The 2017 fire at Grenfell Tower in London and the 2014 fire at the Lacrosse Building in Melbourne highlighted the risks associated with the use of combustible cladding products on high rise buildings. In response to the tragedies, the NSW Government has introduced new laws relating to buildings with combustible cladding. The latest of these, the Environmental Planning and Assessment Amendment (Identification of Buildings with Combustible Cladding) Regulation 2018 (Regulation) and State Environmental Planning Policy Amendment (Exempt Development – Cladding and Decorative Work) 2018 (Cladding SEPP), will commence on 22 October 2018.
The Regulation amends the Environmental Planning and Assessment Regulation 2000 to make a provision for the identification of, and collection of information about, buildings to which combustible cladding has been applied. While this objective mirrors that of the public consultation draft (Draft), which we discussed in an earlier edition, notable amendments have been made since the Draft and exist in the final Regulation.
External combustible cladding
The Draft was driven by the term “combustible cladding.” This term has been replaced in the Regulation by the term “external combustible cladding” which means:
This throws up a disconnect with the other key element in the NSW Government’s legislative response to combustible cladding, the Building Products (Safety) Act 2017 (NSW) (the Act). Under the Act a banning order has been issued (the Banning Order) prohibiting the use of aluminium composite panels with a core comprised of more than 30 per cent polyethylene by mass in certain multi-storey buildings. For more information on the Banning Order, see our previous edition here.
Accordingly, whilst an owner of a building with external combustible cladding will be required to comply with the Regulation, the cladding may not necessarily be subject of an order to rectify, unless it is comprised of more than 30 per cent polyethylene by mass.
Obligations on owners under the Regulation
Under clause 186S of the Regulation, owners of certain buildings with external combustible cladding must register their building with the NSW Government through the NSW Planning Portal and provide information including:
For buildings occupied before 22 October 2018, the deadline for registration is 22 February 2019. Owners of new buildings have been granted an additional month (in comparison to the timeline under the Draft) and will be required to register their buildings within four months of the building first being occupied.
The Regulation applies to the following building types of two or more storeys:
This throws up another disconnect between the Regulation and the Banning Order as the types of buildings subject to the Banning Order are more extensive than those subject to the Regulation.
Under clause 186T a building owner may also be directed in writing, by specified authorities, to provide the Planning Secretary with details about the building.
Information provided to the NSW Government may be made publicly available on the register maintained by the Planning Secretary. This is in addition to any other information the Planning Secretary considers appropriate. This register will inevitably be searched by purchasers of buildings conducting due diligence. That may have a harsh impact on value, particularly for those buildings which are clad with aluminium composite panels with a core comprised of less than 30 per cent polyethylene by mass.
Under the Draft, it was proposed that owners of a building with combustible cladding would be required to have the building inspected by a properly qualified person and provide the Planning Secretary with a cladding statement. This requirement does not form part of the Regulation as passed.
The penalty for non-compliance with clause 186S remains at $1,500 for an individual and $3,000 for corporations. Similarly to the Draft, non-compliance with clause 186T will result in a penalty of $1,500 for an individual, however the penalty for corporations has increased to $6,000.
Referral of certain plans and specifications to NSW Fire Brigades
The Regulation also amends clause 144 to provide for the referral of certain plans and specifications to NSW Fire Brigades. This applies in certain cases where an alternative solution is proposed involving external combustible cladding and the alternative solution does not apply the verification method in the Building Code of Australia in its entirety. This is a new amendment that did not form part of the Draft.
State Environmental Planning Policies
The NSW Government has also amended eight State Environmental Planning Policies (SEPPs) concerning the approval process for new cladding, re-cladding and decorative work on buildings. The SEPPs that have been amended are:
This impact is most significantly felt with regard to exempt and complying development. This is because the Cladding SEPP introduced a new clause 2.54(d1) into the Codes SEPP which states that if the development involves cladding or is attaching fittings or decorative work:
This dramatically narrows the scope of works that can be undertaken as exempt development under the General Exempt Development Code in the Codes SEPP. In particular, many works which were previously permitted to be carried out as exempt, such as minor external building alterations on commercial buildings, will no longer be possible. Rather, developers will need to obtain development consent to conduct such works, even those relatively minor in nature.
What should you do next?
Owners of buildings with external combustible cladding should begin collecting information about their building to prepare for registration.
Owners can sign up here to be notified when the portal becomes available to avoid being penalised for late registration.
Any owner who is proposing to undertake works as exempt or complying development under the Codes SEPP should seek advice about the implications of these changes.
Editorial: Christine Jones, Eleanor Grounds & Lauren Stables
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Harris v Morabito Holdings Pty Limited  NSWSC 1353
Defendant to pay 80% of the plaintiff’s costs assessed on the ordinary basis. Plaintiffs to have interest on costs. Parties to bring in draft orders.
COSTS – Home building dispute – owners awarded damages of $400,000 against claim of $1.6 million – whether commencement and continuation of proceedings in Supreme Court warranted – matter must be judged prospectively – whether costs should be reduced on account of either the conduct of the owners’ expert or proportion of success achieved – where owners succeeded in each category of defects alleged but did not persuade referee as to the consequent quantum – owners were required to go to court to vindicate rights – hearing was extended as a result of the inflated claim – impossibility of scientifically assessing costs in these circumstances – broad brush of justice indicates that owners should have 80% of their costs.
COSTS – Application for indemnity costs – Calderbank offer sent from owners to builder – offer sent at a time when builder could not properly assess the offer – not unreasonable for builder to reject offer.
Civil Procedure Act 2005 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).
Woodward v D J & T L Mellross Pty Ltd  NSWCATAP 201
COSTS- Appeal allowed in part – Success on minor separable issue – Whether costs should be awarded.
This matter involved appeals by the appellants (“the home owners”) against two decisions of a Senior Member in the Consumer and Commercial Division of the Tribunal. By the first decision (in proceedings HB 16/42636) the home owners were ordered to pay the respondent (“the builder”) the sum of $40,920 being the final payment due on practical completion under the building contract between the parties. By the second decision (in proceedings HB 17/52751) the builder was directed to carry out certain work to rectify what were described as “drainage issues”.
P & N NSW Pty Ltd t/as Euro Solar v Park  NSWCATAP 202
(1) The appeal is allowed.
APPEAL – Adequacy of reasons – where Tribunal failed to adequately reveal the basis of the decision, expressing the specific findings that were critical to the determination of the proceedings - where written reasons materially different to oral reasons.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).
Bajic v Paraskevopoulos  NSWCATAP 205
COSTS – Calderbank Offer - at the time the Calderbank Offer was made the Builder was in receipt of the Homeowners’ Reply to Appeal, which contained appropriate detail for the Builder to properly understand and assess the issues of law that would be raised by the Homeowners in the appeal.
H Build Pty Ltd v Nixon  NSWCATCD 20
Home Building – Cost-Plus contract – variations, implied terms – repudiation – termination under the contract and at common law.
Danieli (Migration)  AATA 2334
MIGRATION – Employer Nomination (Permanent) (Class EN) – Subclass 186 (Employer Nomination Scheme) visa – Temporary Residence Transition stream – electrician – licencing requirements not standardised – tasks of occupation – no electrical wiring work – electrical licence not required in NSW.
Rekrut v Champion Homes Sales Pty Ltd (No 2)  NSWCATAP 208
COSTS – Indemnity costs.
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
Divya Chaddha, Associate
T: +61 2 8083 0457
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
Published by Christine Jones