Cracking apartment tower residents sue NSW Government

In a taste of things to come, residents from Sydney’s Opal Tower, which was evacuated on Christmas Eve amid severe structural cracking, have launched a multi-million dollar class action lawsuit against the NSW Government. From The ABC:

In documents lodged with the NSW Supreme Court late on Friday, owners of the western Sydney apartment tower are suing the Sydney Olympic Park Authority (SOPA), the owner of the land on which the Opal Tower sits.

The Sydney Olympic Park Authority is a NSW State Government-controlled entity, meaning residents are effectively suing the Berejiklian Government — not the developer or builder.

The lawsuit claims a “breach of warranty” and that design and construction of the $170 million apartment complex, which was evacuated on Christmas Eve after residents spotted cracks in its foundations, was not designed or constructed with “due care and skill”.

It is claiming a breach of the Home Building Act, in that the tower was not built in accordance with the plans and specifications.

“Opal Tower was not reasonably fit for occupation,” the claim states.

The owners, hundreds of whom have now been in temporary accommodation for more than seven months, are also claiming losses due to a drop in the value of the apartments and a loss of rental value.

No exact monetary figure has yet been put on the suit, but the claim is expected to run into the multi-millions.

This is likely to be the tip of the iceberg given the rapid construction of flammable, cracking slum towers over the past decade:

Watch on as dodgy builders and developers escape largely scot-free while taxpayers and apartment owners are reamed.

Comments

  1. Mr dos Santos can get financing for a million dollar hovel but doesn’t have $8k spare. This place is mad.

      • In my book this is a very likely scenario.
        Slow erosion of AUD so that house prices sill double up every 7 years, but, oi oi, nominally.
        this way houses did not crash but yet have returned to historical level

    • A crisis that would require …. more migrants to fix. It’s the gift that keeps on giving. Hallelujah!

      • Well done, Dom, I see that you’ve been drinking long at the saloon of wisdom.

        With your edumacation almost complete, I find myself having to post less. More free time. Awesome.

    • Golden Trumpet

      Consider a construction / developer company trying to get insurance for its project. When asked who was certifying the project the answer being – the government – the insurance company would say no way, they are being sued left right and center. Private surveyor – um, no chance.

      Seriously who is going to insure these projects ? How would an insurance company know that things are being done above board when the government, the regulators, the practitioners are all completely without credibility.

      Might as well start selling life insurance policies on death row.

      Before you even consider who is going to buy them ?!!

      Hell – where are you going to get the mortgage for one from ?

      “Hi bank I want to get a mortgage for an apartment”

      “Whats your collateral ?”

      “The apartment”

      https://media.giphy.com/media/l0MYNPBgC4u0fcIdq/giphy.gif

  2. In this case the NSW Government just happens to own the land on which the tower was built. It is not clear whether they would have liability in relation to any other cracking or collapsing building.

    • Ronin8317MEMBER

      The Sydney Olympic Park Authority not only owns the land, but also owns 12 of the apartments in Opal tower. Owning those apartments is what ties it into being a developer.

  3. I get it, they are desperate but I don’t think this will make it to hearing as the cannot be deemed to be (one of the) developers because I doubt they have any ownership of the apartments and likely never have had. Appears illconceived ….

    • They’re definitely going for the softest target … and one with the most money (theoretically).

      If it succeeds …. watch out below.

      • agree and who can blame them. I would have done same. And you are right, if the succeed.. lol

    • My understanding is that a relatively recent change in the law (perhaps specific to NSW) allows them to sue not only the developer but also the owner of the land at the time of the development. Normally, the landowner would try to declare bankruptcy and disappear, but obviously for a State Government bankruptcy is not an option.

      • They are not suing the State Government directly – they are suing SOPA, which can easily be dissolved.

        As a tip for property investors: If your high rise building does not contain a 4th, 14th or 24th floor, steer clear – it wasn’t designed with local buyers in mind.

      • Matti – you think the NSW Government can get away with simply dissolving SOPA and washing its hands of all responsibility? As they say: “Tell it to the Judge!”

    • I think they may have a case. If the legislation or building codes (or whatever laws) are not providing enough consumer protection the government has case to answer.

    • I am correcting myself here. The NSW Government is in big trouble if the below is true and it seems plausible. from the ABC

      ”Living under Sydney’s ‘dome’
      Rather than suing the builder or developer, the ABC understands SOPA has been picked out because it was the original owner of the site and, under a revision to the Home Building Act in 2011, considered the “developer” as it owns 12 affordable-housing apartments in Opal Tower”

      Retaining ownership is going to be very very expensive. But a one off I hope.

      However the good news is that the NSW government should be successful in suing its self in this matter 🙁

    • Agree. I find it difficult to believe that SOPA could be held responsible for this. I hope for the sake of residents that it’s no win – no fee.

  4. Jumping jack flash

    I dont know why they needed to sue. They should have just waited. The government would have arrived on the scene brandishing buckets of money. The pollies could have painted the spending as stimulus, if they were smart.

    “The owners, hundreds of whom have now been in temporary accommodation for more than seven months, are also claiming losses due to a drop in the value of the apartments and a loss of rental value.”

    Ohh I see. Probably that last bit then.
    Doubt that the government would pay them for the loss of value.

    Good luck to them. Governments can do some pretty tricky things in this area. I remember the council where I grew up was tired of being sued all the time so they set up some fund that had 54K in it and if you sued them and won you’d be paid that, maximum.

  5. If SOPA is any clever, they will (in order below):
    1. request ‘show cause’ for the appointing SOPA as the “defence” . (drag for 4 months – draining cost to owner group)
    2. after step 1. if claim not dismissed, lodge a counter claim that strata-management company and agents as responsible for mis-information to owners (drag for 1 year – draining cost to owner group)
    3. if step 2 doesnt work, request for extensive report claiming that the building is uninhabitable (drag for another 6 months – cost involved to complaintee – upwards of $1Million – draining cost to owner group)
    By the time we come down to step-3, the bill to the owner group would have racked upto fair few millions (lawyers are making out like bandits).
    70% of owner group will be deep in shit-creek. Remember, they cannot inhabit while they claim it is uninhabitable but they will have to pay mortgage otherwise they get pulled up. If it is investment property, then their PPOR will be under risk. They will pouring money into this class action like you throw rocks at Three Sisters, only to realise many will be bankrupt by the end of it.

    This drags along for 4 years, a compensation of $200K per apartment will be agreed by then 40% of owner group would have AWOL (commited suicide, ran out of country, etc to escape debt burden), another 40% will be in deep budget blackhole and $200K will let them eat ramen noodles two times a day instead of one and the rest 20% will lick their wounds, cry for victory and go back to their heavily reduced balance sheet.

    As long as there is minimal claim on loss of life, SOPA has a pathway to get out of it scottfree

  6. Easy come (stamp duty) easy go (legal expenses due to poor regulation). Well done state governments.

  7. This is starting to really piss me off. In no article do they ever say that the builders or developers should pay for it. Always the mug taxpayer. These dodgy cvnt developers have been making billions in the last 20 years and they get off scott free! Change the laws so they can’t phoenix and go after their fvcking assets. It’s bullsh1t.

    • We’re paying tax to subsidize and bail out an investor class after the people who rogered them have bolted with all the money. I’d say that Straya has reached peak idiot except that I know it will get worse. This is making my blood boil.

  8. The Government needs to urgently approve building more brand new high rise apartments so we can move all the people out of the not so new ones….