Last week’s fire at the Neo200 apartment building in Spencer Street, Melbourne, is a reminder of the exposure faced by many owners corporations.
Our latest Owners Corporation update looks at the progress made to date on rectifying non-compliant cladding across Melbourne, and more broadly Victoria, since the fire at the Lacrosse building in November 2014. It highlights what owners corporations and their managers need to know about Show Cause Notices and Minor Works Orders and what to do if there is, or may be, combustible cladding on the building.
From Lacrosse to now …
Following the fire at the Lacrosse building in November 2014, the Victorian Building Authority (VBA) initiated the External Wall Cladding Audit to identify the extent of the use of non-compliant cladding in high-rise residential buildings.
The 2016 audit identified 170 high-rise buildings in Melbourne that were clad in non-compliant materials.
Subsequently, the Victorian Government announced the establishment of a Cladding Taskforce to identify and report on:
- buildings which fell outside the scope of the initial audit;
- buildings which have recently come to the VBA’s attention;
- other buildings constructed by individuals with a history of non-compliance; and
- a targeted sample of buildings across the state.
On 1 December 2017, the Taskforce published an interim report that concluded system failures across Victoria led to major safety risks and widespread use of non-compliant materials.
The report made 17 recommendations, which included:
- undertaking action to prevent the use of non-compliant cladding;
- undertaking a State-wide audit to identify this cladding on residential, multi-unit buildings that are three storeys and above and all public buildings higher than two storeys; and
- developing a consistent and thorough rectification procedure.
As a result of the report, the Victorian Government instructed the VBA to increase random compliance checks undertaken on construction sites and buildings.
Many councils are now issuing Show Cause Notices and Minor Works Orders on owners corporations on anything that looks like ACP or ECP.
Show Cause Notices and Minor Works Orders ― what owners corporations need to know
On receiving a Show Cause Notices and Minor Works Orders, the owners corporation must seek advice on the nature of the cladding affixed to its building and in many instances, must take steps to modify and/or remove the cladding. The cost to undertake these works can be extensive. However, if the issue is identified within 10 years of the issue of the occupancy permit for that building AND proceedings are issued within that 10 year period, the owners corporation may be able to recover all or a significant part of those costs.
An owners corporation will be able to substantiate such a claim if it can establish that the cladding was used in a way which breaches the Building Code of Australia (BCA). This occurs if the cladding was used in such a way which breaches the ‘deemed to satisfy’ or performance solutions set out in the BCA in respect of the use of combustible material. In those circumstances, the owners corporation may be able to seek recovery of the rectification costs from various parties including the builder, the surveyor who issued the occupancy permit and/or the architect. The extent and ability of bringing such a claim will depend upon the circumstances.
Receiving a Show Cause Notice from a Council forces an owners corporation to look at and consider these issues. However, if this occurs after 10 years from the date of the issue of the occupancy permit, although the owners corporation will still be required to address any issues identified by the Council, the owners corporation will be unable to recover those costs from any body. This will leave the lot owners to foot the bill.
This is likely to be the outcome for the owners corporation and its lot owners of the Neo200 building because it was built in 2007.
What to do if you manage a property with combustible cladding
If you suspect that you manage a property clad with combustible cladding, and regardless of whether or not the owners corporation has received a Show Cause Notice, you should seek the advice of:
- an appropriately qualified and experience fire engineer to investigate and report on this matter; and
- a lawyer experienced in dealing with such issues to advice on the steps to be taken by the owners corporation manager to protect the owners corporation, and by the owners corporation to protect its building.
Failure to do this could result in a claim being made against the owners corporation manager and/or the owners corporation for failing to act in accordance with their statutory duties to act with due care and diligence.
More information
For more information and advice, please contact Anton Block, Principal Lawyer and Head of KCL Law’s Owners Corporation practice, on (03) 8600 8833 or ablock@kcllaw.com.au.
Author
More information on the author, Anton Block.
Note: This update is a guide only and is not intended to constitute legal advice.