Expert Reports – It’s tricky …


So. Here’s the thing. Expert reports are tricky.

People think they aren’t. Anyone can order one and the owners corporation is good to go. Right? Wrong.

Unless you follow the legal rules of engagement for an expert report, for which you will pay thousands of dollars, it will be useless and worse still, may inadvertently damage your legal case.

In order to keep your attention, I will now set out these rules in rap form. Yes. That’s right. In rap. And thank you Run DMC. I couldn’t have done it without you.


Expert reports are my recital, I think it’s very vital

To get an expert, that’s right all a time

It’s tricky is the title, here we go.

[Hook] It’s Tricky to write a report, to write a report that’s right all a time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

It’s Tricky to write a report, to write a report that’s right all the time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

Firstly, the expert must have the right qualifications and experience to be recognised by the courts as a true expert in the field. For example, an experienced plumber might be right to fix a problem, but a hydraulic engineer will be better value for money for an initial report because their advice can be used later if the case doesn’t settle.

[Hook] It’s Tricky to write a report, to write a report that’s right all the time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

It’s Tricky to write a report, to write a report that’s right all a time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

Secondly, the expert must be independent and observe his or her paramount duty to the Court. So when an expert, with the best will in the world, oversteps the mark and starts negotiating with builders and developers, their evidence can be ruled inadmissible.

[Hook] It’s Tricky to write a report, to write a report that’s right all the time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

It’s Tricky to write a report, to write a report that’s right all a time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

Thirdly, there is a difference between expert evidence and expert assistance. By this I mean that not everything an expert produces can be relied upon in court, only expert evidence.

[Hook] It’s Tricky to write a report, to write a report that’s right all the time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

It’s Tricky to write a report, to write a report that’s right all a time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

Fourthly, the expert must be briefed with a code of conduct to help maintain independence and standards.

[Hook] It’s Tricky to write a report, to write a report that’s right all the time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

It’s Tricky to write a report, to write a report that’s right all a time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

Finally, only expert reports that are expressly prepared for legal advice remain confidential under the rules of legal professional privilege.

[Hook] It’s Tricky to write a report, to write a report that’s right all the time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

It’s Tricky to write a report, to write a report that’s right all a time

It’s Tricky … it’s Tricky (Tricky) Tricky (Tricky).

That is all. Biiatch!!!

Look Mum, I’m a Developer!!

Stop Making Excuses

One of the worst parts of my job is dealing with developers. It’s like dealing with investment bankers. Both have that condescending “what we say goes” attitude but at least investment bankers will buy you dinner before they have their way.

George Bernard Shaw was clearly talking of a developer when he said “He knows nothing; and he thinks he know everything. That points clearly to a political career.”

Anyway, my top 7 responses from developers when approached about building defects are:

  1. we’ve done everything we can do;
  2. we build to a price, you get what you paid for;
  3. we’re only the developer. It’s the fault of the builder (even though the builder was given inadequate design documentation because the developer wanted to save on design costs);
  4. the water penetration is caused by “wind driven rain”;
  5. I can’t give you any design documents because the architect/engineer claims copyright over them;
  6. I’m the developer, so I’m fairly certain I know everything; and
  7. the [INSERT NAME OF POLITICAL PARTY] said I wouldn’t have to worry about building defects if I contributed to their re-election campaign.

Ok. I might have made the last one up.

Rant over.

The Rum Corps Redux








Looking at the procession of NSW politicians recently caught by ICAC with their fingers in the till, it is hard to tell if this is a bizarre new reality television series called “Good politicians gone bad” or even “Politicians gone wild” or just a continuation of The Rum Corps type corruption which has plagued NSW since the earliest days of the colony. At this rate, ICAC is going to bring the paper bag industry to its knees within days.

For those who are playing catch up, the following laws are particularly relevant to donations by property developers (there is other legislation governing political donations but these are the main ones relating to property developers):

  1. Local Government and Planning Legislation Amendment (Political Donations) Act 2008, which commenced on 1 October 2008 requires the public disclosure of donations or gifts when lodging or commenting on development proposals. This law is designed to improve the transparency of the planning system; and
  2. Election Funding and Disclosures Amendment (Property Developers Prohibition) Act 2009, which commenced on 14 December 2009 made it an offence for a property developer to make a political donation as well as unlawful for a person to accept a political donation from a property developer.

Now stay with me people, this does get interesting.

So notwithstanding the above, and as a simple Google search will confirm, political donations to property developers have not stopped.

Call me crazy, but why would a property developer risk breaking the law and appearing in front of ICAC as well as incurring the various penalties, to give money to a politician for simply altruistic reasons. There must be something in it for them.

As Ted Mack (the only person ever to have been elected and re-elected as an independent to local, state, and federal government in Australia) said recently, the Labor and Liberal parties are “like two mafia families seeking control of the public purse for distribution to themselves, supporters, and the special interests who fund them”.

But should we be surprised? After all, I think this exchange from Yes Minister explained it all 30 years ago:

Hacker:             Are you saying that winking at corruption is government policy?

Sir Humphrey:   No, no, Minister! It could never be government policy. That is unthinkable! Only government practice.

Hacker:             You’re a cynic, Humphrey!

Sir Humphrey:   A cynic is what an idealist calls a realist.

The whole truth and nothing but the truth

White House Kitty

For strata managers who care, the Minister who looks after their patch of dirt is the Minister for Fair Trading, Matthew Mason-Cox. His press release on the Home Building Act amendments dated 13 June 2014 is the subject of this blog entry and will include within it various quotes from Yes Minister. See how many quotes you can spot in the blog. The answer is at the bottom, but no peeking!!

The press release in question stated that “Consumers will benefit from a new definition of major defect to include serious fire safety and waterproofing defects for the first time”. Whilst this is strictly true, the press release is interesting for what it doesn’t say rather than what it actually says.

That is, it should have also pointed out that in order to come within the new definition for structural defects (i.e. a “major defect”), the defect must “cause or be likely to cause the inability to inhabit or use the building or part of the building for its intended purpose or the destruction or the threat of collapse of the building or any part of the building”. I ask any strata managers reading this requirement to consider whether any of the defects in buildings they manage would fall within this definition. I would suggest very few, if any.

Luckily, press statements are not delivered under oath. Indeed, the general approach these days seems to be something like “It is our job to tell the public the truth and nothing but the truth. But it would be profoundly inappropriate and grossly irresponsible to tell them the whole truth”.

One suspects that when it comes to NSW politicians, their approach to disciplining bad builders and developers is akin to thrashing them with a wet lettuce leaf and admonishing them with some politically correct statement such as “builders and developers are kindness-impaired. (This is not to imply that all, or even some, builders and developers are that way, nor to deny any builder or developer their right to express whatever disposition comes naturally to them. Far from it, their dispositions are without doubt due to many factors of their upbringing and socialization).” I could go on but in the interests of brevity will not.

Suffice to say, the proposed amendments have very little to do with consumer protection.

The answer is 2, by the way.

The Homer They Fall

156_ The Homer They Fall

The last part of the three-part ABC TV Canberra expose on building defects focused on the “ineffectiveness” of the ACT Government building regulator, ACTPLA.

In short, Cecelia Wood bought a townhouse (ie a class B unit) in Tuggeranong which did not meet the requirements of the Building Code of Australia. Ms Wood lodged a complaint with ACTPLA which duly then issued a rectification order.

The builder ignored the rectification order and ACTPLA then purported to have another licensee complete the rectification work (as it is able under the Construction Occupations (Licensing) Act) but stopped this process when it realised it could not afford to have the work carried out.

Unfortunately, this is not the first time ACTPLA has failed to go through with this process due to financial constraints within the ACT Government.

It all reminds me very much of that episode of the Simpsons, The Homer They Fall, where Homer Simpson fights Boxcar Bob who basically fights to a standstill. Homer Simpson, having taken all this punishment, simply then nudges Boxcar Bob over and wins the fight. See transcript below:


[Bell Rings] [Crowd Cheering] Way to go, Dad! Take those punches.

Man, that tramp’s got the energy of a hobo.

Yeah, he never stops punching, except to check out his bindle.

[Man] He’s not fallin’ down at all.

[Crowd Cheering, Chattering] – [Cheering, Chattering Stops] – [Grunts] Okay, Homer, he’s tired! He’s tired!

Now’s your chance! Nudge him! Nudge him! [Crowd Cheers].


Well, ACTPLA have decided that enough is enough and on 6 March 2014, the ACT Government passed the Construction and Energy Efficiency Legislation Amendment Bill 2013 (No 2).

The two highlights of this amendment are:

  1. the maximum penalties for a builder who does not comply with the Building Code of Australia have been increased up to $70,000 for individuals and $350,000 for companies or 5 years imprisonment or both; and
  2. non-compliance with a rectification order now has maximum penalties of $280,000 for an individual and $1,400,000 for a corporation (up from $28,000 and $140,000, respectively).

So, it looks like the ACT Government are not going to take this crap lying down and will fine non-complying builders into submission.

It’s a start but more needs to be done.

Lies, Damned Lies and Statistics – NSW Government shoots down apartment owner rights


Mark Twain, the celebrated American author, coined the above phrase to describe the persuasive power of numbers, particularly the use of statistics to bolster weak arguments. This technique is one commonly employed by governments.

An example of this technique in action is the continual amendment of Home Building legislation in NSW with a view to encouraging builder and developer activity and thereby stimulating the economy. The latest set of amendments should not be allowed to pass without mention. On 5 June 2014 the Home Building Amendment Bill 2014 received assent and more than any other Bill since at least 2002, will reduce the rights of owners corporations under the Home Building Act to recover losses arising from significant defects in their buildings.

The Home Building Amendment Bill 2014 introduces the concept of a ‘major defect’ which will replace ‘structural defects’ in connection with statutory warranties in the Act.  The definition of a ‘major defect’ contains the following criteria all of which must be satisfied.  A defect, to be a ‘major defect’, must:

  1. be a defect in a ‘major element’ (as defined in the Act and includes fire safety, waterproofing and load bearing structural elements) of a building;
  2. be attributable to defective design, defective or faulty work or defective materials (or any combination of these);
  3. arise from a failure to comply with the structural performance requirements of the National Construction Code;
  4. cause or be likely to cause the inability to inhabit or use the building or part of the building for its intended purpose or the destruction or the threat of collapse of the building or any part of the building; and
  5. not be otherwise excluded by the regulations to the Act.

The great concern is that the 6 year limitation period for structural building defects will effectively be replaced by a 2 year limitation period.  This change will apply to many structural defects that owners corporations typically complain about – even if these defects cost millions of dollars to fix.

Further, the reforms are largely retrospective such that buildings more than 2 years old with defects that cannot be re-classified as major defects will lose the benefit of statutory warranties entirely unless that owners corporation has already commenced proceedings or made a home warranty insurance claim.

In the light of the above, Minister Matthew Mason Cox’s press release dated Friday 13 June 2014 stating “Consumers will benefit from a new definition of major defect to include serious fire safety and waterproofing defects for the first time” is extraordinary.

While it may be true that the definition of major defect will include serious fire safety and waterproofing defects, what the press release glosses over is that those fire safety and waterproofing defects must satisfy the above criteria. As the required criteria will not be met in the vast majority of buildings, the implication that consumers will somehow benefit from these reforms is simply incorrect.

See the link below to a Sydney Morning Herald article quoting me on this issue.

“The Insanity of Building Rectification” or “The Man with the Silicon Gun”


The definition of insanity is to do the same action repeatedly even though the outcome never changes.An example would be the staggeringly insane behaviour of generals in the First World War who sent wave after wave of young men to certain death in the quest for a few hundred yards.

Similarly, we’ve all see builders who send back the same guy with a silicon gun over and over and over again hoping that one day there will be enough goo in the roof, balcony or wall to deal with that intensely annoying leak that never seems to stop.

Heaven forbid that the builder might actually stop and give some thought to exactly why the leak is happening rather than applying a band-aid that was never going to work.

The question is why does this happen? Here are some reasons I can think of:

(a) activity and the appearance of progress is more important than actual progress, mainly because it is cheaper (in the short term) and it shuts up those pesky owners;
(b) it maximises the possibility that the relevant litigation period will expire before any legal action is taken against the builder; and
(c) it is in keeping with the psychology of builders who have a compulsion to act even if they don’t know how to act.

The key takeaway message here is that activity is not necessarily an appropriate substitute for the careful and considered thought that must precede worthwhile action. Unfortunately, careful and considered thought involves effort and attention to detail which does not come naturally to most people (including builders). Indeed, many defects would be avoided if the builder spent more time working through the detail during the construction phase.

The trouble is, with the passing of the position of clerk of works and the introduction of private certifiers whose responsibility is limited to only certain checks, there is unfortunately no one in the building process looking after the detail.

Building Defects, Death and Dying

On Death & Dying (grief)

The Swiss American psychiatrist Dr. Elisabeth Kubler Ross in her landmark 1969 work “On Death and Dying” described the five steps people go through when they are told they have a terminal disease and are about to die. The five steps are: denial, anger, bargaining, depression and acceptance.

People who have bought an apartment with building defects go through a similar range of emotions and it’s important for strata managers and body corporate members to be able to identify them.

Denial – if we can put people on the moon and feed billions of people, how is it possible that the apartment I paid $600,000 for …….. leaks!!!  It can’t be possible and yet it still leaks every time it rains. This stage is a short one.

Anger – some people just like being angry. And it can last for years. Strata managers are particularly familiar with this stage as they are the first to be called when there’s a problem. After a while this anger is transferred to the builder, developer, government and anyone else who might be remotely connected to the building.

Bargaining – here the owner negotiates about how they’ll deal with the defect. “I’ll deal with it after my exam, overseas holiday, cosmetic surgery or [whatever other excuse they can find]” or “This is the problem of my strata manager, building manager, local member, Office of Fair Trading and [anyone else but me], they should deal with it.”

Depression – it’s all too hard. The builder has come back dozens of times, there’s more silicon in the roof than in 100 Dolly Partons and the roof still leaks. There’s nothing that can be done except give up.

Acceptance – This is the revelation that the defects won’t fix themselves, I’m the person responsible for the building and I need to deal with it. It’s only at this point that things begin to move in a constructive direction.

And different people move through the stages at different speeds. In my experience, owners who have a commercial or business background are able to get to acceptance more quickly than others. It is up to them as well as strata managers to understand what stages the owners are going through and to help them through the stages. This is important as the more owners reach acceptance, the more likely:

(a) they act in a constructive and co-ordinated way;

(b) consequential damage to lot and common property is minimised;

(c) key limitations periods associated with insurance policies and litigation are not missed; and

(d) the defects get addressed in an appropriate way.

Phoenix Companies, River Phoenix and Government Inaction


In Greek mythology, a phoenix is a long-lived bird that is cyclically regenerated or reborn.  Associated with the sun, a phoenix obtains new life by rising from the ashes of its predecessor. Mmmmm. That’s a bit boring. Let’s start again.

TISM’s (This Is Serious Mum) 1995 anthem “I’m on the drug that killed River Phoenix” is actually a scathing indictment on many people’s addiction to vicariously following celebrities and their excesses and premature deaths. As with a number of TISM songs, it is a comment on the fairly vapid state of popular culture. This really has nothing to do with phoenix companies but I thought I’d work it in anyway due to the very tenuous connection between the name River Phoenix and Phoenix companies.

In my experience, I have seen a lot of builders engage in phoenix company activity and its evil twin, company name swapping (where the name of a company is changed and another company is incorporated with a name identical to the former name of the first company)

The relevant legislation that the Commonwealth Parliament has finally put forward to begin to address phoenix company activity is the Corporations Amendment (Phoenixing and Other Measures) Bill 2012.

The Phoenixing and Other Measures Bill, which was passed in May 2012, gives ASIC power to order the winding up of a company when, among other reasons, it appears to ASIC that the company is no longer carrying on its business.  This could be used in relation to name swapping but in reality is a pretty tame piece of legislation.

On the other hand, the Corporations Amendment (Similar Names) Bill 2012, which has some real teeth by seeking to impose liability on a director for debts incurred by a company (the debtor company) when that director was also the director of a ‘failed company’ with the same or a similar name as the debtor company, is still in limbo. Well, it’s really not in limbo. Rather it was drafted but never even introduced into Parliament. Indeed, given it was a bill originally drafted under a Labor Government, I think we can be pretty confident this Bill will not be introduced into Parliament anytime soon.

So, there’s still some work to be done on this front and the ultimate and final death of the phoenix is yet to occur.  But if the Commonwealth starts taking phoenixing activity seriously, we’ll be ready to fry that bird ….

DIY Property Development


From the country that gave you the Volkswagen (Volk – people, Wagen – car), the people’s car, now comes the latest idea for the people.

Do it yourself property development.

In Kreuzberg, a trendy suburb in Berlin, a community has bandied together to develop a large apartment complex that is designed to precisely meet their needs.

The homeowners collaborated with the developer and consultants and all decisions from planning, to building standards, to the location of communal rooms and the layout of the balconies were made jointly. That is, all decisions were made according to the desires of the homeowners as a whole.

An innovator in the car industry has now become an innovator in the property development industry.  How long will it take until a smart developer grabs this idea and runs with it in Australia?

See the link below for more information