Buying an out-of-plan apartment has become a long and costly legal battle for Melbourne woman Tamara Railton-Stewart and she is not alone.
Key points:
- Six weeks after Tamara Railton-Stewart and her family moved into her new apartment, the bedroom was flooded.
- They claim that they have had to move due to construction defects
- The builder, Shangri-La Construction, denies the allegations against her and defends her workforce.
“I had no idea of the disaster of that decision,” Ms. Railton-Stewart said.
He told ABC 7.30 that his apartment in south-east Melbourne, completed in 2015, was so full of flaws that it had to be demolished and only recently rebuilt.
And his situation is too familiar.
Construction defects cost in the order of $ 2.5 billion annually nationally, according to a 2021 report from the International Economic Center (IEC) prepared for the Australian Building Codes Board.
The report found that defective apartment buildings accounted for 52% of the problem, at an annual cost of $ 1.3 billion.
Flooding in one of Railton-Stewart’s rooms. (Supplied)
Ms. Railton-Stewart and the other apartment owners in her complex have found themselves in an ongoing legal fight with the builder, Shangri-La Construction.
The company denies the allegations against it and defends its workforce in the Victoria Civil and Administrative Court (VCAT).
In a statement, Shangri-La Construction said at 7.30am that it was “very concerned about any allegations of defects in the property”.
“We are very proud of the quality of the projects we deliver and take any complaint of defects very seriously.
“Defects allegations are the subject of a current procedure in VCAT, in which not only the scope of the defects, but also the distribution of responsibility for this defect among multiple parties, including the subcontractor responsible for waterproofing of the property and the building surveyor who issued the corresponding occupancy permit – is in question “.
“Water runs through the bedroom”
Ms Railton-Stewart said the warning bells began shortly after receiving the keys in late 2015.
“Six weeks later we had a substantial flood in our bedroom,” he said.
“It was water running through the room and that was because they hadn’t connected a drain pipe. There was a hole with no drain pipe connected.”
Ms Railton-Stewart said mold later appeared all over the apartment, which she said caused her daughter to develop asthma at the age of two.
A 2020 report by Cladding Safety Victoria (CSV) found that its building was “in poor condition”.
“The rate of deterioration of various facade systems is rapid, mainly due to water ingress,” the report says.
“Internally, the presence of mold was visually identified and had a strong odor on the wall cavities and bathrooms, despite thorough cleaning.”
Water damage to Railton-Stewart living room ceiling. (Supplied)
The CSV report also found signs of external expanded polystyrene (EPS) fuel coating that needed to be removed.
A separate 2019 water damage report from the occupational health consulting group EHS Assess, commissioned by Ms. Railton-Stewart, also found visible mold.
“Depending on the extent of water damage, the presence of visible mold and owners who have a small baby, considered a risk group, the property, in our opinion, is currently not fit to be occupied until mold repair works occur, ”the report said.
Ms Railton-Stewart said only expert reports and legal fees had cost the handful of apartment owners in her building complex about $ 500,000.
“For real reconstruction, we had to get a multi-million dollar stratum loan as a homeowners corporation,” he said.
“The interest on this loan is more than $ 150,000 every 12 months.
“So each extension [on the legal process] it costs us a lot of money.
“You find yourself forced into an endless, expensive and exhausting process.”
Mrs. Railton-Stewart’s 4-year-old daughter, Charlie, entered the apartment as a newborn.
“Our little girl will be almost eight years old when this is over,” he said.
“[With] the appeals process, could be close to nine or ten.
“How long will this take?”
‘Risk of acquiring a defective apartment still very high’
Bronwyn Weir says most states and territories have been slow to act based on the findings of his report on the construction sector. (Provided by: Weir Legal and Consulting)
Mrs Railton-Stewart’s story was not uncommon, according to lawyer Bronwyn Weir, who co-authored the Building Confidence Report (BCR) report in 2018 on the scale of problems in Australia’s construction industry .
“Buying a flawed apartment and being in a terrible legal battle that continues for years has massive implications for homeowners,” he said.
“Not only economic, but also the emotional trauma that supposes for the owners that try to understand how, without his fault, have finished in these situations.
“Year after year, they are fighting legal fees and reading distressing reports of possible security issues at the place where they rest their heads and sleep every night.”
The International Economic Center (IEC) report estimates that the total benefits of implementing Weir’s 24 recommendations would be in the order of $ 1.4 billion each year.
One of the BCR’s 24 recommendations was to set a three-year deadline to implement all the changes, which no jurisdiction has done.
Ms Weir said that in general most state and territorial governments had been slow to act on the report’s findings and could not yet say she would feel safe buying a new apartment today.
“The report was published four years ago and it’s fair to say that while it hasn’t just picked up dust on the shelf, the uptake of governments hasn’t been as impressive as I would have liked,” he said.
“There is nothing to suggest that we have better quality buildings in our system that are being built.
“There are good builders and there are a lot of people who are happy with what they have bought.
“But there are also many who are not.
“The risk of buying a defective apartment is still very high in Australia.”
Common problem
Samantha Reece says some homeowners are left with “a significant and unresolved default debt.” (ABC News: Daniel Fermer)
Samantha Reece, the founder of Apartment Advocacy Australia, a non-profit organization that promotes apartment living, agreed.
“I get daily calls from people saying,‘ I have flaws and my developer doesn’t want to fix it, the government has turned its back on me, ’” Ms Reece said.
“That can be rectified. We are four years after the Shergold-Weir report. We are five years after [the deadly UK apartment block blaze] Grenfell.
“There are a lot of gaps for builders and developers to get out of, leaving these types of residents with significant default debt and no solutions.”
Ms Weir said New South Wales had taken the most proactive action to crack down on builders and developers since the publication of her report in 2018, including the introduction of audits to prevent the sale of defective apartments .
“Audit buildings before they are delivered, while we still have the developer and builder controlled and responsible,” he said.
“Actually, get into the buildings and do a thorough audit before sales crystallize off the plan.”
In a statement, a spokesman for Victoria’s Department of Environment, Territory, Water and Planning said the state government had “paved the way on the issue of fuel coatings”.
“Cladding Safety Victoria, the agency dedicated to rectifying the Victoria coating, has overseen the rectification of the coating on [more than] 170 residential buildings, with works on 135 more buildings in progress.
“In addition, the Victorian government is providing a safer and more compatible construction industry that protects consumers, supports qualified and experienced professionals, and enables regulators to enforce compliance effectively and efficiently.”
“Very difficult, very expensive”
Andrew and Tamara Railton-Stewart, with daughter Charlie, have decided not to return to their apartment and will rent it. (ABC News: Andrew Altree-Williams)
According to Victorian Building Authority (VBA) data on building inspections, the regulator conducted 2,256 inspections in the first quarter of 2022.
Only 54 of these inspections were of apartment buildings.
Ms Railton-Stewart’s VCAT case against her builder began in 2019 and was recently postponed until March next year after Shangri-La Construction joined various parties as respondents.
“Going through the process is very difficult. It’s very expensive. It takes a long time,” he said.
“The VCAT process is designed for the builder. It’s not designed for the consumer.”
At the risk of bankruptcy, Ms Railton-Stewart said she had to dive into her parents ’retirement.
“My parents have worked a long time, they have saved, they have done the right thing,” he said.
“They wanted to travel, maybe go out to buy a caravan, maybe be gray nomads.
“They couldn’t do any of that.”
Mrs. Railton-Stewart, her partner, and her daughter lived on a rent while their apartment was being rebuilt, adding to their long list of expenses.
She said the stories of other Australian builders who went into liquidation made her nervous.
“Our insurance does not cover alternative accommodation, which at the moment [has cost] just under $ 50,000, ”he said.
“It doesn’t cover our legal fees or expert reports and that’s almost half a million [between the apartment owners in the building].
“None of this is covered if they [Shangri-La Construction] sell off.
“Our legal process gives them more and more time to do that.”
A spokesman for the Victorian Building Authority said the regulator took decisive action when professionals broke the rules.
“The Victorian Building Authority (VBA) is actively targeting building and plumbing work that does not meet our national leader …