According to Hall&Willcox (2017), only the Aluminium Composite Panels (ACPs) consisting of polyethylene (PE) cores have come under scrutiny. Other panel types including FR, A1 and A2 are legal to use given they are attached to fire rated walls. On 15th August 2018, ACPs with PE-cores were strictly banned in high rise buildings and restricted to be only used for Type C constructions (as classified by the National Construction Code). Such constructions include low rise developments, factories and warehouses.
Even in the case of low-rise buildings, under the Building Products Safety Act 2017, a limit of 30% by mass has been imposed on PE-cores. As demonstrated by Norton Rose Fulbright (2019), relating legislation changes are:
State Environmental Planning Policy 2018 (NSW) - the amendment redefines ‘exempt development’ to eliminate combustible product use in cladding and other decorative work in specified buildings
Environmental Planning and Assessment Regulation 2018 (NSW) - Both future and current buildings are required to be registered with the NSW Government
Environment, Planning and Assessment Act 1979 (NSW) - A new condition where the approval of a new project by the Department of Planning and Environment results in an audit issued to examine the compliance with new regulation
Marie-Louise and Shi (2019) further introduces the following additional measures:
Products banned by Building Products (Safety) Act 2017 are non-compliant from 1st September 2018, even if it carries a Codemark certification
All cladding that would be utilised in place of banned cladding must be approved by Fire and Rescue NSW from 22nd October 2018
From 31st October 2018, work consisting of ACPs with PE-cores must obtain building approval
From June 2019, the indemnity insurance necessary for registration is allowed to exclude non-compliant cladding
Current legal status - Importing
Despite the strong recommendation of Senate Committee Interim Report (2017) to “implement a total ban on the importation, sale and use of Polyethylene core aluminium composite panels as a matter of urgency”, such an approach was not followed by the Australian Government. Such a ban would impose implications for other safe utilisations of ACPs with PE-cores (Hall&Willcox, 2017). Therefore, the stance of Australian government is they are better regulated with revised legislation rather than a total ban on imports.
Current status - Rectification
According to Hall&Willcox (2017), results of an audit released by the NSW Government in 2017 revealed that from 178 000 buildings audited across NSW, 1 011 were found to be at risk. Consequently, such buildings may have received a notice acknowledgement as an affected building and hence a rectification order (Norton Rose Fulbright, 2019). It is the obligation of the building owner to take action to reduce the dangerous product in building legal levels, so the building can be made safe again.
Nevertheless, Hall&Willcox (2017) claims NSW seek to address the issue through tightened regulations rather than a governing body overlooking the case. As such, it is the responsibility of building owners to conduct a fire safety risk assessment and determine the conformity with Building Products Safety Act 2017 and other relevant legislation.
Marie-Louiseand Shi (2019) highlight that on 20th April 2018, Home Building Act 1989 (NSW) had been revised to include that possessing the banned PE-core ACPs in a building as a ‘major defect’. Furthermore, a Design and Building Practitioners Bill 2019 (NSW) was introduced on 23rd October 2019 to enforce a duty of care to builders to eliminate economic losses due to defects in construction work.
Liability
As mentioned, the inclusion of banned ACPs in the definition of a ‘major defect’ in Home Building Act 1989 (NSW), results in a 6-year warranty given by the builder under section 18B of the Act. As such, in the event an architect or engineer specifies or fails to identify a banned ACP, breaches of contract provisions result in the form of negligence (Norton Rose Fulbright, 2019).
THE LACROSSE BUILDING
It is a version of the Lacrosse building contract hierarchy as demonstrated by Norton Rose Fulbright (2019). However, the positions of contractor and developer are represented by one entity, LU Simon. The contract between LU Simon and the owners are of design and construct delivery method. Presentations on November 5, 2019 by Professor D G Carmichael at University of New South Wales, Sydney suggests such payments are generally facilitated through lump sum payments. The contractor’s contracts with the fire engineer, building surveyor and architect are consultant contracts.
Court case
Tribunals are most appropriate for civil matters requiring specialty in judgement, especially the likes of Lacrosse fire where such cases are of rarity to normal courts (UNSW Moodle, 2019). As such, the Victorian Civil and Administrative Tribunal was presented the case by a plaintiff consisting of the owners and another 211 applicants. While the primary defendant was LU Simon, according to Norton Rose Fulbright (2019), the building surveyor, architect, fire engineer, superintendent, the occupier of the apartment which the fire originated from and the resident who left the fire causing unextinguished cigarette butt were called in as respondents.
Outcome
Despite the cladding used by LU Simon being non-compliant with the Domestic Building Contracts Act 1995 (Vic) (DBCA), Moriarty and Wang (2019) reveals that LU Simon had not failed to exercise considerable duty of care. However, the failure for reasonable care by the fire engineer, building surveyor and the architect are evident as they failed to oblige to their contract provisions by realising the non-compliancy by LU Simon. This results in them being wrongdoers under s24AH of the Wrongs Act 1958 (Vic).
Norton Rose Fulbright (2019) informs of a liability of $5,748,233.28 handed by Judge Woodward for LU Simon to pay. Nevertheless, the failure to the duty of care by other parties result in the liability passed over in the following proportions (Moriarty and Wang 2019):
Fire Engineer (39% liable): According to Judge Woodward, the fire engineer’s major failures to duty of care resulted in failing to perform a full engineering assessment in accordance with the International Fire Engineering Guidelines. Additionally, he failed to identify that the cladding proposed by LU Simon were non-compliant with BCA.
Building Surveyor (33%): His honour found breaches in the consultant agreement as the surveyor approved architects’ specifications which included cladding non-compliant with the BCA and failing to detect incomplete cladding system descriptions in the Fire Engineering Report.
The architect (25%): The architect failed to determine LU Simon’s cladding samples as non-compliant and identify and resolve defects of the design
Resident who left the cigarette butt (3%): As no party sought judgement against this individual, LU Simon is directly liable for this proportion.
Lessons
The following are few key lessons to be learnt from the judgement:
As highlighted by Clayton Utz (2019), the primary liability may fall back on the contractor as a result of damage caused by fire. However, the liability may be passed to consultants, whose duty is to exercise reasonable care in ensuring the builder’s compliance with relevant regulation. As observed by the liability proportions determined by Judge Woodward, it is vital as a future Fire Engineer to ensure builder’s compliancy, as otherwise contract provisions are breached.
Cornwalls (2019) indicates that the tribunal had clarified the role of consultants. A ‘tick the box’ approach is no longer deemed satisfactory, and hence future consultants must actively inquire and challenge the builder’s view to ensure compliancy of the design.
In the event such reimbursements are necessary, consultants must ensure necessary levels of insurance cover is in place. It is also the responsibility of builders to ensure necessary insurance and the ability of consultants to cover any reimbursements.
Insurance
According to Cornwalls (2019), the requirement to pay additional insurance premiums contributed to the magnitude of claims made by apartment owners. More notably, Clayton Utz (2019) highlights the implication of this event for construction industry professionals who work with polyethylene cladding. The newfound risk prompted insurance companies to increase premiums to levels where indemnity insurance is not viable.
REFERENCES
Critical issues in construction law: When the cracks appear - an update on defects 2019, Norton Rose Fulbright, Australia, viewed on 12 December 2019, .
Aluminium Composite Cladding 2017, Hall&Willcox Smarter Law, Australia, viewed on 12 December 2019, < https://www.api.org.au/sites/default/files/uploaded-content/website-content/curll_matt_aluminium_composite_cladding_brochure_v5.pdf>.
Marie-Louise, S & Shi, J 2019, ‘Update on NSW response to the cladding crisis and recent case law developments’ 11 December, viewed on 12 December 2019, < http://www.mondaq.com/australia/x/874352/Building+Construction/Residential+Focus+Update+on+NSW+response+to+the+cladding+crisis+and+recent+case+law+developments >.
Moriarty, P & Wang, R 2019, ‘Lacrosse tower cladding fire – Consultants burnt and builder walks (nearly…)’, March, viewed on 12 December 2019, < http://www.turkslegal.com.au/files/turkalert-lacrosse-tower-cladding-fire-%E2%80%93-consultants-burnt-and-builder-walks-nearly%E2%80%A6pdf-1/download?token=6b4QN8W5>.