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Owners’ Corporation Law - November 2019

29 Oct 2019

Hats off to you, Premier, but remember, we’ll all be watching …

By Tom Bacon

Credit where credit’s due, I say.

Victorian Premier Daniel Andrews deserves the plaudits this month for Labor’s stunning announcement that it will pursue dodgy building practitioners on behalf of owners of apartments covered in combustible cladding.

One of the key features of the Building Amendment (Cladding Rectification Bill) 2019 which was introduced into parliament on October 15 was the inclusion of a clause to allow owners to subrogate their rights to the State of Victoria so that it could chase builders, surveyors, engineers and other wrongdoers where the State pays for the rectification costs.

Any financial returns from the court action will be reinvested into the cladding rectification program.

The Premier also announced that it would top up the cladding rectification fund by chipping in the extra $300 million that the federal government failed to contribute (by way of charging higher construction levies on builders and developers).

I had criticised the Premier heavily just two months ago, when it revealed that the announcement of a $600 million cladding rectification fund was actually only half that amount.

More criticism was put on the Premier in last month’s column as well, when the announcement of the new owners’ corporation (OC) legislation failed to push through legislative reform to make it easier for OCs to sue builders, developers, engineers and surveyors by removing the barrier of having to pass a special resolution.

Indeed, in one fell swoop, the Premier has resolved both of my criticisms through the new Bill introduced into parliament. Now I’m sure the Premier has better things to do than read my monthly column, but I am very glad that the state government has committed wholeheartedly to this issue by announcing an Australian-first.

We shall wait and see whether other states and territories around Australia will now follow suit.

However, my cynical nature sometimes gets the better of me, because I’m now starting to wonder how likely it will actually be that the state government will actually prosecute these builders, developers, engineers and building surveyors. Perhaps the state government might chase one or two egregious cases, just to send a message to the industry, but journalists will need to be reminded to check the data over the coming years to see whether the state government’s appetite for litigation does actually eventuate.

Litigation is a risky business by its nature, and is there no such thing as a sure outcome. It might be the case that the expenditure of taxpayers’ money to chase builders and developers might just be too uncertain to warrant committing to. There will need to be robust oversight and project management over the prosecutions being commenced to recover these funds, as well as increased oversight on political donations from certain donors related to builders, developers, surveyors and engineers.

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