Dangerous Cladding: A concern for Buyers of Residential Units

Aluminium Composite Panelling, also known as ‘cladding,’ fuelled the devastating Melbourne “Lacrosse” building fire in November 2014 and the Grenfell Tower fire in London in June 2017. Cladding can be combustible when it uses flammable aluminium composite panels with a highly flammable polyethylene core. The polyethylene core is comparable to pouring petrol on a fire – the result is the devastating spread and severity of a fire.

Combustible cladding has been used on thousands of commercial buildings, shopping centres, government buildings and a number of residential buildings throughout Australia, including the ACT.

What are the current regulations in place?

Private building certifiers currently regulate builders, architects and suppliers in the ACT. They determine and regulate the safety of buildings and as such, the approval process is assessed on a case by case basis that is not regulated by the ACT Government. The result has been, at times, a failure by the building industry to self-regulate.

New legislation to stop the use of unsafe cladding in NSW

The Building Products (Safety) Bill 2017 was introduced in NSW to help prevent the use of dangerous building products such as dangerous cladding. This Bill delegates power to the Commissioner of Fair Trading to ban building products that may create safety risks in the event of fire. The objective of the Bill is to prohibit builders, building product suppliers, manufactures and importers from using dangerous products by imposing heavy penalties if they do not produce their records of building materials following a request by Fair Trading. The Bill also empowers Councils to order buildings be rectified if dangerous cladding is identified or if banned products have been used.

Federal Regulation

At the Federal level, the Customs Amendment (Safer Cladding) Bill 2017 was introduced in September 2017. It set out in its explanatory memorandum that ‘the cladding issue is a most serious public safety issue that requires urgent action’. The Bill prohibits the ‘importation into Australia of polyethylene core aluminium composite panels’. The Bill was introduced on an urgent basis due to the Federal and State failure to adequately respond to the requirement for safer cladding. Although it prevents the importation of polyethylene core aluminium panels, it does not prevent the use of polyethylene which has already been imported to Australia or is already used in buildings.

What if my building has combustible cladding?

Combustible cladding has been found on a number of buildings. But what does this mean for someone who has purchased a unit in one of these buildings or is a potential purchaser? Two recent cases in the High Court have shown that a builder does not owe a duty of care to the owners corporation or a subsequent buyer for a latent and previously unknown defect in a building. A latent defect is a defect in the property that could not have been discovered by a reasonably thorough inspection. The question of whether dangerous cladding is a latent defect has yet to be considered by the Courts.

The consequences of the decision of the High Court are that if you discover your building is affected by dangerous cladding, you may not be able to make a claim against the builder, architect or suppliers for the costs of the removal or any damage caused by the dangerous cladding, such as a fire. As such, combustible cladding not only poses a serious health and safety hazard to its occupants but may also expose subsequent buyers and owners corporations to serious liability and costs.

How can you protect yourself?

If you are purchasing a new unit or property which uses cladding, we recommend you make an appointment with one of our specialist Real Estate lawyers. Due to the complicated nature of contract negotiation and our extensive experience representing buyers in new developments, we are able to assist you in negotiating the terms of your contract to include warranties that protect you from the risks associated with dangerous cladding.

For more information or how to protect yourself and your property against dangerous cladding, please contact George Kordis, Special Counsel.