OCN. Owners Corporation Network. Submission (1) to the. Parliament of NSW Joint Select Committee. on the Quality of Buildings

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1 1 of 5 OCN Owners Corporation Network Submission (1) to the Parliament of NSW Joint Select Committee on the Quality of Buildings The role/ activities of the Owners Corporation Network (OCN) The OCN is made up of Owners Corporation members representing Sydney s larger strata title residential developments and over 5000 individual property owners. The role of the OCN is to facilitate the ongoing improvement of living in and/or investing in large strata title buildings. The OCN will focus on facilitating necessary changes to government policy and legislation. Furthermore, the OCN strives to educate Owners Corporation Executive Committees and individuals through sharing experiences and disseminating information from relevant documentation and related organizations. Building Certification, Codes and Standards Adequacy of current minimum building standards There must be an assumption that the current building standards and codes exist and are effective and sufficient to provide: a) The public s requirement for safe livable housing; b) An environmentally friendly product; c) A product that is in keeping with current expectations of environmental standards vis-à-vis noise, light, heat, ventilation etc. and d) A fundamentally sound and a more than structurally adequate product that has a defined lifespan which is longer than x years (possibly 120 years) This means that anyone buying a product, that is certified to meet the required standards, can be safe in the knowledge that simply because those standards are met they are buying something that has passed the quality assurance test. This requires no technical knowledge at all, simply the ability to be able to sight the relevant data that has recorded the certification. This presupposes the certification is itself correct and accurate.

2 2 of 5 Currently not one governmental authority from Canberra to the LGA can say with authority and accuracy that they know and can provide the minimum standards for all building. Effects of standards and certification on Home Warranty Insurance The problems generated by the current flood of insurance claims stems not so much from the inadequacy of the insurance cover as from the inadequacy of the quality assurance of the building process and lack of clear building standards. There should be but there is not, one clear defined undisputed minimum standard required for all building work. At present the BCA will defer to state and to council and no one body can establish, let alone quantify exactly what the minimum standard is. When construction is undertaken, the onus is on the builder to ensure that the construction is completed to the minimum specification. If it is not, there is no comeback on the builder as they will have completed to the contracted standard and will defer to the contract as defence. At no point is there a brake to be able to say to the designer, builder, developer, quantity surveyor, this building must stop or cannot be taken to market because these conditions have not been met. It becomes the responsibility of the purchaser (usually with no formal building training or expertise) to find the problems, or pay to have them found. On doing so it remains their responsibility to have those problems rectified. The LGA can even place an order on them to rectify without having any hand in ensuring their worthiness prior to completion. It is merely an abdication of responsibility down the line to the purchaser who is the person least likely to have any educated idea about what needs to happen. The government authorities have simply pushed the responsibility onto the purchaser in order to remove and absolve themselves of any requirement to provide a QA approval throughout the process. The direct analogy is the motorcar. There is an expectation by the manufacturers and the users of motorized vehicles that the product is constructed to specifications. There are clear, precise and quantifiable specifications for the minimum standards of automobile construction. There are defined imposed standards that the manufacturer is required to meet. There is an expectation that all cars on the road in Australia meet a known minimum standard. If the equivalent of the extant building code were applied to the automobile industry, no one driving a car in Australia would know whether his or her vehicle was safe. If they crashed due to a manufacturing defect, they would be forced to pursue a protracted legal battle with the manufacturer to determine liability. The automobile manufacturer could say that the vehicle was constructed according to original design criteria and therefore they were not liable for any defects. This prospect is inconceivable and yet it currently applies to the building industry. Suggested changes Devise one set of minimum standards that are required to be met by all builders anywhere in Australia. Ensure that building standards are published and easily accessible to the

3 3 of 5 general public. Commission a publicly accessible database for the registration of major complaints against builders and developers. Ensure that all construction companies or individuals are required to maintain public indemnity insurance for the purpose of claims against them for sub-standard workmanship. The provision of this insurance would require the builder to provide sufficient due diligence to satisfy the insurer of their ability and monetary backing. The builder, contractor, sub-contractor or tradesman would be required to provide surety and/or insurance to the value of several times all work completed with a minimum of $x. All The builders, contractors, sub-contractors or tradesmen be recorded in a publicly accessible database that lists their financial status as above, their insurance status as above and their building license number. This would allow all involved in the process to ascertain the worthiness of the people involved. All councils or other governmental bodies should be ultimately responsible either directly or indirectly for ensuring that all building work is carried out to meet minimum specifications. This could include providing work to private QS or certification companies. If the work were subsequently found to be substandard the certifier would be liable for rectification. The development of high-rise non-commercial buildings needs to be recognised in law and statute. The relevant codes and processes need to recognise high-rise non-commercial buildings. Furthermore, the handling of strata issues relating to the same need to be refined and recognised. The introduction of the strata title is only 30 odd years old. The advent of high-rise (3+ stories) and very high-rise (15+ stories) strata titled residential buildings is an even more recent event. Current building codes and specification, legal statutes and process do not adequately recognise high-rise non-commercial buildings. Builders Licensing Quality of licensed builders There is no effective QA process for builders, either directly or via the licensing system. Effectiveness of licensing regime The licensing system as it stands is totally ineffective, realistically it only provides a means of recording the license number and the builder s details. Role of the Department of Fair Trading and the Consumer Trader and Tenancy Tribunal None of the above organizations provide effective timely qualitative and/or quantitative value to the process as a whole. All of the above organizations are involved with bolting the gate and laying blame long after the horse has disappeared. Suggested changes Ensure that all construction companies or individuals are required to maintain public indemnity insurance for the purpose of claims against them for

4 4 of 5 sub-standard workmanship. The provision of this insurance would require the builder to provide sufficient due diligence to satisfy the insurer of their ability and monetary backing. The builder, contractor, sub-contractor or tradesman would require to provide surety and/or insurance to the value of several times all work completed with a minimum of $x. Commission a database, accessible to the public, for the registration of major complaints against builders and developers. All The builders, contractors, sub-contractors or tradesmen be recorded in a publicly accessible database that lists their financial status as above, their insurance status as above and their building license number. This would allow all involved in the process to ascertain the worthiness of the people involved. All licensed builders, contractors, sub-contractors or tradesmen be graded* according to all of the above standards including complaints against them. In the same way that the public can undertake a company search, it should be possible to access the following information: - Who the principals are behind the license? - What is their track record as a builder? - How long have they been licensed? - What else are they licensed for? - What is their financial status? - What is their insurance status? *The builder s license could be graded by license type and category (e.g. gold license with an A++ grading in each of the above categories). The potential customer/investor would then have clear picture of a prospective builders qualifications and track record. The market would then determine the amount of work that each builder was allocated. All building projects completed must retain a register of all the builders, contractors, sub-contractors or tradesmen who were involved. This must be a legal requirement and accessible to the public. Other building related issues and concerns Defect Rectification within strata titled residential buildings Only the original purchaser and not a subsequent owner has a contract with the building developer. This becomes an issue when a strata titled property is on sold prior to completion or sold prior to any homeowners warranty period. Furthermore, there are difficulties an Owners Corporate will encounter in being considered the legal representative for all owners. A defect maybe present in each apartment but not be classified as a common property defect. (e.g. air conditioning installed and a bylaw written by the developer allows owner exclusive use of and obligation to maintain repair & replace) The Owners Corporation should be the legal

5 5 of 5 representative for all building defects, and all current owners to prevent multiple legal cases. There is a recent case where all individual owners have been required to make application to the Dept Fair Trading to fix a common defect within the development. This has resulted in extensive delays in the processing of these applications. The definition of common property should be reviewed and redefined. There have been recent legal cases that have helped clarify what is and what is not. Perhaps these could be encapsulated in a better definition of common property. Notice: The Owners Corporation Network is an incorporated association and makes no claims as to the accuracy of information provided. Any advice or actions taken as a result of information obtained through the network is solely the responsibility of those who receive the information. The Owners Corporation Network recommends any person or group seek professional advice and guidance in the management of their own affairs.