Icons/Ionic/Social/social-pinterest

Residential Focus – 12 September 2018

12 September 2018

#Property & Real Estate

Christine Jones

Published by Christine Jones

Residential Focus – 12 September 2018

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:

  • any cladding or cladding system comprising metal composite panels, including aluminium, zinc and copper, that is applied to any of the building's external walls or to any other external area of the building
  • any insulated cladding system, including a system comprising polystyrene, polyurethane or polyisocyanurate, that is applied to any of the building's external walls or to any other external area of the building.

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:

  • a description of any external combustible cladding applied to the building, including the materials comprising the cladding
  • a description of the extent of application of external combustible cladding to the building and the parts of the building to which it is applied. 

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:

  • buildings containing two or more sole-occupancy units each being a separate dwelling, such as residential apartment buildings (class 2 building in the Building Code Australia)
  • residential buildings, which is a common place of long term or transient living for a number of unrelated persons, such as hotels and boarding houses (class 3 building in the Building Code Australia)
  • health care buildings, including those parts of the building set aside as laboratories and any associated single dwellings within the building (class 4 and 9a of the Building Code Australia)
  • assembly buildings, including a trade workshop, laboratory or the like, in a primary or secondary school and any associated single dwellings within the building (class 4 and 9b of the Building Code Australia)
  • aged care buildings and any associated single dwellings within the building (class 4 and 9c of the Building Code Australia).

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:

  • State Environmental Planning Policy (Affordable Rental Housing) 2009
  • State Environmental Planning Policy (Kosciuszko National Park – Alpine Resorts) 2008
  • State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (Codes SEPP)
  • State Environmental Planning Policy (Educational Establishments and Child Care Facilities) 2017
  • State Environmental Planning Policy (Infrastructure) 2007
  • State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007
  • State Environmental Planning Policy (Three Ports) 2013
  • State Environmental Planning Policy (Western Sydney Parklands) 2009.

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:

  • it must not be carried out on any building other than a 1 or 2 storey dwelling house, attached development or detached development
  • it must not involve the use of external combustible cladding.

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

In the media

From skyscraper to 'plyscraper': Timber to challenge concrete and steel
Wood once dominated the building industry, and now it's making a comeback. It's cheap, fast and sustainable — so will the towers of tomorrow be made of timber? (31 August 2018).  More... 

Business investment and building approvals fall as construction slowdown bites
Expectations of a rebound in capital expenditure investment by the private sector are dashed again by weaker-than-expected June quarter figures (30 August 2018).  More... 

Cladding taskforce works thousands of hours improving New South Wales resident safety
A staggering 22,500 hours of work has gone into inspecting buildings across NSW, suspected of having dangerous cladding. Minister for Innovation and Better Regulation Matt Kean said it was part of the overwhelming response by the NSW Government to keep families as safe as possible following the tragic Grenfell fire in London last year (06 September 2018).  More...

Do not deal with Anthony Lee Francis aka Tony Francis, Tiger Concrete, and Tiger Concrete and Excavation Group in NSW
NSW Fair Trading Commissioner Rose Webb has warned consumers not to deal with Anthony Lee Francis also known as Tony Francis who has traded in NSW under the business name Tiger Concrete and Excavation Group (04 September 2018).  More...

Published - articles, papers, reports

Australian Bureau of Statistics
7 September 2018 Housing Finance, Australia, July 2018 (cat no. 5609.0)
30 August 2018 Building Approvals, Australia, Jul 2018 (cat no. 8731.0)

In practice and courts

ABCC E-Alert: Deadline for reporting payment disputes and delays
Code covered contractors are reminded that since1 September 2018, the ABCC treats any failure to report disputed or delayed payments as a breach of the Code. For further information click here.  More...

ABCB: Do you need help with an NCC Performance Solution?
The ABCB Subject Matter Expert Network can help you (06 September 2018).  More... 

ABCB: Save the date: Accessible Housing National Consultation Forums 2018
National consultation forums relating to accessible housing are coming. The forums will focus on the ABCB’s Accessible Housing Options Paper, which will be released in advance of the consultation forums.  More... 

Solar Panel Validation: a joint industry initiative
The Clean Energy Regulator has partnered with industry to develop and implement the Solar Panel Validation Initiative to address the installation of unapproved solar panels under the Small-scale Renewable Energy Scheme (SRES). This joint initiative is aimed at strengthening the integrity of industry and the scheme, and protecting consumers by making the identification of unapproved panels easier (03 September 2018).  More...  More... 

BPB: Building and Development Certifiers Bill 2018
The Building and Development Certifiers Bill 2018 seeks to strengthen the certification system in NSW.   More...

Cases

Harris v Morabito Holdings Pty Limited [2018] 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 [2018] 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 [2018] 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 [2018] 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 [2018] NSWCATCD 20
Home Building – Cost-Plus contract – variations, implied terms – repudiation – termination under the contract and at common law.

Danieli (Migration) [2017] 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) [2018] NSWCATAP 208
COSTS – Indemnity costs. 

Legislation

Gas and Electricity (Consumer Safety) Regulation 2018 (NSW)
[Draft] Building and Development Certifiers Bill 2018 (NSW)
Gas and Electricity (Consumer Safety) Act 2017 (NSW) 

Contacts:
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution) 
T: +61 2 8083 0477 
E: christine.jones@holdingredlich.com

Divya Chaddha, Associate 
T: +61 2 8083 0457
E: Divya.Chaddha@holdingredlich.com

Disclaimer

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.

Christine Jones

Published by Christine Jones

Share this