The Victorian Civil and Administrative Tribunal’s decision relating to the combustible cladding fire at the Lacrosee Tower in Melbourne’s Docklands was delivered in March 2019, over 4 years after the fire. Judge Woodward delivered a 227 page decision which dissects the practices of key practitioners in the building approvals process with masterful precision providing the industry with much needed legal authority and putting an end to the finger pointing – at least for now.
Whilst the decision makes it clear right up front that the findings apply to the facts in this particular case, it will nonetheless give some clarity to all practitioners about what the courts expect of them and where they might stand in relation to disputes about combustible cladding rectification going forward. The decision is under appeal. In the meantime its an important decision for a industry that is under heavy public scrutiny.
If there is a win to be had from all this it is that this decision gives the industry an opportunity to learn from its mistakes and change the way that it does it job.
In this article I am not going to go over the facts of the case or the outcome of the decision in detail. Instead, I am going to share my thoughts on what this means for the key practitioners involved.
For builders, on first blush, this decision may look like a win. The Tribunal found that although the builder was in breach of the statutory warranties that apply to all domestic building works in Victoria, it was not negligent. The builder was primary responsible but is entitled to have 97% of the damages payable to the owners reimbursed by the fire engineer, building surveyor and architect. The builder will pay the 3% of damages attributed to the occupier that smoked the cigarette that started the fire.
The Tribunal accepted the evidence of the builder that at the time that the non-complaint ACP was installed, it did not know that these panels were a fire risk and it was entitled to rely on the advice of the 3 consultant experts.
However, the following passage from para 308 should be noted:
That is not to say, of course, that a substantial commercial builder like LU Simon is inoculated against a finding of negligence, so long as it can show that it complied with the specifications and instructions given by other building professionals. Clearly its expertise and experience is such that there will be many instances where it would be reasonable to expect it to identify errors by another building professional. The case law is replete with examples of this. But where (as here) the skill involved is beyond that which can be expected of a reasonably competent builder and there is no actual relevant knowledge, I consider that LU Simon’s relationship with each of the other building professionals is analogous to that between a developer and a building professional.
Builders should take from this that the law expects a reasonably competent builder to question errors or anomalies that they detect in building plans and other documents. Further, the expected knowledge of builders will change over time. For example, a court may be much less likely to make the same findings about builder where ACP was installed on a building after the Lacrosse fire, when all of the industry (in Victoria at least) became acutely aware of the fire risks associated with ACP.
The architect made several arguments in their defence of the matter. They gave evidence that at the relevant time, they were not aware that ACP products were a fire risk. They argued that despite the words in their consultancy agreement, the builder had assumed all responsibility for the design when it was appointed by the developer. They argued that although they had specified the use of ACP by referring to ‘indicative to Alucobond’ in the drawings, the builder could have chosen any product in that range including products which were more fire resistant that the 100% PE product that was chosen. In addition, the builder substituted Alucobond for Alucobest. The architect said even though an Alucobest sample was submitted to the architect and approved, the approval only related to the colour and look of the product. Finally, the architects argued that one or more of the fire engineer, building surveyor or builder were responsible for ensuring the cladding was complaint with the BCA and it is not the responsibility of an architect to be aware of these things.
All of these arguments failed. Whilst the Tribunal accepted that of the 3 consultants, the architects were the least responsible for knowing that most ACP products used at the time would not comply with the BCA, it nevertheless found that the services the architect agreed to provide under its contract included the preparation of contract material in a manner consistent to satisfy the legislative requirements which included the BCA.
The upshot of this for architects is that subject to the terms of their consultancy agreements, the courts do expect them to prepare drawings and documents that demonstrate compliance with the BCA. Whilst it would be good if other designers or the building surveyor picked up and corrected aspects of the architect’s design which did not comply with the BCA, if they don’t this won’t get the architect off the hook. Taking that one step further, everyone in the chain is expected to do their job properly. Architects need to understand the BCA and produce documents that will comply with it.
I begin by noting that the Tribunal found that the use of ACP on the balconies of the Lacrosse building was not compliant with the BCA. It rejected arguments from the building surveyor that the product was a ‘bonded laminated material’ within the meaning of C1.12 of the applicable BCA at the time. At paragraph 207 Judge Woodward states:
In summary, a “bonded laminated material” can be expected to comprise a bonding material (adhesive) and two or more laminates. C12.1(f) is plainly seeking to deal in express and precise terms with the potential combustibility of each of these elements. Combustible adhesive is permitted up to a maximum thickness of 2mm. But each of the laminates (including the polyethylene laminate) must be noncombustible.
The building surveyor had initially also argued that the ACP was complaint because it was used as an ‘attachment’ as set out in clause 2.4 of Specification C1.1. Ultimately the building surveyor abandoned this argument conceding that it was not arguable that the ACP met clause 2.4 in this case. Despite this, there is a discussion of clause 2.4 at paras 271 to 278. In the end, Judge Woodward notes that the various assertions by the experts for the building surveyor about common interpretations of clause 2.4 that prevailed at the time lacked ‘any real analysis of how or why this approach was justified.’ (para 278)
The building surveyor went on to argue that even if the use of ACP on the Lacrosse building was not compliant, it was common industry practice for building surveyors to approve its use in this way at the time and therefore the ‘peer professional opinion defense’ available under s 59 of the Wrongs Act 1958, applied. Judge Woodward found that building surveying was a ‘profession’ to which this defence could apply. He accepted that it was a uniform practice for building surveyors to treat this product as a ‘bonded laminated material’ thereby approving its use as a deemed to satisfy (DTS) solution. However, he said there was no logic in that practice and therefore the Wrongs Act defence did not apply. At para 388 Judge Woodward says his general impression of the evidence from the building surveyor and his 3 experts was:
that otherwise experienced and diligent practitioners were beguiled by a longstanding and widespread (but flawed) practice into giving insufficient scrutiny to the rationale for that practice.
There was a discussion about whether the changes to the BCA since the Lacrosse fire were evidence that the use of ACP was complaint at the relevant time. At para 378 the Judge states:
In this context, each of the Gardner Group Experts put significant store in their evidence in the ABCB’s decision since the Lacrosse tower fire to amend BCA C1.12(f) (which is now found in BCA C1.9(e)(vi)). For example, Mr Leonard asserts in his report that an advisory note foreshadowing this change confirmed that the ABCB was “well aware that clause C1.12 BCA was being interpreted in a manner that permitted the use of ACP with a combustible core”.611 In my view, the Gardner Group Experts overstate what conclusions or inferences can be drawn from the change. At most is shows that at some point (probably after the fire), the ABCB became aware of the Relevant Practice. Moreover, the explanatory note expressly states that the “clarification was made to prevent the incorrect interpretation” of the concession in C1.12(f) (emphasis added).
The Judge’s discussion of the building surveyor’s evidence was lengthy. He noted at para 349 that the building surveyor ‘probably believed that ACPs were BCA complaint but had not undertaken a robust or critical analysis, investigation or inquiry to determine this.’ He said that the surveyor had adopted an unreasonable construction of A2.2 and C1.12 in the context of the BCA as a whole and that he wrongly relied on the test certificate alone in circumstances where the ACP was to be used in continuous vertical run and as part of unsprinklered balconies.
Ultimately the court found the building surveyor had been negligent in issuing the relevant building permit and had also engaged in misleading and deceptive conduct under the Australian Consumer Law.
The message for building surveyors is clear. Applying DTS is not a tick box or paper collection exercise. The courts will expect building surveyors to undertake a reasoned analysis of the proposed design having regard to the context of the BCA as a whole even where DTS solutions are used. The clear intention of the BCA is to provide for public safety and amenity. This is what the community expects. That is the lens through which the BCA must be interpreted at all times. The court noted that the building surveyor had no contemporaneous notes or memory of what he actually did when considering the proposed use of ACP for this building and that even with hindsight, his justification for approving the use of ACP whilst genuine, lacked logic and common sense. Building surveyors are expected to apply logical reasoning to their decisions and should document that reasoning so that their decisions are transparent.
The fire engineer and all of the experts for all parties that were fire engineers, said they were aware at the relevant time that ACP with a 100% PE core was a fire risk and did not comply whit the DTS provisions of the BCA.
Despite this and despite the fact that the fire engineer admitted that he was aware that ACP was proposed for use on the building, he argued that it was not his role to question the use of ACP. Further, he argued that he had discharged his duties because his report provided that ‘Unless otherwise noted, external areas (e.g. balconies, eaves, overhangs etc.), which comprise non-combustible construction, need not be sprinklered.”
The Judge rejected these arguments. He noted that the fire engineer had not followed the requirements in the International Fire Engineering Guidelines (IFEG). He said the IFEG required the evaluation of the structure and construction materials early to establish potential fire hazards for the building which had not been done in this case. The Judge also noted that the various versions of the Fire Engineering Report (FER) gave an incomplete description of the materials to be used in construction making no reference to the use of ACP. This included the fifth version of the FER that formed part of the documents approved by the building surveyor and was submitted to the MFB for its report and consent. He said the FER referred to an outdated edition of the IFEG and contained ‘boilerplate’ language. He states at para 487
My impression generally of Thomas Nicolas’s approach to the FERs and other documents, was that there were a number of instances of the use of template or “boilerplate” language (as well as reference to out-of-date guidelines), without much attention being given to what the words actually meant or required. Thomas Nicolas is, of course, not alone in this. It is often the case that diligent and competent professionals blithely reuse standard documents that have served them well over the years, focusing only on those parts that need to be tailored to each job. It is only when something goes wrong and the lawyers become involved, that any real attention is given to how that boilerplate language informs potential liability.
The fire engineer argued that notwithstanding the terms of his consultancy agreement required him to undertake a ‘full engineering assessment’, this was not his actual role. At para 480 it says
Thomas Nicolas opened its case on the basis that “it was never expected that the fire engineer would have the role of going through architectural drawings and identifying possible non-compliances”. 737 Rather, the role of the fire engineer was limited to responding to the alternative solutions or “deviations from the DTS provisions” identified by the “Authority Having Jurisdiction” (namely, in this case, Gardner Group).
The Judge said the fire engineer’s understanding of his role was at odds with the services he’d agreed to provided under his consultancy agreement. At para 481 the Judge says
The obligation may not have extended to undertaking “never ending searches…for noncompliances”. But it at least required some proactive investigation and assessment of the principal building materials.
Ultimately the court found the fire engineer had been negligent in undertaking his services and had also engaged in misleading and deceptive conduct under the Australian Consumer Law.
The decision confirms that subject to the terms of a consultancy agreement, the courts will expect fire engineers to undertake an assessment of the building as a whole when performing their role. Judge Woodward found that of the 3 consultants, the fire engineer was the consultant that was relied on the most to question the proposed use of ACP. He said that the notation in the FER that the external areas be of non-combustible construction was not sufficient to discharge his duty. To the contrary, in circumstances where the fire engineer knew that a combustible product was proposed to be used on the balconies, he should have done more to object to that use or to propose a design that would accommodate the use of the product in accordance with the BCA. (see para 483) As a consequence of these findings the fire engineer received the highest apportionment of damages at 39%.