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Back to "Leasing and Property Newsletter - September 2018"


Uncertainty within the foundations: the NSW ban on aluminium cladding and implications of the Building Products (Safety) Act 2017

In response to the Grenfell Tower fire that saw the deaths of 72 people in West London in June 2017 and the earlier Lacrosse building fire in Melbourne, the NSW Government passed on 23 November 2017 the Buildings Products (Safety) Act 2017. The Act allows certain building materials to be declared as prohibited where there are reasonable grounds that the use is unsafe. As was expected following the commencement of this Act,  Rosemary Ann Webb, the Commissioner for Fair Trading, Department of Finance, Services and Innovation, published a notice banning the use of aluminium composite panels (ACP) with a core that consists of more than 30% polyethylene within certain buildings of two-storey height or greater. This ban commenced on 15 August 2018 and applies not only to new buildings but also to existing buildings constructed prior to the prohibition. The financial ramifications following the banning of ACP and the potential future prohibition of other building materials could be significant for property owners.  

The Act makes it an offence for a person to cause a prohibited building product to be used in a building, with significant fines of up to $1.1 million for corporations or $220,000 for individuals (with additional fines for each day the offence continues) and up to 2 years imprisonment. The Act also gives the Government powers to investigate and assess existing buildings to determine whether they contain prohibited building products and, where such products are identified, make orders requiring rectification or accept undertakings to make rectifications. The powers of investigation include the power to enter premises, receive assistance from building occupiers, perform tests on things (which may include, where reasonable, destroying them) and require persons with relevant knowledge to answer questions. Compensation is payable in respect of any damage caused by an authorised officer entering a premises or breaking open or other accessing a thing, but compensation is not payable for damage caused due to the exercise of any other power.

The aluminium cladding ban includes some exceptions such as where the building product is not deemed combustible by successfully passing specified standards testing. As required by the Act, the Commissioner’s Notice banning the material must set out the reasons for the prohibition following extensive consultation.

While the Act was introduced specifically with the intention of responding to the issue of ACP, it will allow other material to be deemed prohibited in the future following the requisite assessment process. A list of all current notifications can be found on the NSW Fair Trading Website which, at the time of publication, currently only contains the ACP notice.

Owners of properties affected by building material prohibitions will be the most likely candidate footing the bill for required rectification work. A preliminary audit in NSW identified 1,011 buildings potentially requiring investigation due to ACP content. The risk inherent in certain building materials such as ACP do not become widely known until the occurrence of tragedies such as Greenfell, and as such it is quite possible that other materials may be subject to prohibition in the future. While it may be important that owners and prospective-owners be aware of the components within their property’s building, both the safety and financial risk due to that material might not be known for some time.

Alex Collie, Lawyer
Paul Carroll, Partner

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