The Lacrosse ruling sets an interesting precedent… but there are still a lot of unanswered questions.
As someone who does his fair share of developments, I’ve been a little bit concerned about the uncertainty surrounding the ‘flammable cladding’ crisis.
In case you’re new to this, this is the revelation that many buildings across Australia, particularly high-rises, have been clad in a substance that has an unfortunate tendency of catching fire.
The Grenfell tragedy in London is the most famous example, but there have been a number of fires in Australia recently too.
Thankfully no one has died (yet!) but it’s a pretty worrying state of affairs. And at first I didn’t think I had too much skin in the game since I don’t tend to build high-rises.
But then there were the revelations this month that even suburban houses could be affected. From the ABC:
The VBA alert said the certification withdrawal meant nine types of cladding “cannot be relied upon as evidence of suitability”, meaning they would no longer be regarded as compliant with building codes…
The organisation’s vice president, Wayne Liddy, said the affected products were commonly used on small residential homes as well as high-rise apartments, meaning the impact would be felt throughout Australian cities and suburbs.
“It’s very alarming,” Mr Liddy said.
“It affects the industry as a whole. From high-rise to suburban housing.
“It’s not just aluminium composite panel, or ACP, it’s also expanded polystyrene, which is common in many buildings with fewer than three storeys…”
Oh boy. That’s not good.
And a key question is who picks up the bill? You can’t leave the flammable cladding up on the buildings. You have to fix it. But who pays?
We might have a bit of clarity on that with the Victorian Civil & Administrative Tribunal ruling on the Lacrosse Building.
The Lacross building caught fire in 2014, when a single cigarette sent a fire racing up 8 storeys.
The tribunal has found that the builder LU Simon must pay apartment owners $5.75m in damages, but LU Simon can pass that cost on to their architect, their fire engineer and their building surveyor, who were deemed ultimately responsible. From The ABC:
The owners of apartments at Melbourne’s Lacrosse tower in Docklands have won more than $5.7 million in damages in a lawsuit launched after a fire fuelled by flammable cladding caused significant damage to the building in November 2014…
That claim for damages covered the cost for owners of replacing non-compliant cladding, damaged property, additional insurance premiums and “anticipated future losses”.
In a decision handed down in the Victorian Civil and Administrative Tribunal (VCAT) by Judge Ted Woodward on Thursday, LU Simon was ordered to pay more than $5.7 million to apartment owners.
However, most of that money would be paid to LU Simon by the architect, fire engineer and building surveyor who worked on the project, after Judge Woodward found they had breached contractual obligations…
In his ruling, Judge Woodward found the architects Elenberg Fraser had failed to remedy “defects in its design”, specifically designs which allowed the “extensive use” of aluminium composite panels (ACPs) on the east and west facades of the building…
He also found the building surveyor, Gardner Group, breached its agreement with LU Simon by failing to exercise due care when it issued a building permit in 2011 for those architect plans.
Thirdly, he found the fire engineer, trading as Thomas Nicolas, failed to recognise and warn the builder that the ACPs proposed for use on the building did not comply with the building code…
As a result, he ordered that the three parties pay LU Simon a combined total of 97 per cent of the damages owed to apartment owners.
Gardner Group was ordered to pay 33 per cent, Elenberg Fraser 25 per cent and Thomas Nicolas 39 per cent…
Some of the $12.7 million sought by apartment owners is yet to be resolved.
The architecture firm Elenberg Fraser is also on the hook for replacing the cladding, at a cost of $6.8 million for the cost of the cladding’s replacement
So there’s a bit of clarity here, but not a lot of comfort. As a developer, if I’m doing everything right, then I should be ok. It’s the responsibility of the architect, the fire engineer and the building surveyor to make sure everything is tickety-boo.
It’s also great news for people who have bought apartments recently. They’re not going to end up on the hook.
But I’m not sure that this is where this story ends.
Because it has emerged in the AFR that the government has known about these problems for 30 years.
According to fire engineer Jonathan Barnett, Canadian researchers first raised concerns about combustible cladding in a report published in 1990, and testing by the CSIRO in 1995 found that such cladding was a fire risk, but no formal reports were published in Australia until five years later.
State and territory building regulators were made aware of fire authorities’ concerns about the use of combustible cladding in 2010, as was the Australian Building Code Board. However, in the case of Victorian regulators, they did not issue any warning about the use of combustible cladding until June 2015… which was more than six months after the fire in the Lacrosse building.
Hmmm. Smells like liability to me.