In Strata Plan 92450 v JKN Para 1 Pty Ltd & Anor  NSWSC 958, an Owners Corporation failed to establish breach of statutory warranty in a combustible cladding case. So what is required, in a cladding case, to satisfy the Court on the balance of probabilities?
The Owners Corporation of a building in Parramatta (Building) commenced proceedings against Toplace Pty Ltd (Builder) and the JKN Para 1 Pty Ltd (Developer), alleging that the Vitrabond FR aluminium composite panels (ACP), installed as external cladding on the building, breached the statutory warranties under section 18B of the Home Building Act 1989 (NSW) (HBA). It was alleged that the ACP was combustible and therefore did not comply with the Building Code of Australia (BCA).
The defendants responded that the ACP installed on the Building complied with the BCA at the time of installation.
The parties agreed on a number of facts, relevantly:
The parties disagreed as to whether any alternative solution had been adopted under the BCA to demonstrate that the cladding complied with the performance requirements under the BCA or the DtS provisions.
The core of the dispute at trial was whether or not the ACP installed on the Building complied with the DtS and if not, whether an alternative solution was available to ensure that the Building complied with the fire safety requirements of the BCA.
The findings in this case can be summarised as follows:
The relevant standard, which is indicative of compliance with the DtS, is AS 1530.1, which includes a method of fire testing on building materials, including combustibility.
The Court found that there was there was insufficient evidence to suggest that testing of the ACP was carried out in accordance with AS 1530.1. The owners’ expert concluded that it was ‘likely’ that the cladding would cause risk to life. The Court found that the rate of combustibility of the ACP could be ascertained by conducting a calorimeter test, however no such test was carried out and a conclusion that the ACP were ‘combustible’ as defined under the BCA, could not be drawn.
Counsel for the owners drew similarities to the Grenfell Tower and the Lacrosse Tower fire events. However, the Court found that the ACP in those particular instances, consisted wholly of polyethylene and, by contrast, the ACP in this case comprised a substantial proportion of flame retardant material. The Court found that this instance was dissimilar to the Grenfell Tower and the Lacrosse Tower fire events given the difference in ACP composition so little weight was given to the owners’ comparison.
A question arose as to whether an alternative solution was available to ensure the Building’s compliance with the fire safety requirements of the BCA.
The owners led expert evidence to suggest that an alternative solution could not be prepared in respect of the building. The Court ultimately found that the Owners had not established that an alternative solution court not be prepared, and also found conversely, that the Defendant had not established that an alternative solution could be prepared, and the defendants had conversely established that an appropriate alternative solution could be devised.
The Court found that the cladding could not satisfy the DtS provisions of the BCA, because no AS 1530.1 test was or is available to establish that the ACP were not combustible for the purposes of the BCA and no alternative solution was suggested by either party to ensure compliance with same.
The Court affirmed a point made in Taylor Construction Group Pty Ltd v Strata Plan 92888 that an occupation certificate does not create an “irrebuttable presumption” that the relevant statutory warranties have been complied with, or preclude a claim that the building does not comply with the BCA.
The owners sought to establish that the ACP were not good and suitable for their purpose because they were combustible. The owners reasoned that as the ACP had a core which consisted of 35-40 per cent polyethylene, they were combustible, as determined by AS 1530.1 and a banned product under the BPSA. The owners furthered that, therefore, the ACP were not compliant with the BCA.
The Court considered the owners’ submission to be untenable, noting that where the legislature subsequently bans a product that was previously permitted, a conclusion cannot be drawn on its face that the product has never been good and suitable for the purpose for which it has been used.
The Court repeated that there was no evidence to suggest that the ACP was ‘combustible’ within the meaning of AS 1530.1 as no test complying with that standard had been carried out. The Court also accepted the defendant’s submission that the fact that a component is combustible is not conclusive of is suitability, particularly where combustible components are used as an attachment to a building or because they can be used to achieve an alternative solution for the purposes of the BCA.
The Court could not find that the combustibility of the ACP had been established or that the evidence before the Court established that the ACP were, or were not combustible.
It followed that the Court also could not find that there had been a breach of the statutory warranties under the HBA.
The Court commented that it was plainly possible that the ACP did not comply with the BCA when it was installed and that a breach of the statutory warranties under the HBA may exist, but those matters had not been established.
The Court furthered that such matters could well have been established, if the owners had undertaken a cone calorimeter combustibility test of the ACP.
The Court considered whether it was necessary to approach the assessment of the evidence having regard to section 140 of the Evidence Act 1995 (NSW), which allows the Court to take into account, among other things, the gravity of the matters alleged.
Ultimately, the Court found that the owners had not established the relevant breach of the BCA or the statutory warranties on the balance of probabilities, whether or not regard was had to the gravity of the allegation, and had not established that the defendants were liable.
The Court has made it clear that simply establishing that it is 'possible' that there is a non-compliance or that a party may have breached the relevant law is not enough to establish, on the balance of probabilities, that any breach of the statutory warranties has in fact occurred.
Authors: Christine Jones, Nicholas Achurch & Annie Papageorgiou
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Home Building Act 1989 (NSW) ss 18B, 18C, 18D, pt 6; Home Building Regulation 2014 (NSW) pt 6; Limitation Act 1969 (NSW) s 33; Design and Building Practitioners Act 2020 (NSW) s 37; Strata Schemes Management Act 2015 (NSW) s 8(1).
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