Defects in Residential Strata Buildings? Take Care not to Overlook the Most Prevalent!

Defects in Residential Strata Buildings? Take Care not to Overlook the Most Prevalent!

“It is a harsh reality that body corporates are often faced with rectifying their dwindling asset at their own cost.”

 

In recent times, the construction and strata industries across eastern Australia have shifted their focus away from leaking buildings and toward the highly publicised structural failures, fire separation and combustible materials. The attention is warranted considering recent global examples where human lives have been lost, body corporates crippled and families facing financial and emotional ruin at the hands of defective construction.

The shift of focus away from leaking buildings is not by virtue of water-related defects taking the year off, neither is it because the level of construction has improved; water ingress via a building’s external fabric or via escape from wet areas remains among the most prevalent defects in the Australian construction environment and continues to create havoc for lot owners and corporations.

State-based building regulators publish results annually on the most prevalent defects plaguing the industry – for as long as I can recall, water issues have featured amongst the top 10 defects, almost as if they enjoy the spotlight. In 2019, the Queensland Building and Construction Commission (QBCC) noted roof cladding, internal wet areas and external waterproofing membranes in its top 10. Despite the connotation of ‘top 10’ suggesting good performance, this is not an honor roll; rather it is a wall of shame.

The Master Builders Association of New South Wales suggests that over 80% of complaints about building and construction are waterproofing issues. My personal experience of remedial construction highlights that the cost to rectify water-related defects can be more than 10 times the cost of doing it right in the first instance, that being at the time of construction.

Whilst consumer and political spotlights remain firmly aimed at structural failures and/or fire-related defects, in context neither of the defects feature in top 10 ‘wall of shame’ lists. I say this not to downplay the severity and degree of devastation that is attributable to structural and fire-related defects, rather to highlight the broader problem for building owners who must monitor their properties. Very importantly, our regulators, legislators and experts must continue their work towards proactively addressing the most common defects in our industry.

 

So why are we experiencing a defect crisis in Australia?

There are many opinions across the industry about why we are experiencing a defect crisis. The Foreword of Australian Standard 3740 – Waterproofing of Domestic Wet Areas provides clarity of the problem facing the construction Industry in stating, in part, that problems with waterproofing defects relate to several fundamentals, including the following:

  • Workmanship
  • Applicator skill and competence
  • Changes in design trends
  • Quality control, including supervision, inspection and testing
  • Professional attitude and a desire to continuously improve without compromising quality, performance and contractual obligations

As I have supported remedial construction programs across the three eastern states, investigating more than 1000 buildings with defects annually, I have found the Foreword of AS 3740 to be accurate and without rebuke for not just waterproofing but many of the common defects in the construction landscape including the much publicised structural failures and/or fire-related defects.

 

The optimum solution is – of course – prevention!

Consumer confidence for the New South Wales (NSW) construction industry has received a shot in the arm of late with the announcement of new reforms that have prevention as the main objective.

The key points of the reforms include:

  • Design and Building Practitioners Act 2020 (DBP Act) – Under the DBP Act, a person who carried out construction work has a statutory duty to exercise reasonable care to avoid economic loss caused by defects. As of 11 June 2020, the DBP Act will provide owners corporations an avenue to pursue not only the builder/developer but also the professional services and contractors directly involved in the construction for losses.
  • Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 – From 1 September 2020, the RAB Act provides the Building Commissioner a statutory power to investigate building work under construction, including conducting invasive investigations and preventing the issue of completion documents. The RAB Act also requires developers to provide advance notice to the NSW Building Commissioner before applying for an occupation certificate.

The reforms have a common theme of accountability. Whether in the planning/design phase, contractor fulfillment or inspection/completion phases, the industry will be held to higher account under the reforms.

Australian construction, at least in NSW, can be viewed as making a comeback, but for now and until construction improvements are implemented across Australia, there are pending issues with the current stock of high-rise Class 2 housing.

For individual owners and body corporates alike, there are several options when facing a defect crisis in their properties. The first option is to pursue the entity(s) responsible for the construction – the builder or third party. It is always a worthwhile to have a few experts in your corner when taking this action – seek advice from a lawyer with construction expertise and a building consultant/engineer.

In the event that your builder is not cooperating or no longer accessible, litigation is an option for body corporates or individuals; however, this can be a drawn-out process over several years and can cost building owners significant capital to finance.

Any action of mitigating your loss is a good action to take; the last thing body corporates can risk is a defect manifesting further as a result of inaction. The unfortunate parties should remain proactive and seek advice from experts in remedial construction.

In the event that a builder or developer of the property conducts rectifications for water-related defects, the cost to the building owners can still be significant due to a decline in the market value of their property or the loss of tenancy, and the cost of professional services to act on their behalf such as engineers and lawyers.

It is a harsh reality that body corporates are often faced with rectifying their dwindling asset at their own cost.

One thing is certain – if your building leaks, it will cost you money, time and inconvenience, but doing nothing will cost you more. With the latest reforms setting new prevention standards and levels of accountability, we can hope that a reduction in defects is also assured.

 

If you would like to get in touch with the author, James can be contacted by email at james.mcintosh@au.sedgwick.com or by mobile 0420 959 938 Sedgwick

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