Doubling Down on Combustible Cladding

Bronwen Gora // News // 10th Feb 2021

Efforts to tackle combustible cladding gained fresh impetus this week: in Victoria strict rules have been introduced banning the use of certain hazardous materials in future multi-storey developments. At the same time, the NSW government is under pressure to release details of its promised financial assistance scheme that will help homeowners afford remediation.

Victoria effectively toughened existing guidelines on combustible cladding by changing the Building Act to ban hazardous materials. It is now prohibited to use flammable aluminium composite panels and rendered expanded polystyrene in the external wall cladding of new high-rise buildings. Breaching the ruling is punishable by fines of up to $400,000 for companies and $80,000 for individuals. The new rules also crack down on the type of aluminium composite panels used in future builds, stating they must now contain a core comprising 93 per cent or more inert material, up from 70 per cent (the existing standard in NSW).

The legislation replaces a 2018 ministerial directive issued in response to the Lacrosse building blaze in Melbourne’s Docklands in 2014 and London’s 2017 Grenfell Tower fire which claimed 72 lives. While the directive stated Victorian surveyors grant permits only for high-rise developments not using banned cladding materials, it was an unenforceable guideline applicable only to municipal and private surveyors.

Developments covered by the ruling include residential buildings with two or more storeys, hotels, aged care facilities, office blocks, retail outlets such as shopping centres

Core issues

Central to the issue are lightweight aluminium composite panels widely used in the construction industry to clad building facades. Over the years it was discovered many contained cores of highly flammable plastic material which some observers have described to be as dangerous as “solidified petrol”. Following the Docklands incident and Grenfell tragedy, governments across the globe keen to avoid similar disasters ordered panels containing certain levels of combustible material be removed, a double-edged sword which while saving lives, slapped building owners with eye-watering remediation bills and enormous insurance premium rises.

Lawyer Mark Glynn, partner with Bartier Perry points out that the level of risk posed by panels depends on their location on the façade and the potential consequences of ignition. “Low risk is tolerable and may be managed without removing the panels,” he said. “High or extreme risk will require immediate removal of the panels as it represents an intolerable risk to life and safety.”

Victoria’s latest measures come almost two years after the state government’s initial building audit in 2019. Of the estimated 2200 buildings inspected, a total of 432 were deemed either ‘extreme’ or ‘high-risk’ , requiring hazardous cladding to be replaced. Work started on rectifying the first 15 buildings on the list in April last year with owners aided by the government’s $600 million Cladding Rectification Program.

In NSW, about 230 buildings have been labelled ‘high-risk’ by the NSW Cladding Taskforce, a body established in 2017. In the past week reports surfaced that in the City of Sydney region alone, 103 apartment and office buildings are ‘high risk’. But the NSW government is yet to release details of the $139 million Project Remediate scheme which will assist owners of affected buildings to cover interest costs on loans taken out for cladding removal and remediation work. Announced in November last year, details of how the scheme will work are still being nutted out after the stated December deadline for their release has now passed. Applications for assistance are still scheduled to open in March. Owners in affected buildings can register for updates on the official website Project Remediate | NSW Government.

New way forward

When it does eventually arrive, the financial aid provided by Project Remediate may also give building owners the ability to channel funds toward pursing those who installed the dangerous cladding and seek compensation for remediation costs. This path has been made clearer by a “duty of care” provision contained in the Design and Building Practitioners Act 2020 (DBP Act) devised to restore faith in the building and construction industry following a string of problems not only with combustible cladding but shonky workmanship in general.

This duty of care provision maintains “a person who carries out construction work” has a duty to exercise ‘reasonable care’ to ensure no defects exist that owners (and importantly all subsequent owners) would have to pay out of their own pockets to have fixed. If they do, the new laws will allow them to claim not only against the builder or developer but also the engineer, architect, subcontractors, project managers and even product manufacturers and their suppliers. The duty of care applies retrospectively to June 2010.