Victoria's cladding rectification scheme fuels liability debate

Out-Law Analysis | 31 Jul 2018 | 10:02 am | 3 min. read

ANALYSIS: Plans to allow property owners to enter into 'cladding rectification agreements' are being taken forward by the Victorian state government. The scheme has once again fuelled debate over who is ultimately responsible for the use of combustible cladding, and in particular aluminium composite panels (ACP), on buildings across Australia.

Under the financing scheme backed by the state government, property owners in Victoria will be able to obtain low-interest loans to pay for combustible cladding on their properties to be removed, with their loan subsequently repaid via council rates.

The model has received some criticism.

Many commentators have asserted that it is the builders who should be held responsible for replacing the combustible cladding. Just recently, Sahil Bhasin, national general manager of Roscon, was quoted in The Age newspaper as saying that the "Andrews Government … should be helping [the owners] prosecute the builders".

Unfortunately, there is a significant amount of misinformation circulating regarding the use of ACP which is – quite unfairly, in our view – leading to builders and registered building surveyors being condemned for approving or using these materials, without any regard being had to whether or not they complied with the building regulations that were in force at the time.

The fact is that, prior to the changes to the framework introduced in March, the National Construction Code (NCC) – which was adopted into and formed part of the building regulations in Victoria – provided a number of concessions or exemptions to the requirement to use non-combustible materials and, therefore, permitted the use of combustible materials like ACP if certain criteria were satisfied.

In relation to the use of ACP cladding, there were two main pathways that existed through the 'deemed-to-satisfy' provisions – either of which would be sufficient to permit the use of ACP: 

  • The 'bonded laminate concession' in Clause C1.12(f). This permitted the use of materials which have non-combustible laminate layers bonded to a combustible core – i.e. two layers of aluminium, bonded to a polyethylene core, as is typically the case in ACP – wherever non-combustible materials were required, subject to the material satisfying four key criteria.
  • The 'finish' or 'attachment' exception in Specification C.1.1, Clause 2.4(a). This permitted combustible materials to be used as finishes or linings to walls and roofs, or as attachments to buildings, subject to a number of criteria being met.

This is not some legal fiction. The body whose primary role is to update and maintain the NCC – the Australian Building Codes Board (ABCB) – expressly acknowledged the availability of these pathways in Advisory Note 2016-3 and confirmed that, subject to satisfying the requirements of one or more of those pathways, combustible materials, like ACP, were permitted on buildings of Type A and Type B construction, which includes medium and high-rise residential apartment buildings.

This, of course, goes a long way to explaining how there can be a reported 1,369 buildings in Victoria alone in respect of which registered building surveyors have approved building designs that use cladding of this type. It is simply implausible that the profession, as a whole, would approve this many building designs without there being clear pathways through the NCC which permitted the use of this cladding.

Consequently, it is simply wrong to assert, as many commentators have done, that the builders and/or registered building surveyors were wrong to ever use or approve the use of ACP in any buildings. There will undoubtedly be buildings with ACP cladding that can be demonstrated to not comply with the applicable NCC. Each case must, however, be considered on its merits and, to the extent that the relevant building complies with the NCC and the other building regulations in force at the time, neither the builder nor the registered building surveyor can be held to be liable for the use of ACP.

Indeed, in the vast majority of cases we have seen to date, builders and registered building surveyors were simply complying with the building regulations imposed upon them at the relevant time. This included complying with the then prescriptive 'deemed-to-satisfy' provisions of the NCC or by following the performance-based approach permitted by the NCC.

If responsibility for the fact that ACP has been permitted to be used on buildings rests with anyone, it rests with those responsible for the regulations and the relevant regulatory body. After all, it is the ABCB who is responsible for updating and maintaining the NCC "to ensure [that] it is part of an effective and contemporary regulatory system".

Melbourne-based Greg Campbell and Nicholas Whitmore are experts in building regulations and resolving disputes in the infrastructure sector.