Introduction 
Fires in November 2014 in the Lacrosse high-rise building in Melbourne (a 23-storey mixed residential and commercial building constructed in 2011/12) and in June 2017 at the Grenfell Tower in London, have highlighted concerns about the use of non-conforming building products in Australia and about extensive delays in developing and implementing policies to address these issues.

On 21 May 2018 the Grenfell Inquiry in London commenced taking evidence from lay witnesses and experts. The first stage of the Inquiry is expected to conclude in September 2018. The second stage will commence in January 2019 and examine the lead-up to the fire including the refurbishment of the building, which has been widely blamed for the spreading of the blaze which claimed 72 lives.
Various Government Task forces across Australia have been commissioned to investigate the use of unsafe building products in buildings.

This article reviews the key issues involving the use of potential combustible aluminium composite cladding in buildings, the findings of recent public sector regulatory reviews across several States in Australia and what this means for industry and consumers.

Why is aluminium used in buildings?

Aluminium has increasingly been used in building design. It is the second most widely specified metal in buildings after steel, and is used in all construction sectors, from commercial buildings to domestic dwellings.

Aluminium composite panels (ACP’s) consist of two thin aluminium sheets bonded to a non-aluminium core, and are most frequently used for decorative external cladding or facades of buildings, and signage. They are classified as attachments in Australia and New Zealand, and it is a requirement of the Building Codes in both countries that the panels, ‘irrespective of their fire classification’, only be attached to fire rated walls. Such panels must demonstrate that they will not contribute to the spread of flame in the event of fire.

The use of various types of composite aluminium panel cladding’s and the risk that each material type poses is important because of the growing technological advancement in the types of claddings used, in particular where the core material (such as polyethylene) is flammable. Furthermore, because integrating the overall building design (including the cladding) with the fire safety systems i.e. fire sprinklers, & fire escapes) are central to ensuring safer use of high -rise buildings.

Building audits

The NSW Government’s Fire Safety and External Wall Cladding Task force carried out an audit of buildings across NSW and identified 1011 buildings had external wall cladding’s that will need to be inspected for non-compliance.

Similar audits in Qld, SA, and VIC have been carried out or are being established. In July 2017 following the Grenfell fire in London, the Victorian and New South Wales governments established “cladding task forces” to assess fire safety in buildings across both of those states. The Victorian Task force originally identified 1,369 buildings as most likely having aluminium composite materials with a polyethylene core. Of these 579 had not commenced construction and a further 129 were half built.

In September 2017 the Qld Government announced that cladding on Brisbane’s Princess Alexandra Hospital would be removed after testing revealed it was more combustible than previously thought .The removal of the cladding will take 18 months.

On 13 March 2018 the Victorian Government introduced new ministerial Guidelines to building surveyors and builders to ban aluminium composite materials with a polyethylene core of more than 30% on all multi-storey buildings.

The NSW Government has also introduced a draft Regulation with obligations for owners of buildings with combustible cladding, aiming to reduce the risk around the use of combustible material external wall cladding. The draft regulation will require building owners to register with the NSW Government if their building has combustible wall cladding and undertake a fire safety assessment if needed.

The Federal Senate Inquiry into Cladding Materials 

Commencing in January 2015 the hearings by the Australian Senate into non-conforming building products and polyethylene aluminium composite cladding received a number of submissions from interested stakeholders. Those hearings revealed that the Building Code is too complicated and contradictory, with no hierarchy of control for various clauses that compete with each other.

On 6 September 2017 the Senate Economics References Committee delivered its interim report concerning the use of aluminium composite materials and expressed concern that there was evidence of widespread use of these materials in a manner that did not comply with the Building Code. It also welcomed the recent announcement that the National Construction Code would be amended to reflect the Australian Building Codes Board’s (new comprehensive package of measures for fire safety in high rise buildings.

The key findings from the interim report included:

  • Recommended that the Australian Government implement a total ban on the importation, sale and use of aluminium composite panels as a matter of urgency, with a key emphasis on safety.
  • Proposing greater coordination and a national approach to reform National licencing schemes, to establish a national licensing scheme with requirements for continued professional development for all building practitioners.
  • The Building Minister’s Forum give further consideration to introducing nationally consistent measures to increase accountability for participants across the supply chain.
  • State and Territory governments work together to develop a nationally consistent statutory duty of care protection for end users in the residential strata sector.
  • The Commonwealth government to consider imposing a penalties regime for non-compliance with the National Construction Code such as revocation of accreditation or a ban from tendering for Commonwealth funded construction work and substantial financial penalties.

In August 2018 the Federal Senate granted the Senate Economics References Committee an extension to prepare its final Senate report on 19 September 2018.

Legislation

In Qld and NSW legislation has been passed dealing with the use of unsafe building products in buildings. In Qld the Building and Construction Legislation (Non-conforming Building Products-Chain of Responsibility and Other Matters) Amendment Act 2017 Qld became effective on 1 November 2017.

In NSW on 18 December 2017 the Building Products (Safety) Act 2017 NSW came into operation. From the explanatory note to the Act, it was introduced in response to the Grenfell fire in London. It is not specifically directed at cladding. The Act:

  • Enables the Fair Trading Commissioner to ban the use of unsafe building products and issue affected building notices;
  • Permits enforcement authorities to make building product rectification orders and accept enforceable undertakings by a person who has breached or is likely to breach a building product use ban.
  • Enables investigative powers on authorities to support the identification and elimination of unsafe building products. In addition, substantial penalties may be ordered.

The Act amends the Environmental Planning & Assessment Regulation 2000 to prescribe that a building planning certificate which is accessible to the public must include a statement of whether there is any affected building notice or building product rectification order in force or intention to issue such notice in respect of the building that has not been complied with. In addition, the use of a building product in breach of the Act will be regarded as a major defect for the purposes of section 18E of the Home Building Act 1989 NSW and permit a claim for damages for use of the building product for 6 years after completion of the relevant building work.

Council emergency orders: Vic & WA

In December 2017 a local council in Melbourne, Vic. ordered that the owners of an apartment block in  Brunswick, covered in combustible cladding have received an emergency order to make their building safe within three months.. The overall cost to repair the building has been estimated, in research done for the owners corporation, at approx. $2 million. Council ordered that flammable cladding around fire hydrants and hoses be removed within two months and that additional sprinklers be installed on each balcony in the complex within three months.

Also in December 2017, the WA Building Commission announced that it would broaden the scope of an initial audit to include a state-wide audit of all high-rise buildings with cladding attached. The audit identified 460 multi-storey buildings in WA with cladding.

The broader consequences

The fires in Grenfell London and in the Lacrosse Building in Victoria in 2014, have been the impetus for a review of non-compliant use of non-conforming building products in Australia. This has led to a number of state-wide audits and introduction of regulations and legislative changes to address the use of non-conforming building products in buildings.

Aside from the immediate issues of safety and a wider set of responsibilities and duties should be considered:

  • Increased scrutiny by authorities and governmental agencies of buildings with unsafe building products in particular, aluminium composite panels.
  • Policing the importation of polyethylene aluminium composite cladding.
  • Building surveyors, building inspectors, builders & project managers, should seek to improve compliance and provide greater consumer protection and public safety outcomes. A national licencing scheme including requirements for continuing professional development would ensure that building practitioners have the necessary skills and knowledge to operate in the building industry’s complex regulatory environment.
  • Appropriate risk management is made to ensure that decision making including cost benefit analysis of the best outcomes.
  • Increased insurance premiums and excesses: as understanding of how widespread the issue is spreads, increases in insurance premiums are inevitable.
  • Consider insurance policies that these respond to potential claims, actions and rectification costs that are likely to be made. Insurers should also be mindful of suitable recovery options against third parties that may have been responsible for the damage. Further, if the products have been manufactured overseas, relevant recovery action against parties that supplied and/or designed the unsafe building product, should also take into account that limitation periods in some overseas jurisdictions may be shorter than operate in Australia.
  • Urgent review by owners corporations/owners by appropriate expert investigation (for example, the CSIRO) regarding unsafe building products and suitable remedial action taken to ensure necessary compliance.

Conclusion
Non-conforming building products affect a number of entities, namely, developers, building owners, and bodies corporate who are concerned because they potentially will be impacted by the level of non-compliances with buildings and the duties they owe to the occupiers of those buildings.

Various Governmental audits and the interim findings of the Federal Senate Committee, suggests that the non-compliant use of cladding is widespread. There has also been extensive delay in developing and implementing policies to address non-compliance in the building industry. This is an important issue for the community, with ramifications for industry and insurance providers. The final report of the Federal Senate Inquiry due on 19 September 2018 is awaited with interest. It is likely to result in further changes at a State level regarding non-conforming building products.

Anthony Herron
LL.B (University of Sydney)
Executive Loss Adjuster and In-House Counsel
Technical Assessing Pty Limited