Comments on last week’s article about the sinking building at Maidstone, Melbourne fall into two predictable categories: the bleeding hearts and the hard heads.
To recap, a mature-age high-rise residential building is sinking and has been evacuated, although some are now back as the owners corporation is weighing up what to do next. Press reports describe the usual array of mixed emotions and confusion about the best course for the owners, none of which is good news for them. In the coming weeks, owners will get much free advice. You can read mine here.
Read: Is Maidstone Melbourne’s Mascot?
The bleeding hearts want a government bailout. In their world, government sets building standards and approves what’s built. Here, they rest their case. The bleeding hearts would have the government effectively be the insurer of all that could possibly go wrong.
Hard heads see it differently. You are a property owner and you take your chances. If your investment is a screaming success, the spoils are yours. If it’s a lemon, that’s bad, but it’s all yours.
In every building defect case I’ve been involved with, most owners start thinking like the bleeding-heart camp and begrudgingly end in the hard-head camp, licking their wounds but at least beginning to heal. The only variable is how wounded they are and how long the healing takes.
There are valuable lessons to be learned from Mascot Towers and Opal Tower on the catastrophic failure of residential strata. Mascot took many years to arrive at a solution. Opal took effectively a matter of months, although a little longer to implement. The distinguishing factor, in my opinion, was the role of government in brokering the solutions.
Read: From Grenfell to Champlain to Opal: How NSW’s ‘Two Bob Each Way’ Response Compares Globally
Opal came first and was the more dramatic ofthe cases. Newly built, iconically located at Sydney Olympic Park on land owned by a government agency and evacuated on a slow news day (Christmas Eve), the government was relatively quick to move. At the time, new builds were the focus of the NSW Government, and while this one was built under the old legal regime, the Minister wasn’t going to miss the chance to interpose himself between the affected owners and the builder and developer. The result was a good one. The engineering error was identified, admitted, and fixed. Compensation was agreed, and the warranties extended for good measure to restore confidence in the building’s integrity. Credit to all involved: the Minister, government agencies, the builder who took responsibility for their work, and the Chair and committee who ran a great, well-orchestrated campaign for justice.
Mascot was messier. Nothing happened fast. The owners received bad advice and made poor initial decisions. The Building Commissioner, through no fault of his own, arrived later to the negotiating table, but by the time he did, all parties were wounded enough to be ready to do a deal, and a deal was struck. The owners sold to a new developer prepared to take on the redevelopment risk, and each of the owners and their mortgagees took a loss. It wasn’t pretty, but at least it was over.
Read: Mascot Towers – the other side to a sad story
And here’s the point for governments worldwide grappling with how to deal with these situations: without admitting responsibility for the cause of these problems, governments can and must take an active role in brokering the solutions.
Such solutions invariably involve a multitude of parties. Apart from the owners, there will be banks, builders, developers, contractors, lawyers, consultants and managers, and everyone will be ducking for cover. At this point, the owners are shattered and feel let down by everyone. They don’t know who to trust. Resources are unevenly distributed. They need a leader.
The honest broker role is one the government can and should fulfil. Financial losses can stay with the owners and their banks, but expecting owners in this position to make good decisions about how to end their pain is a recipe for compounding disasters.
Michael Teys has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
