DEFECTS 2.0 THE MYSTERIES OF DEFECTS EXPLAINED

1. DEFECTS 2.0THE MYSTERIES OF DEFECTS EXPLAINED Dr Pat O’Donnell Nicholas Hudson JP

2. INTRODUCTION TOSYDNEY DEFECTS SPECIALISTS SYDNEY (SDSS) sdss.net.au KNOWLEDGE KNOWLEDGE AND EXPERIENCE SERVICE TECHNOLOGY At SDSS we do a broad range of building inspections and reports: Defect inspections for owners, developers and builders On-Completion inspections Expert witness inspections and reports Replies to expert reports We have advanced technology and systems We have the tools and equipment necessary We are accredited and trained to safely deliver an efficient and professional service The qualifications and experience of our staff as well as understanding strata laws and building requirements, gives our team the knowledge needed to accurately carry out all types of building inspections. DEFECTS 2.0

3. INFORMATION AND FACTS Builders give a warranty on their work (2 years minor, 6 years major) Owners corporation is responsible for dealing with common property defects Lot owners are generally responsible for internal fittings and fixtures DEFECTS REFERENCES: New South Wales Guide to Standards and Tolerances 2017 produced by New South Wales Fair Trading for guidance on defects National Construction Code Series (NCC), Volumes 1 and 2, of the Building Code of Australia (BCA) Contract documents (design documentation, specifications, plans, etc) Australian Standards Manufacturer’s installation instructions Where there is any contradiction or difference between the Guide and an Act, a regulation, the BCA or a building contract, all of these take precedence over the Guide KNOWLEDGE DEFECTS 2.0

4. STANDARDS - REFERECNES DEFECTS 2.0

5. STANDARDS - REFERECNES DEFECTS 2.0

6. APPEARANCE DEFECTS Most ‘minor defects’ relate to appearance Generally, variations in the surface colour, texture and finish of walls, ceilings, floors and roofs, and variations in glass and similar transparent materials are to be viewed where possible from a normal viewing position, defined as looking at a distance of 1.5 m or greater (600 mm for appliances and fixtures) With the surface or material being illuminated by ‘non-critical light’, which is the light that strikes the surface, is diffused and is not glancing or parallel to that surface Slight variations in the colour and finish of materials do not always constitute a defect Serious discolouration, roughness and poor quality workmanship to finishes in liveable areas are usually considered defects KNOWLEDGE DEFECTS 2.0

7. APPEARANCE DEFECTS KNOWLEDGE DEFECTS 2.0

8. EXAMPLES OF CRACKING DEFECTS KNOWLEDGE Cracking in Concrete paving must exceed 1.5mm to be considered a defect Cracks to Concrete slabs are defective where they are Category 3 (Moderate 2mm to 4mm width) and Category 4 (Severe 4mm to 10mm width) Cracks in Masonry walls are defective if Category 2 (Slight < 5mm), Category 3 (Moderate 5mm to 15mm) and Category 4 (Severe 15mm to 25mm) DEFECTS 2.0

9. COMMON CATEGORIES OF DEFECTS Appearance: unsightly; incomplete work; paint smears; cracks; poor quality workmanship to finishes Water leaks; showers; roofs; skylights; walls/flashings; windows; planter boxes Drainage issues; insufficient falls to drains; ponding water; flooding Fire protection defects: fire doors including rating & gaps; emergency lighting and exit signs; fire stair dimensions; penetrations through fire rated structure; fire hydrant and extinguisher locations; smoke detectors; FIP; egress distances; cladding system fire rating; sprinklers NCC compliance, handrails and balustrades, materials and fixing methods; ponding water Building Services: electrical; mechanical; hydraulic; security; communications Structural – rare other than cracking to brick work and concrete KNOWLEDGE DEFECTS 2.0

10. COMMON CATEGORIES OF DEFECTS DEFECTS 2.0

11. CURRENT STRATADEVELOPMENT INDUSTRY SITUATION As the end of the warranty period approaches owners corporations are encouraged to commission a defects report Lawyers and consultant are marketing their services to Strata Managers and Strata Committees Builders and Developers are being ambushed by massive defect claims, many hastily prepared to beat the warranty expiration time Some claims are being exaggerated to get into the supreme court (>$500k) Owners corporations are spending $$$K on consultant defect reports Builders and Developers are spending $$$k responding to the defect reports with their own experts Both sides are spending $$$$k on lawyers Most of the defects are petty incomplete work, bad finishes, water ponding, etc A small number of owners get irate at minor defects and are frustrated. Their anger is infectious The owner’s consultants tend to pick on everything no matter how minor to justify their fees Attention to detail and quality control in finishing projects could save a lot of $$$$$$ Much cheaper to identify and fix defects before handover Client Relationship Management is essential to avoid legal conflicts A massive Defects industry has emerged DEFECTS 2.0

12. WHAT TO DO IF YOU GETHIT WITH A DEFECTS REPORT? EXPENSIVE Defect reports Engage lawyer who will advise and brief experts - $$$ Legal notices / lawyers NCAT or Courts No legal notices Specialist experts as required eg: fire, electrical, mechanical, structural - $$$ SDSS Inspection & Expert Report in response - more expensive $$$ SDSS review & Initial consultation - inexpensive $ Dispute defects Agreed defects Agreed defects Fix defects (can be least expensive option) or compensate owners corporation DEFECTS 2.0

13. NEW STRATA LEGISLATION - TIMELINE (PART 11, MANAGEMENT ACT) Strata Schemes Development Act 2015 and Strata Schemes Management Act 2015 – and related regulations Both commenced on 30 November 2016 Except for building defects provisions which commenced from 1 January 2018 Owners Corporation must approve Building Inspector 1st AGM after initial period Builder/Developer must rectify defects before bond returned Developer pays 2% bond OC – Completion Strata Plan Registered Initial Period Developer Control Contract Executed Developer must nominate a Building Inspector within 12 months Interim Report 15 To 18 months after completion Final Report 18 to 24 months after completion Contracts post 1/1/18 Construction period Essential to have qualified, experienced, professional and independent building inspectors Essential to have good communications and working relationships between all parties DEFECTS 2.0

14. SOLVING DEFECT ISSUESBEFORE THEY BECOME A PROBLEM Identify and fix defects before handover – don’t wait for owners to find problems and get a bad first impression Inspection much easier before units occupied – master key access - no waiting for occupants - no furniture Defect repairs easier before units occupied and while subcontractors on site Opportunity Builder/Developer must rectify defects before bond returned Opportunity Building Inspector Appointed – 1st AGM Strata Plan Registered Initial Period Developer Control OC Completion Contract Executed Developer must nominate a Building Inspector within 12 months Interim Report 15 To 18 months after completion Final Report 18 to 24 months after completion Contracts post 1/1/18 Construction period Independent defects inspection and fix before handover – good customer relations – good marketing Inspection and photo record before handover - evidence against false defect claims later DEFECTS 2.0

15. SOLVING DEFECT ISSUESBEFORE THEY BECOME A PROBLEM SDSS are happy to provide economical fee proposals for ‘on-completion’ independent inspections We need to disclose prior engagement with developer if nominated for formal inspection process a year later If owners are happy with the developer and their building they are more likely to endorse nominated inspector On-Completion Inspection Builder/Developer must rectify defects before bond returned Building Inspector Appointed – 1st AGM Interim Report Strata Plan Registered Initial Period Developer Control Final Report OC Completion Contract Executed Developer must nominate a Building Inspector within 12 months Final Report 18 to 24 months after completion Interim Report 15 To 18 months after completion Contracts post 1/1/18 Construction period Waiting 15 to 18 months will likely result in perpetuation of the current ‘defects industry’ situation On-Completion reports will help in countering any exaggerated Interim Reports DEFECTS 2.0

16. Whose Responsibility to Maintain – Strata or Owner?*This is not an exhaustive list, but a general guide. STRATA Balcony-Columns, door, window & wall, painting of balcony ceiling, railings, water leak through wall Ceiling or Roof – Ceiling cornices, false ceilings if registered on strata plan, guttering, membranes, plastered ceilings, vermiculite ceilings. Courtyard – Fencing – if shown as a thick line on a strata plan then deemed a common wall. Trees – existing mature trees that extend past the stratum limits of a lot including damage and trimming costs. Electrical – A/C systems serving more than one lot. Garage door openers if original equipment. Fuses and fuse board in meter room. Intercom handset. Light and power wiring serving more than one lot. Light fittings serving more than one lot. GPOs serving more than one lot or in common property. Smoke detectors connected to the building fire board. Entrance Door – Door locks, automatic closer, security door repair if originally installed. Floor- Floorboards or parquetry flooring (structure only) unless installed by owner. Mezzanines and stairs within lots. Sound proofing (magnesite) floor base. General – Damage to common property by tenant. Dampness in a unit coming from outside. Exhaust fans in communal ducting. Hot water services serving more than one lot. Letter boxes. Painting external to a lot. TV aerial and associated wiring serving more than one lot. Plumbing – Blocked floor drain or sewer in common property. Burst pipe in common property or outside the lot. Damage to a unit after water leak that strata have repaired. Main stop cock to unit. Water leaking from bath or shower and affecting another lot or common property. Water leaking through tiles or from one lot and affecting another lot or common property. BRUCE BOES DEFECTS 2.0

17. Whose Responsibility to Maintain – Strata or Owner?*This is not an exhaustive list, but a general guide. OWNER Balcony - Awnings Ceilings or Roof – false ceilings inside the lot, paintwork inside the lot. Courtyard – Deck, pergola, privacy screen, louvres or steps within a lot (regardless of whether constructed within that lot). Fencing – if shown as a thin or dotted line on the strata plan (Dividing Fences Act). Electrical – A/C systems exclusive to a single lot. Fuses and fuse board within the lot. Insinkerators. Intercom wiring. Light and power wiring, light fittings, light switches and GPOs serving one lot. Stand alone smoke detectors, stoves, telephone wiring and sockets. TV and Internet wiring and sockets. Entrance Door – Additional door locks to the original. Entrance door to lot. Keys, security cards, etc. Floor – floor and wall tiles unless on a boundary wall or floor, then strata. Floorboards or parquetry flooring (lacquer or staining on top). Internal carpets, floating floors, linoleum, vinyl or cork tiles. General – Built-in wardrobes or kitchen, laundry and other cupboards. Cracks in walls – exception where the crack is on a boundary wall or cornice and is greater than 1mm. Dishwasher. Exhaust fans inside the lot. Hot water service exclusive to a lot. Internal doors and paintwork. Pavers. Skirting boards and architraves – exception when they are on a common wall. TV aerial and associated wiring. Plumbing – Burst pipe within the lot. Cabinets and/or mirrors. Cracked bath or hand basin. Dampness in a lot coming from condensation from the inside. Dripping ‘S’ bend below sinks, basins. Leaking pipes under shower, sink, laundry tub, bath or hand basin. Plug and waste in bath, sinks, tubs. Shower screen repairs. Toilet bowl or cistern. Water leaking from a bath, shower, sink, laundry tub or hand basin not affecting another lot. Leaking taps. Water leaking through tiles not affecting another lot. Damage to a lot caused by any water leak mentioned above as a result of the problem itself. BRUCE BOES DEFECTS 2.0

18. CONTACT US E: info@sdss.net.auP: (02) 8007 3359 W:www.sdss.net.au Suite 5, 101 George St Parramatta NSW 2150