Owners corporations and strata managers have the potential to benefit from two recent decisions in Victoria and New South Wales in which building certifiers are being held accountable for work they signed off on which has been found to be defective.
Building defects and their rectification are major problems in residential strata buildings, with nearly three-quarters of residents living in strata have experienced one or more defects in their scheme.
The Victorian Building Authority (VBA) has just rendered a high-profile decision relating to the fire in Melbourne’s Lacrosse Building in Docklands in November 2014.
Highly flammable and non-compliant external aluminium cladding contributed to the rapid spread of the blaze, with the fire jumping from a balcony on the eighth floor to the top of the 23-storey building. When the Metropolitan Fire Brigade reviewed the case, it found the aluminium cladding did not comply with the Building Code of Australia.
The subsequent investigation by the VBA has resulted in the building surveyor who signed off on the building work facing disciplinary action, with the authority recently announcing it had referred the registered building surveyor, Anastasios Galanos, to the Building Practitioners Board.
The VBA’s investigation led to the allegation that the building surveyor had breached the Building Act and Regulations and failed to carry out his work in a competent manner and to a professional standard in that he “could not have been satisfied that the building work would comply with the Building Act and Regulations when he issued the building permit.”
Penalties if the allegation is found to be true include fines and cancellation or suspension of the certifying surveyor’s registration.
The VBA is also referring the conduct of the architect to the Architects Registration Board of Victoria, the regulatory body responsible for the conduct and discipline of architects.
The disciplinary action follows increased scrutiny of the operations and current practices of building surveyors in Victoria.
In December 2015, the government announced that builders would be banned from hiring their own surveyors under a radical shake-up of Victoria’s construction laws.
Last year, an examination of data from Victoria’s Auditor General by Fairfax Media found that the state’s building surveyors had been found guilty over more than 700 misconduct claims since 2009, with many ignoring illegal building work or serious fire risks, or issuing an occupancy permit when a building was not fit for occupation.
It comes amid concerns that there is an inherent conflict of interest in requiring private building surveyors to assess building work while they are also employed by the builder.
The VBA action follows a decision in New South Wales late last year where the Supreme Court found a certifier liable to a home owner for building defects. While the certifier in that case was a local council, it offers hope to owners corporations whose buildings are affected by defects.
In the case Chan v Acres (2015), the plaintiffs bought their home from an owner-builder who had renovated and built extensions at the property. A firm of engineers had been engaged by the previous owner to prepare structural drawings and carry out inspections of the structural work as it was built. The previous owner then got the local council to certify the property when the renovations were completed and the council issued an occupation certificate for the house to certify that it was suitable for occupation and use. Despite the involvement of the engineers and council, there were significant defects in the home.
The plaintiffs subsequently sued the owner-builder for breach of statutory warranties, and both the council and the engineers in negligence. The claim against the previous owner was a success but the Court was not satisfied that there was enough evidence to establish that the engineers owed a duty of care
However, the Court found that the council owed the new owners a duty to use reasonable care in performing its critical stage inspections during the renovations of the house and in issuing the final occupation certificate for the house once the renovations had been completed.
The Court found that the negligent performance of the council’s function as certifier could well injure the economic interests of the purchasers of the house, who it knew would rely on the occupation certificate.
This is an important verdict for owners corporations considering negligence claims against certifiers of residential buildings.
We know the incidence of building defects in New South Wales is significant. There have been a number which have had serious consequences: the Bankstown apartment block fire with resulting death and injury; the Lane Cove balcony collapse and resulting injuries; and the Macquarie Park failure of a high level balustrade and resulting death.
Compliance and certification of building work in New South Wales is currently under review, as part of the continued reform of the planning system. Recent reforms under the Strata Management Bill 2015 do not address the issues that exist.
Developers should be subject to a statutory obligation to ensure compliance by engaging professional accredited designers of critical building elements. That should include an obligation to rectify non-compliant construction work.
There also needs to be a stronger certification process which requires that design and construction compliance for critical building elements be undertaken by qualified professional practitioners, and preferably by the actual designer of the building element or system.
We need to improve the scope and detail of mandatory building inspections of critical building elements. Construction compliance certification has to be based on professional inspections during construction, not afterwards.