Combustible cladding crisis continues!

Australia’s combustible cladding crisis continues with the New South Wales Civil and Administrative Tribunal (NCAT) determining that the use of cladding product Biowood in multi-story, residential properties is not compliant with the Building Code of Australia (BCA).

In March 2019, the Victorian Civil and Administrative Tribunal handed down the first Australian judgment on liability for combustive cladding in the Lacrosse Tower litigation.

In The Owners Strata Plan 9288 v Taylor Construction Group Pty Ltd and Frasers Putney Pty Ltd [2019] NSWCATCD 63, NCAT broadened the scope of cladding products considered to be non-compliant with the BCA beyond polyethylene core, aluminium composite panels to include the composite timber product, Biowood.

The Tribunal found that combustible Biowood used as an attachment to a non-combustive external wall presents an undue risk of fire spread and is not fit for purpose and a breach of statutory warranties.

The continuing cladding crisis in Australia and this recent decision will likely have ongoing implications for builders and building professionals who will need to consider:

• if they are now at risk of being exposed to claims from property owners who need to carry out rectification works relating to the installation of Biowood on their property;
• whether any cladding related exclusions imposed on their liability and professional indemnity (PI) insurance in the wake of the Lacrosse Tower litigation will now extend to claims relating to Biowood and their duty of disclosure; and
• how this decision impacts their notification and disclosure obligations to insurer and whether they should consider making notifications to trigger any existing cover before insurers take steps to impose further and broader exclusions.

Furthermore, in light of that risk of uninsurability, property owners should consider putting builders and building professionals on notice of potential claims to assist professionals trigger any available PI cover.