In October 2016, a 27-storey apartment building in St Kilda Road, Melbourne, known as ‘Park Lane Apartments’, caught fire due to a stove fire breaking out in the kitchen of a 3rdfloor apartment when a resident accidentally overheated a pan of cooking oil. The fire quickly spread up the external façade of the building, which had been constructed using aluminium composite panels (ACPs) with a highly combustible 100% polyethylene core resulting in damages in excess of $11 million. The Park Lane Apartments building had been constructed by the building contractor, JV Stevens Pty Ltd, under a design and construct contract, and an occupancy permit was issued for the building by a private building surveyor on 31stJanuary 2014.
The architect for the building, Steinman Associates Pty Ltd, had originally been engaged by the building developer to carry out the preliminary design. In the preliminary design, Steinman Associates specified the ACPs as external cladding for the building, and the ACPs had been listed as a client’s requirement in the design and construct contract agreed with the builder, JV Stevens. Subsequently, when the builder was appointed, the design services agreement with Steinman Associates was novated to JV Stevens. Thereafter, Steinman Associates continued in their role as head designer under a consultancy agreement with JV Stevens. After being contracted to the builder, Steinman Associates affirmed their selection of the ACPs as cladding and even approved a sample ACP despite the architect’s own specification stating that:
- all elements of wall cladding shall be non-combustible or not easily ignitable with low flame spread characteristics and shall not produce excessive quantities of smoke or toxic gases; and
- external wall cladding areas, where necessary, shall meet unprotected limitations of the BCA with respect to surface spread of flame.
The private building surveyor appointed by the builder under a consultancy agreement was Brooke Taylor Group Pty Ltd (BTG). BTG did not refer the use of the ACPs for further investigation to the fire engineer. Instead, the building surveyor made a decision to approve the use of the specified ACPs on the basis that they met the ‘Deemed to Satisfy’ concessions as to non-combustibility contained in BCA Clause 1.12(f), and that there was an industry wide understanding that ACPs were BCA compliant and there was widespread use of ACPs on other similar projects at the time. BCA Clause 1.12(f) states as follows:
C1.12 Non-combustible materials
The following materials, though comustible or containing combustible fibres, may be used
wherever anon-combustiblematerial is required: (f) Bonded laminate materials where –
(i) each laminate is non-combustible;
(ii) each adhesive layer does not exceed 1mm in thickness;
(iii) the total thickness of the adhesive layers does not exceed 2mm; and
(iv) theSpread-of-Flame Indexand theSmoke-Developed Indexof the laminated material as a
whole does not exceed 0 and 3 respectively.
The fire engineer appointed by the builder under a consultancy agreement was Tobias Niklaus Pty Ltd. The consultancy agreement between JV Stevens and Tobias Niklaus expressly stated that the fire engineer was to at least assess the construction materials for any fire hazards. The fire engineer, however, misunderstood the nature of his contractual obligations, and only investigated and assessed matters referred to him by the architect and building surveyor. As the ACPs were not referred to the fire engineer by either the architect or building surveyor, the fire engineer failed to assess them.
In October 2017, the Owners Corporation of the Park Lane Apartments together with the individual apartment owners (together known as the ‘Applicants’) commenced a civil action against the builder, JV Stevens, in the Victorian Civil and Administrative Tribunal (VCAT) claiming damages in the amount of $11.1 million. The damages claimed include amounts for:
- the costs to -
-
- loss of rental income for those apartment owners who were leasing out their apartments, and the cost of temporary alternative accommodation for apartment owner-occupiers.
In turn, JV Stevens joined the architect (Steinman Associates Pty Ltd), the building surveyor (Brooke Taylor Group Pty Ltd) and the fire engineer (Tobias Niklaus Pty Ltd) into the lawsuit.
reclad;
reinstate the parts of the building damaged by the fire;
additional insurance premiums that the applicants had to pay after the fire to insure the
building until the remaining unburnt ACPs had been removed and the building had been
compliance costs, including the future cost of replacing non-compliant cladding and
associated costs; and
Note: In order to answer the questions below, you will need to familiarise yourself with the
Victorian Civil and Administrative Tribunal’s (VCAT) decision in
your answer.
Question 1
Advise as to the likely liability of the builder, JV Stevens, to the Applicants with respect to the damages claimed. Your answer should identify the branch of the civil law under which JV Stevens may be liable and any relevant legislation.
Question 2
Advise as to whether there is any legal avenue which may enable JV Stevens to recover any damages it has to pay to the applicants from the architect, the building surveyor and the fire engineer. Your answer should consider any relevant legislation.
Question 3
The architect, Steinman Associates, claims that it should not have to pay any damages because the damages claimed are too remote from their breach. Steinman Associates argues that the presence of Brooke Taylor Group and Tobias Niklaus as “gatekeepers” to catch any non-compliances with the Building Code of Australia precludes a finding that it was reasonably in the contemplation of JV Stevens and Steinman Associates at the time they made their consultancy agreement that the breaches found against Steinman Associates would result in JV Stevens breaching its contractual warranties.
Advise as to whether Steinman Associates argument is likely to succeed. In your answer, you should refer to and explain the relevant legal principles relating to remoteness of damage and any associated case law.
Question 4
Explain whether it is likely that the building surveyor,Brooke Taylor Group,may be held liable to JV Stevens for misleading or deceptive conduct under s 18 of the Australian Consumer Law by issuing a building permit and occupancy permit for the Park Lane Apartments building.