Building Commission NSW has begun prosecuting developers over defective Sydney apartment buildings, as it follows through on its promise to crack down on those ignoring rectification orders.
Commissioner James Sherrard warned the first prosecutions should serve as a “wake-up call” for others, with about 30 in the crosshairs of the regulator.
Building commissioner James Sherrard is following through on his promise of targeted legal action.Credit: Janie Barrett
Apartment builders are regularly defying commission-issued rectification orders for serious defects, data obtained by this masthead reveals, with more than half of the 32 orders issued since January 1 ignored.
After taking up the top job late last year, Sherrard flagged the regulator would focus on targeted legal action, moving away from his predecessor’s preferred method of publicly shaming shoddy construction quality across Sydney. Home owners have previously criticised the commission for responding too slowly to complaints of serious and systemic defects.
Since June, the regulator has brought prosecutions against two developers, Ross Kenna Developments Pty Ltd and Nutek Investments Pty Ltd, over defective apartments in Caringbah South and Beecroft, respectively.
Four more developers, whom the regulator declined to name, could face prosecution for failing to comply with rectification orders in the coming months.
The court action represents the first time the commission has prosecuted developers over failing to comply with rectification orders. Previously, the licences of these companies were either suspended or cancelled, and affected consumers were then burdened with the time and cost of pursuing builders through the courts to complete the work.
Ross Kenna Developments was issued a rectification order in August 2023 over a property on Burraneer Bay Road in Caringbah South. An inspection report found eight serious defects, including two related to waterproofing issues, while there was also an “absence of suitable firefighting equipment in the building”.
The licence of an eponymous building company owned by Kenna was cancelled in 2019.
Eleven serious defects were discovered in Nutek Investments’ Allure Apartments project on Beecroft Road. The vast majority related to defective fire systems, with the commission’s inspector finding that construction of the apartments’ doorways meant “occupants may be required to re-enter the building to find a more suitable exit” during a fire.
Nutek is directed and wholly owned by Nicholas Kalantzis, who faced legal problems earlier this year.
In April, Supreme Court judge awarded a couple $4.4 million in damages after a development built by Nutek Construction, a related entity, caused a home’s driveway to collapse “rendering their property virtually worthless”.
A Gosford driveway that collapsed next door to a development built by Nutek. Credit: Google Maps
Kalantzis and Nutek did not respond to requests for comment.
A commission spokesman said, “as part of its work to lift standards across the sector”, the commission was actively considering enforcement action against around 30 other developers for non-compliance with Building Work Rectification Orders (BWROs), which are issued for serious defects in apartments.
“This forms part of a project assessing outstanding BWROs for further regulatory action, which may include prosecution, court orders, disciplinary action, or undertakings,” he said.
In a statement to this masthead, Sherrard said the commission would pursue builders and developers where they refused to work with the regulator.
“The recent regulatory actions taken by Building Commission NSW should be a wake-up call to developers and builders who think they can flout our orders – work with us towards compliance or face disciplinary action, legal proceedings and fines,” he said.
Disciplinary action has also been taken against a third builder, Altavale. The Sydney-based firm spruiks “high-end residential builds, boutique industrial and bespoke multi-residential” claiming new technologies are harnessed for “timeless results”.
“Plus, we’re perfectionists – it’s our secret to building the best in Sydney,” Altavale’s website states.
But the commission found the company breached statutory warranty by failing to undertake compliant building work and not complying with a rectification order on an apartment building on George Street in Waterloo. Of the 12 serious defects, one included “uncontrolled cracking” up to 4 millimetres in the rooftop slab.
Altavale has been hit with a $50,000 fine and barred from entering into new contracts until it complies with the rectification order. The company’s director, Thomas Cull, has also been stung with a $40,000 fine. His licence will be cancelled from May next year.
The builder has sought an internal review of the regulator’s decision. Altavale and Cull did not respond to requests for comment.
Sherrard spoke about the compliance blitz during a presentation at the Preconstruction Innovation Summit on October 30.
Slides in his presentation showed that the regulator issued 359 rectification orders in the last calendar year. The vast majority of those followed inspections reacting to complaints.
On Friday, the commission said only 45 per cent of BWROs have been complied with between January 1 and November 30.
In contrast, about 70 per cent of 3A and 3b rectification orders, which are issued for defects in standalone homes, were complied with by builders, up from 60 per cent this time last year.
Last year, Sherrard said he did not believe the proportion of disobeyed rectification orders represented a compliance problem. He characterised the proliferation of defective buildings as the consequence of some builders doing the “minimum standard with some work”.
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