Remedies for Construction

INTRODUCTION

The decision of The Owners Strata Plan No 92888 v Taylor Construction Group Pty Ltd & Frasers Putney Pty Ltd (2019) 15 November 2019 raises important issues for construction and fire safety compliance.

We set out our comments about this decision and its consequences.

THE CLAIM

Biowood* cladding had been installed as architectural attachments on the external walls on the façade of a large residential complex of 148 apartments at Ryde, NSW.

*Biowood Architecture Flame Resistant Reconstituted Wood Plastic Composite (“Biowood”) was found to be made up of 70% reconstituted timber and 23% of PVC.

The building owners, The Owners—Strata Plan 92888 alleged that the attachments on the external walls were defective as they were combustible and failed to comply with Clause 2.4 of the Building Code of Australia (BCA). Specification C1.1 and in breach of the warranties under S18B of the Home Building Act 1989 NSW (HBA).

THE ISSUE

In issue was whether Biowood as installed is compliant with the BCA and codes and standards.

Furthermore, even of cladding is compliant with the codes and standards, was it fit for purpose?

THE TRIBUNAL FINDINGS

Senior Member P Boyce found a breach of Section 18B(1(b)c)e) and f) of the HBA and Clause 2.4 of the BCA [now the National Construction Code of Australia (NCC)] specification C1.1 arising from residential building work carried out by Taylor Construction Group (“Taylor”).

The Tribunal ordered that Taylor rectify the breach of the statutory warranties by removing the Biowood attachments installed on the building façade and replace the attachments to the external walls with ones that complied with the codes, standards and statutory warranties.

We set out the key findings below:

Biowood is an undue risk and combustible material

 

In breach of the warranties in Section 18B of the HBA of fitness for purpose. The fact that the Tribunal highlighted a specific building material as being non-compliant is high unusual, in cases arising from claims for damages/rectification concerning defective building work. It serves as a warning about new or innovative building products that offer advantages at the design stage in terms of efficiencies, cost, reduced weight and design alternative, compared to traditional products used as cladding.

These issues about sourcing alternative products used internally and externally, should be actively assessed at all stages by the design team and the builder responsible for project design, and then, later by the fire safety engineer and certifier, to ensure that all materials achieve compliance.

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The Tribunal referred to the Lacrosse judgment from VCAT:

The Tribunal referenced the VCAT judgment in The Owners Corporation No.1 of PS 613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VACT 286 (“Lacrosse”), (which concerned a claim involving a large fire in a high rise composite cladding installed by the builder) regarding the following issues:

 

1.  The tests to be used to established whether a building product is compliant:

Expert evidence is essential. The standard for whether a building product is combustible is the BCA (now the NCC).

 

 2. The applicant/plaintiff bears the onus of establishing whether the material is non compliant:

For fire safety purposes, a single test method will not provide a full assessment of the fire hazard under all fire conditions. To establish whether a building product is compliant from the fire safety perspective, the elements of undue risk are a function of several factors, namely combustibility, rate of flame spread and other safety measures.

 

3. Fitness for purpose: The warranty of fitness for purpose is absolute:

The BCA (now the NCC) is the minimum standard by which fitness for purpose is to be measured. If a material fails to comply with the BCA, the use of the material was not fit for the purpose because there is a real risk of dire hazard or danger contemplated by the BCA.

The use of Biowood was in breach of the warranties in S18B 1)b) of the HBA as it was not fit for the purpose used. The assessment may also be applied to other states apart from NSW, where relevant legislation about building materials are implied into every contract. The Tribunal agreed with the “common sense test” referred to in Lacrosse, i.e. It must consider the purpose and type of building that was built. The common sense test indicates that it is illogical to stipulate that the external walls must not be combustible and then allow them to be covered in combustible attachments.

4. The building contract may also provide assistance in relation to the remedies sought by identifying the principal’s project requirements and reliance on the builder’s skill:

A finding of a breach of fitness for purpose requirements in S18B 1)f) of the HBA may be demonstrated by a design and construct contract concerning the principal’s project requirements and objectives.

While it had not seen the entire contract, the Tribunal was prepared to infer that it was a Design and Construct contract. This meant that the developer has made known the particular purpose for which the building was required. The Tribunal found that the developer relied on the builder’s skill and judgment and so by doing the statutory warranty of fitness of purpose is incorporated into the contract.

•  Section 18B 1)f) of the HBA implies a warranty in every contract that the work and materials used in doing the work will be reasonably fit for the specified purpose if it is expressly known to the holder of the contractor license the particular purpose for which the work is required, or the result that the owner desires the work to achieve , so as to show that the owner relies on the holder’s or person’s skill or judgment.
•  This means that the contract between the builder and the developer may serve to demonstrate whether the developer relied on the builder’s expertise to install a product that was fit for purpose.
• From the developer’s view point, it is important to ensure your contract with the builder includes that the builder’s work and materials will be fit for purpose by way of express warranties. Also nothing that for residential projects, the warranties in Section 18B of the HBA will be implied into the contract.

 

5.  Whether an interim occupation certificate (IOC) binds a Court who must assume that is conclusive evidence that all requirements to its being issued have been complied with:

The Tribunal is not bound by the issue of an IOC which is an administrative and not a judicial act. The issue of the IOC does not prevent the Tribunal from determining whether cladding or building material complies with the relevant standards and codes.

The Tribunal is granted jurisdiction to determine compliance with all applicable laws.

 

CONCLUSION

New developments and modifications to buildings should be reviewed shortly after construction. If you or an owners Corporation of which you an owner, are concerned as to whether your building has cladding or building materials that may not comply with relevant standards and codes it is important these be checked by an appropriately qualified building consultant/ fire safety certifier very soon after completion of construction or occupation.

Equally builders and developers should also check that their consultants carefully check that alternative building products are fully compliant with relevant standards and codes.

CONTACT US

For more information, please contact our lawyers David Glinatsis or Anthony Herron at excellence@kreisson.com.au or on 02 8239 6500.

This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.