare regulated designs under the DBP Act. Once the designs have been prepared, a registered builder will need to carry out the works in accordance with the designs.
• An independent superintendent will be appointed to oversee the works.
• Remediation work is undertaken and completed.

According to Nyss, both the involvement of registered design practitioners to prepare regulated designs and the involvement of superintendents to oversee work helps to ensure that the rectification work is planned, designed and completed in a satisfactory manner.

Where the defect involves waterproofing, for example, regulated designs will ensure that the source of the problem is identified and that an appropriate solution is prepared before work commences.

Both this and the involvement of the superintendent will avoid the potential for developers to implement cheap and superficial repairs such as application of fillers or sealants and new coats of paint.

(Obstruction of the basement fire sprinkler uncovered during an inspection undertaken as part of Project Intervene. Image supplied.)

As mentioned above, Project Intervene aims to provide owners corporations with a means through which serious defects on common property are able to be resolved without needing to resort to legal proceedings.

Largely speaking, Nyss said that the project originated out of research conducted jointly by the NSW Government and Strata Community Association NSW that was published in September 2021.

That research found that serious defects in relation to the five key building elements above are present in as many as 39 percent of recently completed apartment building complexes (Class 2 buildings under the National Construction Code). At an average cost of $332,000 per building, rectification is expensive.

Of concern, the report found that these defects were being reported to NSW Fair Trading in only 15 percent of cases. As a result, owners corporations were being left either to negotiate an outcome with the builder on their own or to undertake long and costly legal proceedings which offered no outcome certainty.

Since the program was launched in the middle of last year, around 100 owners corporations have registered their buildings and 49 inspections have been completed.

On Sunday, the NSW Government announced that the deadline for registration has been extended by five months from June 30 until November 30.

Asked about the types of jobs which are typical under the program, Nyss says the most common defects relate to waterproofing and fire safety.

In many cases, problems relate to the overall operation of the building as a result of a lack of design coordination or integration. This can be problematic even where individual building elements have been satisfactorily designed.

In one example, the operation of a fire safety sprinkler system in a basement was impacted by the presence of ducting that had been placed underneath and was in the way of where water was supposed to fall (see image).

In other cases, drainage which had gone between two rooms had not been properly fire rated and could potentially have led to the spreading of fire between rooms even where the individual rooms had initially been correctly fire rated.

This, Nyss said, reinforces the rationale behind the Design and Building Practitioners Act – a critical objective of which involved promotion of greater collaboration between design practitioners.

(Shattered balustrades uncovered during an inspection as part of Project Intervene. Image supplied)

Asked how owners corporations and developers can derive the best outcomes from the program, Nyss encouraged action in several areas.

For owners corporations, the program should be viewed as an alternative to litigation. With involvement being at no charge, there is nothing to lose through participation.

At a broader level, owners corporations are encouraged to learn as much as possible about the operation of their building and to adopt a proactive approach toward building maintenance.

For developers, Nyss encourages them to engage with the program in a constructive manner so that defects can be quickly and satisfactorily resolved without the need for litigation.

“The owners corporation should consider this program to be an alternative for them,” Nyss said.

“They need to understand that because we are using the powers under the RAB Act, we are only focused on serious defects which are in the key building elements.

“This is no cost to the owners corporation so why not give this option a try to get the serious defects fixed?

“When it comes to developers, we are asking them to consider being part of this program.

“When we identify serious defects in the building, we want them to engage with us, offer an undertaking, go along with the process, get this done and get it done right so that everyone can get on with their lives rather than having a protracted litigation process.

“If it’s done properly and done once, everyone can move on with their lives.”

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