Podcast: Chandler unpacks case study facts

Last week we discussed the new report from the NSW Office of the Building Commissioner – they’re calling it a case study – titled “Broken Promises, Blame Games and Balconies”.

It’s a big document but essential reading for anyone in an apartment block that’s about to pursue a claim for defects or is concerned about the way the whole housing industry is going (or not).

The case study follows, in granular detail,  the trail of disastrous attempts at defect rectification at the Otto 2 building in Roseberry, Sydney, where residents have been denied access to their balconies after four years and $2.5 million in legal fees. 

This week, as promised, Building Commissioner David Chandler hooked up with the Flat Chat Wrap podcast and fleshed out some of the major points of the report.

Our chat covered issues from why he decided to commission the study in the first place to investing in the fight rather than the fix and other expensive legal follies.

This longer-than-usual podcast also touched on how the additional costs of more thorough certification checks pay for themselves many times over, driving “cowboys” out of the industry and, as we try to get more homes built, not allowing quality to be sacrificed in favour of quality.

Commissioner Chandler also revealed that Fair Trading is preparing a defects kit for strata committees – not individual owners – to take them step-by-step through identifying defects and getting them fixed by the developers without needing to embark on expensive and emotionally destructive litigation.

It’s a long chat and we’ve broken it up into chunks for your listening convenience. If you don’t pod, have a look at the transcript (right here) when it’s been tidied up.  And you can read Broken Promises, Blame Games and Balconies on this link.

TRANSCRIPT IN FULL

Jimmy  00:00

So last week, we were talking about the case study…

Sue  00:05

Oh, the David Chandler one?

Jimmy  00:06

Yes. Which brought back memories for us, because it’s a detailed investigation into a fairly disastrous defects claim, at a building called Otto 2, which blew out into two-and-a-half million dollars in legal fees. Bronwyn Weir wrote this very detailed description of what happened, every step of the way. The case study, as they’re calling it, is called ‘Broken Promises, Blame Games and Balconies.’ And last week, we said we’d try and get David Chandler, the Building Commissioner, to come in and talk about it, since he actually commissioned the thing. And he’s here today.

Sue  00:49

Excellent!

Jimmy  00:50

So we are now going to have a chat with David Chandler. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  00:58

And I’m Sue Williams and I write about property for Domain.

Jimmy  01:01

And this is the Flat Chat Wrap. Good afternoon, David.

David Chandler  01:17

Good afternoon, Jimmy and Sue. How are you?

Jimmy  01:20

We’re good. First question, about the case study; why did you do it?

David Chandler  01:27

Well, we felt that someone needed to tell the story largely from the customer’s perspective; the purchasers of these apartments, because, as you know Jimmy,  many apartment owners are very coy about having their apartment buildings in the public domain. But this one was sufficiently in the public domain, that it wasn’t us who was taking it there. We thought it was a great opportunity to make this the first case study. We’ve got two or three others that are currently being defined at the moment. But we also felt this one had a number of special features to it, that also needed discussion. It had a builder that became insolvent and so we felt unpacking that was important. And of course, it had substantial litigation. And at the time of the settlement (that was reached in February), after nearly four years of litigation, not a single defect had been rectified. So we felt that there were three sides to this. The first bit was, what’s it like for customers who buy into apartments with serious defects? Second of all, what’s the story from the builder’s side, before they’ve managed to pack their tent and go away? And then finally, what’s the litigation story in this and what have we got to take out of this as a regulator? Because it’s clear that going forward, in the new Building Commission, having a reputation that it’s not helpful to go there, because there’s no help offered… So we had to understand what was the journey here and what are the areas we should look at, moving forward, because as we set up the business case for the new Building Commissioner, there’s currently just over 3,000 matters before NCAT, related to building projects and building homes and works. And we believe we’ve got to make a large impact on reducing that, because the stress to consumers; the cost to consumers and the cost to the public, of  these matters running through NCAT, is just huge. So that will be a very high priority on the Building Commission’s list; reduce the number of customers who have to go to NCAT.

Sue  03:29

So when they read your case studies, they’ll actually understand the procedure and what’s happening, and then the alternatives, as well?

David Chandler  03:36

Well, out of this particular case study, the former Minister, Kevin Anderson, said well we’re getting a lot of feedback from the community to say “well, are we going to have a cohort of buildings that are pre-the Building Commissioner and post-the Building Commissioner? What are we going to do about the buildings as we come up to that pre-Building Commissioner’s phase?” He said it would be a real pity, if we hadn’t done something, where we could go back and assist owners. Of course, out of that, has come Project Intervene, and that’s where we’re now asking owners to report their defects to Fair Trading and where we can, we’ll help. That was first of all, about building trust. Jimmy. We had to build the trust in the owners to come forward. And, you know initially, we spoke about the fact of, however are consumers’ going to come forward and ‘out’ their defects, because it does impact (in their mind), the value of their building and the saleability of their building. We understand that, but we can’t let that be the reason for sweeping them under the carpet, because we know that there’s a date in the future, where no matter how far you sweep defects and backlog maintenance under the carpet, it comes back and bites you, so we had to earn the right to have a mature conversation with the industry about that. And how far we’ve come in three years, when you think about it, because this was “oh my god! Don’t mention this! We don’t want things out!” And suddenly, here we are; we’re having a really mature conversation, in the context of, it’s now appropriate to come and bring your defects forward and in Project Intervene, we’ve already got over 110 owners corporations that have come forward and said “okay, well we’d like to be part of that.” It shows how far we’ve come, doesn’t it?

Sue  03:38

110; that’s huge!

Jimmy  05:33

And the whole point of Project Intervene is for owners corporations. And let’s face it, the majority of owners corporations and strata committees have a majority of people who have no idea what they’re doing. Is this to bring in expertise, or is it actually to bring in negotiating heft, when they go back to the developers and say “can you come back and fix this?”

David Chandler  05:56

Well, it’s got a number of features, Jimmy and the first is that, it’s no good coming forward for Project Intervene if the developer’s already become insolvent, because there’s no-one to go back to. So the message there is, don’t leave it too long, because the closer you have these matters brought forward for accountability, the better for everyone. The RAB Act in New South Wales is the most forceful piece of accountability legislation in the country. So we’re obliged to say well, what are the things we can do, using the RAB Act and clearly one of the things is to make developers accountable for their serious defects. Now, as you’ll recall, we did the strata survey a year ago, and we had this conversation way back at the beginning, where we have to separate what we call the colours and the whites… You might recall, litigation involves a long list of everything and it doesn’t involve just the things that are material to the shared common property. So we wanted to make sure that in the survey, we identified how many buildings had one or more serious defects in their common property and the history of that report (we’re about to start that survey again at the end of this month, because we want to benchmark where that’s up to), is that 39% of buildings that were built in the last six years, had one or more serious defects. We wanted to turn our mind to those. So Project Intervene simply looks at serious defects in the common property; it doesn’t look at what we would call the ‘consumer-type defects,’ which is the scratch on the benchtop, and a disappointment over some carpet. While these things can be emotionally important, we don’t think they go to the ultimate value and the viability of the building. So it looks at key building elements in the common property. And then finally, what it does is it offers owners corporations a wrap-around, where we’ve got a panel of trained experts to actually go and ‘triage’ these defects in a building and to bring them back to us in a form that they could be issued as a building works rectification audit to a developer. So they all have to be in the standard form, so we’ve developed a whole bunch of standard templates, so that as we produce these reports now, they’re all very standard. The immediate benefit of that is that we’ve now got a panel of about 20 or 30 people who do this building triage for us and they’re becoming very capable of working within this standard format of identifying the defects that would be material in these circumstances. They will be a big leave-behind of Project Intervene, because suddenly, we will have a bunch of experts that actually know how to structure a package, at least around serious defects. And we’re turning that into an owners corporation kit; so by early next year, we’ll have this work that we’re doing at Intervene, developed into a form that owners corporation’s could start to bring their claim or their notices forward to Fair Trading, using the bones of this kit. We don’t want them to become experts; we don’t want them to be burdened. But at least we can get them to look at the categories of issues through the eyes of where we can help them. You’ll see in that diagram there, that’s on page 28 of the original strata survey, Jimmy, and it’s important just to notice that… When the owners corporation’s filled out the strata survey, the predominant issue was waterproofing and a lesser issue was the key services in the building. That’s because they don’t go into those spaces; they don’t go into those common property places. They really are only thinking about those things that are really, really annoying, like waterproofing. So we’ve compared that diagram in a spider form, for the owners corporation’s intensity of reporting, but then we overlaid on that, what the experience was from our OC audits and of course, that showed a slightly different emphasise of where the defects were presenting. So we’ll be really keen this time, to go back to owners and say “please, look at all of these things; don’t just take the ones that are annoying. Look at them all, because we want to come back and help you with them.” Now, we provide that wraparound service in Intervene at no cost to the owners corporation. We provide all of that technical investigation; we use it to prepare a draft Building Works Rectification Order to give to the developer. We show it to the owners corporation and say “is there anything in our list that we’ve missed; a key building element? So we don’t look at all the rats and mice; we look at the things that are key building elements. And then we prepare a draft Building Works Rectification Order. We give that to the developer, and the developer has the opportunity to offer us an undertaking to go back and fix those defects. And generally, we require a reasonable security from the developer that stands in good faith, that they’ll do that. So one of the early things we’ve run into Jimmy, is that many of these owners are well-invested in the fight, not the fix. That’s what this particular case study points out, that in fact, you can get well and truly into the fight and do nothing about the fix. And we want to do the fix, not the fight.

Jimmy  11:12

Sue herself was saying in our podcast the other day, there’s a point in these things where you just want revenge… You’re just so upset and angry at the way you’ve been treated, you just want someone else to suffer as much as you have.

David Chandler  11:42

Unfortunately, that indulgence costs a lot of money and that’s what this report identifies so well. So we’re very much focused on the fix, not the fight. And of course, that hasn’t won us a lot of friends with some of the lawyers who spend most of their life in this space and that is that they want to first of all, dictate to us what the defects are, using their experts. And of course, I’m responsible for my orders and the way they’re drafted, not a lawyer (nor the lawyers’ experts), so we’ll rely on our experts. But we’ve had in these early matters… We’ve had a number of lawyers pounding the table and saying “but my experts are better than your experts and you used my experts in your Order.” And I’m saying “well, I’m sorry, but that’s not the way it works. We’re going to use our experts, and it’ll be our Orders. But we are interested in hearing whether there’s anything we’ve missed.” And of course, the next thing we get Jimmy, is well “are you going to make an order for costs?” And we go “well, actually, no, because we’re not a judge. We’re not a court. We’re here for the fix, not the fight. So I’m afraid that we won’t be helping you with an order for costs.” So that sort of leaves the expense of some of these legal follies in full stark daylight, saying “well, here you are; your’e way out on this diving board. You’ve racked up all this money, and you’ve achieved nothing and you haven’t even had a dive off the board yet.”

Jimmy  13:07

I was interested in reading the case study (and especially the comments at the end), about how much it cost for certification, per apartment, when it was done originally… How much it would have cost, had it been done properly and how much (hypothetically), would have been saved, if the extra money had been spent at the beginning? Is that something you would stand by now and say that those extra costs pay for themselves many times over?

David Chandler  13:40

Well, first of all, we think Jimmy, we’ve probably had a bit of a spike in what certifiers are charging, because they’re all probably going through a process of adjustment. So we think that’ll normalise and come down a bit. But if you just look at it on the face value, the numbers here sort of say, well… I think it was something like $2.5,000 dollars an apartment; would have been about the cost of doing it properly. We are now looking at litigation, that’s sort of $17,000 per apartment, when you add up what everybody’s spending and you think “we’ll just spend $2.5,000 to avoid $17,000.” Well, it’s not about a return on investment. Getting the certification done properly is one thing, but Jimmy, we know from our experience, that if a developer saves 10% in the cost; if you remember those bathroom pods back at Botany, where we actually got TopPlace to go back and replace 260-odd bathrooms, way back when I first started… They told me that they reckoned they’d saved about $1,500 a bathroom by the things that they’d cut corners on. And they then freely admitted to me, that to fix those defects before they got an occupation certificate, they’d spent about $15,000 or 10-times that amount of money to go back and fix them. And then they agreed (because we’d spoken to a number of owners corporations), that to go back and fix those defects after the building had been occupied, was about $35,000 a bathroom. So for $1,500 bucks, nickel-and-diming at the front, it cost the developer $15,000. And had it been not discovered until the consumers were in possession and they had to do it, it was going to cost about $35,000 per bathroom. So we think this is really telling a story that says ‘developers, you will be held accountable, if you cut these corners, and we catch you.’

Jimmy  13:40

I wonder if looking back at that and taking the certification as a starting point, other critical junctures, at which the owners corporation could have acted differently (in the Otto 2 case); where they could have made different decisions that would have saved them a lot of grief?

David Chandler  15:53

I’m not sure, because I think that in this case, all the parties led each other on a bit. I think Icon were disappointing. I think that the way the litigation was run was probably too egregious, too aggravating. And I think the parties were initially in denial, because when I first got involved in that project, the first thing I got was “well, as you can see in the report, the builder said, ‘well these aren’t defects. I mean, these are all okay.'” And so like all things, with these issues, we go through denial and then we go through confrontation. So you remember that in this instance, I was confronted with legal letters from the builder’s company, saying I’m overstepping and I better pull my head in and if not, I’ll  be taken to the cleaners. And of course, with others, it’s litigation. So the poor owners corporation’s get led on a very unpleasant and intimidating journey, so we’re hoping that we can start to stop the number of incidences of that. But what we have managed to do is we’ve managed to get developers to realise that the tactics in New South Wales are very different to every other state, because the other states are focused on ‘why don’t we licence the waterproofers and the plumbers and electricians?’ And I’m saying “yeah, that’s fantastic, but why don’t we just simply make the developers responsible, because they appointed the designers, they appointed the certifiers, and they appointed the builders… They paid them progress payments, so therefore, they obviously condoned the work. And then they ultimately made the promise to the consumer that when we take your deposit, there’ll be a day in the future, I’ll turn up and give you a building that meets your expectations.” Why wouldn’t we just focus on the developers? And that’s what we’ve done and that’s why we’re turning it around.

Jimmy  17:39

One of your stated aims, right at the beginning of your tenure, was to drive the cowboys out of the industry. Is that happening?

David Chandler  17:49

Well, I think that what my comments on that would be, are that yes, there are some that are no longer in business. In fact, some don’t live here anymore. I always imagined there was sort of 10% or 15% of players, that wouldn’t make it to the other side on this journey and I think that we’re starting to see that those sorts of players are dropping off. People like Next Constructions and those sorts of people. I mean, these people; and Ace Engineering, which was an engineering company that was out there, Jimmy, that… You know, they were probably responsible for at least a third of all the structural defects we found in buildings. Ace Engineering has now become bankrupt. We think that we’ve actually taken out of play developers and consultants that were producing over 1,500 apartments every year in New South Wales. So, you know, that’s a pretty big number and I think we’ll double that before we’re finished. I think we’ll take out the same number of players again, that were producing potentially, 3,000 apartments a year into New South Wales, of very unacceptable quality. Now, let’s say that was 10% to 15% of the field; I believe that the balances have started to pivot. And I reckon already, 60- to-70% have pivoted and said “okay, we’re leaving that behind.” And what we’re finding is that when we stood up the Design and Building Practitioner’s Act, everybody went “oh, this is gonna cost us a fortune. Oh, my god, cost of construction is gonna go up!” Suddenly, builders are coming back to me and saying “David, we’ve actually found that having better design resolved before we start, we can actually plan the work to go faster, and we’re going to buy better subcontracts. And we’re actually doing jobs without the amount of rework that we were originally doing.” We showed them that, for example, organisations like Procore, who sell a lot of construction technology; they’ve done a major research piece to indicate that across Australia, they believe that residential builders are spending about 12% of the cost of construction on rework. So just imagine that being taken out of the business?

Sue  20:04

That’s a huge achievement, isn’t it; actually getting all these mainstream developers to come around to your way of thinking?

David Chandler  20:10

Well, the number of people Sue, who actually get an iCIRT rating; you might recall the number of rock-throwers there were at the start, saying “oh, that’ll never happen, that’ll never happen.” You know, we’ve now got consumers, as you know, changing deposits from one developer to another, who’s not iCIRT-rated. There’s over 240 now being rated. There’s over 140 rated. You wouldn’t believe it; there’s a couple that have got four -star ratings, and they’re not happy with four-stars, so they haven’t come out with their rating, because they think four wasn’t good enough. We’ve got a couple of them saying “oh, we’re sweating on a five.” And it’s interesting; a couple of those companies are owned by offshore owners. And the reason they don’t get a four, is there’s not adequate enough support for the domestic company from the offshore company to say ‘in the event you run into sticky weather, we’ll back you up with our balance sheet.’ So the reason they’re not getting a five, is they don’t have a strong-enough connection to their parent company. So they’ve got to go away and fix that. A couple of them are in the process of doing that. Many of them, of course, are companies that have got a single director and they’ve never ever thought about a succession plan. We’ve got one builder, who is currently doing about $150,000 a year worth of work. He’s a sole -director; he’s 72-years of age and he looks as though he’s in good shape. But I remember when I was working in America, the bonding companies over there used to take a very dark view of you once you turned 55, and you’d been running a successful construction company for 20-or-30 years. They felt that unless you had a succession plan, they were going to start to increase your bonding risk. They said the first thing that happens when you’ve got a couple of million in the bank (and you’ve been successful), is you buy a boat and then you start to take your eye off the game. They said then the other hazard that you get into, is you tend to have multiple marriages. And this particular builder looked at me said “Dave, you wouldn’t believe it. I’ve got a boat and I’ve been married four times.” That’s a way to destroy your balance sheet, isn’t it?

Sue  22:25

At the moment, we’re obviously in a real housing crisis. And the number of development applications for new apartments has gone down; it’s really slumped. What do you see as a resolution? I mean, when people get more confidence about buying off-the-plan apartments, will developers perhaps, raise the number of apartments they’re going to be developing? Can you see any way forward on this?

David Chandler  22:50

I’m pretty excited about it for New South Wales, because you think about this… We were doing about 22,000 apartments when I was made Building Commissioner; that dropped back to about 14 or 15. Hopefully, that’s the low-point. Now most of the developers, to start new projects, I think were legitimately saying that the approval process was the thing that was really slowing them down. It really wasn’t the fact there wasn’t consumers, because we’ve got the demand and consumers tend to buy stuff, even with all the warnings in the world. So here we are, with the new government, and the new Premier comes out and says “the first thing we’re going to do is we’re gonna have a Building Commission. And rule number one is, quantity doesn’t come at the price of quality.” I don’t know who advised the Premier, but he came out of the blocks and basically said “we recognise in New South Wales, that we put quality up there with quantity.” And the public believe that. I think it’s fair to say Jimmy, that we have achieved a high degree of credibility for our work. Now, what a fantastic launch pad for the Premier then to say “and I’m now going to really increase the pipeline of new developments.” Now, had he not had the launchpad of a largely reformed industry, all he would have got rocks thrown at him was about “you’re a developer’s mate.” He came back and said “hold on a sec; we need more stock. I’m gonna push it through, but it’s not going to be at the price of quality.” He’s copped very little; I mean, apart from a couple of councils, that are sort of saying “you know, you’re stamping all over our rights,” or “we don’t like what you’ve got in mind.” Bottom line is, we desperately need this housing. If anything, having a Premier prepared to come out and say “I’m going to stop pushing through new supply and I’m going to do it, because I’m confident that it’s going to be of a quality that’s never been achieved before.”

Jimmy  24:38

One of the comments was about the Bond’s situation, the Building Bonds; the 2% Building Bond. They said that it’s a waste of time, basically. Do you agree with that?

David Chandler  24:50

You’ve been reading the report; that’s a worry.

Jimmy  24:56

I’ve got more!

David Chandler  25:01

I don’t think anyone in the industry really believes that strata bonds are really working. Because we knew from day one, that the bad guys just saw strata bonds as a cost of construction. They never had any intention of giving the bond back. So the Strata Bond was really only a burden for the good players. And it was also a lever to start litigation, probably a bit too early. And the way it was set up to work wasn’t that effective. We had no choice though, because we know that the latent defects insurers left the market (pretty well across Australia, but in New South Wales), in about 2002. And you know that one of my first missions was to get the insurers back in the market, and reinstate 10-year warranty insurance in New South Wales for latent defects. Now, we must have latent defects insurance, because fundamental to a mortgage to buy an apartment is that you have the building insured for its replacement value. So if the policies are excluding latent defects, then they’re not insured for their replacement value. So I have had at the top of my list to get insurers back in the market. Now in New South Wales, we now have the very first latent defects insurance. Sue, you’ve written about it in your articles. So we’ve now got iCIRT ratings, and we’ve got latent defects insurance. Now, there’s a discussion paper out; it went out last Friday, where the new Minister has affirmed that their intention is to move towards mandating 10 -year warranty insurance. Now, whether that’s where we land; whether we make it mandate, or whether we make it sort of still voluntary for a while, I don’t know. But one thing that’s going to happen is that the price of strata bonds are potentially going to go to 4%. So if the cost of a latent defects insurance policy is less than 2% (and that looks like what the cost of the policies are running at the moment)… They’re running, I’m told, between 1.3 and 1.7% of the cost of construction… The good guys are going to get those policies, the better guys will pay 1.3%, the less-good we’ll get 1.7% and the risky won’t get one. So what a fantastic market pivot that is. I think that over the next two-or -three years, Jimmy, we’ll see the the impact of a strata bond scheme start to minimise. The cost of the scheme will go up, so that the bad guys who want to treat it as a cost of construction will find it too big a pill to swallow; they’ll have to actually start to do some decent construction, if they want their money back. But they also need to understand that you’ll only get a latent defects policy, if first of all, you have an iCIRT rating, and you won’t get an iCIRT rating if you’ve been a phoenixer. So just think about what that achievement is… If you’ve been a habitual phoenixer in New South Wales, you will not get an iCIRT rating and you will not get 10-year warranty insurance. Is that tent starting to collapse a little bit? We have to say, yes.

Sue  28:00

That would be wonderful to see, because phoenixing is a curse on us all and that’s a fantastic way of trying to stamp it out.

Jimmy  28:09

But as the report says, it’s a nice idea, but it’s such a complicated set of interlinked legislations. It’s almost impossible, isn’t it?

David Chandler  28:20

Well, it isn’t. Jimmy, I’m not conceding that, because we’re going to have a new plain English billing Act replace all of the current legislation. So the draft Act is already out for circulation. So we’re going to bring all of that into a single piece of plain English language. So all of those mismatches are all going to be back in one piece of legislation. That draft is already out in the marketplace. You had to boil the ocean slowly here; you couldn’t race out and do this in one go. You know that we’ve done it for class-two buildings and on the 3rd of July, we take it out to boarding houses and then to retirement villages. So class-three and 9C come in, in July. I believe that class-one will follow. So buildings where people sleep at night are at the top of the list. I think we had to boil the ocean slowly. I don’t think this is complex; I’ve always thought this is really simple. This is, beat the hell out of the bad guys; create privileges for the good guys, and inform the customers. I mean, how simple is that as a strategy? Beat the bad guys up, create privileges for the good guys and tell the customers about it.

Jimmy  29:34

There’s one line buried deep in the case study, where there’s a comment that Fair Trading could have done better, under the circumstances.

David Chandler  29:45

Oh Jimmy, there’s nothing like that, surely?!

Jimmy  29:51

Do you feel as part of this whole revolution in the apartment industry, that Fair Trading… One of the complaints to me about Fair Trading is it’s the authority; it’s the first point of contact for people who’ve got problems. They call up Fair Trading and they say “I’ve got a problem with this,” and they don’t get a response that they can use effectively.

David Chandler  30:17

I’m going to say that I think that that particular comment in this report is spot-on; absolutely spot-on. And as we move the current building pieces out of Fair Trading, into the new Building Commission… By the way, my team will go from roughly 15, to 535 by the end of this year. For all those people that this report might have said weren’t doing their job as adequately as they may have; that message is being delivered to everybody that we’re here for a very clear set of purposes. Reduce the number of matters going to NCAT and reduce the numbers of matters going to iCare for the home building warranty insurance claims, and make sure that you understand that we want the boots on the ground to become far more effective than they’ve ever been. I’ve used a bit of a ‘Jimmy’ sort of comment here and I’ve said “I want to understand what the carpet-to-boots-on-the-ground ratio is in the Building Commission, because I want to make sure that I’ve got only the players on the carpet that are going to make the boots on the ground better. So there’s no doubt in my mind that we could have done better and I’m telling you now, we will do better.

Sue  31:30

Fantastic. I particularly love the standardisation of the defects forms, because I remember when we were involved in a defects fight with lawyers and our developer; it was really difficult, because we would have our experts coming up with what was wrong with the building. Their experts would say “no, it’s not in a form that we can understand.” So we would have to pay extra experts, then we’d have to pay extra lawyers, and it just became a huge expense. But now that you’re standardising all these phrases and these processes, that seems like a really a simple thing, but a really valuable thing for owners.

David Chandler  32:05

I think that’s a public service that we’ve got to provide, Sue. I think that the fact that that wasn’t there, is something that was an area where we should have been more active and we will. We will have a product by early next year, that owners corporations will be able to report their serious defects into Fair Trading, using largely common format and language. Now, that’ll enable Fair Trading then, to get going quicker, and to make sure that they understand what the issues are. Of course, those lodgements will have to be done by an authorised member of the owners corporation. You know that we keep getting sort of odd references that come to us from a dissatisfied unit owner? Well, we can’t deal with those, but we will deal with an authorised representative of the owners corporation. So you’re right. We think that by the time we’ve put together the e-planning portal, where now all of the declared as-built drawings have to be lodged before an occupation certificate. Just think about the cost that’s been involved historically, getting a full set of documents… Well, they now all have to be declared and lodged on the e-planning portal, before an occupation certificate is issued. So we’ll be holding certifiers to a very high standard, to say “that better be there, or look out.” So I’m confident that we will progressively have better access to the essential data for building owners in the near future. And that will allow them to start the journey from a much more informed position than they’ve ever been able to, up until now. The strata portal then  becomes the home of all of the knowledge we need to have off strata communities. I think we’re up to about 40% or 50% now of people, who are working on the portal. So that’s going to make it much more efficient for us to deal with owners corporations and for them to deal with us. And I’ve got to call out the new Minister; if we do nothing in this interview, but to call out the new Minister, Anoulack Chanthivong; he has been absolutely adamant. I’m just quoting from his first reading; his speech in Parliament back in May, where he said ‘we must never sacrifice quality for the sake of quantity.’ Now that is his consistent mantra to us, saying “David, this Commission must never ever let us sacrifice again, quality for quantity. Now we’re going to be competent to chase quantity, but you’ve got to chase quality.”

Jimmy  32:30

Good thinking.

Sue  33:07

Absolutely. And, with this case study… I mean, I look forward to the ‘case study the play;’ the ‘case study the TV series…’

Jimmy  34:17

I think it should have been a podcast; like a true crime podcast.

David Chandler  34:50

Well, we haven’t had an apartment-orientated narrative since Number 96. I’m not sure what you’ve got on your mind, Jimmy at all.

Sue  35:01

The Americans have got Murder in the Building…

Jimmy  35:06

Maybe a musical?

David Chandler  35:08

We’re going to do another two-or-three of these. Because we think that they’ll all be slightly different and there’s things to learn from each of them. We’ve got a couple that are already there. One of the things that we’re focusing our immediate attention on, is that buildings that might have defects that could go to their continued occupation. We think that’s the next area for us. Let’s never have another Mascot Towers. So what we’ve got to do is to make sure that we’re really drawing out from the owners corporations, if they’re sitting on things that could go to their continued occupation, put your hand up quickly; we’re here to help you. Because I think there’s probably another three, four or five buildings out there, that could go down that pathway, if they’re not brought to our attention early. We had one last year, where I got an email from Fire and Rescue on a Friday afternoon saying ‘Commissioner, we’re very concerned about this building. It’s got so many issues to do with fire, that we are worried about it’s occupation.’ I met with Fire and Rescue on a Monday morning, to find out what was their issues. I went out and saw that building on Monday afternoon. I had a meeting with the owners corporation and Cumberland Council on Wednesday. We agreed on what we call a ‘continued occupation protocol,’ which basically said what are the things that we have to do, so these people can stay in this building? We agree to things; fix the fire doors, make the smoke detectors work… Do a range of things that we can do within 10-days. And then, what’s the list of things that we will do after 10-days, to bring this up to the standard that we really want, not the ones that are just going to challenge the occupation. Now we achieved that. And the only ultimate condition was that the owners corporation put a 24/7 warden into the building, until those things that were done in the first 10 -days were ticked off. So we’ve developed some very good (what we call) ‘continued occupation protocols.’ We’ve got a couple of buildings at the moment that are in the news, that you’ll know that they’ve got structural issues, and they’ve got props in them. I mean, I’m not going to mention them here in this interview. But those buildings are currently in what we call ‘the continued occupation protocol phase.’ They’re not going to become  unoccupiable, now, but we’ve got them past that point to say “okay, well how can we hold them in a stable place and then what do we need to do now, to bring them back to the permanent situation?” I just want to make sure that consumers are really far more confident to come and do that. And I think the other thing that’s helping that is, that the media; funny-old media, in a way… It always likes to report on ‘dog bites man,’ but it doesn’t like ‘man bites dog’ stories. So when I was originally starting to bite the dog, that copped a couple of media coverages. But you know, a regulator doing their job is actually bloody boring. You don’t see day-after-day “oh, another order from Fair Trading.” I keep getting a call from the odd reporter saying “Commissioner, do you have any raw meat? I need a story with raw meat,” and I’m going “no, I don’t; I’m doing my job.”

Jimmy  38:26

Talking about talking about Project Intervene… That’s for buildings that are less than six years old… Do you see that continuing as we move forward?  I mean, with all these other things that are going to improve the quality of buildings, will people in four years time, who have got four-year old buildings, still be able to come to you, looking for assistance with their defects?

David Chandler  38:50

That’s a great question, Jimmy. So Project Intervene is what we call a ‘surge project.’ We see a surge opportunity to go and do as much as we can, for as many as possible, and then make it business as usual. Let’s say we’re going to get 150 buildings come forward in this current surge, that’s a huge job for us. But let’s say going forward, there is only 20-to-50 a year, then that will become business as usual. So Intervene will simply switch into business as usual in the Building Commission, probably by the end of next year, but right now, Intervene is a ‘surge project,’ to try and make an impact on some of these legacy buildings.

Jimmy  39:35

David, thank you very, very much for your time and your humour. It’s always enjoyable.

David Chandler  39:42

I only tried to match your own, Jimmy. I mean, fancy having a building that started with god and lost it’s way.

Jimmy  39:50

Yes, that was sorted by a higher-power.

David Chandler  39:54

Everybody’s laughing about that. Every time I go somewhere, someone says “hey, did you see that article?” I said “yeah, I know, but you’d need to know the bloke who wrote it.”

Jimmy  40:02

Well, I think people think you’re god anyway, so it doesn’t make any difference. Thanks very much, David. That was really interesting.

Sue  40:20

There’s a lot of stuff to unpack there.

Jimmy  40:22

Absolutely. One of the things that interests me is this idea that they’re going to have a guide; they’re going to develop this guide for people who are buying apartments. It sounds like it’s going to be what you do when you discover your defects, which they are hoping to have ready next year, I suppose?

Sue  40:40

I know he was saying about how as well, when you do have defects, you’ll have a pack, that will show you what to look for and the format in which you make your complaints, that kind of thing as well. Which will be really, really handy.

Jimmy  40:54

Well, I guess the thing about when you first buy the apartment is more just don’t buy it off somebody who doesn’t have an iCIRT rating. And then there’s that whole thing about how Project Intervene (applications for that run out in December this year); how they’re in their ‘surge phase,’ where they’re trying to sweep up as many buildings as they can into the thing, but then it will become an ongoing thing, by the sound of it.  Buildings that are prepared or ready in three years’ time will obviously have missed that deadline. But they will be able to go back to Fair Trading, who are very much part of the picture, and the Building Commission and say “we need help with our defects.” Which is great. All good news. Okay. Well, it was great to talk to David, and it’s great to talk to you, Sue.

Sue  41:46

Okay, fantastic. Thank you.

Jimmy  41:48

We’ll talk to you all again next week. Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.