12 December 2002

Baseless Allegations about Home Warranty Scheme

I have previously made it plain that I arranged extensive renovations at my home in Woollahra. The work that was done was not satisfactory. The fact is that, to this day, significant defects in the renovation work are still to be rectified.

Toward the end of 2000, the back of my home was regularly flooded when it rained and a tarpaulin was erected to keep the water out in early 2001. I still have a tarpaulin over the back of my house.

When I returned to live at the property in about April/May 2000, there was still renovation work in progress. I noticed a lot of defects and more became apparent as I used the house.

I entered into discussions with the builder to attempt to come to an agreement about what rectifications were needed and the way in which they could proceed. These negotiations continued throughout the second half of 2000 until November when, to assist me to negotiate with the builder, Mr Stephen Abbott was retained.

I attempted to have a formal mediation meeting with the builder and the architect to resolve the issue and I issued a Notice of Request for Conference at the end of 2000. The request was rejected by the architect.

I am aware that Mr Abbott conferred with the builder both before and after I issued the Notice, but no satisfactory conclusion could be reached. In particular, the water penetration in relation to some parts of the renovation work was extreme and I could not get anyone to identify the cause.

When the builder and I were unable to agree on a mutually acceptable way forward, I lodged a claim for defective building work under a home owners warranty insurance policy taken out by the builder as mandated by NSW legislation.

The claim took some 15 months to resolve and delays continued to be experienced even after an oral agreement had been reached in relation to the final settlement amount.

Throughout the course of the claim, I have written on what is available to me at the time, particularly fax headers that have all my contact numbers as I am frequently away from my home and there is not much point anyone trying to reach me there in business hours.

I have certainly not conducted the claim on ministerial letterhead as asserted by the Leader of the Opposition. This claim is absolutely incorrect. On the files available to me at short notice, I have written two letters to Royal & SunAlliance on ministerial letterhead and both were after the amount for which the claim would be settled had been agreed. There was no inappropriate use of ministerial letterhead.

The questions being raised in relation to the renovations undertaken and rectifications required in relation to my home are private matters, they have the potential to infringe the privacy of third parties and they may still be the subject of legal claims.

I reject completely any suggestion that my conduct in relation to the claim I made under the mandatory insurance scheme was in any way improper.

I did what any other Australian in the same situation would have done when it became clear that I would not be able to resolve the outstanding issues with the builder. The claim was lodged prior to my appointment as a Minister. It proceeded from March 2001 until about June 2002.

I have correspondence from Royal & SunAlliance which confirms that:

    "the claim was handled in accordance with Royal & SunAlliance's usual procedures applying to any building warranty claim. It involved an independent assessment of the claim which was complex and rectification costs were estimated to be considerably in excess of the policy limits. Having investigated the claim thoroughly, the company decided to pay out $200,000 in full and final settlement, this being the limit of the cover afforded by the insurance policy."

Not long after being retained, Mr Abbott provided a preliminary assessment of the work that was required to rectify the renovations. He has stated that his initial assessment was qualified and subject to testing and was made before the scope of works had been fully resolved with the insurer and their experts. Mr Abbott has also stated that the detailed quote provided by the insurer's builder reflects a thorough and reasonable assessment of the scope of the rectifications considering the nature of the works to be completed.

The independent quote made by the builder nominated by the insurer (not by me) assessed the cost of rectification as being well in excess of $300,000.

The damage I have suffered over and above the payment from the insurer more than wipes out any balance of monies the builder or the architect could properly claim to be owed.

In my Statement of Registrable Interests, which is a public document, I disclosed that I had a claim for rectifications arising out of renovations to my home. I declared it when the claim was in progress and again when the claim was settled.