Here's Your Strata Defect Gift [that keeps on taking]
Will Skyview 960 inherit both the defects & monitoring obligations ...
The latest reporting on the Skyview 960 structural dispute with the NSW Building Commissioner has thrown up the need for ongoing term monitoring. So, how is this not going to be just a long term strata defect gift that keeps on taking from the strata building and strata owners …
[7.00 minutes estimated reading time, 1399 words]
Introduction
The Skyview 960 apartments being developed by the Toplace Group have been in the news a bit this year because of the apparent structural issues, the NSW Building Commissioner’s involvement, the recent Prohibition Order issued prevent apartment sale settlements, and what will happen next.
And, they’re back with a new twist for the strata building and future strata owners.
I’ve written a few articles about the ongoing saga as follows with the my most recent article commenting that:
The dispute playing out at Toplace Group's Skyview 960 apartment complex in Castle Hill is and will continue to provide lessons for everyone about the effectiveness of the NSW Building Commissioner for the interests of owners of new strata building developments.
In May 2021 I wrote about the public disclosure of the major structural issues at a major Sydney strata building in my article ‘Serious Structural Faults: The New Normal in Strata Buildings’.
In May 2021, I also commented that my query about a serious dispute between a developer and the NSW Building Commissioner in my earlier article ‘The NSW Building Commissioner’s Hard Hat Brigade in Action’ might play out here given the complex and technical nature of structural faults and the late stage in the development and construction process when the dispute arose.
In June 2021 I wrote about the likely issues to emerge in the dispute between Toplace Group and the NSW Building Commissioner in my article ‘Round 3 for the NSW Building Commissioner’,
What’s the latest news?
Josh Bavas at ABC News [who’s been actively reporting on developments] has now reported in ‘Skyview apartments in Castle Hill should be permanently monitored, report finds’ that the advisors engaged by the NSW Building Commissioner, Unisearch and Emeritus Professor John Carter, Professor Mark Hoffman, and Professor Stephen Foster have recommended that:
‘In our opinion continual monitoring of the condition and behaviour of measures adopted to rectify the permanent expansion joints should be conducted for at least the next 10 years but ideally for the life of the building.’
The article also reports the position of the protagonists in this dispute [Toplace Group and the NSW Building Commissioner] as:
‘Mr Chandler has said he was optimistic about coming to an agreement with Toplace for the order to be lifted, if it proved the buildings were safe and fit for purpose.’
‘In a statement last week, a Toplace spokesman said the company’s director, Jean Nassif, would "personally guarantee" works conducted at the site.’
So, it looks like the negotiations between them are underway to find a ‘compromised’ solution to the dispute [my first option for the next round].
We’ll see soon whether or not they resolve things between them since the time limits on the appeal against the Prohibition Order run out soon.
Implications for the strata building and strata owners
Whilst an agreement about monitoring the structural integrity of the buildings at Skyview 960 sounds like a good outcome I'm still concerned about the position of the strata corporations and strata owners that will inherit ownership on plan registration and apartment sale settlements.
The key issues I see on the limited information available are as follows. And, these are only the beginning of the potential issues.
1. Who is responsible for the monitoring [now and later]
Is it Toplace Group or someone else? If it is Toplace or a nominee, what rights does the strata building have to enforce the obligations to monitor and get access to the monitoring data and results. If they are part of an agreement between Toplace Group and the NSW Building Commissioner, they can’t involve the strata corporation since it doesn’t exist yet.
Or, is it an obligation that is inherited by the strata building on registration of the strata plan? After all, the building common property [which will comprise most of the structural elements] will not belong to Toplace group after that.
2. What are the monitoring details
Obviously, there’ll be details of the type and kind of monitoring that will take place based on the experts’ advice and the negotiations between Toplace Group and the NSW Building Commissioner. But these details will be crucial to the outcomes for the strata building and strata owners.
How is doing the monitoring? Where in the building? How is the data secured, collected and shared?
For instance, since any monitoring equipment must be located in common property or lots, and inspections will need to occur routinely over time; what rights and obligations are being created to ensure that can occur?
Plus, depending on what the monitoring reveals it may need to change over time or what is monitored may vary. How that is handled becomes increasingly difficult the longer it lasts.
3. Who decides that the monitoring reveals structural issues
Once monitoring begins, what criteria are applied to the results to determine that the strata building’s structurally integrity is fine or not? And, who decides that question?
Is it Toplace Group, the NSW Building Commissioner, the parties experts, a new third party expert, a Court, etc? That will be another situation where a strata builing’’s
And, what about the strata building and strata owners? Does it or do they get rights to participate in that debate about the implications and results of the monitoring or not?
Plus, even if there is agreement about ongoing or new structural issues in the future, who decides what works are required as a result?
That’s going to prove difficult if the decisions about works exclude the strata building since they’ll be done to its property. And, it seems very unlikely Toplace Group would today agree to a provision that a future group of strata owner tell it what rectifications work is done.
Or, is it possible that the details of future structural defect rectification works will be subsumed with the strata building’s rights to make a building defect claim and the monitoring is just evidence in that claim?
4. Who pays for any future structural defects [and other stuff]
All this monitoring, future analysis and disputes about the monitoring and structural defect rectification works will all cost money. Not just for Toplace but also for the NSW Building Commissioner and the strata building.
So, who pays?
It obviously should be Toplace Group and that’s likely to be part of any agreement. But, an obligation to pay in the future is very different from actually getting paid. And, the experience of many strata buildings with developers and builders is that they often vanish in a puff of liquidation and ‘phoenixing’.
Plus, since Skyview 960 is over 3 storeys there’ no Home Warranty Insurance to fall back on.
And, finally, even defect claims rights will expire in 10 years time.
5. What if Toplace Group [and others] cease to exist in the future
Since any agreement must be between legal entities [Toplace Group, its director/s, the NSW Building Commissioner, the monitoring experts, and, the strata building] those parties need to continue to exist for enforcement of monitoring, repair and other obligations against them.
Sadly, though the only one that can’t become insolvent, die or be disbanded is the strata corporation for Skyview 960.
So, will it be the case that in 5, 10, or 15 years time all of the implications and consequences of identified potential structural problems and ongoing monitoring will just be a ticking time bomb in the strata building and strata owners hands?
Conclusions
There’s not enough detail so far about a potential agreement between Toplace Group and the NSW Building Commissioner to know how well or poorly the strata building and strata owners will be protected or exposed.
But, as I’ve identified in this article there are so many complex and unpredictable future issues that it’s likely the strata building will be left with the consequences.
Plus, because they are not involved in these investigations, negotiations and agreements, history tells me that their interests are not going to be well protected and they are the most likely group to end up stuck with the problem [again].
June 28, 2021
Francesco …