NSWNSWCATCD

The Owners Strata Plan No 92888 v Taylor Construction Group Pty Ltd and Frasers Putney Pty Ltd

[2019] NSWCATCD 63

NCAT Consumer and Commercial|2019-07-30

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Source facts

Court

NCAT Consumer and Commercial

Decision date

2019-07-30

Source

Original judgment source is linked above.

Judgment (44 paragraphs)

[1]

Application

This is an application by the applicant under the Home Building Act 1989 ("HBA") seeking: 1. Findings that the residential building work contains and/or contained defects and non-complying work which amount to breaches of the statutory warranties under the HBA, and findings that those defects and non-complying works have caused the applicant to suffer loss and damage and that the respondents do work or services to rectify defective residential building work; and 2. An order that the respondents carry out rectification works to rectify those defects and non-complying works; and/or an order that the respondents pay the applicant damages for the cost of rectifying those defects and non-complying works.

[2]

Parties

The applicant is the registered proprietor of the common property in the land the subject of Strata Plan No 92888 known as 3 & 5 Lardelli Drive Ryde, New South Wales ("Common Property").
The first respondent was and is the holder of a contractor licence no 113546C issued under the HBA and is the builder that carried out residential building work relating to the building and improvements erected on the land at 3 & 5 Lardelli Drive Ryde and which now comprises the Common Property.
The residential building work was done in connection with an existing or proposed dwelling in a building or residential development where four or more of the existing dwellings were, or would be owned, by the second respondent. Upon registration of Strata Plan 92888 the second respondent became the owner of lots 1 to 148 inclusive in Strata Plan No 92888.

[3]

Jurisdiction and legislation

S 28 of the Civil and Administrative Tribunal Act 2013 provides that the NSW Civil and Administrative Tribunal ("Tribunal") has jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation.
S3 of the Home Building Act defines: "residential building work" means any work involved in, involved in co-ordinating or supervising any work in: (a)The construction of a dwelling, or (b)The making of alterations or additions to a dwelling, or (c)The repairing, renovation, decoration or protective treatment of a dwelling".
Section 48K(1) of the Act grants to the Tribunal jurisdiction to hear and determine any building claim brought before it in which the amount is less than $500,000.00.
Section 48I(1) of the Act provides that any person may apply to the Tribunal for the determination of a building claim.
As at the date of the contract section 18E (1) (a)-(d) of the Act provides that the statutory warranty period is 6 years for major defects and 2 years for other defects and that the warranty period starts from the date the contract was completed: (1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions: (a) proceedings must be commenced before the end of the warranty period for the breach, (b) the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case, (c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work), (d) if the work is not completed, the warranty period starts on: (i) the date the contract is terminated, or (ii) if the contract is not terminated - the date on which work under the contract ceased, or (iii) if the contract is not terminated and work under the contract was not commenced - the date of the contract,
At the time the building work was carried out S18B of the Act provided: Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work: (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. (2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.
As to "any other law" referred to in section 18B(1)(c), pursuant to clause 98 of the Environmental Planning and Assessment Regulation 2000 all building work must be carried out in accordance with the requirements of the Building Code of Australia ("BCA"). 98 Compliance with Building Code of Australia and insurance requirements under the Home Building Act 1989 (cf clauses 78 and 78A of EP&A Regulation 1994) (1) For the purposes of section 4.17 (11) of the Act, the following conditions are prescribed in relation to a development consent for development that involves any building work - (a) that the work must be carried out in accordance with the requirements of the Building Code of Australia, (b) in the case of residential building work for which the Home Building Act 1989 requires there to be a contract of insurance in force in accordance with Part 6 of that Act, that such a contract of insurance is in force before any building work authorised to be carried out by the consent commences. (1A) For the purposes of section 4.17 (11) of the Act, it is prescribed as a condition of a development consent for a temporary structure that is used as an entertainment venue, that the temporary structure must comply with Part B1 and NSW Part H102 of Volume One of the Building Code of Australia. (2) This clause does not apply - (a) to the extent to which an exemption is in force under clause 187 or 188, subject to the terms of any condition or requirement referred to in clause 187 (6) or 188 (4), or (b) to the erection of a temporary building, other than a temporary structure to which subclause (1A) applies. (3) In this clause, a reference to the Building Code of Australia is a reference to that Code as in force on the date the application is made for the relevant - (a) development consent, in the case of a temporary structure that is an entertainment venue, or (b) construction certificate, in every other case.
Section 6.9 of the Environmental Planning and Assessment Act 1979 provides: 6.9 Requirement for occupation certificate (cf previous ss 109H (1), 109M, 109N) (1) An occupation certificate is required for: (a) the commencement of the occupation or use of the whole or any part of a new building, or (b) the commencement of a change of building use for the whole or any part of an existing building. (2) However, an occupation certificate is not required: (a) for the commencement of the occupation or use of a new building: (i) for any purpose if the erection of the building is or forms part of exempt development or development that does not otherwise require development consent, or (ii) that is the subject of a compliance certificate in circumstances in which that certificate is an authorised alternative to an occupation certificate (such as a swimming pool or altered part of an existing building), or (iii) by such persons or in such circumstances as may be prescribed by the regulations, or (iv) that has been erected by or on behalf of the Crown or by or on behalf of a person prescribed by the regulations, or (b) for the commencement of a change of building use for the whole or any part of an existing building: (i) if the change of building use is or forms part of exempt development or development that does not otherwise require development consent, or (ii) by such persons or in such circumstances as may be prescribed by the regulations, or (iii) if the existing building has been erected by or on behalf of the Crown or by or on behalf of a person prescribed by the regulations.
Section 6.10 of the EPA provides: 6.10 Restrictions on issue of occupation certificates (cf previous s 109H) (1) An occupation certificate must not be issued unless any preconditions to the issue of the certificate that are specified in a development consent have been complied with. (2) An occupation certificate must not be issued to authorise a person to commence occupation or use of a new building (or part of a new building) unless: (a) a development consent is in force with respect to the building (or part of the building), and (b) in the case of a building erected pursuant to a development consent (other than a complying development certificate), a construction certificate has been issued with respect to the plans and specifications for the building (or part of the building), and (c) the completed building (or part of the building) is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and (d) such other requirements as are required by the regulations to be complied with before such a certificate may be issued have been complied with. (3) An occupation certificate must not be issued to authorise a person to commence a new use of a building (or of part of a building) resulting from a change of building use for an existing building unless: (a) a development consent is in force with respect to the change of building use, and (b) the building (or part of the building) is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and (c) such other requirements as are required by the regulations to be complied with before such a certificate may be issued have been complied with
Section 6.30 of the EPA provides: 6.30 Satisfaction as to compliance with conditions precedent to the issue of certificates (cf previous s 109P) (1) A person who exercises functions under this Act in reliance on a certificate under this Part or complying development certificate is entitled to assume: (a) that the certificate has been duly issued, and (b) that all conditions precedent to the issuing of the certificate have been duly complied with, and (c) that all things that are stated in the certificate as existing or having been done do exist or have been done, and is not liable for any loss or damage arising from any matter in respect of which the certificate has been issued. (2) This section does not apply to a certifier (other than a council) in relation to any certificate that he or she has issued.
An interim occupation certificate was issued for the residential building work on 8 August 2016 ("IOC"). The application was filed in the Tribunal on 3 August 2018.
No issue is taken by the parties as to the Tribunal's jurisdiction.
As to the matters now before the Tribunal, the Tribunal is satisfied that the claims have been brought in time; the claims are less than $500,000 or for work orders requiring the respondents to carry out rectification work, the applicant is able to bring the application, the first respondent is a licensed contractor and by section 3A of the HBA the second respondent is a developer for the purposes of the Act.
The Tribunal is satisfied that it has jurisdiction to hear and determine the application.

[15]

Compliance with cl 2.4(a)(i)

The respondents submit that the applicant alleges that the building does not comply with cl 2.4(a)(i). The applicant bears the onus of proof to show the building and material does not comply with the BCA and also the onus to adduce evidence to rebut the presumption which arises from the existence of the IOC.
Expert Halstead's opinion is that non-compliance with the BCA is premised on non-compliance with cl 2.4(a)(iii) specifically.
The burden of proof rests with the applicant on all matters, specifically why the cladding is not in compliance with the BCA. On the applicant's evidence, Expert Halstead implicitly accepts that Biowood is compliant with cl 2.4(a)(i).
The respondents further submit that the Tribunal should look at Table 1 of C1.10 and determine as a matter of interpretation which of the groups an external attachment must fall into and in that case, the only suitable category is "Other materials including insulation". Therefore Clause 7 and AS 1530.3 must apply.
Exhibit A7-A Webb and N White, Fire Safety Guidelines for External Walls says: BCA Specification C1.1 Clause 2.4 does not specifically state which fire hazard properties requirements prescribed in BCA Specification C1.10 are to be applied. However based on the wording in BCA Specification C12.10 Clause 4(e), CSIRO interprets that the relevant requirements for attachments used as a finish, surface or lining to an external wall is that material must be minimum Group 1, 2 or 3 based on AS ISO 9705 or AS/NZS 3837.
The respondents say that when Exhibit 7 is read in its entirety, in the CSIRO's view, AS 1530.3 does not apply because the correct test is whether the material meets Group 1, 2 or 3 criteria tested under AS 3837.
The respondents contend that Expert Jordaan was unchallenged when he said in his report that "As per the AS 3837-1998 test results (FNK 11808), the Biowood sample tested achieved a Group Number of 3". "Group 3" has a technical meaning (as per Exhibits A7 and R8) and Biowood is accepted as a Group 3 material, on the applicant's submissions. Even if the applicant is correct and AS 1530.3 is not the proper test for whether a material complies with cl 2.4(a)(i), Biowood is still suitable as it passes the alternate test suggested by the CSIRO.
The respondents submit that Exhibit A7 should not be received as expert evidence and to the extent that the applicant seeks to rely on Exhibit A7 as authoritative or determinative with respect to any issue that should be rejected by the Tribunal and only the evidence from the available experts be relied upon.

[16]

Compliance with applicable codes and standards

The applicant submits in reply to the respondents' submission as to whether or not Biowood was an "other attachment" which may be used because it was exempted under C.1.10: 1. The applicant accepts that the CSIRO interpretation does not bind the Tribunal, but that it does not mean it should be disregarded, nor does it mean that cannot and should not be used as an aid to interpretation. The opinions in Exhibit A7, which were adopted by Expert Halstead in evidence are not stated to be authoritative or determinative, but rather highly persuasive and clearly correct. In fact, they have been relied upon by the respondents. Those opinions can and should be taken into account in determining the preferred evidence of the experts. 2. The Tribunal is under no obligation to assume that Clause 7 identifies the relevant and applicable fire hazard. 1. The correct reading of C1.10, harmonious with the CSIRO interpretation, is to the effect: A combustible material may be used as [an] other attachment to a building element which has the required FRL if…the material complies with the relevant and applicable fire hazard properties prescribed in Specification C1.10 1. It may be that the proper way to read C1.1 cl 2.4 is that the relevant requirements for attachments is that the material must be: minimum Group 1, 2 or 3 based on AS ISO 9705 or AS/NZS 3837. 1. It does not follow that because Biowood is Group 3 then it falls within C1.1. Whether the material must be 'minimum 1, 2 or 3' depends upon AS ISO 9705 or AS/NZS 3837. 2. There is no evidence at all about ASO ISO 9705. 3. Group 3 materials refer to timber products as distinct from Group 2 which are fire retardant timber or Group 1 which are non-combustible or near non-combustible material. 4. The applicant says in summary: 1. Expert Jordaan thinks that AS 3837 results are less relevant than AS 1530.3 results; 2. Biowood achieved a Group 3 number as per AS 3837 test results; 3. Wall cladding panels that comprise natural timber with a thickness similar to that of Biowood could result in a relatively rapid spread of fire along the façade. 1. CSIRO observation, submitted in the applicant's first submission, is that even material given a Group 1 rating may provide some indication that there is an undue risk of fire spread requirement and that the risk that material will support fire spread between levels is likely to increase for Group 2 and Group 3 materials. 2. The applicant submits that the respondents' submission that Biowood passes the alternate test suggested by CSIRO should be rejected as inconsistent with the facts.

[19]

Spandrels

In Lacrosse fire at [34] and [35] VCAT found: …the task of interpreting the provisions of the BCA is a matter for the Tribunal and not predicated upon the opinion of experts. The text, context and purpose of the provision to be interpreted ought to be taken into account in the ordinary [way], whilst recognising that what is to be interpreted is a technical document not drafted in the way as acts of parliament and is to be applied by those in the construction industry on a daily basis, and not ordinarily by lawyers.
The respondents contend that Expert Powell has proffered a particular interpretation on the BCA, whether the spandrels can have attachments and whether Biowood forms an attachment to the spandrels. His interpretation assists the Tribunal in making its determination based on the BCA.
The spandrel is a building element and has a required FRL. Cl 2.4 applies as it applies to any "other attachment to a building element which has the required FRL".
Expert Powell in his report dated 24 October 2018 (Exhibit R2) describes a spandrel as: The BCA 2014 Clause C2.6 "Vertical separation of openings in external walls", required: (a) If in a building of Type A construction, any part of a window or other opening in an external wall is above another opening in the storey next below and its vertical projection falls no further than 450mm outside the lower opening (measured horizontally), the opening must be separated by- (i) a spandrel which- (A) is not less than 900mm in height; and (B) extends not less than 600mm above the upper surface of the intervening floor; and, (c) is of non-combustible material having an FRL of not less than 60/60/60; or (ii) part of a curtain wall or panel wall that complies with (i); or (iii) construction that complies with (i) behind a curtain wall or panel wall and has any gaps packed with a non-combustible material that will withstand thermal expansion and structural movement of the walling without the loss of seal against fire and smoke; or…" The BCA provided no definition as to what constituted a spandrel. Notably, and as indicated in (a)(iii), the spandrel does not need to form part of the external wall.
In the absence of a definition of "building element" it should be interpreted as "a constituent or essential part of the building". It therefore cannot be a reference to an "attachment" as is referred to in cl 2.4, which draws a distinction between an attachment and a "building element".
The word "attachment" is not defined in the BCA. It is referenced in the CSIRO guide as the BCA is a technical document drafted for use by building and construction experts. CSIRO defines an attachment in the DPC Reports Exhibit R2 and R4. The respondents submit that cl 2.4 applies and allows attachments to the spandrels.
Cl 2.6 must be interpreted with reference to Cl 2.4 as the document must be interpreted as a whole. In Metropolitan Gas Co v Federated Gas Employees' Industrial Union (1924) 35 CLR 449 at 445 the court said in respect of statutory interpretation: every passage in a document must be read, not as if it were entirely divorced from its context, but as part of the whole instrument. The proper interpretation is to read cl 2.4 as permitting attachments to spandrels.
The applicant submits that in Expert Jordaan's first report he concluded that Biowood did not achieve compliance with cl 2.6 of the BCA because it was not non-combustible material having an FRL of not less than 60/60/60 and to achieve compliance with cl 2.6 the Biowood would have to be removed.
In Expert Jordaan's second report he changed his evidence based on the opinion of Expert Powell to Biowood complying with cl 2.6 based on the reasoning: [Expert Powell's] report concludes that the spandrel or vertical separation in and of itself is required to [sic] non-combustible. However, the report states that there is no provision of the BCA that prohibits the installation of combustible cladding as an attachment, provided the cladding complies with clause 2.4 of the BCA Specification C1.1.
Expert Jordaan concludes that because the cladding falls within cl 2.4, Biowood satisfies the requirement in cl 2.4 that it be non-combustible.
The applicant submits that C1.1 cl 2.6 prohibits the installation of combustible cladding in the circumstances of the case and the respondent's reasoning is flawed. Biowood does not comply with C1.1 cl 2.6.

[20]

Undue risk

The applicant contends that expert evidence of Expert Halstead is that the Biowood constitutes an undue risk of fire spread via the façade of the building. He says in his report: The Biowood extends up the façade in numerous locations…In my opinion fire spread via the external walls where the Biowood is located could enter the building from the façade via the windows and balconies from level to level. Therefore, as the Biowood extends up the façade and joins each level it may (if ignited) allow fire spread into the building and cause undue fire risk via the façade.
The CSIRO opinion at Exhibit A7 on page 9 says: 1. Undue risk of fire spread via the façade of the building may be viewed as spread beyond the floor of origin, although the precise definition of undue risk will vary case-by case. 2. The determination requires the expert judgement of a suitably qualified and expert person, such as a fire engineer. Expert Halstead, a fire engineer, has given his expert judgement. 3. The determination may require evidence from large scale fire testing as the clearest and most reliable basis for assessment of risk of fire spread. No such test has been carried out. 4. Based on Expert Halstead's opinion, Biowood is indisputably combustible and the onus should shift to the respondents to conduct a full scale façade test to demonstrate there is no undue risk. 5. Expert Halstead's report further says that fire hazard property requirements do not automatically limit the risk of fire spread: In some cases a Group 1 rating may provide some indication that the 'undue risk of fire spread' requirement is met. However, because the arrangement and the installation and also the fire exposure is significantly different for…an AS/NZS 3837 test compared to a full scale façade fire, there may be cases where a Group 1 would still support fire spread between levels in a full scale façade test. The risk that a material will support fire spread between levels is likely to increase for Group 2 and Group 3 materials. 1. The Tribunal can infer from the fact that the Biowood has been tested to be a Group 3 material that: 1. Group 1 material does not necessarily mean that there is no undue risk; 2. Biowood is not properly categorisable as a non-combustible or near non-combustible; 3. There is a risk that the Biowood will support fire spread between floor levels and presents an undue risk for the purposes of cl 2.4 1. Biowood constitutes an undue risk as: 1. Biowood cladding is a combustible material and is prima facie unacceptable and it is for the respondent to establish that it falls within the exception; 2. The CSIRO report indicates that an undue risk is a risk that the fire will spread beyond the floor of origin because the material would support fire spread between floor levels; 3. The evidence of Expert Halstead, a qualified and experienced fire engineer is that there is an undue fire risk and his evidence is supported by appropriate reasoning; 4. Expert Jordaan's reasoning appears to be based upon a flame spread index which is not relevant and applicable and does not show that there will not be a spread of flame. In reaching the conclusions in his Fire Safety and Risk Assessment, Expert Jordaan's conclusions turn on assumptions that Biowood cladding would not support self-sustained fire spread unsupported by test data in evidence. In the alternative, the conclusions depend on the assumption that Biowood is unlikely to facilitate rapid fire spread and may self-extinguish, again unsupported by test data in evidence. 5. There is nothing to support the implicit contention that a relatively slow rate of fire spread does not present an "undue risk" in comparison to a relatively higher rate of spread. In the absence of actual rate of fire spread and detailed information as to the means by which inhabitants might be alerted to any threat and evacuate the building, the distinction between rates of spread is not meaningful for determining whether or not there is undue risk; 6. Expert Halstead's evidence referenced the Lacrosse fire in that the aluminium cladding on that building, after applying the AS/NZS 1503.3 test found to fall within the exemption contained in cl 2.4, but when it was subjected to a full scale façade test it readily facilitated the spread of fire between the levels. The assumption that flame spread index of 0 meant that there was no undue risk which is central to Expert Jordaan's reasoning is misplaced; 7. Biowood as a Group 3 material points to the conclusion that it would enable the spread of fire between the levels of the building.

[23]

Undue fire risk

Firstly, consideration must be given to the proper reading of cl 2.4. That is: A combustible material may be used … if … it does not otherwise constitute an undue risk of fire spread via the façade of the building.
The applicant submits that the only risk to be considered is the risk of fire spread via the façade. It is not the fire spread that must be 'undue', but the risk. Rate of fire spread or the fire protection inside the building will not be material to this assessment: the Code and evidence of Expert Halstead and CSIRO document at Exhibit A7.
Although Expert Jordaan conceded in cross examination that the AS 1530.3 tests showed there was unlikely to be a spread of fire along the Biowood his report says: 1. The existing test data suggest that Biowood is unlikely to support rapid fire spread and may in fact be self-extinguishing therefore the current evidence available does not support the statement that significant fire spread could occur (Exhibit R2 pp 1496-1498). 2. Based on the low level of fire spread expected, drenchers could be a feasible approach (Exhibit R2 p 1499)
The applicant submits in respect of the first quote from Expert Jordaan's report that there is no evidence to suggest that the Biowood may be self-extinguishing and no evidence in relation to the speed of fire spread other than it may be relatively slower than other materials. Issues of rapidity of fire spread or whether it would be significant indicate that there is an absolute risk of fire spread.
In respect of the second quote from Expert Jordaan's report, the fact that a 'low level of fire spread' is 'expected' confirms that fire will spread. It is not a risk, it is an anticipation.
The applicant submits that the report clearly states that the risk of fire spread is not undue in the sense that there might not be any spread. The opposite is the case. That there is no evidence or real suggestion that it will not spread via the façade of the building. Expert Halstead's evidence is misrepresented by the respondents.
Then secondly, the respondents' incorrect assumption that factors other than fire spread via the façade of the building are relevant.
Rather than as contended by the respondents, Expert Halstead's cross examination does not say that the measure of risk is a 'function of various factors'. He says that, for example, sprinklers 'will have no relevance to external fire spread'. Further, that the argument put forward by the respondents that 'undue risk of fire spread via the façade of the building' requires only that the attachment to the external wall not impair the fire-resistance of the external wall itself should be rejected. Such an argument is contrary to common sense and all the evidence. All experts agree that the concern was that fire spread from compartment to compartment of the building via the external façade that also emerges from the CSIRO report.

[24]

Undue Risk

With the agreement between the experts that the BCA is the test which applies to all the cladding and that it is cl 2.4 of the BCA which is the key provision which the cladding has to meet, the question is isolated to whether the cladding poses an "undue risk of fire spread via the façade of the building".
It is uncontested that the evidence of both experts is that the measure of "risk" is a function of at least three factors: 1. combustibility of material; 2. rate of flame spread; and 3. other safety measures.
There is no dispute that Biowood is combustible, but the other two risk factors must be examined to determine whether there is an undue risk of fire spread via the façade of the building.
Whether the Biowood is an undue risk of fire spread is determined by the "spread of flame index". This is a function of the heat that Biowood produces when it is burnt, the Heat Evolved Index, and whether that is sufficient to reach or exceed the ignition temperature. Biowood has a Heat Evolved Index of 1 and a Spread of Flame Index of 0. The evidence of Expert Jordaan at [5.1.1] of his report dated 8 March 2019 is that Biowood burning will not cause adjacent Biowood to ignite and spread fire because the heat emitted from burning Biowood is insufficient to ignite surrounding Biowood. The respondents submit that in cross examination, Expert Halstead said that he accepts that heat given off by Biowood burning will not in and of itself ignite adjacent Biowood. It will burn if exposed to heat factors, heat from burning adjacent Biowood and heat from the original source of the fire.
The respondents further submit that Expert Halstead concedes the rate of flame spread is unknown to him because he has not conducted any fire test and therefore the second factor is unknown to Expert Halstead.
The respondents submit that the Tribunal should take into account Expert Jordaan's adoption of ALARP (being a risk assessment category 'As Low As Reasonably Practicable') approach and he makes assumptions in his report at [7.2] to take into account other safety measures and his approach was not criticised by the applicant or Expert Halstead. Expert Halstead's Report does not consider the existence of any other safety measures. Expert Halstead has only examined the Annual Fire Safety Statement of August 2018. Although he included them in his report, he has not considered the occupation certificate, any approved fire engineering report, fire services operations, audit of the building's fire services and fire safety measures and assessment of NSW Fire Brigade correspondence as other safety measures.

[25]

Not fit for purpose

The BCA requires that materials and construction be fit for the purpose for which they are intended. The HBA statutory warranties require all materials be good and suitable for which they are used and that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result.
Section 18B(1)(f) of the HBA implies a warranty in every contract that the work and any materials used in doing the work will be reasonably for the specified purpose if it is expressly known to the holder of a contractor license the particular purpose for which the work is required, or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgement.
The building contract is not in evidence except for one page. The contract is the AS4902-2000 Australian Standard General Conditions of Contract for Design and Construct. The applicant submits that such a contract makes known to a builder the particular purposes for which the work is required and result to be achieved for the developer, the developer relying on the builder's skill and judgement. In such circumstances the builder and developer cannot deny that section 18B(1)(f) does not apply to the contract.
The statutory warranty that the work and materials will be reasonably fit for purpose is implied into the contract and by section 18B is a duty owed to the applicant.
In the Lacrosse fire decision the Design and Construct Contract between the developer and the builder was relied upon to establish the developer relied on the builder's skill and judgement and containing the warranty fitness for purpose.
In the Lacrosse fire case, Judge Woodward of the Victorian Civil and Administrative Tribunal (VCAT) found: 1. The warranty of fitness for purpose is absolute [282]-[286]; 2. Judge Woodward analysed at [287]-[290] the fitness for purpose of cladding: 287. Consistently with the discussion in Barton v Stiff[470], the starting point in the analysis in respect of both the warranty as to suitability of materials and the warranty of fitness for purpose, is to determine the purpose for which the building (and thus the relevant materials) was required. The purpose of Lacrosse tower was as a multi-storey residential apartment building. What this means for the selection and fitness of materials might be said to be a matter of common sense, but it is convenient to draw on the provisions of the BCA. 287. As the objective in clause CO1 of the BCA indicates, fire has the potential to result in injury to people, physical damage to property and structural failure of a building. For this reason, the BCA requires, by clause CP2(a), that a building have elements which will avoid the spread of fire to the degree necessary to achieve the objective. The BCA places particular emphasis upon the suitability of materials used in high-rise residential buildings. It requires that such buildings be of "Type A construction", being the most fire-resistant type of construction, and specifically provides that their external walls must be non-combustible. 287. The evidence was clear that the Alucobest panels were combustible within the meaning of the BCA. The CSIRO testing established unequivocally (and dramatically) that the Alucobest panel was deemed combustible according to the test criteria specified in clause 3.4 of AS1530.1.[471] No party sought to contend otherwise. Further, the expert evidence as discussed above was unanimously to the effect that the use of Alucobest panels as part of the external walls of the Lacrosse tower caused the rapid spread of the fire beyond the balcony of apartment 805 and up the east face of the building. 287. Against that background, I agree with the Owners' submission that the Alucobest panels were obviously not good or suitable for the purpose of being used in the external walls of a high-rise residential building such as Lacrosse,[472] and thus breached the warranty in s8(b) of the DBC Act. I also agree that this same evidence establishes that the Alucobest panels installed by LU Simon were not fit for purpose in breach of the warranty in s8(f) of the DBC Act. And in my view, the "reliance" prerequisite to a breach under that section is amply demonstrated by the provisions of the D&C Contract concerning the "Principal's Project Requirements" and objectives, set out above.[473]
The applicant further submits that even if all standards are complied with it is not fit for purposes if the cladding used on the external walls of a residential apartment block is combustible and has a real risk of fire spread between the levels of the building. The Biowood is not fit for purpose.
The applicant seeks an order for rectification of the defective Biowood and costs.

[36]

Relevant codes and standards

In making its determination the Tribunal will consider Clause 2.4 of the Building Code of Australia Specification C1.1, Clause 7 and AS/NZS 1530.3.
The effect of the relevant Codes and Standards is that the subject buildings are required to be of Type A Construction. Buildings required to be of Type A Construction must have non-combustible external walls, common walls, and the flooring and floor framing of the lift pits (Cl 3.1 of Specification C1.1 of the BCA).
A combustible material may be used as a finish or lining to a wall or roof, or in a sign, sunscreen or blind, awning, or other attachment to a building element which has the FRL, if the material is exempted under C1.10 or complies with the fire hazard properties prescribed in Specification C1.10 and amongst other things, it does not otherwise constitute an undue fire risk via the façade of the building (cl 2.4 of Specification C1.1 of the BCA).
The Fire Hazard Property Requirement for other materials including insulation for exemption under C1.10 for use as an attachment must satisfy the "Other Materials" criteria in Clause 7, that the material used must have a spread of flame index of 9 and a Smoke developed index of 8 if the Spread of Flame index is more than 5. Despite the urging of the respondents to discount the CSIRO report on Biowood because no "single test method" had been undertaken, the Tribunal finds that the report is highly persuasive with its findings that the specification of AS/NZS 1530.3 test for other materials is not relevant for attachments to buildings used as external wall finishes, lining or cladding.
In the Lacrosse fire case the Alucopanel was found by VCAT to have satisfied AS/NZS 1530.3 test with a Spread of Flame index of 0, but proved to be dangerously inflammable when subject to a full scale façade test. A Spread of Flame index of 0 identifies the relative speed of flame spread rather than the actual flame speed. The Tribunal is satisfied that the submissions in this regard by the applicant correctly state the position with regard to Biowood and Expert Jordaan has not provided reasons to justify disregarding the views of the CSIRO and Mr Halstead. Predicating a Spread of Flame index of 0 achieved in the AS/NZS 1503.3 test does not necessarily exempt Biowood under C1.10.
Biowood is not "another attachment" that is exempted under C1.10 and even if cl 2.4 were to be regard as potentially applicable, Biowood is not exempted under C1.10 as there is no evidence that it complies with the fire hazard properties prescribed in C1.10.
Expert Halstead does not propound that the Biowood has been subjected to the AS/NZS 1530.3 test as the respondents contend should have been done if the applicant is to satisfy its onus of proof. Expert Halstead's position is that the authors of the CSIRO report (Exhibit A7) were correct because a test designed for fires within a room and external fires may behave differently and consequently there is no reason to disregard the view expressed by the authors of the CSIRO report.
The Tribunal is satisfied that Expert Halstead's adoption of the opinions of the CSIRO is persuasive evidence that Biowood is a combustible material and complies with the fire hazard properties prescribed by C1.10. It is assessed as a timber Group 3 material achieved through AS3837 test and that there is a risk that it will support fire spread between floor levels along the façade of the building. In accepting the CSIRO report as persuasive, the Tribunal finds that Expert Halstead's opinion is preferred to the alternate test per AS 1530.3 propounded by the respondents' Expert Jordaan as more relevant than AS 3837, where Biowood achieved a Spread or flame index of 0 to exempt Biowood under C1.10 and is therefore suitable as another attachment.

[37]

Undue Risk

It is the rate of flame spread that the experts disagree on. Expert Jordaan's evidence is that Biowood burning will not cause adjacent Biowood to ignite and spread fire because the heat emitted from burning Biowood is insufficient to ignite surrounding Biowood. Expert Halstead concedes that the heat given off burning Biowood will not be sufficient to ignite adjacent Biowood of itself, Expert Halstead, a qualified and experienced fire engineer opinion is that there is an undue risk. Expert Jordaan's conclusions are based on assumptions that that Biowood will not support self-sustained fire spread. Those assumptions are made in the absence of any test data. A slow rate of fire spread does not preclude a finding that there is an undue risk. The Tribunal accepts that even though there is no evidence of a large scale fire testing of Biowood, it is indisputably combustible and any risk that it will support fire spread between levels of the building presents an undue risk, falling within the opinion of the highly persuasive and proper CSIRO report in Exhibit 7. A slow rate of fire spread does not necessarily prevent an undue risk. Any risk of fire spread is sufficient to satisfy the measure of undue risk.
Expert Jordaan adopts the ALARP approach in respect of other safety measures, even though uncriticised by the applicant or Expert Halstead. However, it is Expert Hallstead's evidence that sprinklers will have no relevance to external fire spread and that the concern is the fire spread from compartment to compartment of the building via the external façade. The respondents submit that Expert Halstead has not had regard to other safety measures and has only had regard to the Annual Fire Safety Statement of August 2018. He merely included them in his report, but he has not had regard to any approved fire engineering report, fire services operations, fire services operations, audit of the buildings fire services and fire safety measures and assessment of NSW Fire Brigade correspondence as other safety measures.
The Tribunal is not satisfied that Expert Halstead has not had regard to other fire safety measures. His evidence, put forward in cross examination, was that the most significant fire safety measure; sprinklers would have no relevance to external cladding as an attachment. The Tribunal accepts Expert Halstead's expertise and is satisfied that the measure of risk factor and other safety measures has been considered and found to not be relevant. Expert Jordaan's adopting of the ALARP method of assessment of risk to find there is no undue risk does not eliminate that risk and does not satisfy the assessment that there is no undue risk of fire spread between the compartments of the building.
The Tribunal is satisfied that Expert Halstead has established that there is undue risk of fire spread via the Biowood extending up the façade of the building which would allow fire spread into the building. The CSIRO report says that the determination of undue risk of fire spread via the façade of the building requires the expert judgment of a suitably qualified and an expert person, such as a fire engineer. Expert Halstead is well qualified and experienced to give his expert judgement. His opinion is that Biowood is combustible and that fire hazard property requirements do not automatically limit the risk of fire spread.
Cl 2.4(a)(iii) requires that there be no undue risk of fire spread via the façade of the building. It is the respondents' contention that façade means the external wall of the building and does not include the attachment to the external wall. It requires that the attachment will not impair the fire-resistance of the external wall itself. The applicant contends that such an argument is contrary to common sense and the evidence.
The Tribunal agrees with the applicant that to interpret cl 2.4(a)(iii) as not to impair the fire resistance of the external wall does not include an attachment to the external wall, defies common sense. Any undue risk of fire spread by an attachment, even if it otherwise complies with codes and standards for use, must be viewed from the perspective of the type of building it is used on, that is a high rise Type A building requiring external walls to be non-combustible, where any risk of fire has the potential to result in injury to people, physical damage to the property and potential structural failure of the building.
The Tribunal is satisfied that Biowood constitutes an undue risk.

[39]

Statutory warranties

At the hearing the applicant relied upon the statutory warranties generally in section 18B(1) and specifically in sections 18B(1)(c) and (f). That is, that the use of Biowood as attachments to the external walls breached the requirement under the statutory requirements that the building work must be done in accordance with, and will comply with the statutory warranties, the HBA or any other law (section 18B(1)(c)). The applicant also alleges that the respondents breached the statutory warranty that the building work must be reasonably fit for a specified purpose or result if the person for whom the work is done expressly makes known to the holder of the contractor licence the particular purpose for which the work is required so as to show that the owner relies on the licence holder's skill and judgment (section 18B(1)(f)).
In their submissions, the applicant raised reliance on the warranty in section 18B(1)(b) of the HBA in that material used in residential building works must be suitable for the purpose it is used. The respondents object to the applicant seeking to rely on section 18B(1)(b) of the HBA in their submissions when they did not address that warranty at the hearing.
The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.
In the Points of Claim filed with the application the applicant pleaded the inclusion of the statutory warranties established by Part 2C of the HBA were implied into the contract and that the statutory warranties are relied upon as they were set out in full in the Points of Claim. The applicant further pleaded that the building work contained defects and non-complying work identified in the RHM Consultants Report (Exhibit A2) and the Core Engineering Group Report (Exhibit A2-Annexure DM2) amounting to breaches of the statutory warranties. Mr Davie, counsel for the applicant, in his opening at the hearing referenced the alleged breach of the statutory warranties under section 18B.
The respondents were on notice of the allegations of the breach of the relevant statutory warranties under section 18B, including section 18B(1)(b), particularly in light of the issue in these proceedings, specifically whether the material, Biowood, was compliant with the applicable codes and standards and even if it is compliant, whether as installed it is a material fit for purpose.
The respondents' objection to the Tribunal considering whether there has been a breach of section 18B(1)(b) is not sustained. The respondents were on notice of it being relied upon by the applicant and have addressed the issue in their submissions.
It is the applicant's case that Biowood is combustible and has a real risk of fire spread between the levels of the building and it therefore not fit for purpose. The BCA sets the minimum standard by which fitness for purpose is to be measured. That is, if a material fails to comply with the BCA then the use of the material was not fit for purpose because there is a real risk of a fire hazard or danger contemplated by the BCA.
The respondents contend that if the BCA is complied with, then the minimum standards are met, the real risk of contemplated danger is minimised, the building is fit for occupation and the material used is fit for purpose. Such an argument has difficulties. The Tribunal has found that combustible Biowood used as an attachment to a non-combustible external wall presents an undue risk of fire spread. As such, the Biowood attachment diminishes the fire resistance of the external walls. The evidence adduced by the applicant is that Biowood is a material that has the risk of permitting fire spread via the façade as it will allow fire to spread from compartment to compartment via the exterior of the building.
It follows that Biowood is not fit for purpose when used as an attachment.
The Tribunal finds that Biowood where used as an attachment to the façade of the building breaches the statutory warranties in section 18B(1)(b) as it was not suitable for the purpose used.
The Tribunal is informed by the "common sense test" referred to in the Lacrosse fire case, that is, it must consider the purpose and type of building of building. The building is a multi-storey residential building, Type A construction. The common sense test dictates that it is illogical to stipulate that the external walls must not be combustible and then allow them to be covered in combustible attachments.
The Tribunal is satisfied that Biowood is combustible and there is a real risk of fire spread between the levels of the building and is therefore not fit for purpose.
As to the statutory warranty under section 18B(1)(f), notwithstanding that only the first page of the contract was in evidence, it is the AS 4902-2000 standard form being the Australian Standard General Conditions for Design and Construct. The parties to the contract are the developer (second respondent) and the builder (first respondent). While the complete contract is not in evidence, the Tribunal is prepared to infer that as the first page is that of AS 4902-2000 that the contract was a standard "Design and Construct" contract. As such the developer has made known to whom the particular purpose for which the building work is required. As such, on the balance of probabilities, the Tribunal finds that the developer relied on the builder's skill and judgement and by doing so; the statutory warranty of fitness for purpose is incorporated.
Section 18B(1)(c) provides that the building work must be done in accordance with and will comply with the HBA and any other law.
Clause 98 of the EPA Regulation provides that all building work must be carried out in accordance with the requirements of the BCA. For the reasons set out in this decision the Tribunal has found that the use of Biowood as an attachment to the external walls of a Type A building the Tribunal does not comply with the BCA. By such a finding, its use breaches the warranty that it must comply with "any other law".
The Tribunal is satisfied that the use of Biowood as attachments to the external walls is a breach of the statutory warranties in section 18B(1)(b), (c) and (f).
The breaches of the statutory warranties, as found, entitle the applicant to the orders sought.

The Owners Strata Plan No 92888 v Taylor Construction Group Pty Ltd and Frasers Putney Pty Ltd - [2019] NSWCATCD 63 - NSWCATCD 2019 case summary — Zoe