<\/p>\n
Following on from our original 2017 Member Alert on non-conforming building products<\/a>, the use of flammable cladding on the facade of Australian buildings has come under further scrutiny.<\/p>\n There has been widespread removal and replacement of non-compliant cladding. Building owners are commencing legal proceedings against building professionals, including architects, to recover costs of dealing with aluminium composite panel (ACP) and expanded polystyrene (EPS) products in their buildings. In large buildings, such claims amount to many millions of dollars.<\/p>\n As well, strict controls are being placed on future use of ACP and EPS products, particularly in high-rise buildings. The insurance market has also changed considerably.<\/p>\n Many statements are being made about ACP and EPS products, which should be treated with caution and should be scrutinised by expert consultants.<\/p>\n As practising architects, you would be aware of your responsibilities to meet your professional competencies and to perform your professional services with reasonable skill, care and diligence, and you should take measures to ensure that you do not expose yourself to future risks of specifying non-compliant cladding.<\/p>\n The following is a summary of recent changes in the legislative and insurance environments as well as links for members to obtain further information.<\/p>\n <\/p>\n Legislative change<\/strong><\/p>\n Some of the latest legislative initiatives include the following:<\/p>\n <\/p>\n A more complete legislative update, current to September 2018, can be found on the MinterEllison website<\/a>.<\/p>\n <\/p>\n Insurance<\/strong><\/p>\n The cost of insurance and corresponding excess contributions are rising rapidly for residential owners\u2019 corporations and bodies corporate of buildings with cladding risks. Building surveyors\u2019 professional indemnity premiums are reported to have doubled, with some rising up to 400% in recent renewals.<\/p>\n Of more importance to architects, most professional indemnity insurers are imposing exclusions on insurance policies for ACP\/EPS or non-conforming building product. These exclusions could leave you uninsured for past projects. The market exclusions appear to be for both legal\/defence costs and indemnity.<\/p>\n Professional indemnity insurance coverage is offered on a \u201cclaims made and notified\u201d basis. This means there must be a valid policy in place at the time you first become aware of, and notify a claim or circumstance to your insurer, regardless of whether the claim relates to activities performed in a previous policy period. Therefore, the PI policy you have in place today will be the policy that you notify a claim under if you became aware of a matter today. Not the policy you held when you did the work.<\/p>\n Planned Cover are insurance brokers who specialise and manage the insurance programs for the majority of Australian based architectural practices. They offer the following advice:<\/p>\n \u201cBefore obtaining or renewing professional indemnity insurance, check the policy wording and schedule carefully to find out exactly what is excluded. We recommend that you discuss any non-compliant product exclusion with your insurance broker to ensure you fully understand the extent of the exclusion and the potential impact it may have on your business. The level of cover can vary greatly from one policy to the other.<\/em><\/p>\n Some exclusions are very broad and exclude \u201cany building material that is non-conforming or non-compliant with the National Construction Code, the Building Code of Australia, the Australian Standards or any other applicable laws or regulations\u201d. This type of exclusion goes well beyond non-compliant cladding and leaves the architect uninsured for claims arising from any non-compliant material or potentially design. This could include tiles, screws, glass, railings etc.<\/em><\/p>\n On the other hand, there are more moderate exclusions which seek to exclude claims arising only from the use of non-compliant Aluminium Composite Panels or even narrower ones which just exclude Aluminium Composite Panels with a Polyethylene core. It is important to note that no matter how narrow or broad the exclusion, it will apply to all projects, past and future, unless it specifically states that it only applies to future work or work after a certain date.<\/em><\/p>\n Once an exclusion is imposed, architects should review the cover provided and adjust their activities to reduce their ongoing exposure. They should also be aware of engaging sub-consultants. If you engage a sub-consultant, you become liable to the client for the work of that sub-consultant. Most PI policies provide cover for your legal liability when engaging sub-consultants. However, if a subsequent claim is made against you for the actions or errors of your sub-consultant and that claim is in connection with non-compliant cladding, you may be faced with no cover. For example, if you engage a fire engineer as your sub-consultant, and there is a subsequent claim arising from non-compliant cladding, the client will usually bring the claim against you as lead consultant. Depending on the nature of the exclusion, you may have no cover for your liability nor defence costs relating to the claim. This scenario can be avoided if the client engages the sub-consultant directly.\u201d<\/em><\/p>\n <\/p>\n More information<\/strong><\/p>\n Australian Institute of Architects Acumen Note – Non-complying building products<\/a>.<\/p>\n Australian Building Codes Board – Advisory Note: Fire performance of external walls and cladding<\/a><\/p>\n ACT Environment, Planning and Sustainable Development Directorate Building Cladding Review<\/a><\/p>\n CSIRO – Fire safety for external walls of buildings<\/a><\/p>\n Northern Territory Building Development – Building Notes<\/a><\/p>\n NSW Fair Trading <\/p>\n Queensland Fire and emergency services – Combustible external cladding<\/a><\/p>\n Queensland Government Department of Housing and Public Works – Non-Conforming Building Products Code of Practice<\/a> Queensland Building and Construction Commission – Non-Conforming Building Products<\/a><\/p>\n South Australia Planning and Property – Building news and Practitioner forms<\/a><\/p>\n Tasmania Consumer, Building & Occupational Services – Changes to the Building Regulations 2016<\/a><\/p>\n Victorian Building Authority<\/p>\n Government of Western Australia Building Commission – State-wide cladding audit<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\nSafer Buildings for Queensland- What’s happening across Australia?<\/a><\/p>\n\n