External cladding – how to manage an emerging problem

Over the past 10 to 15 years many buildings have been constructed using Aluminium Composite Panels (ACP). ACPs are frequently used in buildings because of the need to improve thermal or acoustic aspects of the design and also because the panels are a comparatively cheap building material to use.

ACPs typically have on each side of the panel an aluminium skin that is 0.5 mm thick and a core of 2 to 5 mm of polyethylene. The problem with ACPs is that heat from a fire will conduct quickly through the aluminium skin and melt the core of the panel and potentially cause the panel to catch fire. This problem is exacerbated where ACPs are improperly installed, leaving the core exposed.

The extent of the problem

There have been many major fires around the world involving combustible cladding. The most notable in Australia being the Lacrosse fire in Docklands and overseas the disastrous Grenfell fire in London, with 67 formally identified deaths.1 Following the Lacrosse fire, the Victorian Building Authority undertook an audit of 168 high rise residential and public buildings in Melbourne and identified 51% of those audited buildings had cladding fitted in a non-compliant manner. Anecdotal evidence suggests there could be thousands of buildings in Australia with combustible cladding.

How to assess the problem

It is difficult to assess whether ACPs have been installed because most cladding looks the same or similar. Some options to assess the problem include:

• checking the initial design of the building and the materials specified for use in constructing the building; and
• arranging for the testing of a sample of the façade to identify and confirm the materials used in the cladding.

It is important to be aware that often the building may not have been constructed as initially designed. This was the case with the Lacrosse building in Melbourne where the builder’s foreman substituted one building product for another and the sprinklers on the building’s balconies were deleted from the initial design during the construction process. Details of what was intended to be constructed should be available among the building permit or licence documents.

Solutions

For developers undertaking new building projects we recommend the following actions:

• ensure that all building practitioners involved in the design, approval or installation of the cladding are appropriately registered and qualified;
• require the builder to provide a sample of each significant component of the building’s material so that this can be used for testing at a future point in time;
• have an independent fire engineer certify the initial design of the building and also the construction when completed to certify that the construction accords with the design; and
• have in place a procedure which ensures, for example with foreign manufacturers, that materials or panels supplied in fact comply with the requirements of the contract and all legal requirements. In particular, we recommend checking whether the material or panel has been certified by the supplier or independent certification bodies approved by the CodeMark Australia scheme.

Recent legislative developments and government initiatives

National Construction Code

The rules regarding how buildings are to be constructed are set out in the National Construction Code (NCC) which require that external walls of buildings (three storeys and above) must be non‐combustible (if it is to comply with the deemed–to–satisfy provisions). This includes cladding affixed to or forming part of an external wall.2

It was recently announced that the NCC would be amended to reflect the Australian Building Codes Board’s new comprehensive package of measures for fire safety in high rise buildings.3

Interim report: aluminium composite cladding

The Senate Economics References Committee (Committee) released an Interim report on aluminium composite cladding on 6 September 2017, which recommended, among other things, that the Commonwealth government implement a “total ban on the importation, sale and use of polyethylene core aluminium composite panels as a matter of urgency”4 and acknowledged that the current building regulations are “inadequate and too easily evaded”.5 The final inquiry report on non-conforming building products is due on 30 April 2018.

Customs Amendment (Safer Cladding) Bill 2017

In response to the Committee’s recommendations, Senator Nick Xenophon introduced the Customs Amendment (Safer Cladding) Bill 2017 (Bill) which purports to prohibit the importation of polyethylene core aluminium composite panels. The Bill is unlikely to gain traction. Some have criticised the Bill on the basis that it remains unclear what constitutes a “polyethylene core aluminium panel.” Others have criticised the Bill on the basis that it fails to regulate “polyethylene core aluminium panels” produced domestically and that it disregards uses of the material which are compliant with the NCC

Building Ministers’ Forum

The Building Ministers’ Forum (Forum) is a body comprised of Commonwealth, State and Territory Ministers responsible for building and plumbing policy and regulation. On 6 October 2017 the Forum agreed unanimously that they will use their available laws and powers to “prevent the use of aluminium composite cladding with a polyethylene core for class 2, 3, or 9 buildings of two or more storeys, and class 5, 6, 7 or 8 of three or more storeys” (until they are satisfied that newly established standards are complied with and the system of permanent labelling of cladding is implemented).6

Victorian Taskforce

The Victorian Cladding Taskforce (Taskforce) (co-chaired by former Liberal premier Ted Baillieu and former Labor deputy premier John Thwaites), was established in July 2017 by the Victorian Government in order to investigate the extent of non‐compliant cladding on Victorian buildings and to provide advice regarding rectification and regulatory reform.7 The focus of the Taskforce in the first instance will be external cladding on residential buildings and accommodation (three storeys and above) as well as hospitals and nursing homes.

Although the Taskforce was due to deliver a report on its interim findings to the Minister for Planning, Richard Wynne, on 31 October 2017,8 it appears that at the time of publishing this article, the report is not yet publicly available.

Legislative changes – Queensland

At this stage it appears the Queensland Government is the first to introduce new legislation which confers responsibility with respect to non-conforming building products on participants in the building product supply chain. The Building Construction (Non-Conforming Building Products – Chain of Responsibility and Other Matters) Amendment Act 2017 (Qld) (QLD Act) imposes a primary duty on each individual in the “chain of responsibility for a building product”, that is, each person who designs, manufactures, imports, supplies or installs a building product (provided that the individual knows or is reasonably expected to know that the product will or is likely to be associated with a building).9 All such persons are required to ensure, so far as reasonably practicable, that the building product is not a “non-conforming building product” i.e. that the product is safe, complies with relevant building assessment provisions and fit for its intended purpose.10 The QLD Act has been commended by the Forum which has described it as “a model for jurisdictions to consider”.11

Proposed Legislation – New South Wales

On 16 November 2017, NSW Fair Trading Minister Matt Kean introduced the Building Products (Safety) Bill 2017 which gives the Commissioner for Fair Trading the power to ban building products that are unsafe for a specific use or building class.

Under the proposed Act, substantial penalties apply where a person “cause[s] a building product to be used in a building in contravention of a building product use ban” or “represent[s] that a building product is suitable for a use in a building if that use would contravene a building product use ban.” For corporations, the maximum penalty is $1.1 million and $110,000 for each day the offence continues. For individuals, the maximum penalty is $220,000 and/or imprisonment for 2 years and $44,000 for each day the offence continues.

• [1] Metropolitan Police, ‘UPDATE: Number of victims of the Grenfell Tower fire formally identified is 67’ (Media release, 27 September 2017), 1
• <https://news.met.police.uk/news/family-tributes-to-victims-of-grenfell-tower-fire-247006
• [2] The Victorian Cladding Taskforce, Department of Environment, Land, Water and Planning (Vic), Advisory Note 1: Fire Safety Actions for Residents, Building Owners, Owners’ Corporations and Facilities Managers (28 September 2017) 1.
• [3] Senate Economics References Committee, Parliament of Australia, Non-conforming Building Products Interim Report: Aluminium Composite Cladding (6 September 2017) 3.40.
• [4] Ibid 3.65.
• [5] Ibid 4.13.
• [6] Building Ministers’ Forum, Department of Industry Innovation and Science (Cth), Building Minister’s Forum Communique (6 October 2017) 1.
• <https://industry.gov.au/industry/IndustrySectors/buildingandconstruction/Documents/BMF-Communique-October-2017.pdf>
• [7] The Victorian Cladding Taskforce, above n 2.
• [8] Department of Land, Water and Planning (Vic), ‘Cladding Taskforce to commence pilot audit’ (Media Release, 16 August 2017) 1 <https://www.planning.vic.gov.au/__data/assets/pdf_file/0033/79764/Media-Release-Pilot-Program-16-August-2017.pdf>.
• [9] Queensland Building and Construction Commission Act 1991 (Qld) s 74AE.
• [10] Ibid s 74AB; Explanatory Notes, Building and Construction Legislation (Non-conforming Building Products – Chain of Responsibility and Other Matters) Amendment Bill 2017 (Qld) 17-18.
• [11] Building Ministers’ Forum, above n 6.
• [12] Building Products (Safety) Bill 2017 (NSW) s 15(1) and (3).

Authored by:
John Kehoe, Partner, Melbourne
Adrian Clifford, Senior Associate, Melbourne
Evelyn Vagias, Lawyer, Melbourne
Rachel Ong, Lawyer, Melbourne