Time to Define Defects and Specification 11

Monday, May 9th, 2016
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A lack of robust definitions that outline what constitutes good workmanship and defects are causing plenty of headaches for homeowners. It’s time that ended.

The dumbing down process and multiplier effects hurt many people and two recent cases show us how much.

Governments legislated and produced Acts of Parliament that do not adequately define specification by not insisting on a comprehensive thorough list of workmanship clauses on each trade to be included. In turn, publishers cut back what they include, and most specifiers now purchase published specifications on the understanding that workmanship (and we all know what that is) must be of a good standard as stated in the warranties of standard building contracts.

This started the dumbing down of the general public immediately.

But now 30-plus years have elapsed since workmanship clauses began to be successively pruned from specifications through the use of terms such as ‘tradesmanlike’ as substitutes for specific details of what actually separates good workmanship from poor. And some manufacturer specifications have also followed suit – certainly paint specifications. Privatised building surveyors no longer insist on specifications containing detailed workmanship clauses because the standard building contract basically defines specification to be just a list of materials and a general description of the works.

Now a new generation of builders and architects (the bulk of the specifiers) and most building consultants whose job it is to check quality have replaced those who once knew (and are rapidly forgetting) the niceties of the specifications that make good workmanship happen.

The vast majority of today’s generation of building industry personnel have not even seen a specification that describes good quality workmanship, resulting in most of them not having a clue what it really means or what is defective.

Some builder specifications for new homes contain no detailed workmanship clauses at all, and those specifications that do actually contain workmanship clauses are devoid of clauses that inform the reader as to the stages of work and the detailing that are vital for basic good quality.

And so a considerable number of defects are built into almost every home built today; defects that are simply not discovered by building inspectors, building consultants or building supervisors, basically because they don’t know what separates good quality work from substandard work.

As such, today’s Standard Specifications, Standard Building Contracts and the Domestic Building Contracts Act 1995 are all basically in great need of a thorough overhaul.

There is also the Guide to Standards and Tolerances (GSAT), a hand-me-down from the original Victorian Government’s warranty insurer, the Housing Guarantee Fund Limited.

In some respects, this document is quite a fair document, spelling out what can and cannot be claimed. But it is nowhere near a complete list, and because of this document now being 70 pages, many building consultants seem to think that the defect items listed in it are all they need to concern themselves with.

Note that some of my clients have had decisions based on this tome reversed because I challenged its content.

At least in Victoria, where building consultants incorrectly call themselves building inspectors, confusing the public further, most building consultants have an inadequate definition of defect, using a watered down version that does not include inferior (inexpert) alternative solutions, or manufacturer requirements, or time related issues such as ‘what has been built being likely to reach a reasonable life expectancy.’

If you’re lucky, their definitions are based on the half-baked Consumer Affairs definition or the paltry list of warranties contained in Standard Building Contracts based on the Domestic Building Contracts Act 1995. Many base their definitions on the Australian Codes AS4349 – Parts 0 and 1, where there are at least six definitions of various types of defect, all of which fail to address even the paltry list of warranties in building contracts.

It’s a joke.

These simple failures to define terms thoroughly have caused a raft of further problems via the multiplier effect.

Because Australian Standards and Building Authorities are inept in defining ‘defect’ and also fail to adequately define ‘specification.’ The result is that very few people actually know what needs to be done so as to comply with the standard contract warranty conditions:

“That all work must be carried out:

  1. In a proper and workmanlike manner, and
  2. With reasonable care and skill.”

How can home owners (when questioning what appears to be substandard) find out the truth when their building consultants do not know?

The multiplier effect is again at work in a big way regarding dispute costs. Here, negating solicitors/barristers exploit the grey areas (the lack of adequate definitions) in our standards and generally stymie the paltry list of legitimate defect claims taken to VCAT by home owners and their inept experts. Those who carried out substandard work only pay a pittance on the proviso that gag orders are made part of the deal.

Add to that the protection (for the last 20 years at least) seemingly afforded to repeat offender on the building scene who contravene basic regulations and/or produce extremely poor quality work but still demand payment and/or treat their clients with disdain. That’s how you end up with the resulting annual $6 billion legal/experts costs in Victoria alone (assuming legal costs are similar on both sides of a dispute) just because home owners attempt to have their homes brought to a reasonable standard.

It’s a whole lot of fighting with hardly any rectification of the defects – a devastating situation for so many home owners and the economy.

We must correct vital definitions in basic standards to get rid of this negating.

The Residential Slabs and Footings Code AS2870 was deficient (at least up until 2012) in that it didn’t adequately spell out what constitutes potentially serious out-of-the-normal weather events, thus permitting Appendix D requirements to be by-passed over and over again by soil report writers. This caused eventual structural instability of particularly waffle-pod concrete slabs due to these slabs not being able to withstand latent (or poor drainage-caused) soil heave, resulting in thousands of houses in far west Melbourne with diabolical problems. One failure of one code (and/or by those who police it) is causing a multitude of further problems!

The owners of one such decrepit house, the Softleys, recently fought their builder Metricon Homes and their negators and won twice (as did the Hoopers).

I personally think they are heroes for their perseverance.

Their steadfast actions and resolve has put on notice the unethical practice of offenders negating with the sole aim of making their valued clients give up. Hopefully this case will make all builders of poor quality new homes offer (at the outset) realistic rectification settlements instead of mere pittances. This will mean that expensive VCAT hearings are no longer necessary.

But these builders must hand over sufficient money to actually rectify (as opposed to maintain or provide Band-Aid solutions to) the agreed defects in the homes they built, or the economy will continue to suffer greatly.

It seems these particular home owners did not accept any form of gag order, so now the general public is at long last privy to what actually happened, and now knows what harm thoughtless building can cause.

And you would hope (after these two costly precedents) that this builder now realizes that doing the right thing can be quite a bit cheaper.

The Softleys fought the good fight for what they perceived was their right to have a house that didn’t progressively fall to pieces. And their legal representatives beat the negating legal representatives, who fought because that is what nearly everyone in business seems to think is the most cost-effective thing to do, even when there is overwhelming evidence that serious detriment has occurred.

And these home owners again fought the good fight when the negating legal team tried the old common law trick of bluffing their builder’s valued client with further litigation’, instead of accepting the original VCAT finding.

Based on quite a few VCAT cases I have been involved in, the overall legal costs for each of the two cases is likely to be conservatively another $600,000 on top of something like the $290,000 awarded figures for the pull-downs/re-builds, plus removal costs, plus rent. I think $400,000 is more realistic allowing for building cost inflation.

So thanks to ‘commercial reality’ (which seems to say offending builders should negate because most home owners give up) we now have a very important new precedent for everyone to come to terms with. The wheels of change are nigh!

It seems an appropriate time to thoroughly define ‘defect,’ ‘specification’ and ‘expert’ as regards ‘alternative solutions’ and alter the acts that govern building contracts accordingly. It is also time for governments to work closely with consumer groups and the building industry (in that order), with a view to removing the need for expensive legal actions by also introducing measures that hold to account those who distort a new full definition of defect.

The (sadly lacking) checks and balances that have dumbed down the public and the residential building industry must be returned, or we may well see a continuance of a very large building industry led economic blight.


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  1. Anne Paten

    Mark, you have ‘hit the nail on the head’! This is an outstanding article, well written and easy to comprehend. It reveals your expert knowledge, lengthy experience and equally highlights your strong moral compass.
    As you rightly point out, much of the construction industry these days suffers from a scarcity of talent, knowledge and skills. Since the 1990s, these have not been required nor rewarded – and unsurprisingly, they have disappeared. Consequently, as a direct result of decades of neglect by those involved in public policy and practice (credentialing, legislation, enforcement of compliance and consumer/public ‘protection’), the community is faced with the devilish disaster bequeathed.
    We must not forget the key creators and catalysts who designed the distorted ‘justice system’, they who facilitated the failure of building practitioners and who gave them carte blanche to ignore their obligations and make consumer injustice ‘legitimate’!
    Government-authorized incompetency now underpins a largely non-compliant industry. This combined with a lack of interest in contractors knowing/meeting minimum building and safety standards has powered the rise of ever-increasing numbers of third world buildings across Australia. As if not bad enough, this has been further compounded by a paucity of pride in workmanship by persons of ethical principles. And we might ask: "WHY?" The answer: “Because there are no penalties for behaving badly”!
    As you correctly highlight, consumers have no hope. They cannot obtain information, truthful or accurate – difficult to come by from many large and medium-sized building companies, and impossible to source from the 'officials'. Defect destined, lives wrecked – this is the owners' lot!

  2. Annette watson

    Well said Mark. If volume builders actually read the Australian standards and abided by the regulations we wouldn't have half the consumers attending VCAT and paying out more to solicitors and lawyers to be able to get anything back.
    Congrats to the softleys (who only live 2 street downs from me). Hopefully this helps other consumers get there builders back to repair there damage. And hopefully builders will now wake up to there regulations and no short cuts

    • Greg Ellevsen

      ……… "read the Australian standards" ………….I'ts hard to believe, but it is so true, that so many people in the building game don't.
      I experience this deficiency often in supervising trade works – so often work methods are available to use straight from a Australian standard and many people don't even realise one exists for the work they are doing. One thing for certain is that licencing of contractors has become too easy with the current "pathways" available through vocational training organisations sanctioned or in fact created by our legislators that don't require serving apprenticeships or achieving trade qualifications.
      What a mess it's become

  3. Greg Ellevsen

    Mark, what a brilliant article, thank you.
    So where can we start to re write the descriptions of acceptable standards of work – do you know of any old public works specifications gathering dust anywhere that may give us a leg up to help our industry "remember" the past?
    Maybe the departments of housing have archives somewhere. If I find something I'll let you know- if you find something please let me know
    I feel your frustration constantly. We just don't have teams of good tradesmen led by exceptional & concientious "boss" tradesmen any more who know through their training what good workmanship is and good building methods are. The tradesmen use to teach the apprentices and the "boss" would guide the tradesmen.
    As I replied to Annette Watson's comment…."One thing for certain is that licencing of contractors has become too easy with the current "pathways" available through vocational training organisations sanctioned or in fact created by our legislators that don't require serving apprenticeships or achieving trade qualifications."

    I'd love to read some of these old specifications you refer to and see if I can apply their guidance to my work and try help our industry to re learn

    • Mark Whitby

      Thanks for your interest and comments Greg,

      Pre-1985 State Bank or Commonwealth Bank project Specifications have quite a few now removed specific workmanship clauses… perhaps the further back the better… to a point. With new materials such as acrylic renders, the manufacturers are the best bet I think. There are also older architect specifications that should be consulted… plus there would be nothing like a full definition of defect to make it happen, Good luck with such a venture. I think a few heads together might produce quite a document!
      Cheers Mark

  4. David Chandler

    Mark, when government clients fail to stand the industry up for non-compliant construction, it is hard to imagine that a few consumers will be able to turn things around. The reality is that builders sign up to build in accordance with the contract. The contract sets out the designs, specifications and lawful standards required.
    Builders make progress claims for work performed in accordance with the contract (and not otherwise).
    Progress claims made where the work does not accord with the contract is 'Fraud". I make this point to government agencies who are the recipients of non-compliant work. They point to retentions and other terms in the contract for dealing with non-conforming work. This misses the point. If the parties accept that compromise on quality and lawful standards is contemplated then lets give this better clarity up front. I would think the tax payer would be dismayed that custodians of public money could be so delinquent. This was however evidenced in the BER Schools program with Victoria public schools being by far the worst in quality I have seen in over 40 years in this industry. But it was too hard. The cost of enforcing rectification to contracted standards was something that the Department of education had no gall for. The industry made a few noises that the standards had to be lifted but as usual it was not their members fault. So the status quo remains. Government sets the standard in condoning bad workmanship and this "good enough' attitude is pervasive. I advocate for offended customers who can demonstrate breach and poor work following a fraudulent progress claim to go to the police and have it dealt with that way. This response should start at the top but bottom up may be just as effective

  5. Bruce Christopher

    Having said that though I acknowledge the necessity for supply of more affordable housing which may benefit from less of the larger feature-packed, but poorly built, and more of the more modest but well built variety. The upholding and enforcement of minimum standards is required as a safety net for consumers. Unfortunately aiming for good quality workmanship and materials only has a personal benefit for the cognisant purchaser if the house will be kept for decades. When reselling, many buyers may 'sense' the quality difference and condition, but will still rarely be prepared to pay any more for it than the jerry-built house down the road.

  6. Bruce Christopher

    Well said Mark. The only way I would go down the path of a new build these days would be to again do all the critical finishing workmanship items myself or to use a local small scale trade qualified builder with trusted trade contractors happy for me to inspect previous work, including in progress, and be around for some inspections along the way. The message needs to be clear from the start that the quote does not need to assume shortcuts in workmanship so there is no way I would approach any of the mass building companies who seem to employ a lot of itinerant amateurs.

    I think the problem is that many consumers cannot discern workmanship. I can't help noticing gaps, mismatched architraves, bowed walls, poor paint, incorrect gutter falls etc. but so many owners of such homes seem blissfully unaware until something like a major water leak, crack or breakage occurs.

    • Mark Whitby

      It's like the mother duck syndrome Chris… one, two… happy day… until the fox had made off with the second last duckling… then all hell broke loose. Home owners are (I think), deliberately kept in the dark on what constitutes good workmanship, via their inadequate specifications. As long as it's neat and tidy it will get the supervisor's nod of approval. Not good eh?

  7. Les Williams

    Good luck with the police. There is huge fraud in the industry but the Police don't appear to be interested. A colleague of mine engaged Walton Constructions to construct a residential unit complex in inner city Brisbane. It was described to me by a QBCC executive as one of the worst builds he has witnessed but they took no action. The client had an independent report undertaken by a very reputable firm accompanied by 1029 photographs of defects ranging from serious water ingress to varying height and illegal hand rails accompanied by 29 individual complaints. The QBCC inspector informed my colleague that whilst he could see serious water leaks he could not issue a breach notice because he didn't know why it was leaking. The project was subject of a very credible $4m claim for defects and over-runs and was underway when the Walton entities liquidated owing creditors in excess of $70m. There was never any demerits posted on the QBCC web-site about this company to warn consumers. The Subcontractors Alliance is currently seeking an independent investigation into certain aspects of the Qld industry including QBCC licensing – compliance etc. With the assistance of legal representatives we are preparing a number of briefs for presentation to the Police and the Qld Parliament regarding fraud. Mr Chandler is correct about the BER program but in more ways than one. There was some serious fraud and profiteering associated with that program.

  8. Russell Jones

    The story Title Define defects and specifications says it all. If a house is built with defects and not to specifications the builder has breached the contract and is liable for all costs to repair or replace the house. It is that simple. R. Jones