Round 3 for the NSW Building Commissioner
Watching this major & early strata building defects dispute play out has lessons for the future ...
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. So, let’s look at what’s happening in Round 3.
[5.5 minutes estimated reading time, 1430 words]
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’ following an ABC News article.
I 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.
At the time I asked the question:
‘What happens when a developer or builder disputes a building work rectification order or a prohibition order and wins? It’s going to happen sooner or later unless you believe the NSW Building Commissioner is infallible and when it does, it will create political, financial, and timing impacts on the process.’
Well, it’s starting to look like Skyview 960 might be the location of that first fight and that it will occur over a few rounds.
Round 1: The Slow Dance
Round 1 played out over 2020 and early 2021 during which it appears the following occurred:
structural issues had arisen in the strata building in early 2020,
the developer and builder had investigated the issues with their own advisors,
the builder has undertaken a range of repair works that it says satisfactorily resolves the issues [although the fixes look rough from the photographs],
the NSW Building Commissioner became involved over the construction issues and was liaising [apparently informally] with Toplace,
information was scarce and only became publicly known when a construction industry insider sent a dossier of photos of the Skyview basement to several Members of the NSW Parliament, and
apartment buyers were waiting to see what happens next.
So, let’s call that a slow-paced dance around the issues by the fighters that was mostly happening in the dark until the ABC News article in May 2021.
Round 2: Some Sparring Begins
Round 2 was a bit shorter happening between April and June 2021 as a result of the public disclosure of the structural issues and involved the following actions:
Toplace maintaining that it had done what its experts had recommended, that no ongoing structural issues existed, and, that it would work with the NSW Building Commissioner to resolve any queries they may have,
the NSW Building Commissioner's office undertaking its own independent audit of the expert reports in relation to structural issues, and
the NSW Building Commissioner monitoring a review by the private certifier,
Toplace seeking final certification and occupation certificates for 2 of the 5 towers at Skyview 960 [1 tower has already been certified and 2 towers are not yet built], and
apartment buyers continue waiting to see what happens next.
So, think of this as sparring between the fighters as they take positions and throw out a few jabs to announce themselves and see what the other does.
Round 3: Who Throws the First Punch?
Like in all sparring, eventually someone throws a punch.
In this case, it was the NSW Building Commissioner who punched first as reported by ABC News’ Josh Bavas in his latest article ‘Buyers blocked from moving into Castle Hill apartment tower after 'extensive signs of cracking' found’.
That punch was to issue a Prohibition Order that prevents certification of the buildings. Prohibition Orders are based on the NSW Building Commissioner being satisfied that a ‘serious defect’ exists which prevents an occupation certificate from being issued.
It’s a major move that has significant financial impacts on Toplace due to delayed settlements, impacts buyers of the strata apartments who have to wait even longer to know their position, and, the advisors for the parties.
It significantly ups the ante in this dispute.
Issuing the Prohibition Order, means [to me] that the NSW Building Commissioner had to stop the certifier approving the structural integrity of the 2 towers and is trying to force Toplace to do or agree to do something in relation to structural issues that they have refused to so far.
What’s next for Rounds 4, 5, 6 and beyond?
A few things can now happen in this fight as follows.
Firstly, Toplace and the NSW Building Commissioner can reach an agreement about the issues that gave rise to the Prohibition Order to satisfy the NSW Building Commissioner and the Prohibition Order can be removed.
That’s suggested by some of the reporting which quotes:
a NSW Building Commissioner representative saying: ‘The Office of the Building Commissioner and NSW Fair Trading will work with Toplace to formalise their undertaking and we will then review the prohibition order.’, and
Toplace as saying: ‘Toplace is organising for that surety to be provided, which will occur shortly, and anticipates that once in place an occupation certificate will be issued.’
Secondly, Toplace can appeal the Prohibition Order in the Land and Environment Court within 30 days and hearings can be expedited where there are significant costs or if a completed building remains idle for an extended period. The Land and Environment Court can revoke building work rectification orders or prohibition orders. This is a merit-based appeal, so the Land and Environment Court can consider legal issues, facts, and discretion.
Thirdly, Toplace can also apply for judicial review of the decision to issue the Prohbition Order in the NSW Supreme Court within 3 months if it wants to challenge the NSW Building Commissioner’s interpretation or application of statutory powers or obligations.
What’s your guess about the most likely next step? Will there be a counter punch by Toplace, or, will the fighters agree to a draw?
Here are my predictions.
1. I’d say it’s unlikely that there’ll be a clear and acceptable agreement about the structural issues within 30 days that means Toplace may be forced to appeal the Prohibition Order to protect its position. No legal advisor would allow those appeal rights to lapse.
2. Toplace will want to show strength in the fight generally and to ensure it has a strong negotiating position so it will want to [and will be advised] to lodge a Land and Environment Court appeal against the Prohibition Order and maybe even a NSW Supreme Court judicial review application.
3. Getting an agreement, undertaking, or surety from Toplace about structural issues will be difficult in any circumstances if they have engineering advice already that they have properly addressed them. After all, why would they agree to do things their advisors say are not necessary unless the advisors are proved wrong or change their advice?
4. The most likely kind of agreement, undertaking, or surety that will arise will be conditional or based on monitoring and future promised actions since that’s the best way to reconcile competing experts’ opinions [ie: we don’t agree with each other but we will agree to monitor things to see who is proved right or wrong later]. That’s also a ‘face-saving’ way for the fighters to end the bout.
And, guess who’s being left out of this fight [again]?
For all the excitement of this fight, there’s one group that doesn’t seem to have a say in it and, more importantly, in the final outcome.
They are the apartment buyers who will become the future strata owners of Skyview 960 and will have to bear the consequences of any unresolved structural issues, incorrect certification, appeal outcome, or negotiated agreement.
So, for them, it’s just like it was before: where a developer, builder, and certifier decide the quality [or not] of the strata building they will inherit without them having any ability to participate in those decisions. This time there are a few more people deciding for them [the NSW Building Commissioner, the Land and Environment Court, and, the NSW Supreme Court].
But, I don’t have much confidence they will put the future strata owners’ interests first.
And, as always, they are being kept out of the fight over their strata building and in the dark about the key building construction details, outcome, and results.
To me this fight between Toplace and the NSW Building Commissioner about Skyview 960 reminds me of what Tyler Durden says about the first and second rules of Fight Club:
‘The first rule of fight club; you don’t talk about fight club’
‘The second rule of fight club; you don’t talk about fight club’
June 21, 2021
Francesco …