These articles about Queensland cladding laws has been supplied by Frank Higginson, Hynes Legal.
It is terrifying how quickly time flies. Two months ago we wrote about the new cladding regulation (below). It has now commenced.
Every building in the compliance zone is now on the compliance bus.
That means that unless you actually get off the bus at the first stop (being stage one on 31 July 2019), then you stay on the bus and must ride all the way to stage two. Likewise, if you don’t get off at the second stop (being stage two on 29 May 2019) then you have to go all the way to stage three, which is the fire engineer.
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The Queensland Building & Construction Commission (QBCC) will be the conductor (eventually) inspecting tickets, and its inspectors will not be as jovial as Merv Hughes was in this clip for those buildings who don’t do what they have to.
Other than that, we think a few things are worth noting:
- The safer buildings website where buildings that are caught by the regulation has gone live. There is lots of information there for all affected buildings.
- Buildings will register by their real property description. For community titles schemes that is actually lot 0 in their plan number. That is the common property title where all dealings for the body corporate (like the CMS or easements etc) are recorded.
- We think the better view is that the decisions made in stage one are not restricted issues, meaning that the committee can make them. That is not to say they have to – but we think they can. Stage two decisions might involve spending limits, which we wrote about here: Body corporate spending limits – What are they and when do they apply?
- Given the potential liability that would come with swearing a statutory declaration saying your building is clear of non-conforming cladding when it actually isn’t, we think getting professional advice from a qualified service provider about the status of any cladding on your building would be a no-brainer for stage one.
If you are in an affected building you simply must get started now.
This post appears in Strata News #212.
Read Next: QBCC – Second Round of Cladding Checks Underway
Are you an owner in a building affected by combustible cladding? RMIT would like to invite you to participate in the ‘‘At what cost? Cladding concerns for owners” research project.
They are interested in learning more about the scale of the problems owners of property affected by combustible cladding face day to day across Australia, particularly those living in apartments. Find out more via this document from RMIT.
Combustible cladding laws in Queensland announced
August 2018 – If you don’t know whether the cladding on your building is combustible (or to use the less scary word – non-conforming), you are soon going to be forced to find out.
The issue over what cladding has been used on buildings crystallised after the Grenfell Tower fire in the UK in 2017. Australia’s equivalent (without the horrific loss of life in Grenfell) was the Lacrosse Tower fire in Melbourne in 2014. The ABC’s Four Corners covered the issue in this excellent episode.
Since then the wheels of respective state governments have turned very slowly. Victoria has their cladding task force and has now come up with a rectification solution that will allow lot owners in bodies corporate to pay back the cost of addressing the defective cladding through their rates.
Other states have equivalent bodies but no solutions yet.
The Queensland approach has been to create the Non-Conforming Building Products audit taskforce which led to the government addressing concerns with all of their own buildings.
Now it is the turn of the public at large.
It’s a seemingly innocuous title, but it has some real kick. The new regulation is:
Building and Other Legislation (Cladding) Amendment Regulation 2018
And what it means for bodies corporate when it commences on 1 October 2018 is this:
The compliance zone
If your building:
- is any of classes 2 to 9 (which covers basically everything residential and commercial other than houses); and
- had a building development approval issued after 1 January 1994 but before 1 October 2018 to build the building or alter the cladding; and
- is of Type A or Type B construction (essentially buildings of three storeys or higher)
then the building is caught by the new regulation.
Stage 1 – registration
If your building is one of those in the compliance zone you need to register and complete an online checklist via the QBCC that will run you through whether the building is likely to be one of those with non-conforming cladding. Every building will have until 31 July 2019 to complete this.
If you don’t complete it, there is a maximum fine of 20 penalty units ($2,611).
If there is no issue, then all is well and you just need to keep that certification. If not, you are onto stage two.
And no – we don’t know what the checklist will include yet or even a link to where you will be able to find it, but when we do we will let you know.
Stage 2 – building industry professional
If your building is one that may have non-conforming cladding you have until 31 July 2019 to go back to the QBCC with a statement from a building industry professional about whether the cladding on your building is non-conforming.
If you know the cladding on your building is non-conforming you can skip the completion of the report, notify the QBCC you have non-conforming cladding and go to straight to stage three.
There are only two months between the last date to register and the date on which this first assessment is required. We suspect it will not pay to be tardy in getting started, as there are fines for missing the deadlines.
There maximum fine for missing this date is the same as that for missing stage one.
Read Next: BQCC Why is my building in Part 2?
Stage three – fire risk assessment
If you have non-conforming cladding then you must have a qualified fire engineer complete a fire risk assessment about the safety of the building. That assessment will determine whether the scheme as it is will essentially remain safe or whether rectification works are necessary.
Every building must give the name of their fire engineer to the QBCC by 31 October 2019 and have the final report to the QBCC by 3 May 2021. That is less than three years away.
If you have not nominated your fire engineer or completed the risk assessment by the required dates the fines gear up to a maximum of 50 and 165 penalty units respectively ($6,527.50 and $21,540.75).
After assessment
If the building has non-conforming cladding then:
- a notice to that effect must be displayed in a conspicuous part of the building for so long as the cladding remains in place; and
- every lot owner and tenant must be given a copy of the notice – including new tenants and new owners.
The crystal ball
This is where the fun begins. Not.
We see the following compliance headaches with all of this, but these are just the immediate issues.
Ignorance of the need to comply
Everyone will be out there trying to make bodies corporate aware of their obligations. But some will simply ignore them. Some strata managers may also simply ignore them. It is ultimately the role of the committee to get this done, but no doubt fingers will be pointed at strata managers if it isn’t.
Strata managers need to be vigilant to make sure they have covered their backsides by addressing this with everybody corporate they manage. It may not be pretty when the government starts rounding up those buildings that have not participated in stage one by the required date.
It would also seem that there will need to be some form of evidence (termed ‘a proof of agency’) produced to the QBCC about the ability of anyone to complete the document on behalf of the body corporate. What that looks like is also yet to be determined.
Stage two timing
There are only two months from the last date for registration to the time to return the building industry professional report.
If bodies corporate leave it to the last minute we suspect there won’t be enough experts to go around. Get started and get started early, because when you allow for the Australian holiday season (Melbourne Cup Day through to Australia Day) there is also another three months that disappears very quickly during that registration period.
Note: This deadline was extended until the 31 July 2019.
Read Next: BQCC Safer Buildings checklist: Four weeks to complete Part 2
Fire risk assessment notifications
If a building has non-conforming cladding, notifying new owners is easy. They appear on the roll, and (hopefully) the strata manager’s software programs then deal with the notification.
Tenants will be a lot harder. For those with onsite management or professional property managers, it may be okay as they should have systems that will deal with it. Communicating what needs to be done with property managers will be important.
For people who self-manage or use a property manager who does not know what they are doing, the reality is tenants may not be told. Our immediate interpretation is that holiday / corporate tenants probably do not need to be told (as they might not be ‘leasehold interest holders’), but time will tell.
The bigger issues
The uncertainty.
These are all guesses, but try these as flow on effects:
- the fact that non-conforming cladding may be present is going to be a potential disincentive to prospective property buyers while it is not known, and a probable genuine turn off to them once it is certain.
- what will banks do with their lending policies for potentially affected, or known to be affected, buildings?
- strata insurers will now have to price the (soon to be) known risks for building insurance.
It wouldn’t surprise us if there was some change to the disclosure regime to specifically address this issue. After all, the statutory disclosure at the moment includes who the body corporate secretary is. Whether the building has non-conforming cladding is probably a tad more important.
Rectification costs
The Lacrosse Tower owners are still fighting about who wears what cost five years after their fire. The statutory position is that if rectification is required, then the body corporate must do it. It may well have a right to recover those costs from parties involved in the construction process, but that right is independent of the immediate obligation to sort the issue out. We will leave limitation periods aside for the moment too.
This means owners are going to have to pay special levies, or bodies corporate borrow money, to bring their building back to having conforming cladding. Bodies corporate will not be allowed to delay that while they try to recover the costs from a third party.
The statutory obligation to disclose defects
And for you faithful readers who have come this far, this is the biggest issue we see for property sellers.
Just because cladding is non-conforming might not mean it needs to be removed. The other fire safety mechanisms may cover any risk appropriately. Having said that, the non-conforming cladding could still very well be considered a defect in common property (although we are still debating that internally). There are arguments for and against this, but if it is not a defect, why is there the need for the conspicuous sign in the building about it?
Section 223 of the Body Corporate and Community Management Act 1997 imposes an obligation on sellers to disclose to buyers latent or patent defects in common property that the seller is aware of or ‘ought’ to be aware of.
Sellers ‘ought’ to be aware of issues identified in the body corporate minutes. Committee members who are actively involved in the decision-making process around this have nowhere to hide under any definition.
If buildings have non-conforming cladding, which is not disclosed in the sale contract by a seller, and there are subsequent rectification works required along with the special levies or borrowings, we can see a raft of litigation about the lack of that disclosure against sellers, sales agents and those who prepared contracts for sale (such as lawyers).
We like providing solutions, but with this one there is a long way to go before the air clears. We will keep you updated as this one evolves.
This post appears in Strata News #204.
Read next:
- Safer Buildings: understanding the combustible cladding legislation
- Q&A Can non-fire rated Aluminium Composite Panels comply with National Construction Code
- Strata Finance: The guide for Owners Corporations
- Qld govt may close cladding loopholes
Frank Higginson
E: [email protected]
P: 07 3193 0500
W: http://www.hyneslegal.com.au
This article has been republished with permission from the author and first appeared on the Hynes Legal website.
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Have a question or something to add to the article? Leave a comment below.
Is there a further update to this report?
Hi Janice
We have received the following back from Frank Higginson:
All that seems to be happening is buildings are dealing with the issues.
Hi,
I am looking for advice regarding the combustible cladding issues. We are a new-ish (completed July 2018) boutique complex of 12 units (4 floors), and in the process of completing the QBCC Combustible cladding audit, our builder has submitted the form 34 – Building Industry Professional Statement, and declared we actually do have “combustible cladding”, (this is the first time we have heard this!), which they identified as timber balcony soffits to the northern elevations – no further information has been given, even when requested. As a result of this we are required to engage a fire engineer to complete stage 3, at the body corporate’s expense (quotes range from $3800 to $12000).
When we have questioned the builder regarding this matter, they have stated it’s not their problem, as the register was only enforced from the 1st October 2018, and the building was completed in July 2018.
Is this correct? Can a builder still use cladding which is classified as combustible? Or could they use combustible cladding in July 2018 – without any duty of care, or obligation to provide information to the owners / developer?
Any clarity you could provide regarding this matter would be greatly appreciated.
Hi Suzy
We have received this reply from Todd Garsden, Hynes Legal:
This is (what we think) will be the circumstances of what hundreds of bodies corporate will potentially be involved in a wave of potential building defect litigation – it is yet to be tested (and will be different for each body corporate) whether the installation of combustible cladding amounts to a building defect and whether that can be sheeted home to the builder.
The complicating factor is that the way the QBCC registration process worked was that it seemed to capture a lot more than the original aluminum composite panels that it was publicised to capture. The way the checklist ended up working was that it required almost anything that could burn to be ticked off – and timber is certainly that.
If the committee wanted to contact us directly we could provide a proposal to advise and act on its behalf. For now, most bodies corporate seem to be firstly dealing with the issue and will then look at who they can recover from (which is the correct method with the deadlines provided by the QBCC).
All buildings Class 2 to Class 9 are affected. They can be Type A or Type B even Type C if they are more than three stories .
Thanks for your article – I note that it states that Type A or Type B construction is “essentially buildings of three storeys or higher”. My read of the Types of Construction table has a Building Class of 2, 3 or 9 with a Rise in storeys of 2 assessed as a Type B. Is there something I’m missing? Thanks
We are a block of 5 townhouses, we have this year noticed the wall cladding on our buildings disintegrating due to rain water . The cladding is soggy and only the paint is keeping it together. There are several areas where this is happening. We don’t know the name of the cladding. The townhouses were built in 2000. We are wondering if we can claim from the builder as the Insurance Company say the cladding wasn’t properly sealed when it was installed. We are in Queensland and are wondering who else has this problem . It is hard to believe we are the only ones.
Hi D.Bramwell
We have received this response from Frank Higginson, Hynes Legal:
I very much suspect that it is too late for a claim against anyone. The limitation period for a claim of this nature is 6 years, and the chances of extending it for a further 12 years from expiry are extremely remote.
What the body corporate does have though is an obligation to maintain common property. So regardless of whether there may be rights to claim against anyone, the body corporate has to fix itself up.
Hi Frank, we are a class 2 building of 16 floors but the building dates to around 1988. The legislation with respect to the “Compliance Zone” is confusing. Does the building age (definitely pre 1994) mean we are exempt from stage 1 or is the “Compliance Zone” made up of all buildings in any 1 of the 3 stated categories. Many thanks.
If your building is pre 1994 you don’t have to do anything and you will not receive any correspondence to register your building. However if you have done any alterations post 1994 and your CFC is showing then you may be required to register and depending which type of Construction it is . Type A or Type B.
Could you please clarify for me the progression from stage 1 to stage 2. For example, if during stage 1 you state that your building is conforming with respect to cladding do you still have to hire an expert at stage 2 to prove that? Thanks.
Hi Lyn
The following from Frank Higginson:
If your building has combustible cladding of the type defined in the Regulation then you need to go to stage 2.
The definition is:-
combustible cladding means cladding that—
(a)is made of a material of a kind that is not mentioned in the BCA, clause C1.9(e)(i), (ii), (iii), (iv) or (v); or
(b)is deemed to be combustible under AS 1530.1—1994 (Methods for fire tests on building materials, components and structures, Part 1: Combustibility test for materials), section 3.4(a), (b) or (c).
To me, that is ‘get an expert opinion’ territory before you say you don’t have it in stage 1.
I am part of a body corporate that has 15 units which obtained a building approval prior to January 1,1994 although construction was completed after that date. The units are divided into 4 buildings containing two storeys. Each unit has two stories. I beleive that the cladding on the front and back of the building (not not sides) is Handiplank by James Hardie. Our Chairperson wants to comply with the new cladding regulations. Do you see any benefits for our Body Corporate if it complied with the new regulations? Thanks for your assistance.
PS Our Chairperson thinks that there is no cost associated with complying with the Regulations.
Hi Lyn
We have received the following comment back from Frank Higginson, Hynes Legal:
My take would be that this is a building not likely to have to comply, but I honestly believe there is very little danger is understanding the position. There are going to be experts offering their services to provide the certification, so there would be a cost with that if you engaged someone, but if you did it solo there would be no cost.
I have visited the QBCC site and have found no information relevant to me.
I am secretary/treasure of our Body Corporate, Small Schemes Module. Number CTS34246. Our buildings consist of 2 separate duplexes. they are ground level only and made of brick. (No external cladding)..
Do I have to submit some form to whoever so that I can obtain confirmation that the new cladding law does not appy to this complex and thus not be liable for any penalties for inaction?
Thank You
Thanks Lawrence
We have received this reply back from Frank Higginson, Hynes Legal:
I am sure that when the QBCC make their information portal online this will all become clear. Until then though, we are all a bit in the dark!
I would have your building assessed by fire authority to confirm that building is all brick and send it through. If they require any further info., they will need to let you know.
As a Victorian, we are having to send samples to the CSIRO for testing!!!
Hi Lawrence. You don’t have to do anything now. Sit and relax. QBCC will send a letter to you stating “Action Required”. Then you have to register by going on the website: http://www.saferbuildings.qld.gov.au
According to your description of the building there should not be any combustible cladding.