Inner West Independent

Cracks appear in NSW building policy

Mascot Towers: 131 units, including nine commercial enterprises, and all but two are now uninhabitable. Photo: Alec Smart


Mascot Towers, the Sydney apartment blocks from which residents were urged to vacate on June 14 after structural cracks appeared in the basement, remain uninhabitable. Tenants are expected to pay for superficial repairs, although it has since been revealed the flats are moving in a ‘downward motion’ – sinking into the ground, due, allegedly, to original failures in construction.

The emergency evacuation comes six months after an equivalent crisis at Opal Tower in Sydney’s Olympic Park. On Xmas Eve 2018, a number of cracks were identified in the 36-storey Opal building, just months after its completion, forcing the immediate evacuation of 3,000 residents from its 392 units.

An independent report into the complex found it had been constructed with ‘lower strength concrete’ and ‘partial grout coverage’ and that the supporting hob beams were ‘susceptible to failure by shear compression and bursting.’

Mascot Towers, at 1-5 Bourke Street Mascot, features two 10-storey apartment blocks above Mascot underground railway station, incorporating 131 units in a complex that also includes nine ground floor commercial enterprises ranging from a Thai restaurant, a medical centre, an IGA Express supermarket and a café. All apartments and all but two of the ground floor traders are now uninhabitable.

On Thursday 13 June 2019, building management informed tenants via letter that props were being installed in the basement carpark because cracks had developed in the “transfer slab beams supporting the primary building corner.”

The letter explained that “this is in response to an ongoing and persistent cracking and structural deformation observed within the primary support structure and the facade masonry. This deterioration has been rapid, hence expedited propping was deemed a necessary precaution to ensure the safety of the building and its occupants.”

Evacuation urged

Residents were then urged to evacuate by 9pm the following night and emergency services were called to assist. A temporary shelter for the buildings’ residents was set up at Mascot Town Hall, although their strata management company, Strata Choice, urged tenants to find longer-term alternative accommodation, as it wasn’t known when, or if, they could ever move back into their apartments.

It now seems likely residents might never return to their homes as Mascot Towers may have to be knocked down and rebuilt.

Residents in 64 of the 122 apartments have since been given permission to re-enter the premises under supervision, as their homes could be ‘accessed for a short period of time’ in order to retrieve personal possessions. The rest were forbidden because their units, plus the car parks and several of the retail premises, are within a ‘non-accessible zone’ that cannot be entered.

On June 18, Strata Choice released an email they sent to the Mascot Towers building manager, Building Management Australia, criticising the ‘lack of transparent and reliable communication’ and the ‘callous and discourteous treatment’ of the Mascot Towers’ tenants. The email complained that the sudden evacuation put residents in “varying states of distress, not to mention extreme mental and financial duress.

“We have to express our disappointment and dismay over which the evacuation was handled; there has been a shocking lack of leadership and emergency planning when this crisis happened.”

Strata Choice then presented residents with a bill for initial repairs to Mascot Towers, revealing they needed to pay a special levy of $1.1 million – thousands of dollars per unit – payable by August 1.

“Due to the recent evacuation of residents from their apartments, the owners’ corporation is required to perform urgent repair and maintenance to ensure the complex is safe and secure for all residents to return to their homes,” Strata Choice declared.

Costings include: $100,000 for the estimated cost of the evacuation; $250,000 for engineering work; $254,000 for building propping; $176,000 for legal fees; $70,000 for new carpets; and $5000 for a ‘media consultant’.

After several residents raised concerns about affordability, the NSW Government Minister for Better Regulation and Innovation, Kevin Anderson, announced an emergency financial assistance package via a no-interest loan to the Mascot Towers Owners’ Corporation.

Residents of one-bedroom units are eligible for up to $220 per night; two-bedroom units up to $300 per night; and three-bedroom units up to $400 per night.

In response to reporters’ questions on whether homeless tenants would eventually be excused from having to repay the no-interest hardship loans, Premier Gladys Berejiklian replied vaguely, “We’re actually working through those issues. The engineers haven’t yet finished their assessments. Whilst there’s huge question marks as to who is accountable, I want to assure everybody the government will keep those who made those mistakes and haven’t done their job properly accountable.”

Five companies were identified as the landowners or developers of the Mascot Towers project. However, four of those companies have since been deregistered, although many of the directors and shareholders of the five companies continue to be involved in a range of other Sydney property projects.

The single company listed as still involved in Mascot Towers is the primary builder, J & B Elias Pty Ltd, registered at 124 Dean Street, Strathfield South, 2136, although their ABN status lists them as ‘not currently registered for GST’. There are suggestions they’ve gone into administration, although a 69-unit project at 278 Bunneron­g Road, Hillsdale, owned by J & B Elias director Hanna Elias, received construction approval last year.

A look at the original Deed of Agreement, the contract between Botany Bay City Council and the principle firms involved in the Mascot Towers construction, signed and dated 30 May 2007, is eye-opening, revealing the extent of the Elias family connection.

The signatories include: J & B Elias Pty Ltd, Sole Director/Secretary Hanna Elias; Oribe Pty Ltd, Sole Director/ Secretary Hanna Elias; B-1ST Choice Roofing Pty Ltd, Sole Director/ Secretary Sarkis Elias; Damjet Pty Ltd, Sole Director/Secretary Elias Elias; CW Building Pty Ltd, Director Miledy Elias, Secretary Nasr Elias.

Cause of the cracks?

While the cause of the Mascot Towers cracks remains uncertain, some residents blamed ‘vibrations’ caused by construction work on the recently-completed Peak Towers, the neighbouring apartment block at 27 Church Avenue Mascot.

On Tuesday 25 June the NSW Deputy Premier John Barilaro gave credence to this theory by confirming Mascot Towers was ‘sinking’ due to a ‘drop in water tables’ attributable to neighbouring construction work – ie, Peak Towers – leading to ‘differential settlement’ of the land mass beneath Mascot Towers.

However, on Wednesday 26 June, the builders of Peak Towers, Aland Development Group, rejected the Deputy Premier’s claim. Aland Development managing director Andrew Hrsto went so far to say that there was ‘no basis in fact’ that cracks in the decade-old Mascot Towers was caused by or even linked to his company­’s construction work.

“We feel compelled to respond to some of the reckless commentary and speculation in recent days that has sought to pre-empt and in some cases shape the outcome of investigations.”

Aland revealed it had engaged Australian Consulting Engineers to carry out a pre-construction inspection of buildings around its Peak Towers project prior to commencement of work in 2016. This so-called ‘dilapidation report’ includes photos – publicly available – taken of Mascot Towers showing significant cracks that were then ‘several years’ old. They are reportedly the same cracks that caused the June 14 rapid evacuation of tenants.

According to both Financial Review and Property Observer, the first official recognition of basement cracks at Mascot Towers came in 2011, only three years after the apartment block’s completion.

In March 2011, an extraordinary general meeting was called by the owners to commission engineer MES Consulting to investigate a range of defects, following the discovery of basement cracks and leaks in the carwash bay.

MES Consulting’s investigations also revealed there were faulty gas meters and leaks in common area corridors, they believed to have been caused by “poor sealing practice at construction and in the construction joists.”

In October 2011, more serious defects were discovered in Mascot Towers, including faulty fire systems, leakages in the swimming pool, faulty garden irrigation systems and, most alarming: ‘structural movements.’

On Thursday 27 June 2019, it was revealed at a meeting held with around 250 apartment owners that Mascot Towers owners struck a deal with J & B Elias in 2015 – accepting $750,000 from the builder to waive any responsibility for ongoing defects.

J & B Elias agreed to fix the defects identified by MES Consulting free of charge in what was recorded as a ‘spirit of co-operation between the owner’s corporation and the builder.’

However, the defects returned after those repairs, which were subsequently found by the building committee to be ‘below general industry and Building Code of Australia standards and that problems were arising again subsequent to completion.’

Furthermore, “the committee noted its serious concerns in the builder’s commitment and ability to address these issues,”.

According to the owners’ engineer, ‘interior apartment defects’ were ‘repetitive in nature’ and that the ‘volume of work required to correct was very significant.’

In the wake of the Mascot Towers’ revelations, Kevin Anderson, Minister for Better Regulation and Innovation, announced the NSW government would restore ‘confidence’ in building construction with “the biggest shake-up of the construction industry that this state has ever seen,” including an annual audit of 30 per cent of certifiers.

On Sunday 16 June NSW Premier Gladys Berejiklian told reporters that the NSW Government “will hold everybody to account” for the cracks in the Mascot building and “we need to find out the cause before we know how to act.”

NSW Government culpable

Nevertheless, construction lawyers, such as Bronwyn Weir, author of a 2018 report into nationwide issues with strata building standards, are sceptical of the NSW Government’s sincerity.

“There have been people reporting on defects in high-rises for a number of years,” she told the New Daily on 16 June. “The problems are across the board. Not enough has been done, given the feedback has been coming through for so long.”

A report from Bronwyn Weir and former Prime Minister’s department head Peter Shergold in February 2018 warned: “Until relatively recently, there has been almost no effective regulatory oversight of the commercial building industry by regulators. Those involved in high-rise construction have been left largely to their own devices.”

Stephen Goddard, chair of Owners Corporation Network, in an opinion piece in the Sydney Morning Herald on 18 June, said, “For 20 years, new residential strata schemes have been plagued with building defects. According to one estimate, 80 per cent of all new residential strata schemes are constructed with defects. Yet the government response has been to shrink consumer protections. Statutory warranties have decreased as has access to home building insurance.

“Typically, building defects take years to be identified by which time the statutory warranty period of 6 years has expired. Even if the fault is discovered within the warranty period, the builder/developer can be hard to find…

“Mascot Towers – and Opal Towers earlier this year … These buildings have defects so great it is not possible to “remain silent” and fix the problem quietly..

“Last February, in response to Opal, the NSW government told the Australian Council of Governments meeting in Hobart that if re-elected, it would introduce legislation to: Create a Building Commissioners Office; Require architects and engineers to sign off on building plans; Require builders to sign off that the building was constructed in accord with the certified plans; and Enable Owners Corporations to sue in negligence if the building code was not delivered.

“The first 100 days of this new government are fast approaching. Where is the promised legislative reform agenda?”


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