Time is running out for owners of buildings with combustible cladding in NSW

NSW owners of buildings with external combustible cladding should take action and get prepared now because they will have immediate obligations under the Environmental Planning and Assessment Amendment (Identification of Buildings with External Combustible Cladding) Regulation 2018 (NSW) once it commences on 22 October 2018.

What the Cladding Regulation does

The object of the Cladding Regulation is to enable the NSW Government to identify and collect information about buildings with external combustible cladding. Under the Cladding Regulation, owners of certain buildings with external combustible cladding will be required to register their building via the online NSW Planning Portal.

For buildings occupied before 22 October 2018, the deadline for online registration is 22 February 2019.

Going forward, owners of new buildings will be required to register their building within four months of the building first being occupied.

Is my building caught by the Cladding Regulation?

The Cladding Regulation applies to the following classes of buildings (both new and existing) of two or more storeys with external combustible cladding:

The Cladding Regulation applies if any of the building classes listed above have external combustible cladding made of the following materials:

• metal composite panels, including products comprised of aluminium, zinc, or copper outer layers and a core material; or
• insulated cladding systems including systems comprised of polystyrene, polyurethane, and polyisocyanurate.

Importantly, this definition of "external combustible cladding" captures the recent building product use ban on aluminium composite panels (ACP) with a core comprised of greater than 30% polyethylene by mass in certain commercial multi-storey buildings (ACP Building Product Use Ban), which commenced on 15 August 2018. Presumably, the NSW Government will use the Cladding Regulation to gather information from building owners to target buildings which contain ACP products the subject of the ACP Building Product Use Ban and any subsequent building product use bans that are implemented by the Commissioner of Fair Trading.

Under the new Building Products (Safety) Act 2017 (NSW) (BPS Act), once a building is identified as containing a banned building product (which will be facilitated through the details provided by building owners via the NSW Planning Portal), the building owner may receive a building product rectification order. That order requires immediate action by the building owner to eliminate or minimise a safety risk posed by the banned building product in the building and to restore the building following the elimination or minimisation of that safety risk. An order can be issued for an affected building irrespective of whether a building product subject to a building product use ban was permitted to be used in a building before the relevant ban came into force. The BPS Act adopts the same mechanism for the granting, compliance and enforcement for building product rectification orders that is provided for development control orders in the Environmental Planning & Assessment Act 1979 (NSW).

My building contains external combustible cladding – what do I do now?

Building owners must submit the following details on the NSW Planning Portal about their building and its cladding when the Cladding Regulation commences on 22 October 2018:

• the name and address of the owner of the building;
• the address of the building;
• the classification of the building under the Building Code of Australia;
• the number of storeys in the building, above and below ground;
• a description of any external combustible cladding applied to the building, including the materials comprising the cladding; and
• a description of the extent of application of external combustible cladding to the building and the parts of the building to which it is applied.

These details must be provided by 22 February 2019 for buildings occupied before 22 October 2018 and within four months after the building is first occupied in any other case.

Even if a building owner does not believe that they are required to provide building and cladding details via the NSW Planning Portal, a building owner might be given a direction to provide those details under the Cladding Regulation. Such a direction may only be given by the Minister or the Planning Secretary (in certain circumstances), an authorised fire officer (ie. Fire and Rescue NSW or an authorised fire brigade member) or the council for the area in which the building is located.

A building owner who receives a direction will have at least 14 days to comply with the direction and provide the building and cladding details outlined above.

The information gathered on the NSW Planning Portal, and any other relevant information, may be used by the Planning Secretary to establish and maintain a register of buildings that have external combustible cladding. The information in the register may be provided to Fire and Rescue NSW, any council and any person and it may be made publicly available.

The penalty for non-compliance is:

• $1,500 for an individual and $3,000 for a corporation for not providing details about a building and its cladding via the NSW Planning Portal; and
• $3,000 for an individual and $6,000 for a corporation for not complying with a direction to provide details about a building and its cladding via the NSW Planning Portal.

There are also new provisions in the Cladding Regulation that require the referral of applications for erection, rebuilding, alteration, enlargement or extension of certain buildings to the Fire Commissioner for consideration. The Fire Commissioner may provide the certifying authority with an initial fire safety report for a particular building, which may recommend conditions to be imposed on the erection, rebuilding, alteration, enlargement or extension of the building to which the report relates.

Amended State Environmental Planning Policies

Concurrent to the making of the Cladding Regulation, the NSW Government has amended the "Exempt and Complying Development" regime to ensure that exempt development (ie. development that does not require a development consent) does not involve the use of external combustible cladding.

Commencing 22 October 2018, the amendments to the Exempt and Complying Development regime span across eight State Environmental Planning Policies (SEPPs), including:

• State Environmental Planning Policy (Affordable Rental Housing) 2009
• State Environmental Planning Policy (Kosciuszko National Park – Alpine Resorts) 2008
• State Environmental Planning Policy (Exempt and Complying Development Codes) 2008
• State Environmental Planning Policy (Educational Establishments and Child Care Facilities) 2017
• State Environmental Planning Policy (Infrastructure) 2007
• State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007
• State Environmental Planning Policy (Three Ports) 2013
• State Environmental Planning Policy (Western Sydney Parklands) 2009.

Generally, these SEPPs have been amended by the insertion of a new development standard which requires that any exempt development for new cladding, re-cladding and decorative work on buildings undertaken in accordance with the respective policy does not involve the use of combustible cladding. The consequences of a failure to achieve that standard are that the development will fall outside the definition of "exempt development", and moreover, the person carrying out the development will have committed an offence of undertaking development without consent. Such an offence, if committed intentionally and caused, or was likely to cause, significant harm to the environment or the death or serious injury of a person, attracts a maximum penalty of $5 million for a corporation (or $1 million for individuals).

How to get prepared

This system aims to eliminate the use of unsafe cladding in buildings in NSW, but it also has the potential to cost building owners huge amounts of money.

The Cladding Regulation will have a significant impact on many building owners in NSW. The task ahead now for all building owners is to:

• get comfortable with the new obligations under the Cladding Regulation, including the reporting requirements on the NSW Planning Portal;
• ensure that all current and proposed development being carried out as exempt development does not involve combustible cladding;
• conduct an audit of all building products used on existing buildings. Seek legal advice immediately if any buildings have external combustible cladding;
• check liability and recovery of costs clauses in building contracts; and
• check new and existing insurance policies to ensure there are no carve-outs for banned building products which may be affected.

You are required to comply with the Cladding Regulation if:

• The building:

1. is 2 or more storeys high; and
2. is classified as class 2, 3, 9 or a class 4 part of a class 9 building; and
3. contains "external combustible cladding" as defined under the Cladding Regulation.

OR

• You have received a direction to provide building and cladding details about a building from the Minister or the Planning Secretary, an authorised fire officer or a council.

If you require any further information or advice about the details in this alert, including further advice on the recourse options that may be available to building owners against builders, designers or manufacturers of banned cladding products, feel free to get in touch with any of our contacts below.