‘The Bad Stuff is cheap’: Apartment boom leaves Sydney Facing ‘Dire Consequences’ if Fire Hazards left unaddressed

Posted 24 August 2017

Category: Strata

Years of record highrise building on Australia’s east coast has had an unintended consequence – the creation of buildings with fire hazards that experts warn are costly to fix but too risky to leave unattended.

The risks of aluminium cladding have become front and centre of the debate after the Grenfell Tower fire in June, which left more than 80 dead in the blaze.

But the issue is one that stretches right across the world, with thermo-plastic core cladding – where polyurethane is sandwiched between two layers of aluminium – being found in highrises across Sydney and Melbourne.

Paul Morton, chief executive of Lannock strata finance, warned there would be “dire consequences” if the problems weren’t addressed.

“No one knows when or where the next fire is going to be, but we know there will be one,” he said.

“There are 300,000 strata buildings in Australia, and we’re talking about the ones that are relatively recent – the last 10 years – and mostly highrise [that are at risk]. But no one knows how many buildings are affected”.

After a significant fire at the Lacrosse Building in Docklands in 2014 prompted a Victorian Building Authority probe, half of Melbourne’s new highrises were found to have flammable cladding.

Since that time, more development has been approved than ever before with record numbers of cranes across the Melbourne, Sydney and Brisbane skylines.

But the only way to determine which buildings contain combustible cladding is to cut a piece off the building and send it to a lab for testing, Mr Morton said.

In some situations, the issue has been due to cheap, imported products used by builders and in others it could be due to counterfeit products that come with false fire safety certification.

“The bad stuff is cheap and every builder in Australia has an imperative to build cheap. A buyer won’t pay $3 million for a property they can be confident is free of defects, if they can pay [substantially less] not knowing safety is even an issue”.

In July, Minister for Better Regulation Matt Kean announced the implementation of a 10-point plan for fire safety, including identifying buildings that may have aluminium or other cladding and writing to building owners.

And after a NSW Fair Trading audit of 178,000 properties, 1011 buildings were identified as being potentially affected. Owners were issued letters, encouraging them to check for the type of cladding and rectify any fire safety issues.

Structured Project Management Australia engineer and executive director Peter Blair warned a lack of a regulatory body checking compliance, non-mandatory standards for some products, a reliance on “face value” certification were causing the issues.

And after the building boom he said it was “absolutely” the case that many more people were potentially living in risky buildings.

When rating buildings for fire safety, he said experts looked at the “worst case available fire scenario”.

But aluminium cladding, among other products, had shifted what this scenario would look like.

“It burns very hot, a couple of thousand degrees celsius … it’s a small amount of fuel but it creates fires beyond anything we’ve ever modelled,” he said.

This could leave many floors on fire in a short period of time.

But he said it was complicated to determine whether a building was safe, and the sole existence of aluminium cladding didn’t necessarily indicate a high chance of fire. He noted it depended on the size of the building, other safety features in place and the position of fire-rated walls.

One way to manage the risks of this type of cladding is through a sprinkler system – an expensive proposition that he estimated could add up to $30,000 per apartment to fix a building with the issue.

The question then, is who is at fault and who should pay.

Bannermans principal lawyer David Bannerman said a “stream of liability” would need to be worked through – from importers and subcontractors through to architects and certifiers.

There is only a two-year statutory warranty on non-compliant aluminium cladding for buildings in contracts entered into after February 2012, and a seven-year timeline for those contracted before that date.

“For those who have missed the warranty period there are other more difficult legal avenues to pursue,” said Mr Bannerman.

“Nobody knew about it until the last few years.”

Strata Community Insurance managing director Paul Keating warned the issue spread far beyond combustible cladding, with defects in many new apartment developments.

“[Regulators] don’t check compliance at critical stages … many new buildings have some form of defect,” he said.

“It’s a public health and safety issue. We have to stop adding defective stock into the market and increase the quality”.

A free event, the Strata Fire Safety Forum, which has been organised by Lannock Strata Finance and Bannermans Lawyers, is being hosted on Thursday 31 August 2017 to discuss the issue at Sydney Mechanics School of Arts, 280 Pitt Street, Sydney, from 6pm to 7.30pm.