Construction giant Icon claims it has spent $24 million since the evacuation of its cracked Opal Tower skyscraper, despite putting only $1 million aside as a “provision for defects”.
Financial statements accessed by the ABC reveal Icon – the company that built the tower – was holding just $1.09 million in the fund for its portfolio of buildings across NSW.
However, it has forked out $24 million and counting since the Opal Tower disaster, which happened just months after the building opened its doors.
Many builders have funds to cover defects. However, one expert said the “very modest amount” Icon had put aside was indicative of the under-regulated industry and an example of why reform was needed.
All 392 apartments in Opal Tower, at Sydney’s Olympic Park, were evacuated on Christmas Eve when cracks were spotted in the building, with residents forced out of their homes and into temporary accommodation.
More than eight months on, 15 owners are still locked out of their apartments as rectification works continue.
Some owners have launched a class action against the NSW government.
Icon told the ABC the “Opal Tower event” was insurable. However, it did not reveal how much of the $24 million – which includes an amount spent on housing residents in temporary accommodation – it was planning to claim.
It said the bill to repair Opal Tower would not come out of the $1.09 million defects fund, listed in its financial results.
Icon is broken into state-based companies, with the NSW arm reporting $163.4 million in revenue for 2018, well down from the $335.3 million it reported in 2017.
It banked a $1.63 million net profit in 2018, down from $6.8 million in 2017.
Across the company, Icon estimates a “$1.7 billion” project pipeline this year.
An Icon spokesperson said the company’s approach to Opal Tower since the Christmas Eve evacuation “cannot be questioned”.
“[This is] all without admission of liability,” a company spokesperson said.
The Opal Tower situation triggered a domino effect across the NSW industry, with a parliamentary inquiry into the regulation of building standards wrapping up yesterday.
Mandatory home warranty insurance needed
Strata law expert David Bannerman’s firm Bannerman Lawyers has represented clients in more than 300 cases.
He said the NSW industry’s issues came down to the lack of mandatory home warranty insurance.
Home warranty insurance is taken out by a builder on behalf of the owners and covers the costs of repair of defective or unfinished works when the builder has disappeared, died or become insolvent.
But if a building is more than four storeys tall, it is not required.
“It’s stupidity, absolute stupidity,” Mr Bannerman said.
If that insurance was in place [it] wouldn’t be the debacle it is today.”
But Mr Bannerman said the “modest amount” Icon set aside for defects was a reflection of the way the industry worked.
“Buildings are not going to be faultless, they don’t come off a manufacturers plant and there’s always going to be something go wrong to come and fix up,” Mr Bannerman said.
“But usually what happens is the builders just lean back on the subtractors and say, ‘I need you to fix this for me or I’m not going to give you the next job’.
“A big part of that [provision for defects fund] would be for what the subcontractors can’t complete.”