February 2019

Opal Tower building cracks open up important lessons for purchasers

On Christmas Eve 2018, while most of us were preparing for our Christmas celebrations, almost 3000 people were being evacuated from their homes at Sydney Olympic Park as a result of loud “cracking noises”, which sparked fears that the 36 storey Opal Tower apartment building would collapse.

It was later discovered that the noises were the sound of the building moving by up to two millimetres.

The nightmare did not end there – residents were evacuated again on 27 December, when further investigations revealed the full extent of the structural damage.

Why did it happen?

An interim report commissioned by the NSW Minister for Planning and Housing revealed that:

  • a number of design and contract issues are likely to have caused the damage

  • some parts of the tower were not constructed in accordance with the design drawings or to expected standards

  • significant rectification works are required to repair the damage and prevent further damage.

Who was responsible?

The developer and builder have denied liability.

Authorities and experts involved in the approval and construction of the Opal Tower have tried to distance themselves.

A building certifier is expected to check a structural engineer’s designs and drawings before issuing a construction certificate. However, as private certifiers are not required to be qualified in this area, they often rely on the engineer’s assurances that the designs are structurally sound and comply with relevant standards. 

What’s more, as structural engineers are not required to be accredited, registered or insured, it is often difficult to hold them accountable for the structural integrity of buildings built on their designs.

Similarly, building certifiers aren’t in a position to check that buildings have been constructed in accordance with the engineer’s design in every respect, and rely on certificates provided by the contractors carrying out the work.

The government’s response

In response to the Opal Tower saga, the NSW Government has said that it will implement most of the recommendations made in the April 2018 “Shergold Weir Report”, which are intended to ensure that those in the industry take responsibility for their work. Specifically, the report recommends:

  • requiring the registration of builders, site/project managers, building surveyors, building inspectors, architects, engineers, designers/draftspersons, plumbers and fire safety practitioners, to ensure that only qualified and registered practitioners can carry out work

  • appointing a building commissioner responsible for enforcing the new legislation by auditing practitioners and conducting random building inspections

  • requiring building designers to declare that plans specify a building that will comply with the Building Code of Australia, and that the building has been constructed in accordance with the plans.

Precautions if you are buying “off the plan”

While the proposed laws are a long-awaited step towards improving compliance and enforcement in the building and construction industry, they may take years to come into effect. As a result, the risk when buying off the plan remains.

If you are buying off the plan, you should ensure the contract:

  • describes the building to be constructed with as much specificity as possible (such as what materials, including proprietary brands, will be used and the quality of finishes)

  • allows you access to the Council/certifier-approved construction plans

  • requires the developer to provide copies of certificates of currency of the professional indemnity insurance carried by the design consultants ie architects and engineers, on exchange of contracts and before completion

  • includes assurances from the developer regarding the standard of construction and the ability to verify checks to be made on the building during and following construction and before completion of your purchase

  • requires the developer to provide the name of the certifier who will provide the occupation certificate

  • requires the developer to provide you with the certifier’s statement and copies of all underlying compliance certificates on which the occupation certificate is based before completion of the purchase

  • allows you to have a qualified building consultant inspect the property before completion of the purchase, with completion to be conditional on the outcome of that inspection.

If you have already exchanged contracts to purchase an apartment off the plan, rights to check building quality (and what can be done about it) will largely be determined by your existing contract. Whatever rights exist should be exploited fully.

A request to the developer/builder for copies of the council-approved plans, as-built plans and building certifiers’ inspection reports might extract a bland reply (if any), but it doesn’t hurt to ask.

An inspection of the apartment and common areas by a building consultant prior to settlement is a must.

We can help

Whether you are buying off the plan, or are a developer looking to protect yourself in the wake of the Opal Tower debacle, or simply require more information, Bartier Perry’s Property, Environment and Planning and Construction lawyers will be happy to assist you.

 

Authors: Julia Yassa, Hugh Halliday and David Creais