13 November 2019
(Bills - Second Reading Debate, 13 November 2019, Legislative Assembly, NSW Parliament)
Increasingly the Australian home is an apartment. Our growing population will require us to rely more on higher density living. The last Census found that almost 20 per cent of New South Wales homes are apartments and this proportion continues to grow, with multi‑unit dwellings making up more than half of new developments in Sydney. In my electorate apartments account for over 80 per cent of homes. Since I was elected, I have heard from constituents who are affected by significant defects. I have heard about homes that flood when it rains, homes without fire systems having been installed and homes with walls that are cracking.
The Opal and Mascot building exposés were not a surprise to me. The silver lining of these devastating cases is that defects are finally getting much‑needed media attention and Government action. We do not know how many buildings have defects. Most go unreported because owners are concerned about the effect on the value of their investment and developers demand confidentiality agreements when matters are settled out of court. In 2012 the University of New South Wales City Futures Research Centre released one of the only studies into defects after surveying owners' corporations in buildings constructed since 2000. The results were alarming, with 72 per cent to 85 per cent reporting major defects.
We urgently need to fix this problem to prevent hardship and heartache for many people. We need laws that promote better quality buildings and that help people affected by defects get remedies without financial ruin. This bill is a critically important step. The focus is to improve design and construction. I congratulate the Government on adopting some of the recommendations in the important 2018Building Confidence report by Peter Shergold and Bronwyn Weir. I note that Bronwyn Weir has been in the gallery with the new New South Wales Building Commissioner.
The Design and Building Practitioners Bill 2019 will create a new process for the accreditation of certain building practitioners to ensure they are qualified to do the work. These practitioners will have new obligations to ensure they properly sign off on their work's compliance with the Building Code of Australia and they will be required to declare that a building was constructed to design and plan. The bill will introduce a statutory duty of care on contractors who undertake building work to take reasonable care to avoid defects, creating clear grounds for owners to sue for negligence. The regime represents a great leap forward in building quality assurance, as we know that defects can arise from cutting corners from initial designs and from noncompliant work and that owners can struggle to get needed documentation to investigate problems in their buildings.
I thank the Minister for the consultative approach he has taken with me and key stakeholders in relation to this bill. As a result, the bill will be further strengthened by providing greater certainty to the types of designs, building works and buildings to be captured by the new regime. I foreshadow that I will seek to have the bill considered in detail in order to move amendments to that effect. I understand the Government will also strengthen the application of the legislated statutory duty of care provisions, which is one of the strongest new consumer protections provided in the bill. It is my view that these improvements should extend the duty of care to manufacturers and suppliers of building products. Manufacturers and suppliers often provide instructions on the suitable use and installation of their products. If a builder uses a product in line with poor advice from a manufacturer or supplier it can result in a defect. We must improve the accountability of manufacturers and suppliers if we want to improve building quality. I ask the Minister to address this important matter in his reply.
While there are obligations on regulated design practitioners, a wide range of contractors and subcontractors will do designs and building works that are not regulated and therefore are excluded from the new scheme. These practitioners will not provide any declarations that would help owners identify what work they have done and whether they are responsible for a defect or owe a duty of care. Many defects arise from the construction process and there should be some new form of transparency to ensure contractors and subcontractors not covered by the scheme cannot fly under the radar. This would help encourage building culture improvements. In consultation with the Minister, I will propose an amendment to address this concern.
Currently the bill would allow a certifier to issue an occupation certificate even if all the required documentation has not been lodged. Although the builder is required to provide a compliance declaration before an occupation certificate is lodged, this does not stop the developer from making an application or the certifier approving that application without those necessary declarations. Again, this will be addressed by an amendment developed in consultation with the Minister. The transitional provisions will make the rights of owners and the obligations on design and building practitioners unclear in buildings that are in the process of being designed or constructed on the date that the provisions commence because each practitioner's obligations kick in depending on whether they sign a contract before or after proclamation. This means some practitioners will be covered and others will be excluded. I understand the Government has worked closely with key stakeholders to address this concern and will be proposing amendments to ensure that each building be either wholly captured or wholly excluded by the scheme. I especially commend the Government for agreeing to ensure that a statutory duty of care will apply to owners of apartments that have already been built.
I am disappointed that the bill does not include changes to ensure that all owners' corporations can access statutory warranties for their buildings. Statutory warranties are different to duty-of-care obligations and are often a better avenue for owners to get remedies for defects, as they do not require owners to prove negligence. However, there are a number of loopholes that case law has created that enable developers, builders and subcontractors to escape liability. The courts have ruled that lot owners and owners' corporations are not successors in title to a developer for statutory warranty purposes if the developer is not the landowner. Contracts are now drafted to exploit this situation. Indeed, this was done at Opal Tower, where the Sydney Olympic Park Authority engaged Ecove, which then engaged the builder and carried out the role of a developer, despite not being the landowner.
Another case found that the owners' corporation of a leasehold strata scheme was not the successor in title to the developer because it did not hold freehold title to the common property. That prevented it from suing the builder or developer or from being a beneficiary under an insurance policy under the Home Building Act 1989. Another case found that owners and future owners did not have the benefit of the subcontractors' statutory warranties. It is of great concern that contract arrangements can continue to be used by developers to avoid their liabilities for defects. It goes against the very purpose of the statutory warranty provisions. I thank the Minister for the time taken to discuss the concerns about statutory warranties. I will be proposing amendments in that space and I understand the Government will consider addressing those concerns separately in the future.
In the past two decades the rights of owners have been successively eroded in an attempt to fast-track development and keep apartment costs down. Statutory warranties have become harder to access and home building insurance has been removed for multistorey buildings. Even the defects bond was watered down to ensure that owners could never access it without having to go through a laborious and expensive process with lawyers and expert consultants. I am pleased that the Minister made it clear in his second reading speech that the bill reflects only a first step in reforms to overhaul the building sector. More work is urgently needed. This includes increasing independent oversight of development to provide holistic oversight of variations which individually comply with codes and standards but, when combined, cause defects; preventing builders contracting out of proportionate liability; and stopping builders and developers escaping liability through two-dollar companies.
I am particularly concerned about the backlog of people who are currently affected by defects to whom the bill will provide little relief. These people are on the verge of financial ruin as a result of defects they had no responsibility for causing and could not have foreseen. I acknowledge that the Minister has committed to developing a method to deal with existing buildings. [Extension of time]
The bill reflects important progress in addressing the significant challenges of restoring confidence in the building sector and protecting future consumers. To ensure the new regime works to its full extent, the Government will need to move quickly to provide for electronic lodgement of declarations. Currently, there is no mechanism for owners to access the declarations for their building required under the bill. These documents will be vital for owners to investigate any defects that arise and in pursuing their rights. Fair Trading NSW has already developed a portal for all new buildings subject to the building defects bond. This could be expanded to include documents required by the bill. It will be essential that any portal is accessible to all future owners of a building to which the documents relate. My proposed amendments, developed with the Minister, will improve consumer protections under the bill. I look forward to working with the Government and other members of the House in this process.
Before closing, I acknowledge the tremendous work of the Owners Corporation Network in getting to this outcome. The team continues to provide me with advice on improving protections for apartment owners and has been integral to improving the regime put forward in the bill. I also stress that it is critical that members pass this legislation through both Houses before we leave this year. I note that an upper House inquiry report has recommended not to proceed with the bill. I think that is especially dangerous. We do not want to go on recess, have another Opal Tower or Mascot Towers incident occur and know that we have held up legislation to provide important protections that do not currently exist. I commend the work of the Minister to get the bill right. I commend the bill to the House as an important step in moving the building sector forward.