Owners SP 92450 v JKN Para 1 Pty Ltd  NSWCA 114
The Court of Appeal (CA) recently clarified the onus and evidentiary threshold for proving combustible cladding claims, making it easier for claimants to establish the liability of builders and developers.
- a claimant no longer needs to show that an alternative solution could not be performed at the time of construction or at present; and
- a claimant only needs to demonstrate that the defendant failed to comply with the minimum standards in the BCA for safety from fire. It does not have to establish that there was a substantial breach of the BCA provisions.
In breach of the warranties under section 18B(1)(c) of the Home Building Act 1989 (NSW) (HBA), the Owners Corporation of a residential complex brought proceedings in the Supreme Court against the developer and builder for having installed combustible cladding in its building, The subject cladding was Vitrabond FR, a type of aluminium composite panel (ACP) cladding. Since its use on the building, Vitrabond FR had been subsequently banned under the Building Products (Safety) Act 2017 (NSW) and its CodeMark Certificate had been withdrawn.
Under the Building Code of Australia (BCA) in force at the material time, there were two ways for cladding to achieve compliance:
- by satisfying the Deemed-to-Satisfy (DtS) provisions in the BCA; or
- by preparing an alternative solution approved by a fire engineer.
In this case, the parties accepted:
- that the cladding did not comply with the DtS provisions as there was no evidence that the cladding had passed the AS1530.1-1994 test which determines the combustibility of cladding; and
- further, that no alternative solution had been commissioned by the builder or developer.
One of the key issues was whether the Owners Corporation needed to prove that an alternative solution could not be prepared.
Decision in Supreme Court
At first instance, in the Supreme Court, Black J refused to find a breach of the HBA by the developer and builder and declined to award the Owners Corporation reinstatement damages. His decision was made on the basis that the Owners Corporation had not provided evidence to establish:
- that the cladding was combustible in accordance with the test in AS1530.1-1994 (despite how it was not disputed the cladding did not comply with the DtS provisions); and/or
- that an alternative solution would not have been available to the builder (either now or before the construction certificate was issued).
Decisions of the Court of Appeal
On appeal, the CA overruled Black J, holding that the developer and builder substantially breached HBA s 18(1)(c) as they had provided the Owners Corporation with a building which did not meet the minimum public safety standards.
The CA clarified the onus and evidentiary threshold for combustible cladding as follows.
The Owners Corporation only needed to prove that the cladding did not comply with the BCA, that is, the cladding:
- failed to comply with the DtS Provisions; and
- no alternative solution had been prepared.
The Owners Corporation was not required to go an extra mile to establish that an alternative solution could not have been prepared at the time of construction or at present.
With respect to the evidentiary threshold for combustible cladding, the BCA does not distinguish between a technical or substantive breach. Where it was clear the cladding did not comply with the DtS Provision, the Owners Corporation did not need to assess the actual combustibility of the cladding by way of an AS1530.1-1994 test or otherwise show that the breach was substantial.
Non-compliance with the minimum standards in the BCA for fire safety was sufficient evidence for the Court to find there was a real risk of damage occurring from fire in the building and of harm for the safety of occupants of the building and the public. As such, the CA held that there was a breach of the HBA warranties.
This case lowers the threshold for claiming damages for combustible cladding under the HBA. Once the claimant can demonstrate that the cladding fails to comply with the BCA, the Court is ready to find there is a breach of the HBA warranties. The decision leaves little room for the developer or the builder to dispute liability for combustible cladding.
If you would like to discuss this article with us further, please contact Brett Vincent, Managing Partner, or Angie Kim, Lawyer on (02) 9261 5900.
 Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436T  VSCA 72 at .