Defect Reporting – What’s Changed?

April 22, 2021

On the 29 September 2020, new regulations were passed under the Body Corporate and Community Management Act 1997, effectively known as Body Corporate and Community Management (Standard Module) Regulation 2020.

Effective 1 March 2021, one of the key reforms is Section 181, which includes prompting bodies corporate at the second annual general meeting to consider a motion to prepare a defect assessment report.

Noting that knowledge is power, this will enable bodies corporate to understand the construction defects at their scheme early in the life of the building and make informed decisions about their next actions, including:

  • Mitigating immediate or critical defects.
  • Engaging with the Builder of the property, or other third-party professional to effect repairs.
  • Engaging suitable experts to further investigate defects and prepare a scope of works.
  • Inform legal proceedings in pursuing responsible parties.
  • Inform a tendering process to remedy defects.
  • Inform lifecycle maintenance and monitoring program.

So why are the new reforms necessary?

Throughout Australia and even globally, high rise residential strata buildings have been in the spotlight for the much-publicised structural failures that have resulted in assets being condemned, lot properties deemed uninhabitable and resulting in injury to the public and even fatalities.

Industry has responded positively lead by some of the leading educational institutes and academics in Australia preparing research papers into the state of the construction industry. Perhaps the main catalyst was the Shergold Weir Report titled ‘Building Confidence’ published in February 2018.

With each research project a list of recommendations compiled by experts are now being implemented into the construction and strata industries providing immediate and ongoing benefits to consumers in the residential strata community. Section 181 is just one of recent legislation reforms to promote accountability in the Australian construction industry and provide safer buildings suitable for ongoing occupation.

What type of defects can we expect to encounter?

The construction techniques in Australia have diversified considerably, from what was a conventional 1970’s masonry and concrete structure to what is now commonly an elaborate design combining a mix of external claddings to facades, open plan roof tops with gardens and habitable spaces, open plan (unenclosed) wet areas, also outdoor areas that seamlessly merge into internal living areas.

There are a number of design influences in the current market that are seriously challenging the industry and these challenges often result in missed execution, resulting defects.

The current trend of serious defects that Sedgwick’s National Building Consultancy team encounter include:

  • Building fabric matters – Combustible Cladding.
  • Structural cracking/movement in floor slabs, load bearing columns and walls.
  • Water ingress via external walls systems (above ground).
  • Water ingress to basement car parking/storage facilities.
  • Waterproof membrane failures to balconies.
  • Internal wet areas – particularly unenclosed (frameless) shower designs.
  • Door and window integrity issues – resulting water ingress.
  • Fire separation issues through floor and wall systems.

Additionally, there are always a number of minor defects that are considered non-structural and whilst they are still important, they will not typically result in a major incident or prevent habitation of the property, these can include:

  • Joinery/cabinets, operation or aesthetic defects;
  • Paint finishes
  • Flooring defects –tiles, timber, engineered composite materials
  • Fixtures and fittings – tapware, door furniture, electrical items.

Whilst construction defects are due to failed execution or poor design in the construction phase, Sedgwick regularly note that the occupants of a building, tenants and owners can also inadvertently create matters for concern that should be raised in a Defect Report, these include:

  • Storing of personal items in fire stairs, on balconies and thoroughfares.
  • Propping open fire doors to create air flow or increase space.
  • Removing restraining devices on high rise windows to improve airflow.
  • Tampering with door closing devices and fire seals.
  • Using wet areas (bathrooms) beyond their design capability.
  • Behavioral use of SOU’s that promotes condensation.

What is a Defect Report?

There are several versions of a Defect Report, it all depends on the intended use of the Report. Ideally, the first Report commissioned on a new strata scheme should be a high-level summary of the issues present. This can be obtained with the intent to inform and enable all stakeholders to consider next actions with full knowledge of the serious and non-critical defects across the building.

The Defect Report should include, as a minimum:

  • The occurrence of a defect and observation i.e. 5mm wide diagonal cracking to column
  • Location – Lot number, room etc…
  • Photographic reference
  • Recommendations, including criticality rating.

Additional activities such as Expert Witness Reporting, scopes of work, costing exercise/tendering, legal action etc… can be performed concurrently depending on the direction the bodies corporate decide to take in addressing the defects at the property.


This article was contributed by James McIntosh, National Manager – Technical Services – Sedgwick

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