Since the Grenfell tragedy in London and the Lacrosse apartment debacle in Melbourne, politicians of all stripes have been under pressure to act on combustible cladding and products which do not comply with requirements under the National Construction Code (NCC).

Whilst much work has focused on auditing existing buildings for dangerous cladding, four states have also introduced specific laws or regulatory actions aimed at curbing the problem.

Thus far, Queensland, New South Wales and Tasmania have introduced specific legislation which to varying degrees aims to curb use of materials which are either dangerous or non-complying with NCC requirements.

Victoria has established a cladding taskforce which has produced an interim report and is beefing up both the powers and the funding of the state building regulator. South Australia has introduced some building regulation changes under which notification of some specified products will be required during the approval process (this will almost certainly include cladding). Federally, legislation before Parliament seeks to ban the importation of aluminium composite panels.

That raises questions about which approach is best. It also raises concerns about a lack of consistency of approaches across different jurisdictions.

In Tasmania, a modest approach has seen the state amend Section 18 of its Building Act 2016 to dictate that ‘high-risk’ products are not able to be used on most multi-storey buildings without being accredited by the Director of Building Control. The definition of ‘high-risk’ encompasses only two types of product (both cladding): aluminium composite panels and polystyrene foam sheeting used as cladding. Accordingly, Tasmania’s changes do not affect any product outside of cladding and impacts only two types of products within the cladding range.

Arguably, the limited scale of this response can be attributed to the modest number of affected buildings. During an audit, the state found 43 buildings which were potentially affected with flammable cladding. Of these, only one – the Launceston Hospital – was considered high risk and in need of rectification.

Slightly wider but still modest is the response of New South Wales. Enacted late last year, the state’s Building Products (Safety) Act 2017 gives the Fair Trading Commissioner the power to prohibit the use of products in buildings where he or she is satisfied on reasonable grounds that the product is unsafe. The Act enables the Commissioner to ban all use of a particular product. Alternatively, the ban may simply specify that the product is not able to be used in certain ways or is not able to be used on certain classes of building.

It is important to note as far as this particular legislation is concerned, products are not caught simply by virtue of them being non-compliant with the National Construction Code for the purpose for which they are used. Rather, the product in question are the subject of a specific ban put in place by the Commissioner. That is not to say, of course, that use of non-compliant products more broadly would not fall afoul of broader building legislation.

The legislation also enables the Commissioner to issue an Affected Building Notice to any building which contains a dangerous product. Once this has happened, councils and other relevant authorities can issue a range of conditions and orders in regard to what has to happen to the building going forward. These orders are issued against building owners, who bear costs associated with any rectification and are left to try to recover any costs from builders and other parties through the courts.

Thus far, the Fair Commissioner has yet to issue a list of banned products.

Much broader still and much more comprehensive is Queensland’s approach. There, the Building and Construction Legislation (Non-Conforming Building Products ‒ Chain of Responsibility and Other Matters) Amendment Act 2017 imposes a duty of care on each party throughout the product supply chain to ensure as far as reasonably practicable that non-conforming building products are not used in buildings. This applies to everyone in the supply chain from the product designer to the manufacturer, importer, supplier/retailer/distributor and then through to builders and product installers.

The legislation also increases the investigative powers of the Queensland Building and Construction Commission. It also grants the Commission new powers to:

  • Declare that a specified product is unsafe and cannot be used or can only be used in restricted ways
  • Direct those within the product supply chain to remove and rectify any dangerous products.

For the QBCC to use these investigative powers, there either has to be a safety incident on the site concerned or a risk that a safety incident will occur. The legislation applies to products which are either unsafe or are not compliant with the National Construction Code.

Victoria has taken a different approach. Whilst no specific new legislation has yet been introduced, a Cladding Taskforce made wide-ranging recommendations in an interim report handed down late last year.

In the shorter term, it recommended that the Planning Minister implement measures to prevent the use of ACP panels with a polyethylene core and expanded polystyrene cladding along with broader reforms to improve compliance, education and enforcement of building standards. Beyond that, it recommends consideration of introducing a statutory duty of care for all building practitioners (including architects and engineers) to protect occupants and consumers in residential strata and introducing shared responsibility legislation which would apply through the supply chain similar to that in place in Queensland. The Taskforce also recommended a range of other actions to improve education, enforcement and compliance within the building sector.

In the immediate term, Victoria has also moved to beef up enforcement powers and resources of its regulator, the Victorian Building Authority (VBA). The VBA now has powers to issue notices to builders to fix non-compliant cladding during the construction phase of buildings, for example.

At the Commonwealth level, meanwhile, the Customers Amendment (Safe Cladding) Bill 2017 currently before Parliament seeks to ban entirely the importation of aluminium cladding with a polyethylene core.

According to Lachlan Ingram, a senior associate in the construction and infrastructure team of commercial law firm Holding Redlich, differences between the legislation in Queensland and New South Wales are evident across several areas.

First, the Queensland legislation is broader and encompasses all products which are either unsafe or not-compliant with the National Construction Code. The legislation in NSW applies only to specific products which have been banned.

Thus, even where a product does not comply with NCC requirements for specified uses, this would not be caught under the NSW legislation unless Fair Trading NSW had specifically banned the product outright or banned its from being used in certain ways. In Queensland, all products which don’t meet NCC requirements will be impacted.

Second, the Queensland legislation impacts the whole supply chain and establishes a chain of responsibility among all parties to do what is reasonably practicable to ensure that products are not used other than in a manner in which they were fit for purpose. In New South Wales, no such chain of responsibility is established and upstream supply chain parties such as product designers, manufacturers and importers are unaffected by the legislation.

Third, where non-compliant products are found on buildings, the Commissioner in Queensland can direct responsible parties in the supply chain to undertake (and meet the cost of) rectification work. This means the cost of rectification will be borne by the responsible parties. By contrast, where a building in NSW is declared to have been affected by a dangerous product, the rectification orders are served upon building owners, who are left to attempt to recoup these costs from other parties.

As for the Commonwealth legislation, Ingram points out that this differs from legislation in Queensland and New South Wales in that it bans PE containing ACP panels in their entirety. Both the Queensland and New South Wales laws, by contrast enable particular classes of product to be banned or products to be banned for particular uses.

Which is best?

Courtesy largely of that last point, Ingram says the Queensland legislation is more favourable from a consumer perspective. Queensland, he said, has a ‘consumer protection’ approach. NSW, by contrast, has an approach which is more favourable to building industry participants.

“Definitely under the Queensland legislation,” Ingram said, when asked whether consumers were better off under the legislation in Queensland or NSW.

“First of all, you don’t need to issue a ban. It doesn’t need to be in the category of banned products, it just needs to be found in the legal proceedings to be a non-conforming building product. And the Commissioner in Queensland has the power to force supply chain individuals to pay for the cost of removing or rectifying the cladding.

“In NSW, first of all, it has to be a banned product for there to be a breach. The Secretary (Fair Trading NSW Commissioner) might sue that particular person or might bring proceedings against them for a breach, but that doesn’t particularly help the owners. The builder might get struck with a fine but the owners don’t see that money and the owners might get stuck with an affected building notice which they have to comply with at their cost.

“In Queensland, you affect the people in the supply chain (with rectification costs). In New South Wales you affect the owners and then it is up to the owners if they want to recover that cost to bring proceedings against all involved in the construction and the design phase.”

That said, Ingram stresses that it is not about which approach is better. What is interesting, he says, is the different approaches amongst the states, and where different jurisdictions are deciding the loss should lie.

Housing Industry Association chief executive, industry policy, Kristen Brookfield said HIA is looking for governments across Australia to create an obligation at the point of sale of building products that the products are fit for purpose. Were that to happen, she says builders, consumers, tradespeople and others could go to a store (or to their supplier) and have the assurance that should the product be used properly, it does what it says it does.

In understanding current legislative gaps, Brookfield distinguishes between products which are poorly made and not fit for use under any scenario and those which are properly made but subsequently used in an application for which they were not designed and not fit for purpose.

Whereas existing building acts are adequate to cover the latter issue, she says the gap in current legislation involves products which come out of the factory either faulty or not fit for use in any application. Infinity cable, which contained insulation coating which has been found under testing to degrade prematurely, is an example of this.

As for current approaches, Brookfield says the Queensland legislation does not create a fit for purpose requirement at the point of sale of a product but at least moves in that direction whereas that in NSW does not. Whilst stressing she is not advocating one approach over the other, Brookfield says this is a clear point of difference.

Queensland’s legislation, she added, is also stronger in that it addresses issues across the entire supply chain and covers all non-compliant products rather than those which are considered to be banned.

Moreover, Brookfield expresses concern about different and inconsistent laws being adopted across different states. As things stand, she says you can have a product which would be legal to manufacture in Victoria but banned for use in New South Wales. You can also have a situation where you can manufacture a product in Tasmania which was found to be non-compliant in Queensland. Where that happened, the Queensland legislation would have to go back to Tasmania to look at how that product was made in Tasmania.

Jeanette Barbaro, special counsel in the Projects and Infrastructure group at Minter Ellison lawyers and member of the Society of Construction Law, says there is no one best approach across any state.

Stressing that her comments represented her own views rather than those of all Society members, Barbaro says that moreover, consistent approaches around the nation are needed.

“Since Lacrosse and since Grenfell, we have seen three different approaches taken in three of Australia’s major states,” Barbaro said.

“The different approaches which we have seen across each of these three states could result in continued inconsistency across the nation as to what is a non-conforming product. If approaches as to what is a non-conforming building product are not consistent with views about what is compliant, safe, suitable and what is an acceptable level of risk, then we could, for example, end up with a product that could be prohibited in New South Wales yet could be compliant with the NCC and able to be used in Victoria.”

Barbaro believes there are three significant learnings from the Lacrosse and Grenfell fires and the various investigations which have taken place since.

First, use of non-compliant products in buildings is not able to be traced back to any one singular type of practitioner and you cannot simply point the finger at either architects, engineers, builders or certifiers. Instead, it is a result of different decisions made by different types of practitioners during varying stages of design, approval and construction, each often having a different understanding of the requirements of the NCC. Second, the NCC requirement for external walls including the suitability of materials are inconsistently applied and poorly understood. Third, greater enforcement and compliance activity are needed to deter further NCC breaches.

Given this, she says a multi-dimensional approach is needed. Whilst the approach taken in Queensland, for example, usefully promotes supply chain accountability and may well help to drive behavioural change, Barbaro says this needs to be paired with other approaches. These should be geared toward improving education and awareness, establishing consistent and correct interpretations of the NCC and establishing behaviours which champion adherence to the NCC, building acts in each state, and community safety at large.

Examples would be the introduction of clear and regulated product information, mandating approved testing regimes and requiring compulsory education and accreditation to an acceptable standard for those making decisions about what products should be used on sites.

There is also a need for greater compliance and enforcement.

As for product bans, Barbaro says these in and of themselves are not enough. Approaches geared solely around product bans, she said, would have difficulty in keeping pace with innovation and new products which come onto the market. Thus products could be banned even where new innovations enable them to be used safely in some circumstances. Alternatively, there could be a lag in time between a new and potentially dangerous product coming onto market and the product in question being banned. Moreover, Barbaro questions how the process of deciding which products are to be banned will be managed and how this will be managed consistently.

Australia has a significant problem with non-compliant products.

Governments are acting, but there is a danger of inconsistent approaches across various states and territories.