By Justin Cotton, Director, Lovegrove & Cotton – Construction and Planning Lawyers

Numerous councils in Victoria are issuing building notices and building orders on buildings adorned with ACPs and or ostensibly non-compliant cladding.

Section 212 of the Victorian Building Act 1993 dictates that councils are responsible for the safety of the local rate-paying constituent. So councils intent on discharging their obligations have recently embarked upon a compliance campaign.

Typically, body corporate managers or apartment owners will receive building notices. The cladding building notice will be served upon both the unit owners and the body corporate manager.

What to Do When Served with a Cladding Building Notice or Cladding Building Order

Regularisation

Firstly, do not assume that the body corporate manager will preside over or assume responsibility for that which falls within the legal jurisdiction of the apartment or unit owner, or, for that matter, the commercial strata owner.

In some instances unit owners may be liable for rectification, in others the body corporate, and in other instances both legal entities may be liable.

This being the case, the first task will be for an appointed lawyer to determine whether the liability to comply with the notice resides with the body corporate, the unit owners, or both.

Secondly, ensure that the notice is responded to in writing, within the time specified by the notice. It is prudent at this juncture to appoint a construction lawyer well versed with building regulations to prepare the response to ensure that the notice is addressed and dealt with within the time period for complying with the notice.

Thirdly, a fire engineer should be appointed simultaneously to inspect the building and assist with the drafting of the response to the cladding building notice.

Fourthly, the lawyers, fire engineer and the body corporate manager should make a point of cooperating with the municipal building surveyor to work through the compliance issues.

If the fire engineer is of the opinion that there are material matters of non-compliance, then he or she will no doubt have in mind a recommended course of action that can be brought to bear to regularise matters.

Do Not Shoot the Messenger

The councils in the main are sympathetic to the plight of the property owners, who through no fault of their own have purchased non-complying product. However, by the same token councils are still obliged to have regard to their statutory obligations under section 212 of the Building Act 1993. A fruitful negotiation will then ensure that the body corporate and thus affected property owners will be afforded time to rectify.

In circumstances where there is monetary shortfall, a body corporate manager will recommend a special levy be struck to raise the rectification funds to address any non-compliant cladding or the likes thereof. In other instances, a community of thus affected unit holders may choose to jointly fund a rectification kitty.

The MBS, once engaged with the property owners’ representatives, will likely liaise cooperatively with said representatives to extend the building notices and or may choose to amend the notices to include a realistic and timely method of rectification.

In circumstances where there is a palpable and imminent threat to life, the MBS can issue an emergency order. In such circumstances, the recipient must comply with the order or appeal the order within the period enunciated under the emergency order.

In circumstances where there is no imminent threat to life or limb the MBS will typically limit resort to the building notice.

Failure to comply with the Building notice 

If the recipient fails to comply with the building notice, the MBS or the relevant building surveyor will in all likelihood issue a building order.

The issue of a building order is the ‘upping of the ante’. Regardless of whether you are a commercial, residential property owner or a body corporate owner, you must immediately take cognisance of the contents and the demands within the building order. A response in writing canvassing the issues and demands within the order must be forthcoming within the time period enunciated within the order.

If the terms of the order are unreasonable and one cannot respond within the time period then the owner must appeal to the appeals board at the VCAT.

A failure to either respond to or appeal the order within the time period can culminate in prosecution. A multi-unit development comprising say 100 unit holders may result in the issue of 100 orders. One must not assume that the body corporate manager will respond the orders as the body corporate may not necessarily be construed as being the lawful owner of the property.

Some key considerations 

Be careful of your choice of consultants and lawyers. The best way to regularise matters of non-compliance is by way of a well-considered and cooperative approach with the council. It equally behooves the council officers to be reasonable and cooperative with the unit holders and their representatives.

The property owners are in an invidious position. They purchased product that was compromised. There is no recall button like a compromised car or faulty electrical product. There is no ‘return to sender’.

Rather, the owner, regardless of whether they are an investor or occupant, has to contend with rectification costs that were not envisaged at the time of purchase.

Further, the right type of expertise must be accessed. The deployment of fire engineers of good repute is critical as they will divine holistic solutions. The problem is that fire engineers are ‘flat out’ and in great demand, alas they are critical. This being the case, the municipal officials have to recognize the invidiousness of the property owners’ predicament.

So the issues have to be worked through and the correct technical solutions fathomed.

It follows that that the deployment of adversarial representatives, be they lawyers, be they technical experts, will be counterproductive. Counterproductive in that unless the MBS is satisfied that matters are regularised, they will not lift the notices and orders. Satisfaction will only be forthcoming if there is an accommodation or recognition that that which is compromised must be brought into compliance.

To Sue or Not to Sue?

That will, in the main, be the secondary question – for the first preoccupation must be the regularisation of matters.

The decision to sue will flow from cost benefit analyses. If the rectification cost can be borne by a non-financially crippling special levy, the community may prefer to bite the bullet, pay for the fix and close the chapter.

If the costs are higher, either a class action or a body corporate action may ensue.

Things to consider will be:-

• How many different professions are implicated
• Are they insured?
• Is the building ‘north’ of 3 stories with separate abodes demarcated by each floor? In which case, there will be no builders’ home warranty cover for high rise residential.
• Under proportionate liability, if the builder is insolvent or likely to become insolvent, will there be sufficient alternative insured respondents to satisfy the financial shortfall?

These are questions that will need to be canvassed with one’s lawyers and one’s technical advisers. They are also questions that will ordinarily be asked in parallel with or after regularisation has occurs.

Of course, there may be circumstances where an apartment ownership community may not have the financial resources to pay for rectification absent the endowment of pay out by respondents.

Every case will need to be grappled with according to its own merits.

Lovegrove & Cotton Lawyers to the building industry

For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Justin Cotton is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his recent elevation to Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Committee, for HIA Victorian Chapter. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy. If you wish to engage the firm, feel free to contact us via our website or by emailing enquiries@lclawyers.com.au.