Hot on the heels of the recent Building Appeals Board of Victoria decision that we covered here, the Supreme Court of New South Wales confirms that despite the NSW Fair Trading ban on Aluminium Composite panels (ACPs) with a polyethylene core of 30% or greater, it does not necessarily follow that the installation of such ACPs will be in contravention of the Building Code of Australia (BCA), nor in breach of the statutory warranties provided under the Home Building Act 1989 (NSW) (HBA).

In Issue

  • Whether the cladding installed on the building complied with the Deem to Satisfy Provisions (DtS Provisions) of the BCA?
  • Was the cladding otherwise compliant with the BCA by way of Alternative Solution under the BCA?
  • Whether the cladding is composed of material that is not good and suitable for the purpose for which the cladding is used?
  • Whether the cladding resulted in a dwelling that is not reasonably fit for occupation as a dwelling?

Background

As the owner of a 28-storey building located in Parramatta, New South Wales (Building), the Owners – Strata Plan No. 92450 (Plaintiff) commenced proceedings against the developer, JKN Para 1 Pty Ltd (JKN), and head contractor, Toplace Pty Ltd (Toplace) in respect of allegedly combustible ACPs installed as cladding on the Building.

Relevantly, the Plaintiff contended that the ACPs, in this case Vitrabond FR, installed on the Building, did not comply with the BCA, and as such, were in breach of the statutory warranties provided for under s18B of the HBA.

Requirements under the BCA

Under the BCA, the Building was to be constructed in compliance with the ‘Performance Requirements’ prescribed by the legislation, being the minimum level of performance that buildings must meet. This may be achieved by complying with either the ‘DtS Provisions’ or formulating an ‘Alternative Solution’ or a combination of the two.

As is common of matters of this nature, the parties adduced expert evidence as to the Building’s compliance with the BCA.

Decision at Trial

The Owners Corporation’s experts relied on, among other things, a test report on “Vitrabond”, however there was no correspondence to indicate whether that was the product that was installed on the Building. While the Owners Corporation undertook testing of the ACPs, it was only for the purposes of establishing its composition, which indicated that the core contained predominantly between 35% and 40% polyethylene.

The Court found that the Owner Corporation’s expert evidence did not address whether “the Vitrabond FR cladding is, in fact, combustible and, if so, to what extent and with what speed” [at 11].

The Owners Corporation’s expert made reference to a manufacturer’s publication that Vitrabond FR was tested under AS5113 and did not meet an aspect of the criteria for fire resistance (as distinct from combustibility) under that standard, relating to total debris and flaming debris. However, the Court noted that “the proposition that Vitrabond FR did not meet the fire resistance standard under AS5113 does not of itself establish the Owners Corporation ‘s claims, because I accept…that the ACP cladding would not be required to meet that standard given its location” [at 24]. While the Court accepted that the publication implied that Vitrabond FR had not been tested to or that it had not passed the AS1530.1 test, that “had the consequence only that it could not meet the DtS requirements under the BCA as distinct from the performance-based requirements under an Alternative Solution under the BCA” [at 24].

The Owners Corporation’s expert expressed a reservation about why an Alternative Solution might not be available based on the operation of the sprinkler system installed in the Building. However, there was no indication that that issue had been investigated by the Owners Corporation or its expert to ascertain whether the sprinkler system was adequate or whether an Alternative Solution was or was not available.

His Honour accepted the Owners Corporation’s reasons why they did not adduce testing evidence regarding the Vitrabond FR panels as well as the likely lack of utility in performing such tests (given the need to delaminate the product, testing could only be carried out separately on the individual materials and would not assess the interaction between the fire retardant materials from which the product was formed). However, the fact remained that there was no evidence about the combustibility of the ACPs.

The parties accepted and His Honour agreed that the ACPs did not comply with the DtS provisions of the BCA as no test result under AS1530.1 was or is available to establish that Vitrabond FR cladding is not combustible. Justice Black ultimately found that if it had been established (through AS1530.1 test or the 2019 publication) that the Vitrabond FR cladding was combustible, that could have raised a risk that could make the exits unusable or give rise to an undue risk of fire spread. However, he concluded that “that risk had not been established and could not in any event be quantified without evidence as to the rate of combustibility of the kind that a cone calorimeter test …might have established” [at 46].

Although His Honour found that the Vitrabond FR cladding was not compliant with the BCA by way of Alternative Solution, that was because it had not been established that an Alternative Solution would not have been available either prior to issuance of the construction certificate or now.

While the Court ultimately found the ACPs did not comply with the DtS provisions of the BCA, and otherwise would not have been compliant by way of any Alternative Solution, it did not mean that the cladding was therefore composed of material “not good and suitable for the purpose for which the cladding is used”, or that the cladding resulted in the Building being “not reasonably fit for occupation as a dwelling”. As such, they did not breach the statutory warranties under the HBA.

Implications for you

The decision is certainly good news for construction contractors and professionals, as well as insurers defending cladding claims. It also serves as a wake-up call for Owners Corporations and insurers (involved in subrogation) pursuing such claims.

In recent times, where a cladding product has been found to contain a polyethylene core of 30% or more, there has tended to be a general acceptance (based on expert evidence) that it is likely to be combustible and as such, likely to result in a liability finding requiring full removal and replacement.

Parties pursuing cladding claims will now have to give serious thought to whether their expert evidence is sufficient to prove that a cladding product does not comply with the BCA, particularly, where no testing has been conducted for combustibility and fire spread. In addition, consideration should be given to whether an Alternative Solution is now available, even if it was not at the relevant time.

We'd like to thank Nishan Gil-Misson (Law Clerk) for your assistance in preparing this article.

Strata Plan 92450 v JKN Para 1 Pty Ltd & Anor [2022] NSWSC 958