Statutory warranties and combustible cladding

statutory warranties combustible cladding

The Owners SP 92888 v Taylor Construction Group and Frasers Putney [2019] NSWCAT is NSW’s first foray into the combustible cladding arena but is analogous to VIC’s ‘absolute test for fitness for purpose’ decision arising from the Lacrosse fires (Owners Corporation No.1 of PS613436T v LU Simon Builders Pty Ltd (Building and Property) [2019] VCAT 2 286.).

In Taylor, the Tribunal was persuaded by an Owners Corporation that the external cladding to their building was not fit for purpose because it did not comply with the applicable codes and standards. As a result the cladding was ordered to be removed and replaced.

Facts

The Applicant OC owned the common property in a strata scheme in Ryde clad with Biowood, a product made from 23% PVC and 70% reconstituted timber.
The first respondent was the Builder and the second respondent a ‘developer’ under the Home Building Act 1989 (HBA). An interim occupation certificate only was issued on 8 August 2016.
The OC, as a successor in title to a developer, enjoyed the benefit of the HBA’s s18B statutory warranties against both the Builder and the Developer and so the OC sued both for breach of the s18B warranties and sought a work order for the replacement of the external cladding because it was installed in breach of the statutory warranties.

Issues for the Tribunal

There were two issues for the Tribunal.
1. Whether Biowood, as installed, was compliant with the applicable codes and standards?
2. Even if the cladding was compliant, was the Biowood, as installed, a material which was fit for purpose

Fitness for Purpose

The OC relied upon three of the s18B warranties in relation to the fitness for purpose argument:
(b) all materials would be good and suitable for the purpose,
f) that any materials will be reasonably fit for the specified purpose or result, and
(c) that the work would comply with the HBA and any other law.
It was agreed that ‘any other law’ included the BCA and the EPA and that the BCA required that all materials and construction be fit for the purpose for which they were intended. The OC’s submission was that if Biowood was not fit for purpose it followed that it was defective and in breach of s18B of the HBA.

Expert Advice

All parties relied upon significant amounts of expert evidence. At hearing, the OC contended that Biowood did not comply with the BCA because the material was combustible and had a real risk of fire spread. The Respondents agreed that Biowood was combustible and the BCA was the correct test, but submitted that there was no undue risk of fire spread.

Interim Occupation Certificate

The Respondents also argued that the issue of the IOC was conclusive and supported two submissions. First, the Tribunal was bound by the IOC and must assume that the preconditions to its grant were met. Second that the IOC created an irrebuttable presumption of law and was conclusive evidence that all requirements had been met. The OC countered with various arguments including that an IOC is no more than an opinion by one person as to compliance and does not bind and cannot extinguish the jurisdiction of the Tribunal or the Courts.

Findings

Boyce SM gave short shrift to the Respondents’ arguments as to the IOC, said he was informed by the Lacrosse ‘common sense test’ and held:

  • the cladding did not comply with applicable codes and standards,
  • the cladding presented an undue risk of the spread of fire, and
  • the cladding material was not fit for the purpose for which it was used.

This decision may offer some relief to Owners Corporations concerned about this issue.

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Clare Peacock is an experienced construction lawyer working on Sydney’s Northern Beaches. Clare provides practical, cost-effective building approval advice to property owners, builders and strata managers. Services include residential building disputesbody corporate issues and strata building problems.

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