Troubled Tower Faces New Crisis
Australian Financial Review, 16 July 2002
In a case that could damage the NSW building industry’s self-certification process, one of Sydney’s largest apartment towers and its 653 owners may soon be stripped of insurance cover.
The building’s insurance provider, CHU Underwriters, says it will stop writing cover for the building, Regis Towers.
The action comes as the building’s body corporate and developer, Meriton Apartments, finds itself embroiled in legal action over alleged fire safety issues.
Residents of the troubled building now fear it will be uninsured or that they will be forced to pay 100 per cent premium price hikes when their policy expires on August 2.
According to residents, if insurance cover is not found in time, the public liability cover will also lapse, which means the owners will assume unlimited personal liability and, because they are uninsured, will default on the terms of their mortgages.
Regis Towers, in Sydney’s CBD, was named along with other Meriton-built developments the Summit in George Street (350 apartments) and the Mirage in Bunn Street, Pyrmont (220 apartments) in legal proceedings launched by the Sydney City Council. Meriton is counter-suing. The council claims to have found breaches of the Building Code of Australia’s fire isolation requirements and non-compliance with original development consents.
Solicitor Stephen Goddard, a Regis Towers commercial suite owner, said the State Government’s “disastrous” policy of allowing builders to certify their own work meant the onus was on the State Government to provide a safety net for residents.
“The Government failed to discharge its responsibility to the public by allowing self-certification to occur,” Mr Goddard said.
Now residents are calling for the State Government to underwrite the entire risk if the insurers cancel the policy, to meet the costs of a possible premium increase and to cover any excess in the event of a claim.
Mr Goddard said that if Regis Towers owners were able to find an insurer in time, the terms would most likely reflect the policy on Meriton’s Summit.
“That means a premium increase of 100 per cent, a reduction of cover by imposing a $10,000 excess on claims for every lot and every claim, and the re-insurer can be reviewed at any time,” he said.
Mr Goddard said the new re-insurers insisted that the owners at the Summit raise a special levy to rectify the fire safety problems.
“Regis Towers is undertaking a survey to determine the cost of rectification, which I expect to fall between $20-$50 million,” he said. “The least the Government could do is guarantee insurance cover while Regis Towers goes through the process of raising money to identify and fix defects, then sue Meriton for damages.”