TIME FOR OWNERS CORPORATIONS TO REGISTER WITH “PROJECT INTERVENE” RESIDENTIAL APARTMENT BUILDINGS (COMPLIANCE AND ENFORCEMENT POWERS) ACT 2020 EXTENDED TO NOVEMBER 2023

06/07/2023

On 11 June 2023 the Minister for Better Regulation and Fair Trading announced that the deadline for Owners Corporations to register for Project Intervene will be extended from 30 June 2023 to November 2023.

What is “Project Intervene”?

Project Intervene is a program introduced by the NSW Government and the NSW Building Commissioner to assist newly established Owners Corporations keep Developers and Builders accountable for defective building works.

Project Intervene is provided for in the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (“RAB Act”).

There is the Strata Scheme Building Bond and Inspection Scheme pursuant to Part 11 of the Strata Schemes Management Act 2015 (“SSM Act” or “SSMA”) relating to bonds that has to be provided by the Builder to be available to the Owners Corporation to recover to the extent, the cost of rectification of defective building works, subject to the extent of the warranty.

The objective of Project Intervene is to achieve the rectification of serious defects in newly built residential apartments by the Developer and the Builder, without the need for the Owners Corporation to proceed by way of Court proceedings.

Application for Project Intervene

In short, an eligible Owners Corporation of residential buildings with serious defects can register for Project Intervene through the Department of Fair Trading. The Project Intervene team will then inspect the building and where appropriate, work with the Developer, Builder and/or Owners Corporation to establish a set of required rectification works and make an appropriate Order for the Builder and/or the Developer to rectify those serious defects.

Eligibility to register for Project Intervene

An Owners Corporation can only register for Project Intervene if each of the following criteria is met:

(a)            The defects are serious defects for the purposes of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (“RAB Act”), being a defect that either:

(i)                  arises from a failure to comply with the Building Code of Australia (BCA) the Australian Standards or the Approved Plans;

(ii)                attributable to defective design, defective or faulty workmanship or defective materials which has caused or is likely to cause the inability to inhabit or use the building, the destruction of the building or a threat of collapse of the building; or

(iii)               Uses a building product prohibited by the Building Products (Safety) Act 2017 (NSW);

(b)            The Serious Defect is related to one of the five building elements for the purposes of the RAB Act, as follows:

(i)                  fire safety systems (eg. fire pump room, fire door, fire stairs);

(ii)                 waterproofing systems (eg. planter box, unrenovated bathroom waterproofing, balcony, roof);

(iii)               structural components (eg. cracking in slab, expansion joints, columns, walls);

(iv)               building enclosure (eg. cladding, moisture management, suitable materials); and

(v)                building services (eg. mechanical ventilation, plumbing and drainage, hydraulics).

(c)            The Developer and the Builder are still trading.

(d)            The building is in part or in whole a Class 2 Building as specified in the Building Code of Australia (BCA) (a residential apartment building)

(e)            The building is four or more storeys.

(f)             The Occupation Certificate for the building was issued within the last 6 years.

Project Intervene Process

The NSW Building Commissioner’s office has created a template form for Owners Corporations to complete in order to nominate their building for Project Intervene. The form is then to be lodged with the Department of Fair Trading in the same way any other complaint would be lodged.

Watson & Watson can assist either an Owners Corporations in considering and making an Application for Project Intervene or a Builder or Developer responding to a Project Intervene Application.

Once received by Fair Trading, the Project Intervene Application is to be considered and then, if appropriate, dealt with by the NSW Department of Customer Service.

The NSW Department of Customer Service will arrange for an inspection of the building to be carried out.  This is most often by the appointment of a Building Consultant to assist.  

The NSW Department of Customer Service will then, based on the outcome of the inspection, issue a Draft Building Work Rectification Order (“BWRO”) to the Developer.

If there is an agreement between the NSW Department of Customer Service and the Developer as to the defect, the Developer can enter an undertaking and commit to remediating the serious defects in the building.  If there is such an undertaking, an Undertaking Manager will be appointed to facilitate the process.

If there is no agreement reached between the NSW Department of Customer Service and the Developer, the NSW Department of Customer Service will proceed to issuing the final BWRO which the Developer will be required to comply with to rectify all of the serious defects set out in the final BWRO.

The Project Intervene process does not extend the limitation periods that are available to various parties for example, the Contracts between the parties, the Home Building Act, the Design and Building Practitioners Act 2020, the Residential Apartment Building (Compliance and Enforcement Powers) Act, the Strata Schemes Management Act and various other Acts that apply in relation to the building process.

One needs to consider all the options available to each of the entities involved in the building process.  This consideration includes but is not limited to, ascertain each of the relevant parties and consider the obligations and rights of those parties to consider the interrelationship between the possible claims against different parties in particular, limitation periods, jurisdiction and the effect of joining each of those parties. 

Court proceedings at the same time as the Project Intervene Process

An Owners Corporation can commence Court proceedings including proceedings in NSW Civil and Administrative Tribunal (“NCAT”) even if the Project Intervene process is underway.

In the recent decision of Strata Plan 99576 v Central Construction Pty Ltd [2023] NSWSC 212 (“Central Construction”), Darke J held that a Project Intervene process being under way is not a sufficient reason to stay (delay) a court proceeding against the Developer and Builder.

In Central Construction, the Owners Corporation had commenced proceedings against the Builder and the Developer in the Supreme Court and subsequently entered into the Project Intervene process with the Department of Fair Trading. The Builder and Developer filed a Notice of Motion seeking a Stay of the Court proceedings for 12 months so that the Project Intervene process could be finalised.

The Builder and Developer argued for the Court to grant a Stay.

Justice Darke ultimately rejected the submissions of the Builder and Developer and refused the Stay Application by the Builder and Developer on the following grounds:

(a)      The outcome of the Project Intervene process is uncertain. The overall outcome and the time for completion of the process are all uncertain.

(b)      The Project Intervene process does not have a facility for the Owners Corporation to be awarded any damages.

(c)      Section 43 of the RAB Act provides that NCAT or any other Court determining a claim relating to defective work under the Home Building Act or any other Court relating to building work, the subject of the Order, are to consider the subject of the Order if the Order is brought to the attention of the Tribunal or Court in the proceedings. 

Section 43 of the RAB Act does not have the effect that the Court proceedings should await the outcome of the Project Intervene process or that the proceeding should be stayed until the conclusion of the process.

(d)      There is a risk of inconsistent findings between the different Courts, however, the risk is not so great that it warrants impinging on the Owners Corporation’s right to vindicate its legal rights in the Court.

(e)      The Defendants (Builder and Developer) have not pointed to any particular prejudice that would be suffered if the proceedings are not stayed.  Notwithstanding that the Defendants would be obliged to incur costs in the proceedings.

(f)       The prospect of the Project Intervene process causing the Court case to become redundant or so narrow in scope is too uncertain and does not warrant delaying the Court proceedings.

Watson & Watson Lawyers are experienced Building and Construction and Strata Lawyers who can assist you and guide you through disputes and resolution thereof that you may have with the Owners Corporation, Builder or Developer.  Richard Watson is an Accredited Specialist Commercial Litigation in the stream of Building and Construction. Please contact Richard Watson or his Personal Assistant Shereen DaGloria to discuss your important matter and seek the appropriate advice to facilitate a timely resolution of your matter.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.