GL Trends Update: Towards 2022

Construction risks and injury claims

COVID-19 AND PROJECT IMPACTS

Reclaimed land

LAY OF THE LAND FOR RESIDENTIAL BUILDERS

Flood risks are not the only exposure. In Western Sydney, many residential projects are being built on reclaimed land requiring significant earthworks to bring the sites to a standard sufficient to support residential homes without footings to bedrock. The ongoing settlement of deep fill in these areas can lead to destabilisation of home footings and, ultimately, lead to defect claims. The time lag involved in differential settlement means that claims take some time to manifest, and we are starting to see claims advanced regarding building projects commenced in 2015.

Australia is presently facing a critical shortage of building materials and skilled labour. Construction timber is highly demand-impacted, with materials like bricks and windows not far behind. Key drivers are increased residential construction and renovations during the pandemic and timber stockpile shortages following the devastating 2020 bushfires. Many major Australian cities and regions have also suffered through lockdowns and COVID-19 restrictions that have added further disruption to the ability of contractors and trades to attend site. This cocktail of unprecedented challenges has resulted in widespread construction delays and material price hikes. So, what could go wrong from a liability risk profile perspective? Only time will tell, but we can expect that these pressures will inevitably have bearing on the future liability claims profile of construction industries participants, for example: • prolonged site exposure to the elements during construction (eg. moisture ingress)

Exposures for residential builders, particularly with a focus on large developments, is an area in which we expect to continue to see risks develop.

Flood prone areas

Floods in NSW, South East Queensland and Victoria early in 2021 put the spotlight on residential buildings in areas that are high risk flood areas. The clean-up cost of the floods was said to approach half a billion dollars, with NSW the hardest hit. A debate ensued about planning decisions regarding building in flood prone areas, with a particular focus on Western Sydney, and discussions about raising the Warragamba Dam wall were refocussed. While planning decisions are unlikely to hit a liability portfolio, most states have a well-established residential builders’ scheme that imposes stricter duties on residential builders than otherwise exist at law (eg. Home Building Act 1989 (NSW), Domestic Building Contracts Act 1995 (VIC), which have equivalents in other states and territories). Over the coming years, with the proliferation of urban sprawl and building in more flood prone areas, it is not difficult to conceive of actions commencing with a claim against government instrumentalities for the approval process, or the residential builder.

product substitution with inferior, cheap, untested or incompatible materials, and

• potential latent defects from ‘staggered’ / interrupted trades and supervisory work on site, all of which have the potential to cause resultant damage at some later stage.

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