Plenty has been written both in Victoria and elsewhere as to the issue of defective cladding on the externals of buildings.
This leads to questions about the notion of a “direction to fix” – usually a written order by a building surveyor to a builder to do certain building works in order for the works to be brought into compliance with legislation, regulations and/or a building permit.
There are, though, limits as to when a direction to fix can be issued. Off the top, it is important to consider the ongoing vexed issue of the placement onto buildings of flammable cladding. Such cladding has indeed combusted in cases such as the deadly Grenfell tower inferno in the UK and the Lacrosse fire in Melbourne in 2014 which did not thankfully cause a loss of life.
There have been conflicting reports as to how widespread the problem of non-compliant combustible cladding is where medium and high-rise buildings are concerned. Some reports are alleged to have overstated the problem, while others have allegedly understated it.
There has also been public debate as to whether in fact it is illegal to place flammable cladding on residential developments. Now builders and building are ‘on notice’ that such products are not to be used. The problem is Australia-wide and it needs to be addressed with a systemic approach between local and state governments.
The issue is more acute in respect of medium to high-rise building, as in such buildings the possibility of occupants being able to easily and quickly escape is so much harder. Some say the use of such cladding was always prohibited.
The legal onus is on a building’s owner to ensure the building’s safety toward other occupants and non-occupants such as visitors. However, the relevant regulatory authority has the power to direct the builder, if it sees fit, to rectify building works so that it complies with the law, applicable regulations or the conditions of a building permit. In Victoria, the Victorian Building Authority has the power to issue such written directions. It is often a very effective way to ensure that, among other things, the problem of non-combustible cladding is addressed.
There is, however, a very critical limitation currently in Victoria but potentially applicable in other states, that (by judicial decision) the VBA’s power to issue a direction to fix is limited to the time period prior to the issuing of the occupancy permit or certificate of final inspection. The Victorian Supreme Court limited the time for such an order to be made to the periods prior as by then, the responsibility for the maintenance of and safety for, such buildings by then had passed to the owner.
Very arguably, such a limitation has now left owners to attempt to sort out the problem of the removal of such defective or non-compliant cladding themselves. The builder will thus often deny liability for the associated rectification costs and the owner will be consequently out of pocket, or will have to engage in a costly, time consuming litigation with no guarantee as to what the outcome will be. Many such owners will be ill-equipped to engage in such a battle and thus many will be significantly worse off in a number of respects.
The Court in the case at hand, LU Simon Builders v the VBA, decided in 2017, was decided primarily on the basis of interpretation of just how wide the power in the particular section of the relevant Building Act was exactly and what the section intended. The Court’s decision meant that in respect of the six particular buildings involved in the case, including the Lacrosse building, the VBA did not have the power to order the builder to remove the non-compliant and/or combustible cladding.
In another sense, the decision was favourable for builders in that, if the builder was to be ordered to do such works (at its cost obviously), in some cases many years after the occupancy permit and or the certificate of final inspection were issued, they may have by then lost the right to seek contribution or indemnity from third parties who may have caused or contributed to placement of the non-compliant product on the building, such as suppliers and/or designers or engineers and or building surveyors. However, as is often the case, and as mentioned, the owner is left the ‘loser’ from the situation.
There can be, in the particular circumstance of the case, a right for the owner instead to make a claim against the builder or perhaps the architect or building surveyor after the owner has been forced to incur the rectification cost. However, the owner has to incur the cost of rectification first with a residual right to thereafter make a claim against such parties, an outcome that is most unsatisfactory even if such parties usually have relevant insurances behind them.