When a residential building falls down – who is responsible?

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Carroll & O'Dea

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There is a shared responsibility particularly on Strata Committee Members to address expenditure to better protect safety and structure.
Australia Real Estate and Construction
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There will undoubtedly be an inquiry and findings in relation to the cause of the Miami building collapse – which has cost lives, caused injury, and left survivors in the street without a home.

Let's consider for a moment who would be responsible for avoiding a similar situation here.

Inevitably there will be a debate about cause. The question of defective building design and construction has been the subject of much separate commentary in Australia over the last couple of years and so we won't repeat that now.

Let's assume however that there was cracking and that there were obvious concerns, and work out where the responsibility would fall if a similar situation was to occur here, where most residential buildings are owned and managed by a strata Owners Corporation.

Subject to certain exceptions for matters which do not affect safety or structure, an Owners Corporation has a statutory duty to properly maintain and keep in a state of good and serviceable repair the Common Property. Of course, if a building collapsed then the Owners Corporation assets could be a pile of rubble and not be of much value. In that sort of situation attention would turn to the responsibility of the members of the Strata Committee, who control on a day to day basis the actions of an Owners Corporation, often in conjunction with a licensed professional Strata Manager.

Each member of the Strata Committee has a legal duty to carry out their functions for the benefit, so far as practicable, of the Owners Corporation and with due care and diligence. However, an officer or member of the Strata Committee may be protected for actions (or omissions) done in good faith for the purpose of exercising their functions. That protection may not protect a member of the Strata Committee or an officer where they have not performed a function or were not acting in good faith.

This should be a wake-up call to members and officers of Strata Committees that despite the inevitable pressure to keep costs and levies low, they are at personal risk if they do not ensure that appropriate reports are obtained and acted on.

There are in facts signs that these risks are being taken. On 3 July the NSW Building Commissioner was quoted as saying under 20% of defects requiring legal notification, were being notified. 1 That is truly alarming.

It is also important to note that Committee Members and owners cannot rely on insurance where there is a known problem, since an insurer is not obliged to meet a claim to the extent that they wouldn't have provided cover in the first place if the insured had disclosed known issues.

Strata Managers can also be subject to pressure, particularly in buildings with a high percentage of investors rather than owner occupiers, to reduce cost and defer any necessary capital expenditure, and to not raise issues which might reduce perceived building values.

A clear lesson from the Miami tragedy is that these things can and do happen, and that there is a shared responsibility particularly on Strata Committee Members to address rather than defer any needed enquiries notifications and expenditure, to better protect safety and structure.

Footnote

1https://www.smh.com.au/national/nsw/construction-watchdog-body-corporates-are-not-reporting-known-defects-20210630-p585hh.html

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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