This is a brief outline of what occurs during the process of obtaining a rectification order from the ACT Planning and Land Authority (ACTPLA or otherwise known as the Environment and Sustainable Development Directorate) against a building licensee (including a nominee of the builder).
The information contained in this guide is for informational purposes only and is current as at 18 July 2014. It is not legal advice. The reader should consult a suitably qualified lawyer regarding any specific legal problem or matter.
Complaint is lodged:
The first step is that a complaint is lodged. ACTPLA has prepared a standard complaints form. Kerin Benson Lawyers can complete the form, and in support, draft submissions, obtain the relevant experts’ reports and prepare witness statements to augment the complaint.
This may take a few weeks depending upon the complexity and quantity of the defects, the capacity of the various experts to provide reports and the ability to prepare witness statements in a timely manner.
ACTPLA prioritisation:
After ACTPLA receives a complaint, it prioritises it by the number and severity of defects, so it can direct resources to matters of the highest risk to the community.
Complaints with a risk to public safety are treated as priority one and ACTPLA aims to inspect them within 24 hours of receiving a complaint. Complaints about a serious breach, which are not a safety risk, are treated as priority two and are inspected within 24 to 48 hours of receiving a complaint.
All other complaints are priority three and are investigated as resources allow, taking into consideration the changing number of priority one jobs. In our experience, notwithstanding these KPIs set by ACTPLA, there is a long waiting period for complaints relating to both priority two and three defects.
30-day progress report:
ACTPLA represents that complainants will be:
- provided with an update in writing on the progress of the investigation within 30 working days of receipt of the complaint; and
- informed of the significant milestones and finalisation of the complaint.
However, specific details and actions of ACTPLA’s investigation will not be disclosed to the complainant. This apparently is a consequence of the Privacy Act 1988 to protect the private information of individuals involved and to avoid prejudice in any potential litigation.
Unfortunately, from our experience in dealing with ACTPLA, the above updates and information are not necessarily provided.
Inspection:
As part of its investigation, ACTPLA will request that the complainant grants it access to the complainant’s property to investigate the alleged defective works. ACTPLA will advise the complainant of when the inspection is to take place.
We note that, if a builder requests access to the building, the complainant should grant access on the condition that the builder is escorted at all times and their activities monitored.
Requests for further information:
Following the inspection, but occasionally before, ACTPLA may request further information from the complainant depending upon the complexity of the defect, and/or if the defect requires specialist knowledge to understand.
At Kerin Benson Lawyers, our strategy is to frontload as much of the supporting evidence for the defects as possible. This is then likely to save costs, time and effort that would otherwise have been expended in engaging in a drawn-out iterative process of ACTPLA and the builder requesting, and the complainant subsequently providing further information.
It presently takes on average 2 years for a rectification order to be issued for non-life threatening defects. However, Kerin Benson Lawyers have been able to procure such orders in 6 months, although actual experience has varied. This is because ACTPLA’s workload has been increasing exponentially in the last 3 years. In 2010/11, ACTPLA reported that it had managed 14 complex cases, including 7 litigated matters. In 2011/12, this increased to 46 complex cases, including 17 litigated matters. Furthermore, in 2012/13, ACTPLA managed 84 complex cases, of which 13 were litigated.
Disciplinary sanctions against builders are rare. In 2010/11, 313 complaints were filed against builders but no disciplinary sanctions were handed down. In 2011/12, 303 complaints resulted in 3 builders being disciplined. In 2012/13, 303 complaints resulted in no disciplinary sanctions. Therefore, over the last 3 years, 919 complaints resulted in only 3 instances where disciplinary action against builders occurred – a conversion rate of less than 0.4%.
Our anecdotal experience is consistent with the above figures. ACTPLA is becoming much slower to respond to such complaints. Nevertheless, our perseverance in emphasising to ACTPLA the importance of our client’s matter, has assisted in a faster turnaround time on average than complaints which are unassisted.
Requests for responses from the builder:
To ensure procedural fairness during the investigation, ACTPLA will approach the builder to ask for its response to the issues the complainant has raised in relation to the alleged defects.
If the builder replies, the process may be extended due to the parties having to argue their respective points. We are unable to give a definitive estimate as to how long this process takes. However, the best method to mitigate the impact of a prolonged dispute is to bring compelling evidence substantiating the defects in the first instance.
Decision and further steps:
Eventually, ACTPLA will make a decision as to whether to make, or decline, a rectification order. Ideally, if ACTPLA makes a rectification order, the builder will comply and undertake the rectification works, saving any further action by the complainant.
If the builder refuses to comply with the order, ACTPLA can impose a fine upon the builder. On 6 March 2014, the fines for non-compliance with a rectification order were increased to maximum penalties of $280,000 for an individual and $1,400,000 for a corporation (up from $28,000 and $140,000, respectively).
ACTPLA can also engage (and pay) a third-party builder to do the work required to be completed by the rectification order and then seek to recover that cost from the original builder. ACTPLA may also order (and pay) another builder to complete this work if it considers that the original builder is unsuitable for the work (eg because the original builder does not have sufficient competence).
However, the above may not occur due to funding issues which have recently plagued ACTPLA. There have been a few cases where ACTPLA has issued a rectification order on a builder but was unable to pay a third-party builder to carry out the works due to a lack of funds. This resulted in a breakdown of the process and further delays in the rectification of defects.
Appeal rights:
If you are dissatisfied with the outcome, you may appeal the decision in the ACT Civil and Administrative Tribunal (ACAT). We note that the builder may also appeal the decision if it is dissatisfied with the outcome. The appeal, called a ‘merits review’ involves ACAT stepping into the shoes of ACTPLA and making a fresh decision based on the facts.
Appeals from ACTPLA’s orders are also increasing. In 2010/11, there were 2 appeals to ACAT. In 2011/12, this figure had increased to 12. Comparatively, in 2012/13, there were 23 appeals to ACAT, 4 of which were directed to the ACT Supreme Court. Builders regularly appeal decisions that are unfavourable to them in connection with rectification orders involving large apartment complexes.
To reserve their rights, we recommend owners corporations pass a resolution at general meeting authorising the executive committee to engage in a merits review application before any decision by ACTPLA is handed down. This is because, under the ACT Civil and Administrative Tribunal Act 2008, an application to ACAT for review of ACTPLA’s decision must be made within 28 days after the day the decision is handed down (in practise, this is the date of the letter of decision). Such a timeframe will not allow the holding of a general meeting to approve the appeal within the required period following receipt of the decision.
Having indicated this, an appeal by a complainant would only be required if ACTPLA decided not to issue a rectification order or, issued a rectification order that did not address a sufficient number of defects. The appeals referred to above usually involve the building licensee as the appellant.
Kerin Benson Lawyers can draft a model resolution to be passed at a general meeting if instructions are given to do so.
Further information:
If you believe that your apartment is affected by defects and would like further information or assistance in relation to the rectification order process, please contact Christopher Kerin on (02) 8706 7060.