How the NSW Government got caught up in the Opal Tower Class Action?

Many have no doubt heard of the extensive building defects that have plagued the Opal Tower at Olympic Park, leaving many residents without their homes late last year, some of whom have still not been able to return. However, some may not know of substantial recent developments in the sorry affair, including that:

1. residents have commenced a class action seeking damages suffered as a result of the defects and for being forced out of their homes; and

2. the NSW State Government could end up footing the bill.

Background

By the Sydney Olympic Park Authority Act 2001 the State Government constituted the Sydney Olympic Park Authority (‘SOPA‘) as a corporation and vested it with ownership of the land comprising Sydney Olympic Park, on which the Opal Tower is situated.

In 2014 SOPA engaged Australia Avenue Developments Pty Ltd (‘AAD‘) to design and construct the Opal Tower. AAD then contracted with Icon Co. (NSW) Pty Ltd (‘Icon‘) to carry out the construction works.

Pursuant to amendments that had been made in 2011 to the Home Building Act 1989 (the Act), which governed the construction of the Opal Tower, a corporation which owns land will also be deemed to be a developer where residential building work is undertaken on its behalf in connection with a building in which 4 or more dwellings will continue to be owned by the corporation following completion.

In the case of the Opal Tower, SOPA retained 11 apartments for use as affordable public housing. Accordingly, there is little scope to doubt that SOPA would be liable for damages, if proven.

This is because the Act implies various warranties into residential building contracts, including (relevantly):

1. a warranty that construction work will be done with due care and skill and in accordance with plans and specifications set out in the contract;

2. a warranty that all materials used will be good and suitable for the purpose for which they are used;

3. a warranty that the work will be done in accordance with any law; and

4. a warranty that the work will result in a dwelling reasonably fit for occupation.

As it stands

Currently, SOPA is the only defendant to the class action. This is likely the case because SOPA, as a statutory corporation, will likely have more resources available to it than AAD and Icon to meet any award of damages which might be made by the Court.

However, it could be possible for it to bring cross claims against AAD and Icon.

In response to the class action the Premier has said that the government intends to appoint a new building commissioner who will be responsible for addressing the challenges facing the construction industry as a result of the Opal Tower and, more recently, the Mascot Towers problems.

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