Reaction to Grenfell and Combustible Cladding – a note from Australia

Problems associated with external wall cladding products became apparent in Australia in 2014 when a fire escalated quickly up the external façade of the Lacrosse tower in Docklands, Victoria. Although a number of government authorities started investigations to determine how widespread the use of aluminium composite cladding was in the Australian states, it was not until the Grenfell Tower fire disaster that state governments took more immediate action through implementing legislation to regulate the use of non-conforming building products and to put in place processes to minimise the risks associated with combustible cladding.

In the 15 months since Grenfell, the governments of the most populated states of Australia established taskforces with various remits but with a focus on regulating (or prohibiting) products including combustible cladding, imposing duties on those responsible for the use of such products and recommending processes to rectify buildings impacted. As a result of the recommendations made by each of these taskforces, various legislative amendments have passed and processes for rectification will shortly take effect. These processes will compel building owners (including bodies corporate/owners corporations (strata homeowner associations)) to take immediate steps to either advise if the property is affected by combustible cladding products or rectify in order to minimise the potential harmful effects of this type of cladding.

In the aftermath of the Lacrosse fire, the Victorian Building Authority (VBA) in the state of Victoria undertook an audit of high-rise and public buildings in Melbourne to determine the extent of non-compliance with the National Construction Code. As a result of that audit, 51% of those buildings audited were deemed non-compliant. As a result of the initial audit, the VBA on behalf of the Victorian Government was then tasked (Victorian Cladding Taskforce) to undertake a more comprehensive audit to identify the use of inappropriate cladding materials that posed risk to health and safety and make recommendations (recommendation report). As a result of this further audit, some 1369 buildings in Melbourne were identified as bearing unsuitable cladding and the Victorian government sought urgent remedies for rectification. To date, some 100 buildings have been issued with building orders to remove their cladding, and to replace it with safer materials.

One of the key recommendations from the Taskforce was the introduction of Cladding Rectification Agreements. This recommendation has subsequently led to the introduction of a new law in Victoria, soon to take effect, which allows for a long-term, low-interest loan whereby cladding rectification agreements (CRA) will help owners and owners corporations meet the rectification costs. The CRA have been devised as a way to assist owners and owners corporations re-pay loans to remedy their problematic cladding via local council rates. That is, lot owners (and potentially subsequent lot owners) will pay for the loan via local council rating systems until the loan is paid off.

Victoria’s current State Planning Minister Mr Richard Wynne recently said “As well as making properties safe and compliant with building laws, these financing agreements allow cladding to be removed quickly, without affecting property prices”.

The CRA, however, adds a further financial burden to owners, who will now have to face multiple mortgages (or a security burden over their property) with their property purchase. Buildings with CRA could impact on land value, with individual lots facing a fresh encumbrance on each lot title because the owners corporation cannot procure a loan over common property. To allow for the CRA, the Local Government Act 1989 (Vic) is to be amended to provide councils with power to enter into agreements to rectify cladding on buildings, and to provide for councils to declare and levy charges to fund rectification.

Under the new section 192B of the Building Act the state of Victoria Minister for Planning can make a declaration prohibiting use of high-risk external wall cladding products.  The Minister can also declare that an external wall cladding product is prohibited from being used by any person in the course of carrying out any building work in connection with the construction of a building. Operationally, Declarations will not apply to the use of external wall cladding products under permits if the applications for the permits were made before the declarations took effect. Further, the Minister must be satisfied, before making a declaration, that the external wall cladding products are causing or will likely cause risk of death or serious injury to building occupants or members of the public, or risk of severe property damage.

It is anticipated that the new law in Victoria will provide clarification for risk that may arise from either the use of external wall cladding products in particular circumstances or because of an event such as fire. Investigation into actual causes and losses will take years of investigation, and litigation, to prove liability. Whilst a declaration may include conditions relating to how wall cladding products affected by any declaration may be used, it must include the Minister's reasons for making the declaration. To allow for greater accountability, should the Minister publish a proposed declaration under new section 192B(9), a person may make a submission within 28 days after the publication of the draft of the proposed declaration. The Minister must then consider any submission on the proposed declaration received within the 28 days period.

In the immediate aftermath of the Grenfell Tower fire, the Queensland government established the Queensland Non-conforming Building Products Audit Taskforce to identify risks, particularly in relation to combustible cladding, and to make recommendations for remedial action. The taskforce identified that approximately 12,000 private buildings would be likely affected. Six recommendations were proposed, including regulatory action by the government to ensure building owners take remediation action to address the use of combustible cladding on existing buildings, the implementation of a building assessment process (including self-assessment) in order to identify buildings impacted, and to develop educational and guidance material for industry and management professionals.

The first reform was the Building and Construction Legislation (Non-conforming Building Products) – Chain of Responsibility and Other Matters) Amendment Act 2017. The Act’s purpose is to regulate building products to ensure the safety of consumers and to impose duties on those involved in the production, supply and installation of building products. The primary duty requires those in the chain of responsibility (designer, manufacturer, importer, supplier) for a building product to ensure that it is not a non-conforming product for an intended use (that is, the product is not safe, does not comply with relevant regulatory provisions, and the product does not perform to the standard it is represented to perform). Financial penalties have been provided in the legislation for breaches of the stated duties.

The second reform deals with combustible cladding more specifically and the obligations on owners to (1) assess the level of risk relating to cladding and (2) if applicable, take steps to remediate (remove the cladding) or ensure that the cladding complies with the Building Code of Australia. The Building and Other Legislation (Cladding) Amendment Regulation 2018, requires all private buildings in Queensland to register and complete a combustible cladding checklist by 29 March 2019. If the checklist result determines that the building may be an affected building, the owner must (by 29 May 2019) engage a building industry professional to determine whether the building is affected by the combustible cladding. If the building is then determined to be affected, a building fire safety risk assessment must be prepared by a fire engineer including an assessment of the combustibility of the cladding material.

In this blogpost, we have outlined recent amendments in the states of Victoria and Queensland, jurisdictions that have reacted swiftly and decisively to the Grenfell fire disaster in particular. There is currently no uniform approach in Australia on how to address combustible cladding, which is problematic for the National Construction Code and related insurance cover and costs. It is clear, however, that it will be the lot owners (collectively), who will face the brunt of rectifying these buildings.

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How to cite this blog post (Harvard style) 

Leshinsky, R. and Johnston, N. (2018). Reaction to Grenfell and Combustible Cladding – a note from Australia. Available at: https://www.law.ox.ac.uk/housing-after-grenfell/blog/2018/10/reaction-grenfell-and-combustible-cladding-note-australia (Accessed [date]).