Investigation into enforcement of fire safety obligations at a residential building in Lane Cove
Investigation into enforcement of fire safety obligations at a residential building in Lane Cove report
PDF - 917KB
Investigation into enforcement of fire safety obligations at a residential building in Lane Cove report
PDF - 917KB
This report has found the administrative conduct of Lane Cove Council regarding its compliance with, and regulation of, fire safety requirements at a property in Lane Cove to be unreasonable and contrary to law. The report outlines how poor governance, inadequate record-keeping and unclear internal responsibilities resulted in non-compliance with fire safety requirements and delays in fixing underlying defects spanning more than 7 years.
On 25 May 2026 we finalised an investigation into the conduct of Lane Cove Council and made a report under s 26 of the Ombudsman Act 1974 (Ombudsman Act). As required by the Ombudsman Act, the report has been provided to the council’s General Manager, the Mayor and the responsible Minister, the Minister for Local Government. This special report details the outcomes of our investigation.
Our investigation concerned the council’s compliance with, and regulation of, fire safety obligations at a mixed-use strata building at 1-5 Pottery Lane, Lane Cove (the Premises), which was co-developed by the council and is located on council-owned land.
Prior to the development, the Premises was a council car park. The purpose of the development was to create additional car parking and a connection to the Lane Cove Aquatic Centre and other community facilities. To fund the construction, the council decided to develop multi-storey residential units above the car park.
On its completion in 2016, the Premises was subdivided into 6 lots with the council remaining the owner of lots 1-5. The sixth lot became Strata Plan (SP) 95221 which is the residential lot consisting of approximately 107 apartments in a seven-storey building situated above commercial office spaces and a multi-level basement car park.
Our investigation was prompted by a complaint from the Chair of the Owners Corporation for the residential lot (SP95221). The Chair complained that the council had not taken appropriate action to fix multiple defects in the building, including fire safety issues. He also told us that the council failed to enforce the relevant regulations that require building owners to provide annual fire safety statements to declare that all fire safety measures in the building met the required standards of performance.
The issues concerning the building defects and responsibility for rectification were not part of our investigation and were dealt with by the Building Commission NSW (the Building Commission). Our investigation focused on examining whether the council:
Local councils may undertake multiple concurrent roles where there is an inherent potential for a conflict of interest to arise. Such situations are common when local councils become owner-developers of a development but also have regulatory roles in relation to the development.
Our investigation highlighted the importance of local councils having strong administrative and compliance systems to manage the potential conflicts of interest arising from the multiple roles undertaken when it owns, develops and regulates the same development.
In the case of Lane Cove Council, lack of clarity within the council about its overlapping roles, as co-developer, majority owner, member of the Premises’ Building Management Committee and regulator of the Premises, all contributed to lack of action in ensuring the fire safety requirements were compliant.
The multiple roles required the council to have clear systems, records and accountability arrangements to manage conflicts and ensure compliance with the requirements. Instead, poor governance, inadequate record-keeping and unclear internal responsibilities meant non-compliance and delays in fixing known fire safety issues continued for more than 7 years.
The council told us that its multiple roles as co-developer, owner and regulator have ‘caused confusion for all parties’. We do not accept this as an adequate explanation for the failures. The council, like any other public authority, has a duty to ascertain the law and follow the law.[1] Confusion or ignorance does not excuse its conduct. The council is a sophisticated organisation. Any ‘confusion’ arises simply from a lack of appropriate systems within the organisation to manage its multiple roles in relation to the Premises.
We made findings of maladministration under s 26(1)(b) of the Ombudsman Act that the council’s conduct was unreasonable because the council:
We also found that the council acted contrary to law within the meaning of s 26(1)(a) of the Ombudsman Act because the council:
The council has advised that it regarded this investigation as an opportunity for improvement. In 2025, it appointed an external auditor to review its practices on building compliance and fire safety. The audit found that existing processes and record-keeping were ‘inadequate’, causing an ‘inability to adequately manage’ its roles as owner, co-developer and regulator. The council informed us that it accepted all the findings and recommendations that arose from the building compliance and fire safety audit.
The council has generally accepted that it did not meet its obligations with respect to fire safety compliance of the Premises. The administrative improvements made by the council to date indicate its commitment to better practice going forward. Several of the recommendations arising from the audit have been actioned and the council has committed to keeping us updated on its implementation of the remaining recommendations.
The council has also advised that it intends to take other steps, beyond the audit recommendations, to improve its organisational governance including, for example, the recruitment of key personnel to improve its risk-taking and decision-making.
The council reported that all fire safety defects within the Premises have been addressed but a Building Work Rectification Order (BWRO) made by the Building Commission remains in place until a final inspection.
While the measures taken by the council to date have been encouraging, we have made 5 recommendations we consider will help ensure the council has the clarity it needs about its roles as owner, co-developer and regulator. We have also recommended that the council issue an apology to the Owners of the residential lot.
We recommended that the council should:
We have asked the council to provide us with regular progress updates on its implementation of the recommendations.
In the following sections we provide a detailed explanation of the reasons for our findings.
Chantal Snell
Acting NSW Ombudsman
In 2014 the council, as landowner and co-developer, engaged a developer to build the Premises–additional public parking to be created and residential units to be built connecting to nearby community facilities. The developer engaged a builder to carry out the construction with work carried out in 2016. On completion the Premises was subdivided into 6 lots. The council remains to be the owner of lots 1-5 and the sixth lot is the residential lot SP95221.
As a mixed-use strata building, with council facilities and a residential component, the Premises has the following:
The Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021 (Certification Regulation) and, prior to 2021, the Environmental Planning and Assessment Regulation 2000 (NSW) (2000 Regulation) require building owners in NSW to maintain fire safety measures in their buildings to a relevant standard.
Under the Certification Regulation (and the 2000 Regulation), building owners must obtain several items throughout a building’s life cycle relating to fire safety:
2017 | |
April | A final occupation certificate for the Premises was issued by a private certifier and included a fire safety schedule and fire safety certificate. |
June | The Council Strata, responsible for managing the affairs of the BMC, engaged a fire inspection company to inspect the Premises to identify any critical defects. |
2018 | |
April | Under warranty, the builder rectified the critical defects identified. The same fire inspection company reinspected the Premises and confirmed all defects were resolved. |
July | At the Annual General Meeting (AGM), the Owners considered the building defects and rectification works undertaken and determined to take further action, such as retaining solicitors and building experts to obtain advice and assistance. |
October | The first notice was issued by the council to the Owners that the AFSS was due. The notice advised that if the statement was not received by the council, it would issue a penalty infringement notice. |
November | The Residential Strata, appointed to manage the residential lot, wrote to the council’s Fire Safety Officer stating that the BMC (not the Owners) was responsible for arranging the AFSS for all lots (the 5 council-owned lots and the residential lot). It asked the council to contact the Council Strata so the BMC can arrange an AFSS for the entire Premises. |
2019 | |
August | At the AGM the Owners delegated authority to the Council Strata to engage a fire services contractor to certify all 6 lots so that the entire Premises could obtain an AFSS. |
November | The second notice was issued by the council to the Owners that the AFSS was due. The notice advised that if the statement was not received by the council, it would issue a penalty infringement notice. |
November | The Owners engaged a fire solutions company which identified non-compliant fire safety measures that needed to be addressed at a cost of around $81,000 before an AFSS could be issued. |
2020 | |
June | After arranging AFSS related works on lots 1-5 and two AFSS related works for all 6 lots (sprinklers and air-handling), the council wrote to the Owners proposing the following solution:
|
July | A solicitor for the Owners declined the council’s proposal on the basis that the council |
November | The third notice was issued by the council to the Owners that the AFSS was due. The notice advised that if the statement was not received by the council, it would issue a penalty infringement notice. |
November | The same fire solutions company engaged in 2019 reinspected the Premises and provided a new quote to rectify issues at a cost of around $107,000. |
2021 | |
August | A company engaged by the Owners provided a Building Code of Australia Fire Safety Defects Report in respect of the residential lot. |
October | The fourth notice was issued by the council to the Owners that the AFSS was due. |
2022 | |
October | The fifth notice was issued by the council to the Owners that the AFSS was due. The notice advised that if the statement was not received by the council, it would issue a penalty infringement notice. |
2023 | |
October | The sixth notice was issued by the council to the Owners that the AFSS was due. The notice advised that if the statement was not received by the council, it would issue a penalty infringement notice. |
2024 | |
January | In response to a complaint, the Building Commission inspected the Premises and identified outstanding fire safety defects including:
|
March | The Building Commission wrote to both the council and the Owners explaining its intention to issue a BWRO for the Premises relating to the fire safety defects. |
May | The council issued a ‘Notice of Overdue AFSS’ to the Owners. The notice advised that if the AFSS was not sent to the council by 31 July 2024, a penalty infringement notice would be served without further notice for $1,000 and further infringement notices would be issued increasing each week up to $4,000. |
May | The Building Commission issued a BWRO to the council, addressing the fire safety defects requiring the council as the co-developer of the Premises to rectify the works within either |
September | The council provided the Building Commission with a fire defect engineering report. |
September | The seventh notice was issued by the council to the Owners that the AFSS was due by 1 December 2024. |
October | In its role of managing the BMC, the Council Strata advised the council that it only recently found out that in August 2019 the Owners had delegated authority to it to organise the AFSS for the entire Premises. |
November | The council re-issued a notice to the Owners that the AFSS was due. Consistent with the September 2024 notice, this notice advised that the AFSS was due by 1 December 2024. |
As the majority owner of the Premises, the council had a responsibility to ascertain who was required to prepare the AFSS to declare that each fire safety measure had been assessed by a fire safety accredited practitioner to be performing to standard. The council had information available to it that, if attended to, could have reasonably led to swifter action on ensuring compliance and enabled the preparation of an AFSS.
In November 2018, the Residential Strata responded to the council’s first AFSS notice to the Owners on October 2018 by informing the council’s Fire Safety Officer that the BMC was responsible for arranging the AFSS for all 6 lots.
Rather than taking steps to clarify who was in fact responsible for arranging an AFSS, the council, acting as regulator, proceeded to issue 6 further notices to the Owners.
In the AGM of August 2019, the Owners formally delegated AFSS management of the residential lot to the Council Strata (that manages the BMC and is the Premises’ Facilities Manager) so an AFSS for the entire Premises could be obtained. The Council Strata wrote to the council in October 2024 noting that it had not known that the Owners delegated the AFSS management to it until recently because the Residential Strata did not inform it of the decision at the time it was made. In the same letter, the Council Strata explained that its usual practice would have been to collaborate with the Residential Strata (manages the residential lot) to obtain an AFSS for the entire Premises and that respective fire services contractors would combine the AFSS documentation from council-owned lots and from the residential lot.
Even without the Residential Strata emailing the council in November 2018 that the BMC was responsible for arranging the AFSS for all 6 lots, the council should have been aware of this given that it makes up the majority of the BMC (as owner of 5 out of the 6 lots). The council should have taken a leading role in organising an AFSS for the Premises, either by itself or by its appointed strata manager, that is the Council Strata.
The role of the BMC is to regulate shared facilities and costs in strata-subdivided developments, such as the Premises–a multi-use complex with combined residential and commercial components. The primary role of a BMC is to manage shared infrastructure that benefits more than one part of a building.
That the BMC was the appropriate entity to organise the AFSS for the entire Premises is also supported by the Premises’ Building Management Statement (the Statement) which includes clauses with particular relevance to fire safety as follows:
Instead of taking an active role in arranging fire safety inspections and rectifying any issues, the council continued to issue AFSS notices to the Owners, for 6 years, with virtually no follow-up action.
As owner and BMC member, the council has accepted that it was responsible for the Premises’ ‘Shared Facilities’.[11] However, based on its understanding of the Statement, the council advised us it believed that some fire services in SP95221 were not its responsibility because such services were wholly within the residential lot. In support of its position, the council relied on a carve out in the description of fire services, under a list of shared facilities in the Statement, that ‘this facility excludes costs to maintain, repair and replace any of the fire services located within an individual lot and which service only that lot’.
We do not accept the council’s explanation. While some aspects of fire services may be wholly within the residential lot, the Statement makes it clear that the council, as a member of the BMC, was responsible for:
Moreover, shared facilities include more than just the itemised list in the Statement as it can also be pipes, wires or any other facility which two or more members share and any service that more than one member benefits from.
In this regard, the council had significant responsibilities in respect of the management of the fire safety systems for the Premises, despite any carve outs. The council has further argued that it had reasonably relied upon the expertise of its appointed strata manager, that is the Council Strata. The council argued that on this basis its conduct cannot be described as unreasonable.
While council is entitled to engage a strata manager to perform certain functions, it is required, as a member of the BMC, to ensure those functions are appropriately carried out.
As the co-developer of the Premises, the council was required to rectify defects that would ensure that either the Owners were in a position to secure an AFSS for the residential lot, or the BMC was in a position to secure an AFSS for the entire Premises.
Rather than accepting responsibility and, ultimately, liability for matters which clearly fell to it as co-developer for defects in relation to the fire safety system, the council delayed responses and expected its contractors would meet the liability. As it happened, both the developer and the builder ended up being subject to wind-up action. Instead of accepting liability and responsibility for the defects, once it was clear that its contractors were wound up, the council waited to be ordered by the Building Commission before it undertook rectification works that it had generally been on notice of for the five years prior. The council has since accepted that it is a co-developer of the Premises for the purpose of the Home Building Act 1974 (NSW).
We suggested to the council that it has been more concerned about the cost of the rectification works than ensuring that the fire safety of the Premises was secured promptly. The council disputed this, arguing that although it failed to act more swiftly due to misassumptions and poor administrative systems, it has always acted in good faith and had:
Despite the council taking such actions, the fire safety defects remained unresolved for several years and presented a risk to residents. Understandably, the Owners who live in the Premises have been concerned about their own safety. Given the findings of the Building Commission against the council, the Owners’ concerns were well founded.
The council has advised that all defects have now been rectified, including every issue raised by the BWRO, with the Building Commission due to conduct its final inspection of the Premises.
In October 2024 we asked the council to produce all fire safety statements, renewal notices and invoices for the Premises from March 2017 to October 2024. It produced no documents that provided evidence that the council-owned lots had been assessed yearly to confirm that fire safety measures are compliant with the relevant standards as required by the Certification Regulation (or the 2000 Regulation when it applied). The council owned lots include a public car park, community rooms, retail spaces, and a public thoroughfare.
In July 2025 we again asked the council to produce fire safety statements to date. The council produced a document described as an ‘Interim Annual Fire Safety Statement’ for the Premises dated March 2025 and signed by the Council Strata who is responsible for the BMC.
An ‘interim’ AFSS is not a concept in Part 12 of the Certification Regulation. Interim fire safety certificates may be issued in accordance with Part 11 of the Certification Regulation, but interim statements do not exist under Part 12. The purported ‘interim’ AFSS is, therefore, not an AFSS at all.
As well, several elements of the fire safety system in the Premises were excluded from the assessment by the Accredited Practitioner (Fire Safety), including:
As the owner of 5 of the 6 lots within the Premises, the council was required to obtain an AFSS for the lots it owns. As discussed above, we have also taken the view that the council was in fact responsible for obtaining an AFSS for the entire Premises, including the residential lot, in its capacity as a member of the BMC.
The council has accepted that no AFSS has been obtained for the Premises since 2017. It pointed out to us that it had ensured that the lots it controlled were inspected annually and that it had in good faith sought to co-operate with the Owners in respect of the defects in the residential lot.
Even accepting that the council may have taken such actions, the Certification Regulation places the responsibility on all building owners to obtain an AFSS for each year. The council’s actions do not change the requirements of the law. Its failure is all the more serious in view of the council’s regulatory role in relation to ensuring compliance with the Certification Regulation as discussed in the next section.
From the time the Premises was issued the final occupation certificate in April 2017, the building owners were required to obtain an AFSS within prescribed times, and failure to do so was an offence. The penalty for the offence as prescribed by s 89(1) of the Certification Regulation is 800 penalty units for a corporation and 400 penalty units for an individual. Under s 89(3), it is a separate offence for each week that the failure continues after the expiry of the time required for the provision of the AFSS.[13]
If building owners do not comply with s 89 of the Certification Regulation, the following options are open to the council as the regulator:
The council told us that its normal practice if an AFSS is not submitted on time is to send an overdue letter reminding the building owner of their obligations. If the building owner still fails to submit the AFSS, the council’s Principal Building Surveyor will contact the owner and advise the owner of the requirements, including the possible penalties. The council has advised that a development control order is the most used remedy if an AFSS is not submitted.
The council’s Enforcement Policy 2017 (Enforcement Policy) sets out the council’s approach to its regulatory duties in relation to compliance and enforcement. The Enforcement Policy explains that, with some exceptions, the council has discretion in relation to the unlawful activity it investigates and takes enforcement action on. The council takes a risk-based, escalating approach to compliance.
Despite there being a legal duty for building owners to obtain an AFSS each year, the building owners of the Premises, including the council itself, has not done so for the 7 years since the final occupation certificate was issued for the Premises. The requirement for an AFSS remains outstanding notwithstanding the purported ‘interim’ AFSS dated March 2025 and the rectification works completed in accordance with the BWRO.
The council had not issued any notices requesting the provision of an AFSS to itself as the owner of lots 1-5 at all since the final occupation certification as issued in 2017. In contrast, the council issued notices each year that the AFSS was due to the Owners of the residential lot. Each notice advised the Owners that a penalty notice would be issued for non-compliance, which the council did not proceed to issue.
The council did not follow its usual procedure (except in May 2024) to issue an overdue notice to the Owners or have its Principal Building Surveyor contact the Owners to discuss the requirements for an AFSS and penalties.
The council told us it did not take any further action beyond the notices that were sent to the Owners because:
The council also told us that it did not take enforcement action due to:
The council’s explanation of why it failed to exercise its discretion to take enforcement action is not persuasive. The council was on notice about the defects as early as June 2017 when it received a critical defect report from a fire inspection company commissioned by the BMC. While it received an updated report from the fire inspection company confirming rectification of the defects (other than an issue relating to mechanical air handling) in April 2018, no AFSS was obtained.
As soon as the Owners did not submit an AFSS by December 2018, the council should have investigated and confirmed if an AFSS was not submitted because there were other fire safety issues with the Premises. The prompt identification of fire safety issues is precisely the purpose of requiring an AFSS. Given the history of issues at the Premises, there should have been more focus on obtaining an AFSS for the building. At the time fire safety concerns first became an issue in relation to the Premises, neither the COVID-19 pandemic nor Fair Trading’s investigation was on foot.
Similarly, when the council did not receive an AFSS for the Premises in November 2019, it missed another opportunity to explore the reasons for non-compliance. By then there was evidence from the report by the fire solutions company engaged by the Owners in November 2019 that there were over 100 non-critical fire safety defects throughout the Premises.
We acknowledge that local councils have discretion regarding what action (if any) to take to ensure compliance with the Certification Regulation. However, the council’s failure to exercise its discretion was unreasonable in this case, given the following circumstances:
We found that the conduct of Lane Cove Council was unreasonable within the meaning of s 26(1)(b) of the Ombudsman Act because the council:
We also found that the council acted contrary to law within the meaning of s 26(1)(a) of the Ombudsman Act because the council:
We recommend that the Lane Cove Council should:
We have asked the council to provide us with regular progress updates on its implementation of the recommendations.
Footnotes
P&C Cantarella Pty Ltd v Egg Marketing Board [1973] 2 NSWSLR 366, 383-384; Federal Commissioner of Taxation v Indooroopilly Children Services Pty Ltd [2007] FCAFC 16, [4], [6].
A Building Management Committee regulates shared facilities and costs in complex, multi-use, or stratum-subdivided developments, such as towers with combined residential, commercial, or retail components.
Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021 (NSW) cl 79(2) (‘Certification Regulation’). Cf Environmental Planning and Assessment Regulation 2000 (NSW) cl 168(3) (‘2000 Regulation’).
Fire and Rescue NSW, ‘Portable fire extinguisher information for business’, Workplace Fire Safety (Web Page) <https://www.fire.nsw.gov.au/page.php?id=699>.
Certification Regulation (n 3) cls 78(1)(c), (5). Cf 2000 Regulation (n 3) cls 168(1)(c), (4).
Certification Regulation (n 3) cl 41. Cf 2000 Regulation (n 3) cl 153.
Certification Regulation (n 3) cls 83(1)(b), (2)(b). Cf 2000 Regulation (n 3) cl 171.
Certification Regulation (n 3) cl 88(1). Cf 2000 Regulation (n 3) cl 171.
This is a non-exhaustive list to provide a sample of defects identified in the Building Work Rectification Order issued to Lane Cove Council.
Building Commission NSW, ‘Building Work Rectification Order for Lane Cove Municipal Council’, (Web Page, 23 May 2024) <https://www.nsw.gov.au/departments-and-agencies/building-commission/register-of-building-work-orders/building-work-rectification-order-for-lane-cove-municipal-council-0>.
The Building Management Statement of the Premises at 1-5 Pottery Lane, Lane Cove states that the Building Management Committee has an obligation to maintain, repair and replace the shared facilities within the Premises.
The list of shared facilities explicitly includes ‘sprinklers in residential lots’ under the description of fire services: Statement sch 1 item SF3. This can be read that at face value 'sprinklers in residential lots' would be subject to the carve out (that shared facilities exclude fire services wholly within an individual lot and which services only that lot). In order to reconcile these provisions and ensure each has force, it would appear that sprinklers in residential lots would remain a shared facility despite only being within the residential lot: Hume Steel v Attorney-General (Vic) (1927) 39 CLR 455, 463.
As specified in s 89(2) of the Certification Regulation.
Environmental Planning and Assessment Act 1979 (NSW) ss 9.37, 9.45(1).
Prior to the establishment of Building Commission NSW, Fair Trading NSW was the regulator of the building industry.
Certification Regulation (n 3) s 89.
We acknowledge the traditional custodians of the land on which we work and pay our respects to all Elders past and present, and to the children of today who are the Elders of the future.
Artist: Jasmine Sarin, a proud Kamilaroi and Jerrinja woman.