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By David Andrews, Makinson d’Apice, Solicitors, Sydney

Aluminium composite panel cladding, referred to by some as “the new asbestos” – is now banned from use in many types of multi-storey buildings in New South Wales. The ban came into effect on 15 August 2018.

ACP, a key factor in the deadly Grenfell Tower blaze in London last year and other similar tragedies, has been found to contribute to the rapid spread of fire.

The new ban makes it an offence to use ACP as external cladding in certain types of multi-storey buildings if the ACP’s core contains more than 30% polyethylene. Fines of up to $1.1 million for corporations and $220,000.00 for individuals apply.

With the arrival of the ban, a relevant enforcement agency (for example, a council) is empowered to make a “building product rectification order” requiring a homeowner to:

  • eliminate or minimise a safety risk posed by the use in the building of ACP; and/or
  • remediate or restore the building following the elimination or minimisation of the safety risk arising from the removal of the ACP.

Fair Trading Commissioner, Rose Webb, confirmed that the ban followed consideration of a range of sources leading Fair Trading to a settled view that the safety risk posed by ACP made it appropriate that the ban be issued pursuant to Section 9 of the Building Products (Safety) Act 2017.

The ACP ban applies to buildings of a certain class and number of storeys that use external cladding, insulation, façade or rendered finish that incorporates the requisite amount of ACP.

Importantly, the ban applies to any buildings that meet the criteria, meaning it applies to existing buildings; not merely new builds.

There are exemptions available for the use of ACP with 30% polyethylene or more if the ACP is not deemed combustible following appropriate testing with the involvement of a properly accredited testing laboratory.

External cladding and statutory warranties for “major defects”

As many homeowners know, the warranty period to pursue a builder or developer for defective residential building work depends on whether or not the defect is a “major defect”.

If the defect is “major” then the statutory warranty period is 6 years from the completion of the work to which the warranty relates. Otherwise, the warranty period is only two years.

In April 2018 Clause 69A of the Home Building Regulation 2014 (NSW) commenced, designating external cladding likely to threaten life safety in the case of a fire as a “major defect”. It appears highly likely that ACP cladding with a core of more than 30% polyethylene – i.e. the now banned ACP – would meet this requirement.

Homeowners confronting the risks relating to ACP ought to bear the operation of Clause 69A in mind when considering the appropriate next steps they might take.

Importantly, Clause 69A has limited retrospective effect. It applies only if the warranty period has not yet commenced or the period in which proceedings could be taken for a breach of the warranty has not already expired. Careful consideration needs to be given to what circumstances Clause 69A will apply.

What should you do?

The ban requires a response from builders and owners corporations to avoid fines and building product rectification orders.

For those in the building industry, the implications of the ban and the operation of Clause 69A are clear: unless the ACP passes the test for exemption and is not a threat to life safety, it must not be used.

There are also implications for the owners of multi-storey buildings which contain or may contain ACP. Owners should approach fire safety professionals to get their cladding tested.

Homeowners should also remember that ACP may constitute a major defect pursuant to Clause 69A and may wish to consider seeking to recover in respect of any breach of warranty.

For buildings which do not involve residential building work (for example, commercial building), the situation is even more complex in respect of recovering compensation for the cost of rectifying non-compliant cladding.  This is because these building do not have the benefit of statutory warranties. Urgent advice should be sought in relation what rights building owners have in this regard. Time limits apply to potential causes of action.

If you require assistance in navigating the evolving landscape following the ACP ban, please don’t hesitate to give us a call.

Contact the author directly by email or by telephone.

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